Workmen's pari passu charge limits secured creditor recovery under the Companies Act, subordinating section 29 enforcement powers.

Section 29 of the State Financial Corporations Act gives a Financial Corporation a statutory right to take over and sell a defaulting industrial concern's assets, but that right is subject to the pari passu workmen's charge created by the proviso to section 529(1) of the Companies Act and the overriding priority given by section 529A. The later Companies Act provisions control the earlier special statute in winding up, so the Corporation's recovery powers must be exercised with the Company Court's supervision through the Official Liquidator. The stated legal position is that conditions preserving workmen's dues are lawful and the Corporation cannot ignore that charge.

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Issues: Whether the conditions imposed by the Company Court while permitting the Financial Corporation to proceed under section 29 of the State Financial Corporations Act, 1951 were lawful in view of the pari passu charge created in favour of workmen under sections 529 and 529A of the Companies Act, 1956.

Analysis: Section 29 of the State Financial Corporations Act, 1951 confers a statutory right on the Financial Corporation to take over and sell the assets of the defaulting industrial concern. However, the proviso to section 529(1) of the Companies Act, 1956, inserted by amendment, creates a pari passu charge in favour of workmen in respect of the security of every secured creditor, and section 529A gives overriding priority to workmen's dues and the corresponding secured debts. The later enactment therefore controls the earlier special statute, and the Corporation's right under section 29 must be exercised subject to the workmen's charge and the supervision of the Company Court through the Official Liquidator.

Conclusion: The conditions imposed by the High Court were lawful and the appellant could not exercise its section 29 rights ignoring the workmen's pari passu charge.

Final Conclusion: The statutory scheme governing winding up preserved the priority of workmen's dues, and the Financial Corporation's recovery rights were subordinate to that protection.

Ratio Decidendi: Where a later provision in the Companies Act creates a pari passu charge and overriding priority for workmen's dues in winding up, the right of a secured creditor or Financial Corporation under an earlier special statute to realise security must be exercised subject to that charge and the control of the Company Court.

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