RDB Act recovery sale can proceed during liquidation, but distribution must preserve workmen's dues and creditor priority.

Where recovery proceedings under the RDB Act overlap with liquidation proceedings under the Companies Act, the Debts Recovery Tribunal may continue the sale of the company's assets because the later special recovery statute prevails to the extent of inconsistency, and the company court does not retain exclusive control over the sale process. However, distribution of the sale proceeds must still follow the Companies Act priority scheme: workmen's dues receive statutory protection under sections 529 and 529A, secured creditors share pari passu, and the official liquidator may participate to safeguard workmen's interests before creditors are paid.

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Issues: (i) Whether the Debts Recovery Tribunal could proceed with the sale of the company's assets during the pendency of liquidation proceedings before the Company Court and whether the official liquidator was entitled to take over the sale process and obtain the keys of the business premises. (ii) How the sale proceeds realised through the Debts Recovery Tribunal were to be distributed so that the rights of workmen, secured creditors and unsecured creditors were protected.

Issue (i): Whether the Debts Recovery Tribunal could proceed with the sale of the company's assets during the pendency of liquidation proceedings before the Company Court and whether the official liquidator was entitled to take over the sale process and obtain the keys of the business premises.

Analysis: The winding up court acts through the official liquidator, but the statutory scheme under sections 446 and 457 of the Companies Act, 1956 differs from the scheme under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The RDB Act is a later special enactment conferring exclusive jurisdiction on the Debts Recovery Tribunal for recovery of debts due to banks and financial institutions. In the event of conflict, the later special law prevails to the extent of inconsistency. The earlier principle protecting the company court's control over liquidation cannot displace the express statutory jurisdiction of the Tribunal to proceed with recovery and sale under the RDB Act.

Conclusion: The Debts Recovery Tribunal was entitled to continue the sale proceedings, and the prayer to direct the secured creditor to surrender the keys to the official liquidator was rejected.

Issue (ii): How the sale proceeds realised through the Debts Recovery Tribunal were to be distributed so that the rights of workmen, secured creditors and unsecured creditors were protected.

Analysis: The Court applied the overriding preference given by section 529A of the Companies Act, 1956 and the pari passu charge created in favour of workmen under section 529(1). Even when the Tribunal conducts the sale, it cannot pay the secured creditor straightaway without first protecting workmen's dues. The Tribunal must determine priorities in accordance with the statutory priority framework and the principles governing distribution among creditors, with the official liquidator being entitled to participate so that workmen's interests are represented.

Conclusion: The sale proceeds had to be deposited with the Debts Recovery Tribunal and distributed by it only after first safeguarding workmen's dues and then determining the claims of the creditors in accordance with law.

Final Conclusion: The liquidation court did not retain control over the sale process, but the Tribunal's recovery jurisdiction was subject to the statutory priority of workmen's dues and the creditor distribution scheme under the Companies Act.

Ratio Decidendi: Where recovery proceedings under the RDB Act conflict with liquidation proceedings under the Companies Act, the later special recovery statute governs the conduct of sale, but distribution of realised amounts must still respect the statutory priority of workmen's dues and the pari passu scheme for secured creditors.

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