Prior court approval and statutory sourcing hierarchy govern security guard appointments for liquidation assets, with secured creditors bearing the burden where feasible.

An official liquidator should ordinarily obtain prior orders of the company court before appointing security guards for assets in liquidation and should not seek post facto ratification, because prior permission enables secured creditors' views to be recorded and avoids later objections. Security services should be sourced through the statutory Security Guards Board where the Maharashtra Private Security Guards Act applies; if not, the employment exchange should be approached, and where the property has an existing watch and ward department, that department should be preferred. Where feasible, appointment, supervision, control and wages should be placed on secured creditors.

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Issues: (i) whether the official liquidator must obtain prior orders of the company court before appointing security guards for assets in liquidation and cannot seek post facto ratification; (ii) whether security services for property under liquidation should ordinarily be sourced through the statutory Security Guards Board, employment exchange, or the existing watch and ward department, with the burden of appointment and payment, where feasible, placed on secured creditors.

Issue (i): whether the official liquidator must obtain prior orders of the company court before appointing security guards for assets in liquidation and cannot seek post facto ratification.

Analysis: The report showed that the official liquidator had engaged security guards first and sought ratification later. The Court held that such appointments should ordinarily not be made without prior permission of the company court, because prior orders would allow the views of secured creditors to be recorded and would avoid later objections. The Court also directed that post facto ratification should not ordinarily be sought in such matters.

Conclusion: The official liquidator was required to obtain prior orders of the company court before appointing security guards and should not ordinarily seek subsequent ratification.

Issue (ii): whether security services for property under liquidation should ordinarily be sourced through the statutory Security Guards Board, employment exchange, or the existing watch and ward department, with the burden of appointment and payment, where feasible, placed on secured creditors.

Analysis: The Court noted that private security agencies were stated to be statutorily barred under the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981, and therefore directed the official liquidator to requisition guards through the Security Guards Board where the Act applied. If the site fell outside the Act, the official liquidator was to approach the employment exchange. If the property belonged to a mill, factory, or establishment with its own watch and ward department, that department was to be preferred. The Court further indicated that responsibility for appointment, supervision, control, and wages should, where possible, be fixed on secured creditors.

Conclusion: The official liquidator was directed to follow the statutory sourcing hierarchy, with preference to the existing watch and ward department where available, and to place the burden on secured creditors where feasible.

Final Conclusion: The report was disposed of with binding directions regulating future appointment and sourcing of security guards for properties in liquidation.

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