Secured creditor rights in winding up remain subject to Company Court supervision over sale and appropriation of proceeds.

A secured creditor with mortgage, hypothecation and charge over a company's assets may remain outside winding-up proceedings and realise the secured assets under the State Financial Corporations Act, 1951, without first being confined to the Banks and Financial Institutions Act or to a claim through the Official Liquidator. That position does not exclude judicial supervision: the secured creditor may take possession and sell the charged assets, but the sale and appropriation of proceeds remain subject to the Company Court's confirmation and control. The secured creditor must also bear its pro rata share of security expenses while the Official Liquidator retains possession.

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Issues: Whether a secured creditor was entitled to remain outside the winding-up proceedings and realise its secured assets by exercising powers under the State Financial Corporations Act, 1951, subject to the control of the Company Court.

Analysis: The application was based on the applicant's status as a secured creditor with mortgage, hypothecation and charge over the company's assets. The objection that the applicant had to first proceed under the Banks and Financial Institutions Act or file its claim only through the Official Liquidator was rejected. The Court held that remaining outside winding up did not oust judicial supervision. The secured creditor could take possession of the charged assets and sell them, but the sale and the appropriation of sale proceeds remained subject to the Court's confirmation and control. The Court also accepted that the applicant remained under an obligation to meet its pro rata share of security expenses while the Official Liquidator retained possession.

Conclusion: The applicant was permitted to remain outside the winding-up proceedings and to proceed with sale of the secured assets, subject to compliance with the Court's directions and supervision.

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