Liquidation control prevails over prior BIFR sale arrangements when an Official Liquidator has been appointed.

Once winding-up proceedings are under court control and an Official Liquidator has been appointed, earlier BIFR-sanctioned sale arrangements cannot displace the liquidation process. The court held that the company's assets, being in the custody and supervision of the Official Liquidator, must be sold through the court-directed liquidation machinery. Parallel permission to the applicant bank and the BIFR-appointed Assets Sales Committee would interfere with orderly administration of the estate and could prejudice secured creditors and other stakeholders. The request for independent sale authority was therefore declined.

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Issues: Whether the applicant bank and the Assets Sales Committee constituted by the BIFR could be permitted to sell the assets of the company despite the appointment of the Official Liquidator by the Court and the directions already issued for sale of the assets under court supervision.

Analysis: The company had already been proceeded against under the Sick Industrial Companies (Special Provisions) Act, 1985 and the BIFR had earlier permitted sale of the assets through the bank as selling agency. However, after the company was directed to be wound up and the Official Liquidator was appointed to take charge of the company and its assets, the Court found that the properties had come under its custody and supervision through the Official Liquidator. The Court noted that the applicant had earlier been given an opportunity to act under the BIFR arrangement but no effective steps had followed, and that subsequent court directions required the Official Liquidator to proceed with the sale. In that setting, any parallel permission to the bank and the BIFR committee would interfere with the liquidation process and could prejudice the interests of the company, secured creditors, and other stakeholders.

Conclusion: The request to allow the applicant bank and the BIFR-appointed committee to independently sell the assets was rejected.

Final Conclusion: The sale of the company's assets was held to lie with the Official Liquidator under the Court's control, and the bank's applications for independent sale arrangements were declined.

Ratio Decidendi: Once winding up proceedings are under the Court's control and an Official Liquidator has been appointed, prior BIFR sale arrangements cannot override the liquidation process where such interference would prejudice the orderly administration of the company's assets and the interests of creditors.

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