Section 529A priority applies at final liquidation distribution, not to bar interim ad hoc payments to workmen.

Section 529A of the Companies Act, 1956 protects the priority of secured creditors and workmen at the stage of final distribution in liquidation, but it does not prevent an interim ad hoc payment to workmen pending final settlement of competing claims. A challenge to a direction for payment of 15% of workers' dues was treated as premature because the order concerned only a partial, temporary disbursement and not final adjudication of entitlement. Interim payment to workers was therefore regarded as permissible, and the appeal was dismissed.

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Issues: Whether the appellant banks could invoke section 529A of the Companies Act, 1956 to prevent or limit ad hoc payment to workers out of the funds lying with the banks before final settlement of the claims of workers and the banks.

Analysis: The challenge was found premature because the impugned direction concerned only an interim payment of 15% of the workers' dues. The statutory protection under section 529A, which governs the rights of secured creditors and workmen in liquidation, was held to be relevant at the stage of final distribution of the total amounts payable, not at the stage of a part payment directed as an ad hoc measure. Interim payment to workers was therefore treated as permissible.

Conclusion: Section 529A of the Companies Act, 1956 was held inapplicable to resist the ad hoc payment order, and the appeal was dismissed.

Ratio Decidendi: Section 529A is attracted for final adjudication and distribution of liquidation proceeds, and does not bar an interim ad hoc payment to workmen directed pending final settlement of competing claims.

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