Secured creditor sale rights continue before winding-up order; Court-supervised highest bid may stand if no better firm offer emerges.

A secured creditor may continue with the sale of a company's assets after admission of a winding-up petition and appointment of a Provisional Liquidator, so long as no winding-up order has been passed and the creditor's rights under section 29 of the State Financial Corporations Act remain relevant. In a Court-supervised sale, the best available bid may be considered for acceptance where bids were invited openly and the company was given repeated chances to improve the offer. For valuation, an approved valuer's report was preferred over book-based figures prepared by non-approved chartered accountants. The company was given one final opportunity to produce a firm superior offer, failing which the existing highest bid could be accepted.

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Issues: Whether the secured creditor could proceed with the sale of the company's assets after admission of the winding-up petition and appointment of a Provisional Liquidator, and whether the highest bid received for the assets should be accepted.

Analysis: The sale process had been conducted under the supervision of the Court, with bids invited in open Court and the company given repeated opportunities to secure better offers. The admission of the winding-up petition and appointment of a Provisional Liquidator did not, by themselves, bar consideration of the sale, since no winding-up order had yet been passed and the secured creditor's rights under section 29 of the State Financial Corporations Act continued to be relevant. On valuation, the Court preferred the report of the approved valuer over the valuation based on book figures prepared by chartered accountants who were not approved valuers. In the absence of any higher effective bid, the highest available bid could be considered for acceptance, though one final opportunity was warranted to bring a firm better offer with earnest support.

Conclusion: The secured creditor was not restrained from pursuing the sale, and the highest bid was not rejected as untenable. The company was granted one further opportunity to produce a superior firm offer, failing which the bid of Ceylon Biscuits Ltd. would be accepted.

Final Conclusion: The application did not succeed in obtaining an injunction against the sale, but the company received a limited further opportunity to improve the sale outcome before confirmation of the existing highest bid.

Ratio Decidendi: A secured creditor may continue to proceed with sale under section 29 of the State Financial Corporations Act until a winding-up order is passed, and a sale supervised by the Court may be confirmed on the basis of the best available bid supported by a credible valuation.

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