Liquidation asset sales require Official Liquidator involvement to protect creditor priorities and lawful distribution of proceeds.

An asset reconstruction company may take part in selling assets of a company in liquidation only in association with the Official Liquidator and under the Company Court's supervision. The SARFAESI enforcement framework operates alongside the Companies Act winding-up scheme, and once liquidation has commenced the Official Liquidator represents creditors and workmen. Sale of liquidation assets must therefore preserve the statutory distribution priorities under sections 529 and 529A and ensure that the process secures a proper price and lawful distribution of proceeds.

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Issues: Whether an asset reconstruction company could be associated with the Official Liquidator in the sale of assets of a company in liquidation.

Analysis: The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 confers enforcement powers on secured creditors and asset reconstruction companies, but those powers operate alongside the scheme of winding up under the Companies Act, 1956. The Court relied on the settled position that once liquidation has commenced, the Official Liquidator represents the creditors and workmen, and the sale of assets of the company in liquidation must protect the statutory distribution scheme under sections 529 and 529A of the Companies Act, 1956. The Court also applied the later Supreme Court guidance that, where assets of a company in liquidation are sold by a secured creditor or comparable creditor, the Official Liquidator must be associated and the Company Court must supervise the process to ensure a proper price and lawful distribution of proceeds.

Conclusion: The appellant was entitled to participate in the sale process only in association with the Official Liquidator and under the directions of the Company Court.

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