Pari passu protection for workmen's dues limits asset enforcement by financial corporations in pending winding-up proceedings.

A company court may regulate the sale of a company's seized assets when winding-up proceedings are pending, because a financial corporation's enforcement power under section 29 of the State Financial Corporations Act, 1951 must operate consistently with the pari passu charge for workmen under the proviso to section 529 and the priority scheme in section 529A of the Companies Act, 1956. Where notice of pending winding-up proceedings has been published, knowledge of those proceedings may be presumed, and the court may control disposal of assets to protect workmen's dues.

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Issues: Whether a company court can order winding up of a company and restrain the Orissa State Financial Corporation from selling seized assets under section 29 of the State Financial Corporations Act, 1951, when winding-up petitions were already pending and the workmen's pari passu rights under the Companies Act, 1956 were implicated.

Analysis: The seizure by the financial corporation was effected after the winding-up petitions had already been filed and notice of their pendency had been published, giving rise to a presumption of knowledge of the pending proceedings. The statutory power of a financial corporation to enforce security under section 29 of the State Financial Corporations Act, 1951 must be exercised consistently with the pari passu charge created by the proviso to section 529 and the priority scheme under section 529A of the Companies Act, 1956. The controlling principle is that the company court must ensure protection of the workmen's dues and may regulate the sale of company assets accordingly.

Conclusion: The winding-up petition was maintainable and the company was ordered to be wound up. The official liquidator was appointed, and the financial corporation was restrained from selling or otherwise encumbering the seized assets.

Ratio Decidendi: The statutory right of a financial corporation under section 29 of the State Financial Corporations Act, 1951 yields to the pari passu rights of workmen protected by sections 529 and 529A of the Companies Act, 1956, and the company court may order winding up and control disposition of the assets to secure those rights.

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