Secured creditor enforcement during winding up proceeds without Company Court leave, but only against assets covered by the security interest.

A secured creditor enforcing security under the recovery statutes may proceed during winding up without leave of the Company Court, because those special enactments override the general Companies Act regime, but enforcement remains subject to protection of workmen's dues. The Court held that the creditor could proceed against the secured land extent found on the record despite objections based on imperfect or partial registration of charge, as the special statute operated with overriding effect to that extent. It also held that movables in the Official Liquidator's custody could not be sold under the securitisation law unless they were shown to be covered by the security interest.

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Issues: (i) Whether a secured creditor enforcing its security under the Recovery of Debts Due to Banks and Financial Institutions Act and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act requires leave of the Company Court in the course of winding up proceedings. (ii) Whether the secured creditor could proceed against the movables and the entire extent of the mortgaged land, including the effect of non-registration or partial registration of charge.

Issue (i): Whether a secured creditor enforcing its security under the Recovery of Debts Due to Banks and Financial Institutions Act and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act requires leave of the Company Court in the course of winding up proceedings.

Analysis: The special recovery statutes were treated as overriding the general regime under the Companies Act. The reasoning proceeded on the basis that the Debt Recovery Tribunal and the secured creditor's enforcement remedies are not subject to the Company Court's control in the same manner as ordinary proceedings, and that the later special enactments provide a speedier and more effective machinery for recovery of secured debts. The provisions of the Securitisation Act were read as permitting enforcement of security without intervention of court or tribunal, while still preserving the workmen's dues scheme under the Companies Act. The Court also relied on the legislative amendments and the statutory scheme indicating primacy to secured creditors subject to compliance with the workmen-related safeguards.

Conclusion: Leave of the Company Court was not required for the secured creditor to proceed under the recovery statutes, subject to the statutory protection of workmen's dues.

Issue (ii): Whether the secured creditor could proceed against the movables and the entire extent of the mortgaged land, including the effect of non-registration or partial registration of charge.

Analysis: The Court held that the Securitisation Act did not authorise sale of movables that had vested in the Official Liquidator and were not shown to be pledged or otherwise covered by the secured creditor's security interest. As to the land, the dispute was confined to the extent of the secured area and the Court accepted the wider extent supported by the company's own modification intimation, notwithstanding the Registrar's imperfect recording. The objection based on non-registration under section 125 of the Companies Act did not prevail against the secured creditor's right in the circumstances, and the special statute was treated as operating with overriding effect to the extent of inconsistency.

Conclusion: The secured creditor could proceed against the secured land extent found by the Court, but could not proceed under the Securitisation Act against the movables in the custody of the Official Liquidator.

Final Conclusion: The applications were disposed of by permitting enforcement of the secured land while restraining sale of the movables, and the secured creditor was required to comply with the workmen-dues safeguards before proceeding.

Ratio Decidendi: A secured creditor proceeding under the recovery statutes may enforce its security notwithstanding winding up proceedings and without leave of the Company Court, but such enforcement remains subject to the statutory protection accorded to workmen and does not extend to assets not covered by the security interest.

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