Company liquidation funds remain under court supervision; direct transfer to recovery authorities requires the statutory application route.

In company liquidation, sale proceeds already in the Official Liquidator's custody remain subject to the company court's supervisory control and the Companies Act winding-up provisions. The Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 cannot compel direct transmission of those proceeds from the Official Liquidator without using the statutory mechanism under section 28(4). The principle in Allahabad Bank was confined to monies realised under the 1993 Act and did not authorise takeover of liquidation funds already under the company court's control. The result is that recovery from such monies must be pursued through the prescribed application procedure, with liquidation priorities left under court supervision.

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Issues: (i) Whether the Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 could require the Official Liquidator, without resort to section 28(4) of that Act, to transmit sale proceeds realised by the Official Liquidator in company winding up proceedings; (ii) Whether the company court retained supervisory authority over the distribution of sale proceeds and priorities in respect of companies in liquidation notwithstanding the jurisdiction conferred on the Tribunal and Recovery Officer under the 1993 Act.

Analysis: The statutory scheme of the 1993 Act was read with the winding up provisions of the Companies Act, 1956. The decision in Allahabad Bank established that, so far as monies realised under the 1993 Act are concerned, adjudication, execution and working out priorities lie with the Tribunal and Recovery Officer, and that the later special enactment overrides conflicting provisions of the earlier law. At the same time, the judgment confined that principle to realisations made under the 1993 Act and did not enlarge section 19(19) to authorise the Recovery Officer to take over all sale proceeds already lying with the Official Liquidator in pending winding up proceedings. Sections 456, 446, 449, 453, 457 and 460 of the Companies Act preserve the Official Liquidator's custody and the company court's control over liquidation assets, while section 28(4) of the 1993 Act enables the Recovery Officer to apply to the court in whose custody the money is held. The statutory balance is that the Recovery Officer may seek appropriate transfer by application, but cannot compel direct transmission outside that procedure.

Conclusion: The Recovery Officer could not require direct transmission of the sale proceeds without making an application under section 28(4) of the 1993 Act. The Official Liquidator was not bound to transmit the proceeds as directed.

Final Conclusion: The company court's supervisory role in liquidation was upheld, and the applications were disposed of by recognising that any recovery from monies in the Official Liquidator's custody must be sought through the statutory route under the 1993 Act.

Ratio Decidendi: In company liquidation, the Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 cannot compel direct transfer of sale proceeds already held by the Official Liquidator; any claim to such monies must be pursued through the procedure expressly provided by section 28(4), subject to the company court's supervision.

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