Liquidator custody of sale proceeds in winding-up remains under company court control despite recovery proceedings

In a winding-up context, the special recovery statute gives the Tribunal and Recovery Officer exclusive control over adjudication, execution, and distribution of sale proceeds realised under that Act, but it does not compel an official liquidator to surrender money already in his custody. Where liquidation assets remain with the liquidator, the company court retains supervisory control, and the Recovery Officer may seek recourse under the statutory mechanism before that court. The pari passu rights of workmen and secured creditors in liquidation remain applicable. On that basis, the company court's direction allowing retention and distribution through the liquidator was sustained.

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Issues: Whether, in a winding-up proceeding, the official liquidator was bound to transmit sale proceeds in his custody to the Recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, or whether the company court could retain control over the proceeds and require distribution through the liquidator under the Companies Act, 1956.

Analysis: The statutory scheme of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 confers exclusive jurisdiction on the Tribunal and Recovery Officer in matters of adjudication, execution, and distribution of sale proceeds realised under that Act. At the same time, once a company is in liquidation, the official liquidator is the custodian of its assets and the company court retains supervisory control over liquidation assets. The earlier authorities were reconciled by distinguishing between sale proceeds realised under the recovery proceedings and monies already in the custody of the official liquidator in a winding-up. The court held that the special statute does not require the liquidator to surrender money already held by him, and the Recovery Officer may instead seek recourse under section 28(4) before the court in whose custody the money lies. The pari passu rights of workmen and secured creditors under the Companies Act remain relevant in liquidation.

Conclusion: The official liquidator was not required to transmit the sale proceeds in his custody to the Recovery Officer, and the company court's order was and sustainable against the appellant.

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