Winding-up priority rules bar post-liquidation interest claims by secured creditors and protect workmen's pari passu dues.

In company liquidation, a secured creditor's claim is fixed with reference to the winding-up date, so contractual interest cannot continue to accrue after that date where it would enlarge the claim at the expense of workmen's statutory pari passu dues. Distribution of sale proceeds must follow the liquidation scheme giving effect to the priority of workmen's dues and the secured creditor's pari passu share, and the quantified workmen's dues must be satisfied before appropriation. A Company Court acting under the Companies Act and the Companies (Court) Rules cannot examine the vires of Rule 156 within that jurisdiction; the challenge to the rule therefore failed.

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Issues: (i) Whether a secured creditor in company liquidation can claim contractual interest beyond the date of the winding-up order and appropriate the sale proceeds without first satisfying the workmen's pari passu dues. (ii) Whether the Company Court, while exercising jurisdiction under the Companies Act and the Companies (Court) Rules, can examine the vires of Rule 156 of the Companies (Court) Rules, 1959.

Issue (i): Whether a secured creditor in company liquidation can claim contractual interest beyond the date of the winding-up order and appropriate the sale proceeds without first satisfying the workmen's pari passu dues.

Analysis: The value of claims in winding-up is to be determined with reference to the date of the winding-up order. Once winding-up commences, the company assets are brought under the control of the Official Liquidator and distribution of sale proceeds must follow the statutory scheme under sections 529 and 529A of the Companies Act, 1956. Workmen's dues and the pari passu portion of secured debts rank ahead of other claims, and allowing contractual interest to run after the winding-up date would enlarge the secured creditor's claim at the expense of workmen, defeating the object of section 529A and disturbing the pari passu distribution.

Conclusion: The secured creditor is not entitled to claim contractual interest beyond the winding-up date, and the balance of the quantified workmen's dues must be deposited before the sale proceeds can be appropriated.

Issue (ii): Whether the Company Court, while exercising jurisdiction under the Companies Act and the Companies (Court) Rules, can examine the vires of Rule 156 of the Companies (Court) Rules, 1959.

Analysis: A court constituted under a special statute acts within the limits of that statute and adjudicates disputes in accordance with the Act and the rules made thereunder. In such jurisdiction, the court cannot pronounce on the constitutional validity of the parent statute or subordinate legislation. In any event, no specific infirmity in Rule 156 was established, and the rule operates to preserve the statutory balance between secured creditors and workmen in liquidation.

Conclusion: The challenge to the vires of Rule 156 was rejected.

Final Conclusion: The application succeeded only to the limited extent of permitting appropriation of the sale proceeds after compliance with the quantified workmen's dues, and the remainder of the challenge failed.

Ratio Decidendi: In company liquidation, the cut-off date for computing pari passu claims of secured creditors and workmen is the winding-up order date, and the Company Court must enforce distribution under sections 529 and 529A without allowing post-winding-up contractual interest to prejudice workmen's statutory priority.

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