Relation back in winding up keeps post-commencement asset sales subject to pari passu claims and statutory distribution rules.

A secured creditor's sale of a company's immovable property after commencement of winding-up proceedings was not invalid merely because prior leave of the Company Court had not been obtained. Applying the doctrine of relation back, the later winding-up order was treated as operating from the date proceedings were instituted, so the transaction remained subject to the winding-up regime and its statutory consequences. The sale proceeds were therefore exposed to pari passu claims of workmen and other protected creditors, and the Official Liquidator was to invite and adjudicate such claims for possible distribution. The sale was preserved, but the secured creditor had to cooperate with directions safeguarding the statutory rights attached to the realised proceeds.

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Issues: (i) Whether the sale of the company's immovable property by the secured creditor during the pendency of winding-up proceedings, without prior leave of the Company Court, was hit by the provisions governing commencement of winding up and avoidance of dispositions; (ii) Whether the sale proceeds realised by the secured creditor remained subject to the pari passu claims of workmen and other protected creditors under the winding-up provisions.

Issue (i): Whether the sale of the company's immovable property by the secured creditor during the pendency of winding-up proceedings, without prior leave of the Company Court, was hit by the provisions governing commencement of winding up and avoidance of dispositions.

Analysis: The winding-up petition was treated as having commenced when the proceedings were first instituted, and the subsequent transfer of the company's assets by the secured creditor occurred after such commencement. The doctrine of relation back applied, so the later winding-up order related back to the commencement of proceedings. On that basis, the transfer was not immune merely because the actual winding-up order was passed later. The Court also found that the secured creditor had sold the property through a proper procedure and at market value, after advertisement and invitation of offers.

Conclusion: The sale was not invalid merely for want of prior leave, but the transaction remained subject to the winding-up framework and the related statutory consequences.

Issue (ii): Whether the sale proceeds realised by the secured creditor remained subject to the pari passu claims of workmen and other protected creditors under the winding-up provisions.

Analysis: Once winding up is ordered, the effect of relation back brings sales effected after commencement of proceedings within the statutory regime protecting workmen's dues and other claims ranking pari passu with secured creditors. The Court therefore directed that the secured creditor must be answerable to any amount required to be brought back for distribution to eligible claimants, and that the Official Liquidator should invite and adjudicate claims for that purpose. A deposit was also directed to enable invitation of claims and further disbursement, if necessary.

Conclusion: The sale proceeds were subject to the statutory pari passu claims under the winding-up provisions, and the secured creditor was required to cooperate with any directions for distribution.

Final Conclusion: The application was disposed of with directions preserving the secured creditor's sale but safeguarding the statutory rights of workmen and other protected creditors in the realised proceeds.

Ratio Decidendi: Where winding-up proceedings have commenced, a later winding-up order relates back to that commencement, and dispositions made thereafter are subject to the statutory protections of the winding-up regime, including the pari passu rights of workmen and other protected creditors.

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