SARFAESI enforcement during winding up must be harmonised with company court supervision and workmen's dues protection.

A secured creditor or its assignee may enforce security under the SARFAESI Act during winding up, but that right must be harmonised with the Companies Act rather than treated as overriding it. The company court and official liquidator retain supervisory protection over sale transparency, liquidation expenses, and workmen's dues under the pari passu framework. Where sale steps have already begun under company court directions, the existing process cannot be ignored entirely, and any surplus from the sale must be accounted for through the liquidation process rather than appropriated unilaterally.

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Issues: Whether an assignee of a secured debt could, notwithstanding pending winding up proceedings and a sale process already initiated by the official liquidator, stand outside the winding up and enforce the security under the SARFAESI Act; and how the competing claims under the SARFAESI Act and the Companies Act were to be harmonised, particularly in relation to workmen's dues and supervision of sale.

Analysis: The security creditor's right to proceed against the secured asset outside winding up was recognised, but that right was not treated as absolute or as ousting the company court's supervisory role in every situation. The judgment emphasised that the SARFAESI Act, the Companies Act, and the RDB Act contain overlapping non obstante and saving provisions, and that the proper approach is harmonisation rather than exclusion of one statute by the other. The court noted that where the secured creditor and its assignee had earlier participated in the sale process through the official liquidator, and where sale steps had already been taken under the company court's directions, it would be inappropriate to unyoke the existing process entirely. At the same time, the statutory protections for workmen's dues under Section 529A of the Companies Act had to be preserved, and the sale process under SARFAESI had to remain transparent and disclosed to the official liquidator and the company court.

Conclusion: The assignee was permitted to proceed under the SARFAESI Act and to stand outside the winding up, but only subject to disclosure, transparency, and protection of the company court's oversight regarding sale process, costs, and workmen's dues.

Issue: Whether the sale proceeds could be appropriated by the secured creditor without accounting for the official liquidator's expenses, the workmen's dues, and the surplus due to the company in liquidation.

Analysis: The judgment held that the secured creditor proceeding under SARFAESI could not appropriate the proceeds in a manner inconsistent with the rights of workmen and the liquidation process. The existing sale expenses incurred by the official liquidator were directed to be deducted from the sale proceeds, the claim and expenses of the reconstruction company were to be placed before the company court, and any surplus beyond what was lawfully due had to be deposited with the official liquidator for the benefit of the company in liquidation. This preserved the statutory pari passu framework and prevented unilateral appropriation of sale proceeds.

Conclusion: The secured creditor was not allowed to appropriate the sale proceeds absolutely; distribution was made subject to the company court, the official liquidator, and the statutory claims of workmen and the company in liquidation.

Final Conclusion: The application was allowed only in part, enabling the secured creditor's assignee to pursue SARFAESI remedies while preserving liquidation safeguards, disclosure obligations, and the priority of workmen's dues.

Ratio Decidendi: Where a secured creditor or its assignee seeks to enforce security during winding up, the statutes must be harmonised so that SARFAESI enforcement may proceed without extinguishing the company court's protective jurisdiction over sale transparency, liquidation expenses, and the pari passu rights of workmen under the Companies Act.

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