Secured creditor rights in winding up remain intact, subject to workmen's pari passu charge and preferential dues protection.

A secured creditor of a company in winding up retains the right to stand outside the winding up and enforce its security under Section 29 of the State Financial Corporations Act, 1951. Sections 529 and 529A of the Companies Act, 1956 create a pari passu charge in favour of workmen and give their dues overriding preferential status, but they do not extinguish the secured creditor's statutory right to sell the secured assets. The company court's role is to protect workmen's dues when that right is exercised, and permission to sell subject to payment of workmen's dues was held to be lawful.

---

---

Issues: Whether a secured creditor of a company in winding up could stand outside the winding up and enforce its security by sale under Section 29 of the State Financial Corporations Act, 1951, after the insertion of Sections 529 and 529A of the Companies Act, 1956, and whether the company court was right in permitting such sale subject to payment of workmen's dues.

Analysis: Section 29 of the State Financial Corporations Act, 1951 confers on the Financial Corporation the right to take over possession and sell the property of the defaulting industrial concern. The company under liquidation did not cease to be an industrial concern merely because winding up had been ordered. Sections 446(2)(b) and 537 of the Companies Act, 1956 confer wide jurisdiction on the company court, but they do not abolish the settled right of a secured creditor to stand outside winding up and realise its security. The amendment to Section 529 and the insertion of Section 529A created a pari passu charge in favour of workmen and made their dues overriding preferential claims, but they did not take away the secured creditor's right to realise its security outside the winding up. The liquidator's role is to represent workmen and enforce the statutory charge when the secured creditor opts to realise the security, not to displace that creditor's right to sell.

Conclusion: The permission granted to the secured creditor to sell the secured assets and realise its security, subject to payment of workmen's dues, was in accordance with law.

Ratio Decidendi: The statutory protection of workmen's dues under Sections 529 and 529A of the Companies Act, 1956 does not extinguish a secured creditor's right to stand outside winding up and enforce its security under the special statute, subject to the pari passu charge in favour of workmen.

---