Company court sale powers in winding up upheld; unpaid seller's lien and arbitration claims did not block asset sale.

In winding up proceedings, the company court may authorise sale of the company's assets through the provisional liquidator, provided the provisional liquidator is associated and the interests of secured creditors, unsecured creditors and workmen are considered. An unpaid supplier loses any lien over goods once title has passed and no enforceable reservation of disposal remains; a money decree alone does not revive that lien. An arbitration claimant whose goods were delivered and whose title had passed has only an unsecured claim and must pursue it before the official liquidator, while arbitration or interim relief cannot bar sale in the winding up process.

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Issues: (i) whether the company court could direct sale of the company's assets through the provisional liquidator pending winding up proceedings and after associating secured creditors; (ii) whether the supplier of the boiler had retained a lien so as to exclude the boiler from sale; and (iii) whether the claims of the arbitration applicant could prevent sale of the turbo generators and the company assets.

Issue (i): whether the company court could direct sale of the company's assets through the provisional liquidator pending winding up proceedings and after associating secured creditors.

Analysis: The provisions governing provisional liquidation and winding up were read together to hold that a provisional liquidator, unless restricted by the appointing order, has the same powers as a liquidator. The court also relied on the scheme of the Companies Act, the Companies (Court) Rules, and the settled principle that the company court may order sale of assets pending winding up, provided the provisional liquidator is associated and the interests of secured creditors, unsecured creditors and workmen are considered. The court rejected the objections founded on the pendency of the petition to set aside the provisional liquidator's appointment, alleged relinquishment of security by the secured creditor, and the plea of parallel proceedings under the RDB and SARFAESI regimes.

Conclusion: The court held that there was no legal impediment to ordering sale of the company's assets through the official liquidator with proper participation of the secured creditors.

Issue (ii): whether the supplier of the boiler had retained a lien so as to exclude the boiler from sale.

Analysis: The contract showed that title in the boiler had passed to the company in liquidation, while the supplier retained only a possessory lien to the extent permitted by the contract. The supplier had already sued only for money recovery and obtained only a money decree, without enforcing any lien. Applying the law relating to unpaid sellers, the court held that once delivery was made and title had passed without reservation of disposal, the unpaid seller's lien was lost, and a decree for price did not revive it.

Conclusion: The claim for exclusion of the boiler was rejected and the boiler was held liable to be sold.

Issue (iii): whether the claims of the arbitration applicant could prevent sale of the turbo generators and the company assets.

Analysis: The arbitration applicant had supplied and commissioned the turbo generators, but the goods had been delivered and title had passed to the company in liquidation. The applicant therefore had no subsisting lien over the machinery and stood only as an unsecured creditor. Its remedy was to lodge its claim before the official liquidator. The arbitration proceedings and interim relief under section 9 could not defeat the company court's power to proceed with sale in the winding up process.

Conclusion: The applications seeking injunction were dismissed and the machinery was not exempted from sale.

Final Conclusion: The application for sale was allowed and the objections raised by the boiler supplier and the arbitration claimant were rejected, resulting in a direction for publication and auction of the company's assets under the supervision of the official liquidator.

Ratio Decidendi: In winding up proceedings, a provisional liquidator may be associated with sale of assets and the company court may order such sale before final winding up, while a secured creditor or unpaid seller loses no security or lien merely by participating in the court process unless there is a conscious relinquishment or a legally effective loss of lien.

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