SARFAESI enforcement and winding up: secured creditor's pre-winding-up sale stands, subject to workmen's dues protection.

A secured creditor may enforce its security under the SARFAESI Act without prior leave of the Company Court even where a provisional liquidator has been appointed and winding up proceedings are pending. The Companies Act, 1956 does not give the winding up court control over such enforcement, and the reference in section 13(9) to sections 529 and 529A is confined to protection of workmen's dues and distribution of sale proceeds. A sale completed before the winding up order is not rendered void merely because winding up is later ordered, and liquidation provisions on custody, avoidance, and pari passu claims do not retrospectively invalidate a valid securitisation sale. The statutory obligation to safeguard workmen's dues remains operative.

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Issues: (i) Whether a secured creditor could sell the secured assets of a company under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 without obtaining prior leave or approval of the Company Court when a provisional liquidator had already been appointed and winding up proceedings were pending. (ii) Whether the sale effected before the winding up order was void or liable to be set aside on the ground of the Companies Act, 1956, including the doctrine of relation back and the provisions relating to custody of assets, avoidance of transactions, and pari passu claims.

Issue (i): Whether a secured creditor could sell the secured assets of a company under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 without obtaining prior leave or approval of the Company Court when a provisional liquidator had already been appointed and winding up proceedings were pending.

Analysis: The statutory scheme of the Companies Act, 1956 preserves the winding up court's control over distribution of assets after winding up, but the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is a later and special enactment conferring independent rights on secured creditors to enforce security interest. The Court held that the reference in section 13(9) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to section 529A of the Companies Act, 1956 is limited to protection of workmen's dues and distribution of sale proceeds, and does not incorporate the entire winding up control of the Company Court into securitisation proceedings. Reliance was placed on the later Supreme Court position that the secured creditor's right to realise security remains intact, while the liquidator's role is confined to safeguarding workmen's interests where liquidation provisions are attracted.

Conclusion: Prior leave or permission of the Company Court was not required for the sale effected under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the sale was not invalid on that ground.

Issue (ii): Whether the sale effected before the winding up order was void or liable to be set aside on the ground of the Companies Act, 1956, including the doctrine of relation back and the provisions relating to custody of assets, avoidance of transactions, and pari passu claims.

Analysis: The Court held that section 441 of the Companies Act, 1956 does not render every pre-winding-up sale void merely because winding up is subsequently ordered. The decisive factor was that on the date of sale the company had not yet been wound up, and the later winding up order could not retrospectively invalidate a sale validly conducted under the securitisation regime. The Court further held that sections dealing with custody, avoidance, and priorities in liquidation operate in the context of winding up and distribution, not to nullify a completed securitisation sale. The sale proceeds would nevertheless remain subject to the statutory mandate protecting workmen's dues under section 13(9) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 read with sections 529 and 529A of the Companies Act, 1956.

Conclusion: The sale was not void and was not liable to be quashed or set aside.

Final Conclusion: The application failed on merits, and the secured creditor's sale was allowed to stand, with only the statutory obligation to protect and remit workmen's dues remaining operative.

Ratio Decidendi: A secured creditor may enforce security under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 without prior leave of the Company Court even where liquidation proceedings are pending, and the later winding up of the company does not retrospectively invalidate a pre-winding-up sale; the Company Court's role is limited to ensuring compliance with the statutory protection of workmen's dues.

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