Liquidation sale proceeds must be deposited with the Official Liquidator when unsecured creditor claims emerge and no secured priority exists.

Sale proceeds of immovable assets in liquidation could not remain with the appellant once additional unsecured creditor claims surfaced, because the earlier permission to retain them was only temporary. The Official Liquidator, being responsible for the company's liquidation assets and funds, was required to collect the proceeds and place them before the Company Court for distribution. The appellant was not treated as having secured priority over those proceeds, and unsecured creditors were entitled to rank pari passu in respect of them, subject to workmen's dues. The direction to deposit the sale proceeds with interest with the Official Liquidator was therefore upheld, and the appeal was dismissed.

---

---

Issues: Whether the appellant could retain the sale proceeds of the immovable assets of the company in liquidation, or was required to deposit them with the Official Liquidator for distribution among unsecured creditors and workmen in accordance with the Companies Act, 1956.

Analysis: The earlier arrangement permitting the appellant to retain the sale proceeds was only temporary and operated until claims of other creditors were ascertained. Once a second advertisement brought forward claims from other unsecured creditors, the basis for continued retention by the appellant disappeared. The Official Liquidator, as the person in charge of the assets and funds of the company in liquidation, was required to collect the sale proceeds and seek approval of the Company Court for disbursement. The appellant was not a secured creditor in respect of the sale proceeds of the immovable property, and the claims of unsecured creditors were to rank pari passu to that extent, subject to satisfaction of workmen's dues.

Conclusion: The appellant was rightly directed to deposit the sale proceeds with interest with the Official Liquidator. The challenge to that direction failed.

Final Conclusion: The appeal was dismissed and the direction requiring deposit of the sale proceeds with the Official Liquidator was upheld.

Ratio Decidendi: Where sale proceeds of immovable assets in liquidation are not covered by a secured creditor's priority and other unsecured claims have surfaced, those proceeds must be brought under the control of the Official Liquidator for pari passu distribution in accordance with the Companies Act, with workmen's dues having precedence.

---