Sale of mortgaged property allowed subject to liquidation priority and control of proceeds through the Official Liquidator

Permission to sell mortgaged property under the Maharashtra Co-operative Societies Act was granted subject to liquidation safeguards preserving statutory priority under Section 529A of the Companies Act, 1956. The sale proceeds, after costs, had to be brought into Court through the Official Liquidator because the charge was not shown to be registered with the Registrar of Companies. Wider questions, including whether the applicants were secured creditors, were left open, and the Official Liquidator was directed to report after the sale was completed.

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Issues: Whether the applicants could sell the mortgaged property under Section 101 of the Maharashtra Co-operative Societies Act, 1960, subject to the priority provisions applicable in liquidation and the safeguards directed by the Court.

Analysis: The application was allowed on the basis of the affidavit in support. The sale was permitted, but expressly made subject to Section 529A of the Companies Act, 1956, so that the statutory priority of claims in liquidation would be preserved. The Court also required the applicants to bring the sale proceeds, less costs, into Court through the Official Liquidator, because the charge over the property did not appear to have been registered with the Registrar of Companies. Directions were further issued for the Official Liquidator to report after completion of the sale, while all wider contentions, including the question whether the applicants were secured creditors, were left open.

Conclusion: The applicants were permitted to proceed with the sale subject to the stated liquidation safeguards, and the application was disposed of accordingly.

Ratio Decidendi: Permission to enforce and sell property in liquidation may be granted subject to preservation of statutory priority under Section 529A of the Companies Act, 1956 and control over sale proceeds through the Official Liquidator where the charge is not shown to be registered.

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