Secured creditor sale rights in liquidation survive, but court supervision must protect workmen's pari passu priority.

A State Financial Corporation's statutory power to sell mortgaged assets under Section 29 survives a company's liquidation, but its exercise must conform to the Companies Act, 1956 protections for workmen's dues. The company court and Official Liquidator may supervise the sale to ensure the pari passu charge of workmen under Sections 529 and 529A is preserved. The sale may proceed with the Official Liquidator associated, valuation and upset price fixed under oversight, and sale proceeds deposited for lawful adjudication and payment of claims. The secured creditor may thus realise its security, subject to court-controlled safeguards protecting statutory priorities.

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Issues: Whether a State Financial Corporation, as a secured creditor, could be permitted to auction and sell the mortgaged properties of a company in liquidation under Section 29 of the State Financial Corporations Act, 1951, and on what safeguards.

Analysis: The Corporation's power under Section 29 is not extinguished by liquidation, but its exercise is subject to the Companies Act, 1956 provisions protecting workmen's dues. The controlling principle is that the company court and the Official Liquidator may supervise the sale only to ensure that the pari passu charge of workmen under Sections 529 and 529A is protected. Consistent with that legal position, the sale process could proceed with the Official Liquidator being associated, valuation and upset price being fixed under oversight, and the sale proceeds being deposited so that claims against the proceeds may be adjudicated and paid in accordance with law.

Conclusion: The application was allowed in substance, and permission was granted to auction and sell the mortgaged properties, subject to safeguards protecting workmen's claims and supervision of the sale process by the Official Liquidator and the Court.

Final Conclusion: The secured creditor was permitted to realise its security despite the company's liquidation, but only through a court-supervised process that preserved the statutory priority of workmen's dues.

Ratio Decidendi: A secured creditor's statutory power to sell the assets of a company in liquidation survives, but its exercise is conditioned by the company court's supervisory directions to protect the pari passu charge of workmen under the Companies Act, 1956.

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