SARFAESI enforcement cannot be restrained by Company Court, though Section 529A protections apply at the later liquidation stage.

SARFAESI enforcement by a secured creditor could not be restrained by the Company Court at the stage of Section 13(2) and Section 13(4), because the Act permits enforcement without court intervention and gives overriding effect to inconsistent laws. The Court held that the protection of Section 529A of the Companies Act, 1956 is incorporated through Section 13(9) and becomes relevant at that later stage, so workmen's dues and other secured creditors' claims cannot be ignored. The restraint directions were set aside, but limited safeguards were retained to secure the best price and statutory compliance.

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Issues: Whether the Company Court could restrain a secured creditor from exercising its rights under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 in respect of assets of a company in winding up, and whether the court could nevertheless require safeguards for the dues protected by Section 529A of the Companies Act, 1956.

Analysis: The statutory scheme of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 permits a secured creditor to enforce security interest without intervention of court, and Section 35 gives the Act overriding effect over inconsistent laws. The Court noted that Section 13(9) incorporates the protection of Section 529A of the Companies Act, 1956 in cases of liquidation, so the claims of workmen and other secured creditors cannot be ignored. At the same time, the restraint placed by the Company Court on the exercise of rights under Section 13(2) and Section 13(4) was found to be premature and inconsistent with the statutory framework, because the protections under Section 529A become relevant only at the stage contemplated by Section 13(9).

Conclusion: The restraint directions were set aside, but limited directions were issued to ensure realization of the best price and compliance with the workmen's dues and other secured creditors' claims under the statutory scheme, so the appeal succeeded only in part in favour of the appellant.

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