SARFAESI sale outside winding up permitted, but the official liquidator must be associated to protect workers' dues.

Where a secured creditor or its assignee has validly initiated action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 before a winding up order, the company court should not interfere with realisation of the mortgaged assets outside the winding up proceedings. At the same time, Section 13(9) preserves protection for workers' dues, so the official liquidator must be associated with the sale process as the workers' representative and informed in advance. The secured creditor or assignee may therefore proceed with the sale outside winding up, subject to that participation of the official liquidator.

---

---

Issues: Whether a secured creditor or its assignee, having taken action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 before the winding up order, could realize the secured assets of the company in liquidation outside the winding up proceedings, and whether the official liquidator was required to be associated with the sale.

Analysis: The secured assets had already been taken over by the assignee of the secured creditor before the winding up order. In view of the governing legal position, once proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 are validly initiated in respect of mortgaged assets, the company court is not to interfere with the realization of those assets. At the same time, the statutory protection for workers' dues under Section 13(9) requires that the official liquidator, as representative of the workers, be associated with the sale process.

Conclusion: The applicant was entitled to proceed outside winding up and sell the mortgaged assets under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, with the official liquidator to be associated in the sale and informed in advance.

---