Prior registered secured charge may be enforced outside winding up, subject to workmen's safeguards and Official Liquidator participation.

A prior registered secured charge survives a winding up order, and an assignee of that security may enforce the secured assets outside the winding up proceedings. The assignment is treated as an inter se transfer and does not displace the pre-existing charge. However, the statutory safeguards for workmen's dues must be preserved, so the Official Liquidator retains a role in the sale process and in the distribution or deposit of sale proceeds. The secured creditor's right to proceed independently is therefore recognised, but it remains subject to participation by the Official Liquidator in post-sale steps and protection of the statutory interests attached to the security.

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Issues: Whether an assignee of a secured debt, whose charge was created and registered before the winding up order, could proceed against the secured assets outside the winding up proceedings, and how the Official Liquidator's role and the workmen's interest were to be protected.

Analysis: The charge in favour of Bank of India had been registered and modified long before the winding up order. The assignment in favour of the applicant was only an inter se transaction and did not displace the pre-existing secured charge. In view of the statutory scheme governing secured enforcement and the safeguard for workmen's dues, the secured creditor was entitled to proceed against the security outside the winding up proceedings. At the same time, the Official Liquidator's role in relation to sale and distribution of proceeds had to be preserved in terms of the proviso governing the secured creditor's action.

Conclusion: The applicant was permitted to enforce the secured assets outside the winding up proceedings, while the Official Liquidator was entitled to be heard in relation to post-sale proceedings and deposit of sale proceeds.

Final Conclusion: The common order recognises the primacy of the prior registered secured charge and allows its enforcement outside winding up, subject to protection of the statutory interests of workmen through the Official Liquidator's participation in the distribution process.

Ratio Decidendi: A prior registered secured charge survives the winding up order, and the assignee of such security may enforce it outside winding up, provided the statutory safeguards for workmen and the Official Liquidator's role in sale proceeds are maintained.

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