SARFAESI sale against a company in liquidation must involve the Official Liquidator to protect creditors' and workmen's dues.

A secured creditor may enforce security under SARFAESI against a company in liquidation, but the sale must be conducted with notice to and association of the Official Liquidator under Company Court supervision. The competing statutes are to be read harmoniously so that the liquidator can protect workmen's dues, secure a proper price, and ensure lawful distribution of sale proceeds under the Companies Act. An auction completed without such association was not sustained, and the sale process had to be redone through a fresh notice issued in association with the Official Liquidator.

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Issues: Whether a secured creditor proceeding under the SARFAESI Act could conduct and complete the auction of assets of a company in liquidation without associating the Official Liquidator, and whether the Company Court could require such association before sale.

Analysis: The competing statutes were held to operate harmoniously. The right of a secured creditor to realise its security under the SARFAESI Act was recognised, but where the debtor was a company in liquidation the sale process had to be supervised so that the workmen's dues and the scheme of distribution under the Companies Act were protected. The auction could therefore proceed only with notice to and association of the Official Liquidator, who represents the body of creditors and ensures a proper price and lawful distribution of the sale proceeds. On that basis, the earlier auction conducted without such association was not sustained and a fresh sale notice was directed to be prepared in association with the Official Liquidator.

Conclusion: The secured creditor was not entitled to proceed with the auction independently of the Official Liquidator; the sale process had to be redone with the Official Liquidator associated, and the applications seeking desealing and delivery of possession failed.

Final Conclusion: In a winding-up situation, SARFAESI enforcement remains available, but the sale of the company's assets must be conducted under the supervision of the Company Court with the Official Liquidator associated to safeguard workmen's claims and the lawful distribution of proceeds.

Ratio Decidendi: A secured creditor may exercise its power of sale against a company in liquidation only with the Official Liquidator associated and under the supervision of the Company Court so that the statutory scheme for protection and distribution of creditors' and workmen's dues is preserved.

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