Private sale under contractual power of sale survives winding up when bona fide and the floating charge has crystallised.

A bona fide private sale by a receiver appointed under a debenture was not liable to be set aside merely because publicity was limited or a higher price might later have been obtained; absent fraud or lack of bona fides, irregularity in notice did not defeat the sale. The winding-up provisions of the Companies Act did not render the sale void, because a private sale by a secured creditor or receiver under a contractual power of sale is not a legal proceeding and is not a sale "held" without leave of court. The preferential claims and floating-charge provisions also did not invalidate the transaction, since the charge had crystallised when the receiver took possession before winding up.

---

---

Issues: (i) Whether a sale by a receiver appointed by debenture trustees could be set aside for want of publicity or because a higher price might later have been obtained. (ii) Whether the winding-up provisions of the Companies Act rendered such a private sale void or ineffective without leave of court. (iii) Whether the preferential claims and floating-charge provisions displaced the receiver's power to sell after he had taken possession before winding up.

Issue (i): Whether a sale by a receiver appointed by debenture trustees could be set aside for want of publicity or because a higher price might later have been obtained.

Analysis: A mortgagee or receiver exercising a contractual power of sale is not, in the absence of fraud or want of bona fides, required to have the sale impeached merely because publicity was limited or because a better price might arguably have been secured later. The governing principle, reflected in the statutory protection given to sales in professed exercise of a power of sale, is that irregularity in notice or publicity does not by itself defeat title where the sale is bona fide and within power.

Conclusion: The objection based on insufficient publicity and alleged undervalue failed; the sale could not be set aside on that ground.

Issue (ii): Whether the winding-up provisions of the Companies Act rendered such a private sale void or ineffective without leave of court.

Analysis: Section 171 of the Indian Companies Act, VII of 1913, restrains legal proceedings against the company without leave, while section 232 voids attachments, executions and sales held without leave after commencement of winding up. Those provisions were held not to extend to a private sale made by a secured creditor or receiver acting under the contractual power contained in the security instrument, because such a sale is not itself a legal proceeding and a private sale is not a sale "held" within the meaning of section 232. A secured creditor realising his own security remains outside the winding up unless he invokes the court's assistance.

Conclusion: Leave of court was not necessary for the private sale, and the sale was not void under sections 171 or 232.

Issue (iii): Whether the preferential claims and floating-charge provisions displaced the receiver's power to sell after he had taken possession before winding up.

Analysis: The floating charge had already been acted upon and had crystallised when the receiver took possession before the winding-up petition. Once the charge had crystallised, the property was no longer subject to a subsisting floating charge in the sense contemplated by section 230(2)(b), and section 129 did not assist the challenge. The preferential payment provisions therefore did not confer a basis to invalidate the sale.

Conclusion: The challenge based on preferential claims and the floating-charge provisions was rejected.

Final Conclusion: The sale in favour of the purchaser stood, and the appeal challenging its validity failed in its entirety.

Ratio Decidendi: A bona fide private sale by a secured creditor or receiver acting under a contractual power of sale is not avoided by the company's winding up merely because leave of court was not obtained or because the sale was said to have lacked fuller publicity, and once the floating charge has crystallised before winding up, the preferential-payment provisions do not invalidate the sale.

---