Secured creditor's power of sale survives winding up without leave where the sale is an independent realisation of security.

A secured creditor's independent contractual power of sale over a company's assets, exercised by a receiver after commencement of winding up, was held not to require leave of the winding-up court under section 232(1) of the Indian Companies Act. The provision was construed narrowly, in context with sections 171 and 229, and as directed to court-supervised sales rather than a mortgagee's or secured creditor's own realisation of security. Applying noscitur a sociis, the presumption against unexpressed change in existing law, and the legislative history, the sale was valid absent fraud, lack of bona fides, or recklessness.

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Issues: Whether a sale of a company's assets by a receiver appointed by debenture-holders, made after the commencement of winding up and without leave of the winding-up court, was void under section 232(1) of the Indian Companies Act.

Analysis: The statutory scheme distinguished between secured creditors who remained outside the winding up and unsecured creditors who participated in the liquidation. Section 171 required leave of court for suits or other legal proceedings against the company, while section 229 preserved the ordinary insolvency principles as to the rights of secured and unsecured creditors. Section 232(1), read in context and with the words introduced by the 1936 amendment, was construed as aimed at sales effected through the intervention of the court and not at a secured creditor's or mortgagee's independent exercise of a contractual power of sale. The rule of noscitur a sociis, the presumption against a substantial unexpressed alteration of existing law, and the legislative history of the amendment all supported a narrow construction. On that construction, no leave was required for the receiver to realise the security by sale, absent fraud, want of bona fides, or recklessness.

Conclusion: The sale was not void under section 232(1) and was valid and binding; the challenge failed.

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