Statutory lien in winding-up treated as secured creditor status, with sale proceeds available to satisfy the debt.

A statutory lien arising by operation of law can place its holder in the position of a secured creditor in company winding-up, and such a lien is not invalidated for want of registration under section 125 of the Companies Act, 1956. A lien under section 170 of the Indian Contract Act, 1872 confers a right of retention, while an unpaid seller under sections 46 and 47 of the Sale of Goods Act, 1930 may also have a right of resale. In insolvency-linked winding-up, the lien-holder may realise the machinery in possession through sale and apply the proceeds towards the debt, remitting any surplus to the official liquidator.

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Issues: Whether a person having a statutory lien on the property of a company is a secured creditor in winding-up proceedings, whether such lien requires registration under section 125 of the Companies Act, 1956, and whether the holder of the lien may realise the machinery in satisfaction of the debt.

Analysis: The lien claimed arose both from the bailee's right to retain goods after rendering services and from the position of an unpaid seller of spare parts. A lien under section 170 of the Indian Contract Act, 1872, gives only a right of retention and not a right of sale, while an unpaid seller under sections 46 and 47 of the Sale of Goods Act, 1930, has a right of retention and resale. Section 125 of the Companies Act, 1956, applies to charges created by the company and not to a charge or lien arising by operation of law. Section 529 of the Companies Act, 1956, read with insolvency law, applies the insolvency concept of secured creditor to winding-up of an insolvent company, and section 2(e) of the Provincial Insolvency Act, 1920, expressly treats a lien-holder as a secured creditor.

Conclusion: The statutory lien-holder was a secured creditor in the winding-up and was not disentitled by want of registration under section 125 of the Companies Act, 1956.

Final Conclusion: The machinery in the applicant's possession was directed to be sold by public auction so that the applicant could adjust its dues from the proceeds and remit any surplus to the official liquidator.

Ratio Decidendi: In winding up of an insolvent company, a statutory lien or other lien recognised by insolvency law places the holder in the position of a secured creditor, and section 125 of the Companies Act, 1956 does not invalidate a lien arising by operation of law for want of registration.

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