Secured creditors have the right to stand outside the winding-up proceedings and enforce their security by selling the assets of the company in liquidation, as provided under Sections 529 and 529-a of the Companies Act.

( 1 ) THIS original side appeal filed under Section 483 of the Companies Act, 1956 (hereinafter referred to as 'the act') read with Section 4 of the Karnataka High Court Act, 1961, is that of the international coach builders limited (hereinafter referred to as 'the company') in liquidation represented by the official liquidator attached to this court, which seeks the setting aside of the company court's order dated 8-10-1991 made on company application No. 218 of 1991 in company petition No. 131 of 1988, by which the Karnataka state financial corporation (hereinafter referred to as the 'k. s. f. c. '), a secured creditor of the company, is permitted to stand outside the liquidation proceeding and work out its remedies under Section 29 of the State Financial Corporations Act, 1951 (hereinafter referred to as 'the sfc act') subject to payment of the workmen's dues as undertaken.

( 2 ) AS the contentions raised before us in support of the appeal require their examination with reference to the facts which led the company court to make the order under appeal, it would be advantageous to refer to such facts at the very outset.

( 3 ) M/s. Globe detective agency pvt. Ltd. , which was rendering security services to the company, presented on 2-11-1988 before the company court, company petition No. 131 of 1988 purporting to be under sections 433 (3) (f) and 434 of the act seeking the winding-up of the company. There were similar petitions presented before the company court, earlier as well as later, the earliest of such petitions having been presented on 23-5-1988 and the latest of them having been presented on 22-4-1989. The company court, by a common order made in them on 30-11-1990, while ordering the winding-up of the company as sought in the petition and appointing the official liquidator as its liquidator, directed the liquidator to take charge of all the assets of the company other than those, the possession of which had already been taken by the k. s. f. c. however, in the course of that Order, mention having been made that the entire business establishment and factory of the company having been obviously taken over by the k. s. f. c. in exercise of its power under Section 29 of the sfc Act, it (company court) was not going into the question as to whether such taking over was valid, legal or not.

( 4 ) COMPANY application No. 218 of 1991, on which the order under the present appeal is made, was filed by the k. s. f. c. on 4-3-1991. That application having been made under sections 446 (2) (b) and 537 of the Act, the prayers, the grant of which was sought in that application from the company court, were these:" (I) recognise the corporation's right as secured creditor for the realisation of Rs. 43,69,266. 74 due as on 2-11-1990 along with the amounts that have become due subsequent to 2-11-1990 from the company. (ii) recognise the right of the corporation as such secured creditor to stand outside the winding-up proceedings and to sell the secured properties in accordance with law, in exercise of its statutory power under Section 29 of the act for the realisation of the amounts due to the corporation. (iii) to permit the corporation to effect the sale as proposed in annexures 5 and 6 board note and board resolution. (iv) to permit the corporation to continue to remain in possession of the secured properties till such sale is effected, and (v) to hand over possession of the properties to the purchaser as proposed in Annexure 6, board resolution dated 30-11-1990. "the official liquidator, by his objection statement filed respecting that application, objected to the grant of the prayers therein pleading, inter alia, (i) that the remedy under Section 29 of the sfc act was not available to the k. s. f. c. since the company had ceased to be an industrial concern within the definition clause (c) of Section 2 of the sfc act after its winding-up; (ii) that Section 529, as amended, and Section 529-a, inserted into the act