IMPORTANT POINT
When secured creditors have initiated a suit or proceeding in a civil court to realise their debts from the assets of a company which is under winding-up or has been wound up, the exercise of discretion of the winding-up court to transfer to itself this pending proceeding or to grant leave to the secured creditor to pursue his remedy in the civil court depends on the facts and circumstances of each case.

JUDGMENT

Hansaria, J.-The extent of right of secured creditors to realise their debts from the assets of a company which is under winding-up or has been wound up, by               approaching for a other than the company court, is required to be spelt out in these appeals. We have also been called upon to decide as to when a pending suit or proceeding relating to realisation of the debts by susch a creditor should be transferred to itself by a company court seized with the winding-up proceeding.

2. The foundational premise of the aforesaid points is that it is a settled position by now that a secured creditor stands outside the winding-up proceeding and under the law he can proceed to realise his security without the leave of the winding-up caourt, if by the time he initiated the action the company has not been wound up. This view has been holding field ever since a three-Judge Bench decision of this Court in M.K. Ranganathan v. Government of Madras1. As this legal position has not been assailed by any of the parties, we need not advert to the reasons which led this Court in Ranganathan s case to hold as above. Despite this being the legal position, there were some provisions in the Indian Companies Act, 1913, which enactment preceded the present Companies Act, 1956 (hereinafter the Act ) in which also a parallel provisions find place, which put some restrictions on the aforesaid power.

3. It would be profitable to note these provisions of the Act at the thershold itself. These are Sections 446, 529(1) and (2), 529A and 537, reading as below :

"446. (1) When a winding-up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose.

(2) The Court which is winding-up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of -

(a) any suit or proceeding by or against the company;

(b) any claim made by or against the company (including claims by or against any of its branches in India) ;

(c) any application made under Section 391 by or in respect of the company ;

(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding-up of the company;

whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding-up of the company, or before or after the commencement of the Compaines (Amendment) Act, 1960.

(3) Any suit or proceeding by or against the company which is pending in any Court other than that in which the winding-up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that Court.

(4) Nothing in sub-section (1) or sub-section (3) shall apply to any proceeding pending in appeal before the Supreme Court or a High Court.

529. (1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to-

(a) debts provable;

(b) the valuation of annuities and future and contingent liabilities ; and

(c) the respective rights of secured and unsecured creditors ;

as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent :

Provided that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen of the extent of the workmen s portion therein, and, where a secured creditor, instead