D.V. Merchant with S.S. Joshi i/b M/s. Shah Sanghavi, for the respondent Nos. 1 2. T.N. Subramaniam with Sunil DSouza i/b B. Amin Co., for Official Liquidator-respondent No. 3. B. Meena, Official Liquidator High Court, Bombay, present. JUDGMENT - D.R.DHANUKA, J.:--The Official Liquidator as liquidator of M/s. Ajanta Rubbers Pvt. (In Liquidation) has submitted his report to this Court for a direction to Gujarat State Financial Corporation to handover the possession of the assets of the Company in liquidation situate at Bharuch to the Official Liquidator and for issue of such other and further directions as this Honble Court deems fit and proper having regards to the facts of the case summarised in the said report dated 19th March, 1993. The Gujarat State Financial Corporation took over possession of the said assets much after the Company was ordered to be wound up and Official Liquidator was appointed as liquidator of the Company in liquidation in purported exercise of its powers under section 29 of State Financial Corporation Act 1951 i.e.on 7th September, 1989 without leave of the Company Court. By an Order dated 25th March, 1986, passed by this Court in Company Petition No. 203 of 1985 filed by M/s. Indian Textiles (i.e. The petitioning creditors of the said petition). M/s. Ajanta Rubbers Pvt. Ltd. (In Liquidation) was directed to be wound up by and under the supervision of this Court and the Official Liquidator attached to this Court was appointed as the liquidator of the said Company. By virtue of operation of the provisions contained in section 456 of the Companies Act I of 1956 the Official Liquidator is entitled to custody and control of all the properties, effects and claims to which the Company under winding up is entitled. By virtue of operation of section 456(2) of the said Act, all the properties and effects of the Company are deemed to be in the custody of the Company Court as from the date of the Order for the winding up of the Company. 2. The Company has its registered office in the State of Maharashtra and its factory at Bharuch in the State of Gujarat. The Company had obtained large amounts of finance from Gujarat State Financial Corporation, a Corporation incorporated under the State Financial Corporation Act, 1951. 2. The Company has its registered office in the State of Maharashtra and its factory at Bharuch in the State of Gujarat. The Company had obtained large amounts of finance from Gujarat State Financial Corporation, a Corporation incorporated under the State Financial Corporation Act, 1951. The Gujarat State Financial Corporation and Gujarat Industrial Investment Corporation are two of the secured creditors of the Company under liquidation. Both the said Corporations are entitled to first charge over the factory land and building belonging to the Company. Both the said Corporations are also entitled to first charge over several other assets of Company on the footing that the said first charge shall rank pari pasu in favour of the said Corporations. The Bank of Baroda is also one of the creditors of the said Company. The other creditors of the Company under liquidation include inter alia the workmen of the Company and unsecured creditors etc. The workmen of the Company are entitled to pari pasu charge over the assets of the Company alongwith all its secured creditors by operation of law under section 529-A of Companies Act in respect of workmens dues. The Official Liquidator is under an obligation to enforce the said statutory pari pasu charge for benefit of workmen and take all necessary steps to safeguard the securities and their realisation so that the interest of workmen of the Company under liquidation is not affected in any manner whatsoever directly or indirectly. 3. One Harkishandas Keshavdas Kothari was a Director of the Company under liquidation at the time of its liquidation. The said Harkishandas has made an Application No. 41 of 1991 for several directions against the Gujarat State Financial Corporation including the direction to the effect that Gujarat State Financial Corporation do handover possession of all the assets of the Company under liquidation taken charge of on 7th September, 1989 to the Official Liquidator and inter alia also for a direction to the effect that the said Corporation be restrained from disposing of the assets of the Company in exercise of its purported powers under the State Financial Corporation Act, 1951. The Report of the Official Liquidator being Report dated 19th March, 1993, as well as the Company Application No. 41 of 1992 in Company Petition No. 203 of 1985, made by Shri Harkishandas Keshavdas Kothari are heard together. The Report of the Official Liquidator being Report dated 19th March, 1993, as well as the Company Application No. 41 of 1992 in Company Petition No. 203 of 1985, made by Shri Harkishandas Keshavdas Kothari are heard together. The Gujarat State Financial Corporation had made an application to this Court being Application No. 65 of 1990 for a declaration that the said Corporation is in lawful possession of mortgaged and hypothecated assets described in Exhibit "A" and "B" to the said application and that the said Corporation is entitled to sell or otherwise dispose of and realise their securities and apply the net sale proceeds thereof towards satisfaction of their claim against the Company in liquidation. By the said Application the said financial Corporation had sought a direction against the Official Liquidator to the effect that the Official Liquidator be directed to allow the Corporation to sell and/or dispose of the said mortgaged and/or hypothecated and/or charged properties and appropriate the sale proceeds thereof towards their claim against the Company in liquidation. Unfortunately the said Application No. 65 of 1990 was dismissed for default by an Order passed by Vyas, J., on 28th January, 1993 and an oral application for restoration of the said Company Application No. 65 of 1990, was refused, by this Court. It is not known as to whether the Gujarat State Financial Corporation adopted any further proceedings in restoration of the said application. I have perused the papers pertaining to the said application in order to get clear picture of all material facts, even though the said application has already been dismissed for default. These proceedings raise interesting questions of law concerning rights and obligations of secured creditors, particularly the State Financial Corporation on the one hand and the Official Liquidator and the workmen of the Company under liquidation on the other hand. 4. The Gujarat State Financial Corporation has taken the possession of mortgaged and hypothecated assets by itself, without obtaining prior leave of this Court, on 7th September, 1989 invoking section 29 of the State Financial Corporation Act, 1951. The Corporation had made an application to the District Court for sale of the said assets invoking section 31 of the said Act but the said application was withdrawn. The Corporation had made an application to the District Court for sale of the said assets invoking section 31 of the said Act but the said application was withdrawn. The Court is informed by the learned Counsel appearing on all sides including the learned Counsel for State Financial Corporation that the Gujarat State Financial Corporation has already disposed of plant and machinery belonging to the Company by sale thereof, sometime in the month of December for about Rs. 18 lacs. The said sale was effected by the Financial Corporation without obtaining leave of this Court. The Official Liquidator as well as Shri Harkisandas Kothari, Ex-director of the Company are aggrieved by these action of Gujarat State Financial Corporation. The Official Liquidator has contended that the said Financial Corporation has flouted various provisions of the Companies Act I of 1956 by taking "illegal possession" of the mortgaged and hypothecated assets of the Company, under liquidation without prior leave of the Court and by selling plant and machinery as aforesaid. Shri Harkisandas Keshvdas Kothari has contended through his learned Counsel Shri J.K. Majumdar that the State Financial Corporation has committed contempt of this Court by taking unlawful possession of the assets of the Company under liquidation after passing of the Order of winding up without obtaining leave of the Court and by disposing of plant and machinery in illegal manner as indicated above. 5. The proceedings are heard at some length. The proceedings inter alia involve following interesting and important question of law for consideration of this Court. (a) Whether the State Financial Corporation is entitled to take possession of the mortgaged and hypothecated assets of the Company in liquidation without obtaining the leave of the Company Court by invoking section 29 of the State Financial Corporation Act, 1951 and sale or otherwise dispose of the same even though the Official Liquidator of the Company under liquidation is deemed to be in custody of all the assets and properties of the Company under liquidation? (b) Whether the Official Liquidator is entitled to custody, control and possession of all the assets of the Company under liquidation including the assets, mortgaged, hypothecated and charged in favour of the State Financial Corporation and dispose of the same keeping the monetary claims of the secured creditors includings State Financial Corporation in tact subject to statutory pari pasu charge in favour of the workmen created by operation of law under section 529-A of the Companies Act I of 1956? (c) Whether the Gujarat State Financial Corporation acted illegally in taking possession of the mortgaged and hypothecated assets of the Company in liquidation on 7th September, 1989, without obtaining prior leave of the Company Court and by disposing of plant and machinery in the same manner without leave of this Court; (d) Whether any directions should be issued to the Gujarat State Financial Corporation to handover the possession of the assets in question to the Official Liquidator and whether the Official Liquidator should be authorised to dispose of the assets by public auction or by private treaty subject to confirmation of sale by the Court? (e) Whether the Gujarat State Financial Corporation must be directed to handover the net sale proceeds realised by it from sale of plant and machinery belonging to the Company under liquidation to the Official Liquidator with or without interest? (f) Whether any action should be taken against the Gujarat State Financial Corporation or its office bearers under Contempt of Courts Act, 1971 as applied for by Shri Harkisandas Keshavdas Kothari, Ex-director of the Company under liquidation? 6. For the reasons indicated below I have arrived at the following conclusions. The said conclusions are summarised first. Reasons for the said conclusions would follow in the later part of this Order. (a) Section 29(1) of State Financial Corporation Act, 1951 cannot be invoked by the State Financial Corporation once the debtor Company is directed to be wound up and the Company Court is deemed to be in custody of all the assets of the Company by virtue of the operation of section 456(2) of the Companies Act I of 1956. (a) Section 29(1) of State Financial Corporation Act, 1951 cannot be invoked by the State Financial Corporation once the debtor Company is directed to be wound up and the Company Court is deemed to be in custody of all the assets of the Company by virtue of the operation of section 456(2) of the Companies Act I of 1956. Section 29(1) of the State Financial Corporation Act, 1951 can be invoked by the State Financial Corporation in an appropriate case only before such an eventuality has taken place and not thereafter; (b) Once a winding up Order is passed or the Official Liquidator or a provisional liquidator is appointed, the Official Liquidator is deemed to be in custody and control of all the assets of the Company including the assets, mortgaged, hypothecated and charged in favour of the secured creditor like State Financial Corporation. Thereafter the State Financial Corporation can invoke its powers under the State Financial Corporation Act, 1951, if any, only with prior leave of the Company Court which has directed winding up of the debtor Company. The State Financial Corporation is not entitled to dispose of such assets by itself without obtaining prior leave of the Company Court once Company is directed to be wound up and the Official Liquidator is appointed. The State Financial Corporation is not entitled to take action under section 29 of the State Financial Corporation Act or adopt proceedings before the District Court for sale of the securities as contemplated under section 31 of the State Financial Corporation Act, 1951 without obtaining prior leave of the Company Court winding up the Company. Prior to insertion of section 529-A in the Companies Act I of 1956, it was settled law that a secured creditor could remain outside the winding up of the Company and could realise its securities without intervention of the Court. After the insertion of section 529-A in the Companies Act I of 1956, this view no longer holds the field. In view of insertion of section 529-A in the Companies Act I of 1956, the workmen have statutory pari pasu charge in their favour for their dues alongwith the secured creditors of the Company and the Official Liquidator is enjoined by law to protect the interest of the workmen. In view of insertion of section 529-A in the Companies Act I of 1956, the workmen have statutory pari pasu charge in their favour for their dues alongwith the secured creditors of the Company and the Official Liquidator is enjoined by law to protect the interest of the workmen. In this view of the matter, the sale of the securities or the distribution of sale proceeds or the apportionment of the amount of sale proceeds cannot be left to the choice of the secured creditor. In this view of the change in law, the Official Liquidator steps in when the secured creditors attempt to realise their securities without intervention of the Company Court. This view of the Court is consistent with the view taken in recent judgements of the High Court of Karnataka, Kerala and Gujarat. (c) Once the winding up order is passed and the Official Liquidator is appointed, the Official Liquidator is deemed to be in custody of all the assets of the Company. By virtue of operation of section 456(2) of the Act, the Company Court itself is deemed to be in custody of all the assets of Company from the date of passing of winding up order by the Court. On true and correct interpretation of section 29 (1) of the State Financial Corporation Act, 1951, the State Financial Corporation is entitled to take possession, charge, control and management of the assets of the Company only so long as the Company is itself in possession, control and charge of such assets and not after the said assets are deemed to be in custody of the Company Court or the Official Liquidator by operation of law as aforesaid. In this view of the matter, there is no inconsistency between the provisions contained in section 29(1) of the State Financial Corporation Act, 1951 and the provisions contained in the Companies Act I of 1956. Thus the question as to whether the State Financial Corporation Act, 1951 has a over-riding effect over the provisions contained in the Companies Act I of 1956 does really arise for consideration of the Court. (d) The Gujarat State Financial Corporation acted illegally while taking possession of the mortgaged, hypothecated and charged assets on 7th September, 1989, and while disposing of Plant and Machinery in December, 1991 without obtaining prior leave of this Court. (d) The Gujarat State Financial Corporation acted illegally while taking possession of the mortgaged, hypothecated and charged assets on 7th September, 1989, and while disposing of Plant and Machinery in December, 1991 without obtaining prior leave of this Court. If the possesion of the assets alongwith the net sale proceeds realised from sale of plant and machinery is handed over to the Official Liquidator as directed by this Order within the time stipulated herein, no proceedings for contempt need be taken against the Gujarat State Financial Corporation or its office bearers. (e) The Official Liquidator is justified in contending that the Gujarat State Financial Corporation has flouted the provisions of sections 456 and 537 of the Companies Act I of 1956. 7. Thus for the reasons discussed in later part of this Order/Judgment, I answer the questions formulated above as under- (a) .. No (b) .. Yes (c) .. Yes (d), (e) (f) .. As discussed above and as discussed below and as set out in operative part of this Order 8. A few more facts are required to be stated before discussing the relevant case-law cited at the Bar and dealing with the contentions urged. These facts in brief are as under- (a) By an agreement dated 16th January, 1979, the Gujarat State Financial Corporation agreed to advance a term loan of Rs. 30 lacs to the Company. The Company created equitable mortgage over its immovable properties consisting of plot of land forming part of Survey No. 185/2p, 187/p and 184/p. in GIDC Industrial Estate at Bharuch in the registration of District and sub-district of Bharuch in the State of Gujarat on the footing of first pari pasu charge with Gujarat Industrial Investment Corporation. The Gujarat State Financial Corporation as well as the Gujarat Industrial Investment Corporation advanced large amounts to the Company (under liquidation); (b) Sometime in the year 1984, the Bank of Baroda filed a Suit No. 28 of 1984 in the Court of Civil Judge, Senior Division for recovery of the amounts alleged to be due and payable by the Company to the said bank. In the said proceeding, an Order for attachment before Judgment was passed as contemplated under Order XXXVIII, Rule 5 of the Code of Civil Procedure. In the said proceeding, an Order for attachment before Judgment was passed as contemplated under Order XXXVIII, Rule 5 of the Code of Civil Procedure. The Gujarat Industrial State Financial Corporation made an application to the Court of learned Civil Judge Senior Division at Bharuch for release of the attached property from attachment. The attached property included factory land and building as well as plant and machinary therein situate at Bharuch. The Official Liquidator intervened and opposed the application made by Gujarat State Financial Corporation invoking provision of the Companies Act I of 1956 and asserting the claim of the Official Liquidator to custody of all the assets of the Company under section 456 of the Act. The Gujarat State Financial Corporation was fully aware of the fact of winding up order having been passed by this Court in Company Petition No. 203 of 1986 and the Official Liquidator having been appointed as liquidator of the Company. By an order dated 25th August, 1989, the Court of Civil Judge, Senior Division, Bharuch directed release of the attached properties from attachment levied at the instance of Bank of Boroda. The learned Civil Judge, Senior Division, Bharuch did not adjudicate upon the claims and contention raised by the Gujarat State Financial Corporation as well as the Official Liquidator leaving the Corporation and the Official Liquidator to pursue their remedies in accordance with law. The Gujrat State Financial Corporation quickly took possession of assets as stated below. (c) On 7th September, 1989, the Gujarat State Financial Government took possession of the factory land and building belonging to the Company (under liquidation) situate at Bharuch along with plant and machinery in purported exercise of its powers under section 29(1) of the State Financial Corporation Act, 1951 without obtaining leave of this Court even this Court as the Company Court was deemed to be in custody of all the assets of the Company by operation of law. (d) On 20th January, 1992, this Court granted leave to Mr. Harkisandas Keshawdas Kothari to take out Judges Summons (being Company Application No. 41 of 1992) and made the same returnable on 29th January, 1992. No ad-interim Order was passed by the Court at this stage. The said Judges Summons (Application No. 41 of 1992) appeared before the Court on 5th March, 1992. Harkisandas Keshawdas Kothari to take out Judges Summons (being Company Application No. 41 of 1992) and made the same returnable on 29th January, 1992. No ad-interim Order was passed by the Court at this stage. The said Judges Summons (Application No. 41 of 1992) appeared before the Court on 5th March, 1992. On this day, the learned Counsel for Gujarat State Financial Corporation made a statement to the Court that the Gujarat State Financial Corporation had already sold and delivered the plant and machinery of the Company to M/s. Mita Machine and Forbes of Bombay. The said sale is supposed to have been effected by Gujarat State Financial Corporation on or about 23rd December, 1991 without leave of this Court. The learned Counsel for Gujarat State Financial Corporation further informed the Court that the land and building belonging to the Company (under liquidation) was still not disposed of by the Corporation. These facts were recorded by the Court in the order sheet of proceedings of the Court on 5th March, 1992. By my Order dated 5th March, 1992, I directed the Gujarat State Financial Corporation to maintain status quo in respect of undisposed of assets until further order. The said order of status quo continues to be in force. The immovable properties of the Company consisting of factory, land and buildings etc. situate at Bharuch are not yet disposed of. 9. Before I discuss the relevant case law cited by the learned Counsel on either side and summarise my conclusions on the questions arising in these proceedings, it is necessary to refer to some of the provisions of the Companies Act I of 1956 as well as some of the provisions of the State Financial Corporation Act, 1951. 10. Section 456(1) of the Companies Act I of 1956 reads as under- "Where a winding up order has been made or where a provisional liquidator has been appointed, the liquidator or the provisional liquidator, as the case may be, shall take into his custody or under his control, all the property, effects and actionable claims to which the Company is or appears to be entitled." The aforesaid section clearly indicates that the Official Liquidator is entitled to take charge of all the assets, effects and actionable claims of the Company into liquidation. The Official Liquidator is not merely entitled to custody of all the assets of the Company but is also obliged to take charge thereof for benefit of all the creditors and shareholders of the Company under liquidation. Section 456(2) of the Act reads as under- "456(2) All the property and effects of the Company shall be deemed to be in the custody of the Court as from the date of the order for the winding up of the Company. 11. Section 537(1) of the Companies Act I of 1956 reads as under- "(1) Where any Company is being wound up by or subject to the supervision of the Court- (a) any attachment, distress or execution put in force, without leave of the Court, against the estate or effects of the Company, after the commencement of the winding-up ; or (b) any sale held, without leave of the Court of any of the properties or effects of the Company after such commencement; 12. Section 29(1) of the State Financial Corporation Act, 1951 reads as under:- "Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof (or in meeting its obligations in relation to any guarantee given by the Corporation) or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corporation shall have the right to take over the management or possession or both of the industrial as well as the (right to transfer by way of lease or sale) and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation." 13. Section 46(b) of the State Financial Corporations Act, 1951 reads as under:- "The provisions of this Act and of any rule or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an Industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern". 14. 14. It is well settled by the decisions of the Apex Court and this Court delivered prior to insertion of section 529(a) in the Companies Act I of 1956 by the Companies (Amendment) Act, 1985 that A secured creditor could remain outside the winding up and realise his securities without intervention of Court. By section 529-A of the Act it was provided for the first time that "Notwithstanding anything contained in any other provisions of this Act or anyother law for the time being in force in the winding up of a Company (a) workmens dues; and (b) debts due to the secured creditors to the extent of such debts rank under Clause (c) of the proviso the sub-section (1) of section 529 Pari Pasu with such dues shall be paid in priority to all other debts". By the said section, it was specifically provided that workmens dues shall rank pari pasu with the dues owing by the Company to secured Creditors as more particularly provided in the said section. The said section has non-obstant clause. The said section operates notwithstanding anything contained in any other provisions of the Companies Act I of 1956 or any other law for the time being in force. Thus a statutory pari pasu charge has been created by operation of law in favour of the workmen of the company (under liquidation) for the workmens dues on par with the dues of other secured creditors. By the Companies (Amendment) Act, 1985, section 529 of the Companies Act I of 1956 was also amended so as to define the expression "workmans dues". 15. Mr. Subramaniam, the learned Counsel for the Official Liquidator has submitted that in view of the insertion of the above referred provisions in the Companies Act I of 1956, the State Financial Corporation was not entitled to take custody and possession of mortgaged or hypothecated assets without obtaining prior leave of the Court, in purported exercise of its powers under section 29 of State Financial Corporation Act 1951. The learned Counsel submitted that it is the bounded duty of the Official Liquidator to take charge and custody of all the assets of the Company including the mortgaged and hypothecated assets in view of the fact that the workmen of the Company under liquidation have a pari pasu statutory charge over the assets of the Company alongwith other secured creditors. The learned Counsel submitted that it is now the responsibility of the Official Liquidator to realise the securities at fair market value and then decide the question of apportionment between the secured creditors like the Gujrat State Financial Corporation and others on one hand and the workmen on the other hand, having regard to their respective claims and the provisions of law applicable to the parties. The learned Counsel for the Official Liquidator further submitted that the High Courts of Karnataka, Gujrat and Kerala have already taken the view for which the Official Liquidator is canvassing in these proceedings. The learned Counsel for the Official Liquidator submitted that in any event the Gujrat State Financial Corporation could not invoke section 29 of State Financial Corporation Act against the Official Liquidator. The learned Counsel for the Official Liquidator made several submission at the Bar in support of his main submission that the Gujrat State Financial Corporation had violated section 456 and 537 of Companies Act I of 1956. Mr. Majmudar the learned Counsel for the former director of the Company Shri Harkisandas Keshavdas Kothari, supported the submissions of Mr. Subramaniam, learned Counsel for the Official Liquidator and cited several authorities at the Bar. Mr. Merchant, the learned Counsel for Gujrat State Financial Corporation submitted that the State Financial Corporation Act, 1951 was an Special Act whereas the Companies Act I of 1956 was a General Act. Mr. Merchant submitted that the provisions contained in the State Financial Corporation Act 1951 had an over-riding effect over the provisions of the Companies Act I of 1956. Mr. Marchant relied on the scheme of the State. Financial Act, 1951 and in particular on sections 29, 31 and 46(b) of the said Act in support of his submissions. Mr. Merchant submitted that the power of the State Financial Corporation to dispose of the property without intervention of the Court as provided in the State Financial Act 1951 was analogus to the power of the mortgage to dispose of the properties without intervention of Court in cases covered under section 69 of Transfer of Properties Act. Mr. Merchant relied on two judgments of our High Court as well as the judgment of the Honble Supreme Court in the case of (Damji Valji Shah and another v. Life Insurance Corporation of India others)1, A.I.R. 1966 S.C. 135, in support of his submissions urged at the Bar. Mr. Merchant relied on two judgments of our High Court as well as the judgment of the Honble Supreme Court in the case of (Damji Valji Shah and another v. Life Insurance Corporation of India others)1, A.I.R. 1966 S.C. 135, in support of his submissions urged at the Bar. In the case of Damji Valji Shah another v. Life Insurance Corporation of India and others, the Supreme Court held that the provision of section 41 of Life Insurance Corporation Act, being Special Provision, prevailed over section 446 of the Companies Act. The learned Counsel relied on this case by analogy in support of his contention that section 29 of State Financial Corporation Act 1951 prevailed over the provisions of Companies Act I of 1956, like sections 446, 456, 529-A and 537 of the said Act. It is not possible to accept the submissions of Mr. Merchant. 16. In the case of (Mysore Surgical Cottons (P) Ltd. (in liquidation) v. Karnataka State Financial Corporation)2, 1988(1) Company Law Journal 63, the High Court of Karnataka held that section 456 of Companies Act I of 1956 enabled the Official Liquidator (and/or Provisional Liquidator when appointed before winding up) to take in its custody or the properties, effects and actionable claims to which the company is or appears to be entitled. While deciding this case, the learned Single Judge of the High Court of Karnataka in terms referred to the submissions made by the learned Counsel concerning interpretation of section 46(b) of the State Financial Corporation Act, 1951 in context of section 29 of the said Act. After extracting the relevant provisions of the State Financial Corporation Act 1951, the High Court held that section 29(1) of the Act empowered the Financial Corporation to walk in and take over all the assets available to it only when the Company or the Industrial concern itself was incharge of and control of assets and not when the Industrial concern had lost control over its assets in favour of another like Official Liquidator by operation of law. In this case, the High Court construed section 29 of the State Financial Corporation Act 1951, and held that the Financial Corporation had no right to deprive the Official Liquidator of his custody or control or deemed custody or control of the assets which had statutorily vested in the liquidator on passing of the winding up order by operation of law with effect from the date of passing of winding up order. The judgment of the Honble Supreme Court in the case of (M.K. Ranganathan another v. Govt. of Madras others)3, A.I.R. 1955 S.C. 644, was in terms cited before the High Court of Karnataka. The High Court distinguished the said judgment and held that the said judgment was not applicable to the situation before the High Court. The situation in this case is identical with the situation in the case before the High Court of Karnataka. I agree with the view taken by the High Court of Karnataka and held that section 29(1) of the State Financial Act. 1951 empowers the Financial Corporation to take possession charge and control of the assets from the Industrial concern or the Company only while such industrial concern or Company is itself in possession or control of such assets and not when such assets are deemed to be in custody of the Official Liquidator or this Court by operation of law. If that is so, the question of inconsistency or repugnancy between the provisions contained in section 456 or 537 of Companies Act I of 1956 does not arise. 17. Mr. Subramaniam, the learned Counsel for the Official Liquidator relied on the judgment of High Court of Kerala in the case of (Kerala Financial Corporation v. Official Liquidater another)4, reported in 71 Company Cases 324. In this case the Kerala Financial Corporation had made an application to the High Court of Kerala for leave of the High Court to initiate proceedings against Prime Wood Products (P) Ltd. (under liquidation) as provided under section 29 of the State Financial Corporation Act. The High Court of Kerala held that in view of the provisions of law contained in section 529-A of the Companies Act I of 1956, the said application could not be granted by the Court. The High Court of Kerala held that in view of the provisions of law contained in section 529-A of the Companies Act I of 1956, the said application could not be granted by the Court. The Court held that by virtue of provisions contained in section 529-A of the Companies Act I of 1956, the workmans dues were made a preferential payment on par with the debts due to Secured Creditors with ranking of statutory charge as pari pasu with dues of secured creditors. The Court in substance held that section 529-A of the Act had an over-riding effect over all other provisions. The High Court of Kerala held that the question of apportionment or distribution of the amount claimed by secured creditors on the one hand and the workmen on the other could not be left to the Financial Corporation. The Court held that it was in the best interest of all concerned that the sale of the securities be conducted and held by the Official Liquidator under the supervision of the Company Court. In case the State Financial Corporation is allowed to conduct the sale of the mortgaged assets without any control of the Company Court or without intervention of the Official Liquidator, serious consequences would arise. I respectfully agree with the view taken by the High Court of Kerala on this aspect. In my opinion section 529-A of Companies Act I of 1956 is a salutory provision and the decisions of the Apex Court or the High Courts in cases decided prior to insertion of section 529-A in the Act cannot be relied upon in a situation where the section 529-A of the Companies Act I of 1956 is applicable. 18. Mr. J.K. Majmudar, the learned Counsel for Shri Harkishandas Keshavdas Kothari, Ex-Director of the company relied upon the latest judgment of High Court of Gujarat in the case of (Official Liquidator Himalaya Tools (India) Pvt. Ltd. v. Gujarat State Financial Corporation others)5, (1991)2 Gujarat Law Herald 208. In this case, the Official Liquidator of the Company (under liquidation) had made an application for a direction of the Court to the effect that the Gujarat State Financial Corporation be directed to handover possession of the assets taken charge of to the Official Liquidator. After surveying large number of cases cited before the Court/s, the High Court of Gujarat formulated its conclusion in para 33 of the judgment. After surveying large number of cases cited before the Court/s, the High Court of Gujarat formulated its conclusion in para 33 of the judgment. M.B. Shah, J., of the High Court of Gujarat held that section 29 of the State Financial Corporation Act did not empower the Financial Corporation to take possession of the property of the Company (under liquidation) from custody of the Court or the Official Liquidator. The learned Judge held that the question of priorities or the distribution of sale proceeds was required to be determined by the Court which was winding up the company. The learned Judge held that section 529-A of the Act provided by its non-obstent clause that the workmans dues and the debts owing to secured creditors must abate in equal proportion and all of them have pari pasu charge over the securities. The learned Judge made several other observations during the course of his judgment. I am in respectful agreement with the view taken by the High Court of Gujarat in sofar as it analyses the implication of section 529-A of the Act and construes section 456 of the Companies Act I of 1956 and section 29 and 46-B of State Financial Corporation Act, 1951. The learned Judge held that even if the Secured Creditors wanted to remain outside the winding up proceedings and realise their securities without intervention of the Court they could do so only after obtaining prior leave of the Company Court. I have no doubt in my mind that after insertion of section 529-A of the Companies Act I of 1956, the legal position has undergone a change and the Official Liquidator is entitled to be in custody, control and charge of all the mortgaged and hypothecated assets unless leave is granted to the secured creditor to take charge of such assets by the Company Court on such Terms and Conditions as the Company Court, may deems fit to impose. 19. It is not necessary for purpose of this proceeding to decide as to whether section 446 of the Companies Act I of 1956 is applicable to the action of taking of possession under section 29(1) of the State Financial Corporation Act, 1951. In all probability section 446(1) of the Companies Act I of 1956 is not applicable to the proceeding concerning taking of possession under section 29(1) of the State Financial Corporation Act. In all probability section 446(1) of the Companies Act I of 1956 is not applicable to the proceeding concerning taking of possession under section 29(1) of the State Financial Corporation Act. It is not necessary to decide this question in these proceedings. Sections 446 and 537 of the Act are undoubtedly applicable. 20. I shall now refer to the two judgments of our own High Court on which reliance is placed by the learned Counsel for Gujarat State Financial Corporation. Mr. Merchant, learned Counsel for the Gujarat State Financial Corporation relied on the Division Bench judgment of our High Court in the case of (State Industrial and Investment Corporation of Maharashtra Limited v. Maharashtra State Financial Corporation and another)6, and in the case of (Maharashtra State Financial Corporation v. Charan Investment Corporation and others)7, reported in 64 Company Cases 102. In this case, Bharucha, J., as his Lordship then was (Now His Lordship of the Supreme Court of India) speaking on behalf of the Division Bench held that the sale of the assets held by SICOM in exercise of its power of its sale as a secured creditor outside the winding up and without the intervention of the Court it was not void. The Honble Division Bench held that section 537 of the Companies Act I of 1956 was not applicable to a case where the secured creditor chose to realise his security outside the winding up and without intervention of Court. In my opinion, after insertion of section 529-A of the Companies Act I of 1956, in the statute, the legal position on the subject has undergone a vital change. In my humble opinion, the ratio of the said judgment has no applicability to the proceedings under consideration before the Court. Now by operation of law, a statutory security has been created in favour of the workmen of the Company (under liquidation) and all the secured creditors including the workman rank pari pasu in respect of their dues and the securities. Thus the Official Liquidator representing the workmen is entitled to realise the said securities by operation of law and protect the interest of the workmen. It is the need of the hour to give a harmonious interpretation to the various provisions of the two legislation referred to hereinabove. 21. Thus the Official Liquidator representing the workmen is entitled to realise the said securities by operation of law and protect the interest of the workmen. It is the need of the hour to give a harmonious interpretation to the various provisions of the two legislation referred to hereinabove. 21. The learned Counsel for the Gujarat State Financial Corporation also relied on the judgment of G.D. Kamat, J., in the case of (Maharashtra State Financial Corporation v. Official Liquidator, Sidhu Tyres (P) Ltd.)8, reported in 64 Company Cases 644. In my opinion this judgment is clearly distinguishable as it does not refer to section 529-A of the Companies Act I of 1956 or its impact on interpretation of other connected provisions. 22. In the result, I pass the following Order:- (a) The Gujarat State Financial Corporation is directed to handover the possession of Companies Assets situate at Bharuch i.e. consisting of land and building etc. of which it took possession on 7th September, 1987, to the Official Liquidator within 6 weeks from today. The order of status quo shall continue to be operative/in force till the Official Liquidator takes possession of the assets from Gujarat State Financial Corporation. (b) The Official Liquidator is specifically authorised to take steps to sell the said assets by public auction or by private treaty subject to confirmation of sale by the Company Court after following the usual procedure and after giving reasonable opportunity to all the parties concerned including Gujarat State Financial Corporation to bring offers from the intending buyers so as to enable the Official Liquidator to fetch best possible price; (c) The Gujarat State Financial Corporation is directed to handover the entire amount of net sale proceeds received by it from sale of plant and machinery belonging to the Company under liquidation which assets are supposed to have been sold by the Gujarat State Financial Corporation on or about 23rd December, 1991 without leave of the Company Court. The net sale proceeds shall be handed over by the Gujarat State Financial Corporation to the Official Liquidator within 6 weeks from today. The claim of the Official Liquidator to claim interest on the said amount by adopting separate appropriate proceedings is reserved. (d) The Official Liquidator shall investigate the claims of workmen expeditiously. 23. Application made by the learned Counsel for Mr. The claim of the Official Liquidator to claim interest on the said amount by adopting separate appropriate proceedings is reserved. (d) The Official Liquidator shall investigate the claims of workmen expeditiously. 23. Application made by the learned Counsel for Mr. Harkisandas Keshavdas Kothari, Ex-Director of the Company (under liquidation) for taking action against Gujarat State Financial Corporation under Contempt of Courts Act, 1971 is rejected. The action of the Gujarat State Financial Corporation though illegal does not appear to be in the nature of wilful and deliberate defiance of the Orders passed by this Court. The impugned action of Gujarat State Financial Corporation in taking possession of the assets on 7th September, 1987 and sale of plant and machinery on or about 23rd December, 1991 is illegal but not mala fide. If the Gujarat State Financial Corporation does not comply with the Orders of this Court passed today within time stipulated, the Official Liquidator shall be at liberty to make a report to this Court for taking action against Gujarat State Financial Corporation and its officers under Contempt of Courts Act 1971. 24. Having regard to the facts and circumstances of the case there shall be no order as to costs. 25. The parties are directed to act on the basis of Ordinary copy of this order duly authenticated by the Company Registrar. 26. Issue of certified copy is expedited. Order accordingly.