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Now, let me examine the question that would fall for my consideration in this application.

6. No doubt, the decision of this court in the case of International Coach Builders Ltd. [1994] 81 Comp Cas 19 and the decision of the Gujarat High Court in the case of Gujarat State Financial Corporation (1996] 87 Comp Cas 658 rendered following the decision of this court in the case of International Coach Builders Ltd. [1994] 81 Comp Cas 19 relied upon by learned counsel for the applicant and the second respondent, support their contention that the secured creditor is entitled to stand outside the winding up proceedings and enforce his security and in that view of the mutter, even after the amendment of Sections 529(1), 529A of the Act, leave of the company court is not required to be obtained by the secured creditor to enforce his security and bring the assets mortgaged to sale to realise his security. The Gujarat High Court and this court, in the decisions referred to above, have taken the view that the right of the secured creditor to deal with the security and realise the same without the intervention of the court, remains unaffected notwithstanding the vesting of property coming into the custody of the court, on the principle that the right of the secured creditor does not come to the custody of the court. In the said decisions, it has been pointed out that a mortgage creates in favour of a mortgagee an interest in the mortgaged property and to the extent of the charge of mortgage, the property mortgaged does not come to the custody of the court. It is further pointed out in the case of Gujarat State Financial Corporation [1996] 87 Comp Cas 658 that by the amendment to the proviso to Section 529 of the Act and insertion of the Explanation thereto in 1985, the only change which has been made, is that the secured creditor too is liable to pay only the proportionate expenses of the preservation taking into consideration the pari passu charge in favour of the workmen's dues, but the option is still left to the secured creditor to realise the security without proving his debt in the winding up proceedings ; and where the secured creditor opts to realise his security without relinquishing his security and without proving his debt, the realisation is to be governed by the proviso to Section 529(1) and the workmen get from such realisation only that much proportion for which they rank pari passu qua the realisation of the security. The court further pointed out that even after the Companies (Amendment) Act, the principle enunciated in Ranganathan's case [1955] 25 Comp Cas 344, still applies to the secured creditor, who, instead of relinquishing his security and providing his debts, opts to realise the security without intervention of the court. Though the decisions, referred to above, as pointed out by me, support the case of the applicant and the second respondent, in the light of the Division Bench decision of this court in the case of Karnataka State Industrial Investment and Development Corporation [1998] 94 Comp Cas 1 which has considered the earlier decision of this court in the case of International Coach Builders Ltd. [1994] 81 Comp Cas 19 and also the decision of the Supreme Court in the case of Ranganathan [1955] 25 Comp Cas 344 , and has taken the view, fairly in identical circumstances, that the sale of the assets of the company, which was the subject matter of dispute in the said case without the leave of the court, was not valid and directed for resale of the assets of the company subject to the conditions imposed in the said order, I am unable to accede to the submissions made by Sri Narayana Rao and Ashok Hinchigeri. In the case of Karnataka State Industrial Investment and Development Corporation [1998] 94 Comp Cas 1, this court has followed the decisions of the Bombay High Court in the case of Maharashtra State Financial Corporation v. Official Liquidator [1995] 82 Comp Cas 342, wherein the Bombay High Court has considered the principle laid down by the Supreme Court in the case of Ranganathan [1955] 25 Comp Cas 344 and after elaborately discussing the effect of the proviso to section 529(1) and Section 529A, which was inserted into the Act by reason of the Companies (Amendment) Act, 1985, has taken the view that though Sections 529 and 529A, as amended, do not take away the rights of the secured creditor, since a pari passu charge is created in favour of the dues of the workmen on the rights of the secured creditor, the mortgagee or the secured creditor is required to join the pari passu charge-holder in the sale and he cannot sell the property ignoring the pari passu charge-holder and, therefore, the secured creditor as well as the official liquidator as the representatives of the workmen, must join in the sale. It is useful to extract the relevant portion of the said judgment of the Bombay High Court, which reads as hereunder (page 349 of 82 Comp Cas) :

"The workmen's dues and the debt due to a secured creditor to the extent such a debt could not be realised by such a secured creditor because of the pari passu charge in favour of the workmen, or the workmen's portion in his security which he has lost because of the proviso to Section 529, will rank pari passu with workmen's dues under Section 529A. In other words, the extent of his claim which a secured creditor could not realise out of his security because of the rights created in favour of the workmen because of their pari passu charge on the security, would get an overriding preference for payment in winding up along with workmen's dues.

12. The same ratio, in our view, would substantially apply to two charge-holders who have a pari passu charge for the recovery of their dues. It may be that unlike a co-mortgagee, a pari passu charge-holder can receive payment of his mortgage debt from the mortgagor and release his charge independently. But, when it comes to realising the security, both the pari passu charge-holders must join or realise the security simultaneously. The sale proceeds are required to be divided proportionately between them in the same proportion as their dues. Hence, when a sale takes place, it is for the simultaneous recovery of claims of all pari passu charge-holders."

It is no doubt true that on July 29, 1994, the appellant-KSIIDC had taken over possession of the assets of the company under liquidation, acting under Section 29 of the SFC Act. It is also true that no provisional liquidator had been appointed under Section 450 of the Act. Nevertheless, by the time the appellant completed the sale transaction in favour of respondent No. 7 on September 30, 1995, the winding up order had already been passed on September 8, 1995, and the official liquidator had already come into the picture as liquidator of the company under Section 449 of the Act, There were workmen's dues to the tune of Rs. 80 lakhs. Because of the proviso to Sub-section (1) of Section 529 of the Act, the KSIIDC is not the only secured creditor entitled to sell the security by invoking Section 29 of the SFC Act, the KSIIDC has to contend with the pari passu charge in favour of the workmen's dues, the workmen being represented by the official liquidator. The official liquidator would, thus, be an interested party in the sale of security. The proviso to Sub-section (1) of Section 529 as also Section 529A of the Act, having created a pari passu charge in favour of the workmen, the same would affect the right of the appellant, the KSIIDC to sell the security directly by itself by invoking Section 29 of the SFC Act. The appellant is required to join the official liquidator in the sale, and the property cannot be sold ignoring the pari passu charge-holder. Similarly, though the official liquidator, by virtue of Section 457(1) of the Act has the power to sell the property of the company in winding up, and as a pari passu charge-holder under Section 529 of the Act, he has the power to sell the said property with the sanction of the court to realise the charge, he cannot sell the property all by himself ignoring the secured creditors like the KSIIDC. Thus, both the secured creditor, namely, the KSIIDC, as also the official liquidator as the representative of the workmen, are to exercise the power to sell under the directions of the court. The aspect of repugnancy between the provisions of two Acts, i.e., the SFC Act and the Companies Act, and, in that situation, the provisions of the SFC Act having overriding effect over the provisions of the Act, by virtue of Section 46B of the SFC Act, is not to be seriously considered because there is no inconsistency between the provisions of the said two Acts. Section 29 of the SFC Act merely confers certain powers on the secured creditor. It does not deal with a situation where there is a pari passu charge-holder, The power to sell which has been given to the KSIIDC under Section 29 of the SFC Act has to be exercised consistently with the right of the pari passu charge-holder, who in the case of a company under liquidation, would be the official liquidator, whose consent can be subject to sanction of the court. Therefore, the statutory right given to the appellant, KSIIDC under Section 29 of the SFC Act being required to be exercised consistently with the right of the pari passu charge-holder in whose favour a statutory charge is created by the proviso to Sub-section (1) of Section 529 of the Act when the company is in liquidation, and the said pari passu charge-holder being the official liquidator who is required to act under the directions of the court, leave of the court would be necessary, and, any sale without such leave would be void under Section 537 of the Act. The learned company judge was, therefore, right in declining to approve the sale in favour of respondent No. 7 and giving fresh directions for resale of the property by the appellant, KSIIDC by standing outside the winding up in association with the official liquidator right from the time of settling the terms of advertisement, and making the said resale subject to confirmation by the court."