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6. Hon'ble Supreme Court in A.P. State Financial Corporation v. Official Liquidator , while considering the provisions of Section 29 of the Act and the provisions of Section 529 of the Companies Act held that the statutory right to sell the property under Section 29 of the Act has to be exercised with the rights of the pari passu charge to the workmen created by proviso to Section 529 of the Companies Act. Under the said provision, the liquidator shall be entitled to represent the workmen and enforce the above pari passu charge. Therefore, the Court found that the condition imposed by the Company Court on the State Financial Corporation of discharging the liability to the workers, if any, under Section 529-A of the Companies Act and to inform the Official Liquidator about the proposed sale of the properties of the company as well as to obtain permission of the Company Court before the finalising the tender was justified. It was held that if conditions are not imposed to protect the right of the workmen, there is every possibility that the secured creditor may frustrate the pari passu right of the workmen.

7. In the later judgment reported as International Coach Builders Ltd. v. Karnataka State Financial Corporation , Hon'ble Supreme Court considered the aforesaid judgment and held that the rights of pari passu charge holders would run equally, temporally and potently, with the rights of the secured creditors. The official liquidator, as representative of the workmen, to enforce such pari passu charge would have the rights of representing the workmen equally with the rights of the secured creditors. It was held that the statutory right to sell the property under Section 29 of the Act has now to be exercised in tandem with the rights of pari passu charge in favour of the workmen created by the proviso to Section 529 of the Companies Act. It has been further held that the Official Liquidator is in the position of co-mortgagee. State Financial Corporations cannot act independently or by ignoring him for enforcing their security. The realization of the security can only be done by both the charge-holders joining the realising the security simultaneously. If a sale takes place, it can only be simultaneously for recovery of claim of all pari passu charge-holders and sale proceeds are required to be divided proportionately in the same proportion as their dues. The Court concluded to the following effect:

Therefore, the power to sell which is given to a Financial Corporation under Section 29 has to be exercised consistently with the right of a pan passu charge holder. Such a right can be exercised with the consent of the pari passu charge holder or on holders of the Court after making him a party to the proceedings to enforce the security. Since the charge holder is the Official Liquidator, his power to consent is subject to the sanction of the Court.

8. While concluding, it was held that the State Financial Corporation cannot unilaterally act to realize the mortgaged properties without the consent of the Official Liquidator representing the workmen for the pari passu charge. If the Official Liquidator does not consent, the State Financial Corporations have to move the Company Court for appropriate directions to the Official Liquidator, who is the pari passu charge holder on behalf of the workmen.

10. In view of the above judgments, it is apparent that in a case where the Company has gone into winding up, the State Financial Corporation cannot unilaterally sell the charged property without associating the Official Liquidator who represents the pari passu charge of the workmen.

11. Since the ex-Management of the Company in liquidation has not filed statement of affairs, it is not possible for the Official Liquidator to determine the claim of the workers who have a pari passu charge along with other secured creditors. Therefore, it is necessary to determine the dues of the workers as well.