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What are the rights of a part passu charge holder ? Can a mortgagee exercise his power of sale without the consent of a pari passu charge holder ? ....It is, therefore, necessary that when a sale of a mortgaged property takes place, both the charge holders should join in the sale.
The same ratio, in our view, would substantially apply to two chargeholders who have a pari passu charge for the recovery of their dues. It may be that unlike a co-mortgagee, a pari passu chargehoider can receive payment of his mortgage debt from the mortgagor and release his charge independently. But when it comes to realise the security, both the pari passu chargeholders 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 & sale takes place, it is for the simultaneous recovery of claims of all pari passu charge holders.
"... We, however, do not see any inconsistency between the provisions of Section 29 of the State Financial Corporation Act and Section 529 of the Companies Act. Section 29 of the State Financial Corporations Act merely confers certain powers on the mortgagee. It does not cover a situation where there is a pari passu charge holder. 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 pari passu charge holder. Such a right can be exercised with the consent of the pari passu charge holder or on orders of the court after making him a party to the proceedings to enforce the security. Since the charge holder is the official liquidator, this power to consent is subject to the sanction of the court.
"The power to sell which has been given to KSIIDC under Section 29 of the SFC Act has to be exercised consistently with the right of 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 pari passu charge holder in whose favour 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 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...."

33. The decision in M.K. Ranganathan's case (supra) and the several decisions following it make it clear that the secured creditor can stand outside the winding up and realise the amount due to it by selling the security without the intervention of the court and Section 537 will be inapplicable to such sales by the secured creditor. In Shivmoni Steel Tubes Ltd's case (supra) this court has held that having regard to amendment to Section 529(1) and insertion of Section 529-A, by Act 35 of 1985, Section 537(1)(b) will apply to sale by secured creditor, in a case where the sale is after the date of winding up. The proviso to Section 529(1) creates a pari passu charge in regard to workmen's dues over the security held by a secured creditor. But, the proviso to Sections 529(1) and 529A make it clear that paripassu charge in favour of the workmen arises only when the order of winding up is made. The deemed pari passu charge does not exist before the order of winding up. Having regard to the fact that Section 537 is inapplicable to a sale of the secured assets by the secured creditor, without intervention of court and the fact that the deemed pan passu charge in favour of workmen comes into effect only when the order of winding up is passed, any sale by the secured creditor standing outside the winding up proceedings, before passing of the winding up order will not be rendered void, on the passing of the order of winding up. The only effect of proviso to Section 529(1) is that on an order of winding up being made, the official liquidator representing the workmen having pari passu charge for their dues, will be entitled to apportionment of the sale proceeds, from the secured creditor in accordance with Section 529.