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529(A)(1) Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company :--
(a) workmen's dues; and
(b) debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to sub-section (1) of Section 529 pari passit with such dues, shall be paid in priority to all other debts."

From this section, as amended by the Companies (Amendment) Act, 1985, for the workmen's dues, the workmen is made pan passu creditor along with oilier secured creditors. Under proviso to Section 529(1), proviso of the Companies Act, it is further made clear that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of workmen's portion in such security. From these provisions it is clear that once the winding up order is passed, workmen also becomes pari passit creditors along with other secured creditors and such workmen's charge shall be a charge on the security of every secured creditor to the extent of such workmen's portion therein. If that is so, any security at the hands of any secured creditor is answerable to the dues of the workmen. From this it logically follows that whenever a secured creditor is granted leave to stand outside the liquidation proceedings, he can realise his debts from the security along with the dues of the workmen, since the workmen as pari passu has priority on such security. Therefore, such creditor cannot say that he would proceed with the realisation of his debt independently of the other creditors. In other words, the security in the hand of such creditor is also answerable to the charges of other co-creditors. In other words, such security in the hand of such creditor, who has opted to stand outside the liquidation proceedings is also security for the benefit of other secured creditors. It is only having regard to these factors, it is provided by the Companies Act that such creditor shall not proceed Jo realise his debt from such security without the leave of the Court, since winding up proceedings is for the benefit of all the creditors. Therefore, for the preservation of such security, which is for the benefit of all the co-creditors all such creditors shall necessarily share the expenses for such preservation of security, as contemplated by proviso to Section 529(2) of the Companies Act. It is an established principle of law that the burden and the benefit go together. If a secured creditor relinquishes his security, he would not be liable to share the expenses for preserving such security, since he would not be claiming the benefit of such security. Hence, as long as such secured creditor does not relinquishes his security, he shall be liable to pay his portion of the expenses, incurred by the Official Liquidator, for the preservation of the security before its realisation by the secured creditors. The position of State Financial Corporation as one of the secured creditors would not be different from other creditors so far as the provisions of the Companies Act are concerned. In the decision reported in A.P.S. Financial Corporation v. Electrothermic Pvt. Ltd, 1996 (2) ALD 213, the Division Bench of this Court held that State Financial Corporation while exercising its right under Section 29 of the Financial Corporations Act, 1951, can exercise such statutory right to sell the property with the rights of pari passu charge holders in whose favour statutory charge is created by the provisions of Section 529(1) of the Companies Act. The Division Bench of this Court has pointed out that State Financial Corporation shall necessarily stand in the queue of the secured creditors pari passu with the claim of other secured creditors like State Bank of Hyderabad eic. In this view of the matter, the contention of the learned Counsel appearing for the State Financial Corporation that as the Financial Corporation opted to stand outside the winding up proceedings with the permission of the Court, the Corporation can realise its debts under Section 29 of the State Financial Corporation Act, independently of the provisions of the Companies Act, cannot be upheld. A Division Bench of the Karnataka High Court in the decision reported in K.S.I.I.D.C. Ltd. v. M/s. Shivmoni Sieel Tubes Ltd, , made this position further clear by observing as under :-

".....The Proviso to sub-section (1) of Section 529 as also Section 529A of the Aet, having created pan passu charge in favour of the workmen, same would affect the right of the appellant KSIIDC to sell the security directly by itself by involving 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 pari passu charge holder."

So far as the sharing of the expenses is concerned, a Division Bench of this Court in the decision reported in A.P. State Financial Corporation v. Official Liquidator, , has further pointed out as under :--

The Division Bench has further pointed out in that judgment that even though the Official Liquidator may not be in custody of the property secured, but in view of Section 529(2) of the Companies Act such secured creditor may be saddled with the liability. If instead of relinquishing his security and proving for his debt, the secured creditor proceeds to realise his security, he has to reimburse the expenditure incurred by the Official Liquidator. According to this judgment, the liability to make contribution towards the expenses, would not have arisen, but for proviso to Section 529(2) of the Companies Act creating liability in such secured creditor also. In the said judgment, the Division Bench has further pointed out that for the purpose of enforcing pari passu charge in favour of the workmen, the Official Liquidator should apply for rateable apportionment of the amount in the hands of such secured creditor on behalf of the workmen. Having regard to this principle enunciated by the Division Bench of this Court, it follows that the Company Court may direct the other secured creditors whether it is a Financial Corporation or any other creditor to contribute his share of expenses in the expenses incurred by the Official Liquidator in preserving and maintaining the security. Such preservation and maintenance of security so far as he is concerned, it is for the benefit of the workmen, who are pari passu secured creditors, having equal rights with other co-creditors, since "pari passu itself means "with equal step equally without preference" as per Jwittle Dictionary of Law. The Official Liquidator may have to incur other incidental expenses like paper publication communicating orders to the other persons affected by the winding up proceedings and all such expenses are ultimately meant to preserve and maintain the security for the benefit of workmen, who are pari passu secured creditors. Therefore, the Official Liquidator is entitled to contribution from other co-secured creditors, the expenses incurred by him proportionately. Another learned single Judge of this Court in the decision reported in Business Machines (I), P. Ltd v. Bank of India (A.P.), (1998) 9t Company Cases 434, has also held that the Company Court can direct such secured creditors standing outside the winding up proceedings, but without relinquishing their security, to pay their proportionate share in the expenses incurred by the Official Liquidator. In all these cases, on hand I find that it is not the case of any secured creditor, including the State Financial Corporation that they have given up or relinquished their interest in the security, and if they have not relinquished their interest in the security, they are bound to make contributions towards the expenses incurred in preserving and maintaining such security. To the same affect also is the law declared by the High Court of Punjab and Haryana in the decision reported in Punjab United Forge Ltd v. Punjab Fin. Corpn, (1993) 76 Company Cases 660.

"(6) Nothing in this Section shall effect the power of any secured creditor to realise or otherwise deal with his security, in the same manner as he would have been entitled to realise or deal with it if this Section had not been passed."

From a reading of the entire Section 28 of the Provincial Insolvency Act along with Section 529 of the Companies Act, I find that Section 28 of the Insolvency Act, though made applicable under Section 529, but is made subject to pari passu charge of the workers under proviso to Section 529(1) of the Companies Act. Proviso to sub-section (2) of Section 529 of the Companies Act, further provides as under :--