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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 workman, or the workmen's portion in his security which he has lost because of the Proviso to S. 529, will run pari passu with workmen's dues under S. 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. What are the rights of a pari passu charge holder? Can a mortgagees exercise his power of sale without the consent of a pari passu charge holders?

The meaning of the word 'pari passu' is defined in Jowitt's Dictionary of English Law, Volume II, 1959 Edition page 1294 as: "With equal step, equally, without preferance". The term is similarly defined in Black's Law Dictionary, 6th Edition, page 1115 as, "By an equal progress. .... Used especially of creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other". Prem's Judicial Dictionary, Volume III, 1964 Edition, page 1217 also defines pari passu as : "With equal steps, that is to say, proceeding side by side at the same piace". Therefore, the rights of an Official Liquidator as representing the workmen run equally with the rights of the secured creditors.

15. 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 chargeholder 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 chargeholder must join or realise the security simultaneously. The sale proceeds are required to be divided proportionately between them in the same porportion as their dues. Hence, when a sale takes place, it is for the simultaneous recovery of claims of all pari passu charge-holders.

22. It is in this context that we have to consider the provisions of S. 537 of the Companies Act under which leave was asked for by the appellants for conducting the sale. The decision of the Supreme Court in the case of M. K. Ranganathan v. Govt. of Madras, (supra) dealt with a situation where a there was no pari passu charge and the secured creditor had obtained possession of the property of the company before the company went into liquidation. In such a situation, the Supreme Court upheld the right of the secured creditor to sell the security without the intervention of the Court and, hence, the leave of the Company Court was held not necessary under S. 537. In a situation where the Official Liquidator, as a representative of the workmen, has a pari passu charge on the property of the company over which a security is created in favour of a creditor, it is difficult to see how the secured creditor can sell the property outright ignoring the Official Liquidator of the Court. Under S. 537(1)(b), any sale held without leave of the Court of any of the properties or effects of the company after the commencement of winding up shall be void. Since the Court is directly concerned with a property which is in its custody and over which its officer, the Official Liquidator, has a charge, the sale cannot take place without Court's sanction and the provisions of S. 537(1)(b) of the Companies Act are attracted. The observations of the Supreme Court refer to a sale which can be effected by a secured creditor without the intervention of the Court when there is no pari passu charge in favour of the Official Liquidator. If there is such a charge in favour of the Official Liquidator, intervention of the Court is necessary, Although a secured creditor may not have to file a suit for this purpose in view of his power to sell leave is necessary under S. 537 of the Companies Act in such a situation.