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2. The company has its registered office in the State of Maharashtra and its factory at Bharuch in the State of Gujarat. The company had obtained large amounts of finance from the Gujarat State Financial Corporation, a corporation incorporated under the State Financial Corporations Act, 1951. The Gujarat State Financial Corporation and the Gujarat Industrial Investment Corporation are two of the secured creditors of the company under liquidation. Both the said Corporations are entitled to a first charge over the factory, land and building belonging to the company under liquidation as secured creditors of the company. Both the said companies are also entitled to a first charge over several other assets of the company on the footing that the said first charge shall rank pari passu in favour of the said corporations. The Bank of Baroda is also one of the creditors of the said company. The other creditors of the company under liquidation include, inter alia, the workmen of the company and unsecured creditors, etc. The workmen of the company are entitled to a pari passu charge over the assets of the company along with all its secured creditors by operation of law under section 529A of the Companies Act in respect of "workmen's dues". The official liquidator in under an obligation to enforce the said statutory pari passu charge for the benefit of the workmen and take all necessary steps to safeguard the securities and their realisation so that the interest of workmen of the company under liquidation is not affected in any manner whatsoever directly or indirectly.

(b) Whether the official liquidator is entitled to custody, control and possession of all the assets of the company under liquidation including the assets mortgaged, hypothecated and charged in favour of the State Financial Corporation and dispose of the same keeping the monetary claims of the secured creators including the State Financial Corporation intact subject to the statutory pari passu charge in favour of the workmen created by operation of law under section 529A of the Companies Act, 1 of 1956 ?
(b) Once a winding up order is passed or the official liquidator or a provisional liquidator is appointed, the official liquidator is deemed to be in custody and control of all the assets of the company including the assets mortgaged, hypothecated and charged in favour of the secured creditor like the State Financial Corporation. Thereafter, the State Financial Corporation can invoke its powers under the State Financial Corporations Act, 1951, if any, only with the prior leave of the company court which has directed winding up of the debtor company. The State Financial Corporation is not entitled to dispose of such assets by itself without obtaining the prior leave of the company court once the company is directed to be wound up and the official liquidator is appointed. The State Financial Corporation is not entitled to take action under section 29 of the State Financial Corporation Act or adopt proceedings before the District Court for sale of the securities as contemplated under section 31 of the State Financial Corporation Act, 1951, without obtaining the prior leave of the company court winding up the company. Prior to the insertion of section 529A in the Companies Act, 1 of 1956, it was settled law that a secured creditor could remain outside the winding up of the company and could realise its securities without the intervention of the court. After the insertion of section 529A in the Companies Act, 1 of 1956, this view no longer holds the field. In view of the insertion of section 529A in the Companies Act, 1 of 1956, the workmen have statutory pari passu charge in their favour for their dues along with the secured creditors of the company and the official liquidator is enjoined by law to protect the interest of the workmen. In this view of the matter, the sale of the securities or the distribution of sale proceeds or the apportionment of the amount of sale proceeds cannot be left to the choice of the secured creditor. In this view of the change in law, the official liquidator steps in when the secured creditor attempt to realise their securities without the intervention of the company court. This view of the court is consistent with the view taken in recent judgments of the High Court of Karnataka, Kerala and Gujarat.

15. Mr. J. K. Majmudar, learned counsel for Shri Harkishandas Keshavdas Kothari, ex-director of the company, relied upon the latest judgment of the High court of Gujarat in the case of Official Liquidator, Himalaya Tools (India) Pvt. Ltd. v. Gujarat State Financial Corporation [1991] 2 Gujarat Law Herald 208. In this case, the official liquidator of the company (under liquidation) had made an application for a direction of the court to the effect that the Gujarat State Financial Corporation be directed to hand over possession of the assets taken charge of to the official liquidator. After surveying a large number of cases cited before the court/s, the High Court of Gujarat formulated its conclusion in para 33 of the judgment. M. B. Shah J. of the High Court of Gujarat held that section 29 of the State Financial Corporations Act did not empower the Financial Corporation to take possession of the property of the company (under liquidation) from the custody of the court or the official liquidator. The learned judge held that the question of priorities or the distribution of sale proceeds was required to be determined by the court which was winding up the company. The learned judge held that section 529A of the Act provided by its non obstante clause that the workmen's dues and the debts owing to secured creditors must abate in equal proportion and all of them have pari passu charge over the securities. The learned judge made several other observations during the course of his judgment. I am in respectful agreement with the view taken by the High Court of Gujarat in so far as it analyses the implication of section 529A of the Act and construes section 456 of the Companies Act, 1 of 1956, and sections 29 and 46B of the State Financial corporations Act, 1951. The learned Judge held that even if the secured creditors wanted to remain outside the winding up proceedings and realise their securities without the intervention of the court, they could do so only after obtaining prior leave of the company court. I have no doubt in my mind that after the insertion of section 529A of the Companies Act, 1 of 1956, the legal position has undergone a change and the official liquidator is entitled to be in custody, control and charge of all the mortgaged and hypothecated assets unless leave is granted by the company court to the secured creditor to take charge of such assets on such terms and conditions as the company court may deem fit to impose.