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9. Shri S, Tamba, learned counsel for the petitioners, in support of the present petition, has raised several contentions, in that he says that what every assets are hypothicated by the then partnership firm on August 18, 1981, do not belong to the company under liquidation on the proposition that the hypothecation had come much before the company was allowed to be incorporated and which fact took place only on October 1,1983. Alternatively, he canvasses that the partnership firm still subsists and no conversion under the law could take place by which it could become a company because there is no transfer and at any rate no evidence of any such transfer. The other side of the same argument is that the object of the company does not allow the take over of the aforementioned assets and this being so, it was impermissible for the company to have taken over the assets of the firm. The next submission is that action has overriding effect over all other provisions of the Companies Act or any other law for the time being in force and, therefore, there cannot be anything that can curtail the power of the petitioners vis-a-vis machinery and equipment which are taken over in attachment and subjected to the panchnama placed on record also with order dated March 29, 1985.

10. In the first instance, it may be recorded that counsel for the petitioners was trying to be on the fence in urging that in the absence of evidence, there is no conversion of the partnership into a company and, therefor, not action taken by the debtor company or nay orders obtained in that behalf can be said to affect the original partnership firm and that way the rights of the petitioners are intact vis-a-vis the original firm. In so many words,s the petitioner have also claimed relief on the footing that the original partnership firm has undergone a conversion and got itself incorporated as a private limited company. I am, therefore, not enamored by the several arguments taken by learned counsel for the petitioners that the assets hypothicated on August 18, 1981, do not belong to the company under liquidation or that the charge having been created originally by the partnership firm could not be binding once it has gone into a transformation merely because certain events have taken place subsequently. It is equally not possible to hold that the partnership firm still subsists and,d therefore, there is no transfer of assets to the company.

16. It may be seen in the first pace that the petitioners have a right in cases of default to take over the management of possession as well as the right to transfer by way of lease or sale and realise the property pledged, mortgaged, hypothicated or assigned to themselves. This unlimited power given to financial corporation is apart from proceeding in a judicial manner under section 31 thereof. Section 31 requires a sort of an execution to be preferred before the District Court for attachment and sale of the properties. At any rate, action under section 29 of the State Financial Corporation Act, 1951, was undeniably taken on March 29, 1985, and, what is more, the petitioner had not only attached the equipment and machinery lying in sheds Nos. 9 and 10 of D-2 of the Industrial Estate at Bicholim but had even taken possession of the sheds and put a lock of their own. Mr. Tamba, learned counsel for the petitioners rightly places reliance on the decision in Kerala Financial Corporation v. C.K.Sivaswnkara Panicker (1978) 8 TLR 1850 (Ker). The question there arose with regard to the width of section 46B as to whether it has overriding effect over section 125 of the Companies Act. Section 125 of the Companies Act speaks of every charge created on or after April 1, 1914, by a company as void against the liquidator or nay creditor of the company unless the charge was filed with the Registrar for registration in the manner required for that purpose. On an analysis of these two sections, that is to say, section 46B of the State Financial Corporations Act, 1951, and section 125 of the Companies Act, 1956, it is ruled in this decision that section 125 of the companies ACt, 1956, it is ruled in this decision that section 46B, being a special Act, the effect of an order passed under that Act would be binding on the liquidator of the company notwithstanding what is mentioned is section 125 of the Companies Act. Having come thus far, it must be further observed that the petitioners had no chance to participate in the winding up proceedings, vide Company Petition No. 4S of 1986, and, therefore, just not possible to hold that such orders can bind the petitioners for all time to come and having regard to the facts and the circumstances already set out, it is just not possible to deny the reliefs sought for by them in the present petition under section 446 of the Companies Act.

21. In the event of any claim being made by the employees of the company under liquidation, the Maharashtra State Financial Corporation shall be bound to contribute on pro rata basis out of the monies realised by them from the sale of machinery, equipment, or whatever assets that are available and taken charge of and sold by them.

22. It is now clear that the assistant official liquidator has taken possession of the two sheds and presently is in charge thereof and has since sealed them. A direction must be given to the assistant official liquidator to remove his seal affixed on the sheds and after taking the necessary inventory and on confirming what machinery and equipment is the subject-matter of the hypothication, shall segregate and give them to the possession of the petitioners. The petitioners shall be at liberty to deal with these items of machinery and equipment in the manner they like including its sale by auction or otherwise, maintain an account thereof for the purpose of making an order if required in future in relation to the claim for unpaid wages by the employees if any.