JUDGMENT <NAME>, J.

1. In this application, the applicant-<ORG> (hereinafter referred to as "the <ORG>"), has made two prayers. Firstly, the applicant has prayed for modification of the order dated October 31, 1996, made in Company Petition No. 17 of 1989, to the extent this court directed the official liquidator to forthwith take charge of all the properties and effects of the first respondent, <ORG> (hereinafter referred to as "the company"), and to exempt from the direction given in the said order in so far as it relates to the assets taken over by the <ORG> pursuant to the mahazar dated December 11, 1989, prepared by the <ORG> and their sale in favour of the second respondent ; and, secondly, to permit the <ORG> to hand over the assets of the company to the second respondent pursuant to the sale of the assets of the company made in favour of the second respondent.

2. The facts, which are relevant for the disposal of this application, may be briefly stated as hereunder :

(a) <ORG> instituted proceedings in Company Petition No. 17 of 1989, under Section 433(e) and 433(f) read with Section 439 of the Companies Act (hereinafter referred to as "the Act") for winding up of the company on January 21, 1989, and on the said company petition, this court directed notice on February 16, 1989, and thereafter, the company came to be wound up by this court by its order dated March 25, 1994. Subsequently, the said order was recalled on June 2, 1995.

(b) It is on record that the <ORG> had in all advanced a sum of Rs. 76 lakhs to the company on the security of the assets of the company, which have been mortgaged/hypothecated to the <ORG>. Since, the company failed to repay the loan taken from the <ORG> as per the terms and conditions of the loan advanced and committed default in payment of the loan advanced by the <ORG> and the company was due in a sum of Rs. 1,46,36,070 as on September 15, 1989, to the <ORG>, in exercise of the power conferred on it under Section 29 of the State Financial <ORG>s Act, 1951 (hereinafter referred to as "the Financial <ORG>s Act "), took possession of the assets of the company on December 1, 1989. Thereafter, the company had raised a reference before <ORG> (hereinafter referred to as "the <ORG>"). In Case No. 28 of 1989, as provided under the provisions of the Sick Industrial Companies (Special Provisions) Act , 1985 (hereinafter referred to as "the SIC Act"). The <ORG>, by its order dated August 26, 1993, recommended winding up of the company in the event of the failure of the company to submit a viable scheme for rehabilitation in exercise of the power conferred on it under Section 20 of the SIC Act. In the same order, the <ORG> had authorised the <ORG> to take steps for the sale of the assets of the company in its possession subject to the terms and conditions imposed in the said order. A copy of the order dated August 26, 1993, passed by the <ORG> has been produced as annexure-H to this application. Pursuant to the order, annexure-H, the <ORG> notified the sale of the assets of the company by issuing advertisements in <ORG> (Calcutta Edition), dated March 13, 1994, Bangalore Edition, dated March 7, 1994, <ORG>, dated March 8, 1994, <ORG> Delhi Editions both dated March 9, 1994, and <ORG>, dated March 7, 1994. In the advertisement issued in the papers, referred to above, it was notified, among other things, that persons interested in the purchase of the assets of the company, could inspect the land, building and machinery on March 18, 1994, between 11 a.m. and 5 p.m. and should send their sealed offers to the <ORG> before March 30, 1994 (4 p.m.), along with an EMD as per the details set out in the said advertisement. It is, further, notified in the said paper publication that the offer made by the intending purchasers would be opened on March 30, 1994, itself at 5 p.m., in the office of the general manager (Operations) of the <ORG> in the presence of the tenderers. The offer submitted by the second respondent being the highest, the same was placed before the <ORG> for approval and the <ORG>, by its order dated October 26, 1995, accorded its approval for conclusion of the sale in favour of the second respondent for a total sale consideration of Rs. 2 crorcs and 80 lakhs in terms of the conditions in Clause 10(j) of its order anneuxre-H, dated August 26, 1993. Pursuant to the approval accorded by the <ORG>, the <ORG> had issued sale letter dated December 28, 1995, to the second respondent, a copy of which has be'en produced as annexure-R to this application. The second respondent, by its letter dated December 28, 1995, accepted all the conditions stipulated in the letter, annexure-R, issued by the <ORG>. Thereafter, the second respondent, as per the terms and conditions of the sale, had paid the entire sale consideration of Rs. 2 crores and 80 lakhs to the <ORG>.

(c) Aggrieved by the order annexure-H dated August 26, 1993, passed by the <ORG>, the company had filed an appeal before <ORG> as provided under the SIC Act and <ORG>, by its order dated April 25, 1995, dismissed the appeal. This court, by its order dated April 25, 1995, recalled the order dated March 25, 1994, winding up the company on the ground that the appeal filed by the company against the order annexure-H was pending consideration before <ORG> on the date of the winding up order made by this court on March 25, 1994. Subsequently, on the dismissal of the appeal by <ORG> on April 25, 1995, this court, by its order dated October 31, 1996, allowed Company Petition No. 17 of 1989, and ordered for winding up of the company and the official liquidator came to be appointed as liquidator of the company and he was directed to forthwith take charge of all the properties and assets of the company.

(d) In the meanwhile, aggrieved by the sale of the assets of the company approved by the <ORG>, the company had filed Writ Petition No. 8760 of 1994, before this court and obtained an ex-parte interim order of stay of the sale on March 29, 1994. Subsequently, this court, by its order dated October 26, 1994, vacated the said ex parte interim order and the said writ petition also came to be rejected by this court, by its order dated September 25, 1996.

(e) Thereafter, the company had filed one more writ petition, Writ Petition No. 8025 of 1996, and again obtained an ex parte interim order of stay of the sale of the assets of the company. This court, by its order dated April 10, 1996, discontinued the ex parte interim order earlier granted and the said order was challenged in Writ Appeal No. 1825 of 1996, which came to be dismissed by the Division Bench of this court, by its order dated June 28, 1996. Further, it is also on record that one <ORG> had filed a suit, O. S. No. 684 of 1996, before the court of the Principal Civil Judge, Bangalore (Rural), seeking an order of injunction restraining the <ORG> and the company from disposing of the assets of the company and obtained an ex parte order of temporary injunction against the <ORG> and the company. However, the learned city civil judge, by his order dated December 20, 1996, vacated the said ex parte order of temporary injunction, Thereafter, one Sri Raj Kotak, who was the director of the company, filed one more writ petitions (i.e., third in the series), Writ Petition No. 34402 of 1996, challenging the sale of the assets of the company. However, in the said writ petition, this court, by its order dated December 20, 1996, observed that the sale of the assets of the company is subject to the result of the writ petition.

(f) During the pendency of this application, the aforesaid <NAME> had filed Company Application No. 109 of 1997, seeking permission of this court to come on record as supplemental respondent No. 3 in this application, i.e., Company Application No, 64 of 1997. The said application was allowed by this court by its order dated September 17, 1997. Further, during the pendency of this application, by means of order dated August 13, 1997, this court had directed the applicant in Company Application No. 109 of 1997, i.e., the third respondent in this application, to furnish the valuation report of the company in respect of the assets sold by the company on the date of the sale either from an approved valuer or a <ORG> valuer. Pursuant to the said order, the third respondent has filed three valuation reports dated August 21, 1997, March 1, 1993, and July 11, 1996, given by one Sri <NAME>, chartered engineer and approved valuer. As per the valuation report dated August 21, 1997, the total value of the assets of the company as on April/ September, 1994, was in a sum of Rs. 5,56,00,000. As per the valuation report dated March 1, 1993, the total value of the assets of the company as on March, 1993, was in a sum of Rs. 4,87,50,000. As per the valuation report dated July 11, 1997, the total value of the assets of the company as on October 1, 1995, was in a sum of Rs. 6,24,50,000.

I have elaborately heard <NAME>, learned counsel for the applicant, <CITATION> , learned counsel for the official liquidator, <NAME>, learned senior counsel appearing along with <NAME> for respondent No. 2, and <NAME>, learned counsel for respondent No. 3.

3. The second respondent supported the application. The submissions of <NAME>, learned senior counsel, and <NAME>, learned counsel for the applicant, are identical. According to them, the sale of the assets of the company cannot be treated either as illegal or void in law on the ground that the sale has been done without the leave of this court. Elaborating this submission, they, firstly, submitted that the law is firmly established that the secured creditor can stand outside the winding up proceedings and realise his security without the intervention of the court by effecting the sale of the mortgaged property by private or public sale; and leave of the court is necessary only when intervention of the court is sought for realising the security; and in this case, the sale of the assets of the company having been made in exercise of the statutory power conferred on the <ORG> under Sub-section (4) of Section 20 of the Act, the sale effected is perfectly valid in law and the properties in question do not vest with the official liquidator on winding up of the company. It is their contention that since on the date of the winding up order passed by this court on October 31, 1996, in Company Petition No. 17 of 1989, the assets of the company having been sold pursuant to the proceedings initiated under the provisions of the SIC Act and the sale of the assets of the company having been approved by the <ORG> and having become final, it is not permissible for the official liquidator to take possession of the said assets, which have already been sold to the second respondent. Secondly, they submitted that the SIC Act is a special enactment and the provisions contained in the said enactment will prevail over the provisions contained in the Act. In this connection, they drew my attention to Sub-section (4) of Section 20 of the Act, which confers power on the <ORG> to get the assets of a sick industrial company sold in such manner as it may deem fit and forward the sale proceeds to this court for orders for distribution in accordance with the provisions of Section 529A and other provisions of the Act, and also Section 32 of the SIC Act, which provides that the provisions of the SIC Act and of any Rules or Scheme made thereunder, shall have overriding effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act , 1973, and the Urban Land (Ceiling and Regulation) Act , 1976, or the memorandum or articles of association of an industrial company or in any other instrument having effect by virtue of any law other than the SIC Act, etc. Therefore, relying upon the said provisions, they submitted that since the assets of the company were sold after giving wide publicity and the offer made by the second respondent, which was the highest offer, having been accepted by the <ORG>; and the same also having been approved by the <ORG>, there is absolutely no justification to nullify the sale or prevent the <ORG> from handing over the assets of the company to the second respondent as per the terms and conditions of the sale. Thirdly, they submitted that since the sale of the assets of the company has been made prior to the order of winding up made on October 31, 1996, which has been approved by the <ORG>, the provisions contained in the Act, which requires the leave of the court for the sale of the assets of the company, which is under winding up, cannot be made applicable. Fourthly, they submitted that as a matter of fact, since wide publicity in respect of the sale of the assets of the company has been given in leading newspapers, which have wide circulation in the country, and also in a <ORG> daily, which has wide circulation in the State, and the sale made was approved by the <ORG>, which consists of members of high reputation and vast experience, by no stretch of imagination can it be said that the interests of the company or the workmen or the creditors of the company have been jeopardised or affected in any manner on account of the sale of the assets of the company. Therefore, they submitted that so long as it is not shown that the sale of the assets of the company has resulted in serious prejudice to the company and every one interested in the company, the sale of the assets of the company made should hot be nullified by this court. Further, relying upon the orders made by this court in the writ petitions filed by the company and its directors and also the suit. O. S. No. 684 of 1996, filed by Super Sales <ORG>, they submitted that every effort was made by the company and its directors to nullify the sale without any justifiable cause and if the <ORG> is not permitted to hand over possession of the assets of the company pursuant to the sale made to the second respondent, as per the terms and conditions of the sale, it would result in irreparable injury to the <ORG> and also to the second respondent. Sri <NAME> submitted that huge money is outstanding to the <ORG>, a public financial institution, and any delay in realisation of the money due to the <ORG> would result in serious financial loss to the <ORG> and other creditors. In the same tone, Sri <NAME> also submitted that the second respondent, in terms and conditions of the sale, has already deposited Rs. 2 crores and 80 lakhs and if, at this stage, this court takes the view that the sale of the assets of the company effected is not valid, it would result in irreparable injury to the second respondent, He further pointed out that even on this date, the third respondent has not been able to get an offer from any person for a price much more than the one at which the assets of the company are sold to the second respondent. He also submitted that it is well settled that in a court sale or a distress sale, normally the real market value in respect of an asset is not secured and that cannot be a ground to nullify the sale. Learned counsel, in support of the submissions made by them, relied upon the following decisions :

(1) <CITATION> , (2) <CITATION> , (3) <ORG>P.) <CITATION> .) Ltd., , (4) <CITATION> .  72 Comp Cas 5 (Delhi), (5) <CITATION> , (6) <CITATION> .  81 Comp Cas 50 (Raj), (7) <CITATION> .  81 Comp Cas 13 ;  4 SCC 159, (8) Gujarat State Financial Corporation v. Official Liquidator, <ORG>  87 Comp Cas 658 ;  1 Comp LJ 503 (Guj), (9) <CITATION> , (10) <CITATION> , and (11) <CITATION>  42 Comp Cas 168 ; .

Repelling the contentions advanced by <NAME> and <NAME>, <NAME>, learned counsel for the official liquidator, and <NAME>, learned counsel for the third respondent, submitted that the proviso given to Section 529(1)(c) of the Act makes the security of every secured creditor subject to a pari passu charge in favour of the workmen to the extent of the workmen's portion therein, and where a secured creditor, instead of relinquishing his security and proving his debt, seeks to realise the security, the liquidator is entitled to represent the workmen and enforce such charge ; and any amount realised by the liquidator by way of enforcement of such charge shall be applied rateably for the discharge of workmen's dues and so much of the debt due to such secured creditor as could not be realised by him, shall rank pari passu with the workmen's dues and, therefore, whenever there is a pari passu charge over any property of a company in winding up by virtue of the proviso to Section 529 of the Act, leave of the company court is necessary for the sale of the property as the charge-holder is the official liquidator. They pointed out that admittedly, in this case, when the property in question was caused to be sold by the applicant, the proceedings for winding up had already been initiated and as a matter of fact, the company also was wound up, by the order dated March 25, 1994, though the said order was subsequently recalled on March 2, 1995, and again a winding up order was passed on October 31, 1996. They submitted that even if the secured creditor is entitled to stand outside the winding up and realise his security, the sale of the assets of the company cannot be done without the leave of the company court once the winding up proceedings are initiated. They also submitted that the decisions of <ORG>, in the case of <CITATION> , <CITATION> , Gujarat State Financial Corporation v. Official Liquidator, <ORG>  87 Comp Cas 658 ;  1 Comp LJ 503 ( <CITATION>  81 Comp Cas 19 ;  4 Comp LJ 311 (Kar), relied upon by the applicant and the second respondent have absolutely no bearing on the facts of the present case. They pointed out that the decision of <ORG> in the case of <CITATION>  25 Comp Cas 344 was rendered before the introduction of Sections 529 and 529A in the Act. In the case of <CITATION>  86 Comp Cas 255, <ORG> has only followed the principle in <NAME>'s case  25 Comp Cas 344 (SC). They submitted that, on the other hand, the principle laid down by <ORG> in the case of <CITATION>  82 Comp Cas 342 ;  2 Comp LJ 165 fully applies to the facts of the present case. They further pointed out that the decision of <ORG> in the case of <CITATION>  82 Comp Cas 342 has been approved by the Division Bench of this court in the case of <CITATION> . . They further submitted that in the case of Karnataka State Industrial Investment and Development Corporation , the Division Bench of this court, after referring to the case of International Coach Builders Ltd.  81 Comp Cas 19 (Kar) and in the light of the direction given by <ORG> in the said case, has clearly held that <ORG> in <NAME>'s case  25 Comp Cas 344 did not have an occasion to consider the impact of Sections 529 and 529A of the Act or Section 537 of the Act and the rest of the decisions were based merely on the decision of <ORG> in <NAME>'s case  25 Comp Cas 344 and, therefore, the sale of the assets of the company made during the winding up proceedings is void in law and is not binding on the official liquidator and the applicant is not entitled for the relief sought in this application. They also pointed out that there is no conflict between the provisions contained in the Act and also the SIC Act in so far as the procedure required to be adopted in the matter of sale of assets of the company in winding up.

4. In the background of divergent contentions advanced by learned counsel appearing for the parties, the question that would arise for consideration is as to whether the sale of the assets of the company effected by the applicant-Corporation, is void in law on the ground that the leave of the company court for the sale of the said assets has not been obtained.

5. It is profitable to first refer to the relevant provisions of the Act, the SIC Act and also the SFC Act , before proceeding to discuss the contentions raised by learned counsel appearing for the parties.

(a) Sections 446 , 456(2) , 529(1) , 529A and 537 of the Act read as under : "446. Suits stayed on winding up order.--(1) When a winding up order has been made or the official liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or, if pending at the date of winding up order, shall be proceeded with, against the company, except by leave of the court and subject to such terms as the court may impose.

(2) The court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of-

(a) any suit or proceeding by or against the company ;

(b) any claim made by or against the company (including claims by or against any of its branches in India) ;

(c) any application made under Section 391 by or in respect of the company ;

(d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company, whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act , 1960.

(3) Any suit or proceeding by or against the company which is pending in any court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that court.

(4) Nothing in Sub-section (1) or Sub-section (3) shall apply to any proceeding pending in appeal before <ORG> or <ORG>.

456. Custody of company's property.--(2) All the property and effects of the company shall be deemed to be in the custody of the court as from the date of the order of the winding up of the company,

529. (1) Application of insolvency rules in winding up of insolvent companies.--(1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to-

(a) debts provable ;

(b) the valuation of annuities and future and contingent liabilities; and

(c) the respective rights of secured and unsecured creditors ; as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent :

Provided 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 the workmen's portion therein, and, where a secured creditor, instead of relinquishing his security and proving his debt, opts to realise his security,--

(a) the liquidator shall be entitled to represent the workmen and enforce such charge ;

(b) any amount realised by the liquidator by way of enforcement of such charge shall be applied rateably for the discharge of the workmen's dues ; and

(c) so much of the debt due to such secured creditor as could not be realised by him by virtue of the foregoing provisions of this proviso or the amount of the workmen's portion in his security, whichever is less, shall rank pari passu with the workmen's dues for the purposes of Section 529A .

(2) All persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company, may come in under the winding up, and make such claims against the company as they respectively are entitled to make by virtue of this Section :

Provided that if a secured creditor instead of relinquishing his security and proving for his debt proceeds to realise his security, he shall be liable to (pay his portion of the expenses) incurred by the liquidator (including a provisional liquidator, if any) for the preservation of the security before its realisation by the secured creditor.

Explanation.--For the purposes of this proviso, the portion of expenses incurred by the liquidator for the preservation of a security which the secured creditor shall be liable to pay shall be the whole of the expenses less an amount which bears to such expenses the same proportion as the workmen's portion in relation to the security bears to the value of the security.

529A. Overriding preferential payments.-(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 passu with such dues ; shall be paid in priority to all other debts.

(2) The debts payable under Clause (a) and Clause (b) of Sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions.

537. Avoidance of certain attachments, executions, etc., in winding up by or subject to supervision of court.--(1) Where any company is being wound up by or subject to the supervision of the court-(a) any attachment, distress or execution put in force, without leave of the court, against the estate or effects of the company, after the commencement of the winding up ; or

(b) any sale held, without leave of the court, of any of the properties or effects of the company after such commencement ; shall be void.

(2) Nothing in this Section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government." (b) Sections 20 and 32(1) of the SIC Act read as hereunder :

"20. Winding-up of sick industrial company.--(I) Where the Board, after making inquiry under Section 16 and after consideration of all the relevant facts and circumstances and after giving an opportunity of being heard to all concerned parties, is of opinion that the sick industrial company is not likely to make its net worth exceed the accumulated losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof is not likely to become viable in future and that it is just and equitable that the company should be wound up, it may record and forward its opinion to the concerned <ORG>, (2) The <ORG> shall, on the basis of the opinion of the Board, order winding-up of the sick industrial company and may proceed and cause to proceed with the winding-up of the sick industrial company in accordance with the provisions of the Companies Act , 1956 .

(3) For the purpose of winding-up of the sick industrial company, <ORG> may appoint any officer of the operating agency, if the operating agency gives its consent, as the liquidator of the sick industrial company and the officer so appointed shall for the purposes of the winding-up of the sick industrial company be deemed to be, and have all the powers of, the official liquidator under the Companies Act , 1956 .

(4) Notwithstanding anything contained in Sub-section (2) or subsection (3), the Board may cause to be sold the assets of the sick industrial company in such manner as it may deem fit and forward the sale proceeds to <ORG> for orders for distribution in accordance with the provisions of Section 529A , and other provisions of the Companies Act , 1956 ."

"32. Effect of the Act on other laws--(1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act , 1973 , and the Urban Land (Ceiling and Regulation) Act , 1976 , for the time being in force or in the memorandum or articles of association of an industrial company or in any other instrument having effect by virtue of any law other than this Act, (2) Where there has been under any scheme under this Act an amalgamation of a sick industrial company with another company, the provisions of Section 72A of the Income-tax Act, 1961 , shall, subject to the modifications that the power of <ORG> under that Section may be exercised by the Board without any recommendation by the specified authority referred to in that section, apply in relation to such amalgamation as they apply in relation to the amalgamation of a company owning an industrial undertaking with another company."

Now, let me examine the question that would fall for my consideration in this application.

6. No doubt, the decision of this court in the case of <ORG> [1994] 81 Comp Cas 19 and the decision of <ORG> in the case of Gujarat State Financial Corporation (1996] 87 Comp Cas 658 rendered following the decision of this court in the case of <ORG> [1994] 81 Comp Cas 19 relied upon by learned counsel for the applicant and the second respondent, support their contention that the secured creditor is entitled to stand outside the winding up proceedings and enforce his security and in that view of the mutter, even after the amendment of Sections 529(1) , 529A of the Act, leave of the company court is not required to be obtained by the secured creditor to enforce his security and bring the assets mortgaged to sale to realise his security. <ORG> and this court, in the decisions referred to above, have taken the view that the right of the secured creditor to deal with the security and realise the same without the intervention of the court, remains unaffected notwithstanding the vesting of property coming into the custody of the court, on the principle that the right of the secured creditor does not come to the custody of the court. In the said decisions, it has been pointed out that a mortgage creates in favour of a mortgagee an interest in the mortgaged property and to the extent of the charge of mortgage, the property mortgaged does not come to the custody of the court. It is further pointed out in the case of Gujarat State Financial Corporation  87 Comp Cas 658 that by the amendment to the proviso to Section 529 of the Act and insertion of the Explanation thereto in 1985, the only change which has been made, is that the secured creditor too is liable to pay only the proportionate expenses of the preservation taking into consideration the pari passu charge in favour of the workmen's dues, but the option is still left to the secured creditor to realise the security without proving his debt in the winding up proceedings ; and where the secured creditor opts to realise his security without relinquishing his security and without proving his debt, the realisation is to be governed by the proviso to Section 529(1) and the workmen get from such realisation only that much proportion for which they rank pari passu qua the realisation of the security. The court further pointed out that even after the Companies (Amendment) Act , the principle enunciated in <NAME>'s case  25 Comp Cas 344, still applies to the secured creditor, who, instead of relinquishing his security and providing his debts, opts to realise the security without intervention of the court. Though the decisions, referred to above, as pointed out by me, support the case of the applicant and the second respondent, in the light of the <ORG> decision of this court in the case of Karnataka State Industrial Investment and Development Corporation  94 Comp Cas 1 which has considered the earlier decision of this court in the case of <ORG>  81 Comp Cas 19 and also the decision of <ORG> in the case of <NAME>  25 Comp Cas 344 , and has taken the view, fairly in identical circumstances, that the sale of the assets of the company, which was the subject matter of dispute in the said case without the leave of the court, was not valid and directed for resale of the assets of the company subject to the conditions imposed in the said order, I am unable to accede to the submissions made by <NAME> and <NAME>. In the case of Karnataka State Industrial Investment and Development Corporation  94 Comp Cas 1, this court has followed the decisions of <ORG> in the case of <CITATION>  82 Comp Cas 342, wherein <ORG> has considered the principle laid down by <ORG> in the case of <NAME>  25 Comp Cas 344 and after elaborately discussing the effect of the proviso to section 529(1) and Section 529A , which was inserted into the Act by reason of the Companies (Amendment) Act , 1985, has taken the view that though Sections 529 and 529A , as amended, do not take away the rights of the secured creditor, since a pari passu charge is created in favour of the dues of the workmen on the rights of the secured creditor, the mortgagee or the secured creditor is required to join the pari passu charge-holder in the sale and he cannot sell the property ignoring the pari passu charge-holder and, therefore, the secured creditor as well as the official liquidator as the representatives of the workmen, must join in the sale. It is useful to extract the relevant portion of the said judgment of <ORG>, which reads as hereunder (page 349 of 82 Comp Cas) :

"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 workmen, or the workmen's portion in his security which he has lost because of the proviso to Section 529 , will rank pari passu with workmen's dues under Section 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.

Therefore, because of the proviso to Section 529 , the secured creditor is not the only mortgagee entitled to sell the security. He has a co-mortgagee (in the form of workmen) with an equivalent charge on the same security. These workmen are to be represented by the official liquidator. Therefore, when a secured creditor seeks to realise his security, he has also to contend with the official liquidator. The official liquidator is an interested party in the sale of the security in two capacities in such a situation--(1) as a representative of the pari passu charge-holder ; and (2) as an officer of the court in custody of the company's properties, who is responsible for the sale and distribution of the assets of the company in winding up. In both these capacities, he has an interest in the sale of the mortgage security by the secured creditor.

7. What are the rights of a pari passu charge-holder ? Can a mortgagee exercise his power of sale without the consent of a pari passu charge holder ?

8. 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 preference'. The term is similarly defined in Black's Law Dictionary, Sixth 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 pace". Therefore, the rights of an official liquidator as representing the workmen rank equally with the rights of secured creditors.

9. In the case of co-mortgagees, the courts have held that one co-mortgagee cannot sell or institute any proceeding for the sale of the mortgaged property without joining the other co-mortgagees, if the other co-mortgagees are not willing to join as plaintiffs they should be joined as defendants. This is because the mortgaged security is one and it must be realised as a whole by a common sale, thus, in the case of <CITATION> , AIR 1958 Mad 621, the court considered the case of co-mortgagees and held as a proposition of law that a mortgage is one and indivisible in regard to the amount and security. The court said that no suit can, therefore, be filed to enforce a mortgage which entails the disintegration of either the amount or the security.

10. That, therefore, normally all the mortgagees should join. But if some of them refuse to join, they should be included as defendants. Such mortgagees-defendants are not pro forma parties but are necessary parties in that the mortgage right vests in them along with the plaintiff-mortgagees,

11. <ORG> in the case of <CITATION> , AIR 1919 PC 24, said in the case of two mortgagees holding as tenants-in-common that the right of either mortgagee who desires to realise the mortgaged property and obtain payment of the debt, if the consent of the co-mortgagee cannot be obtained, is to add the co-mortgagee as a defendant to the suit and to ask for the proper mortgage decree. It is, therefore, necessary that when a sale of a mortgaged property takes place, both the charge-holders should join in the sale.

12. The same ratio, in our view, would substantially apply to two charge-holders who have a pari passu charge for the recovery of their dues. It may be that unlike a co-mortgagee, a pari passu charge-holder 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 charge-holders 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 a sale takes place, it is for the simultaneous recovery of claims of all pari passu charge-holders."

13. It was further observed in paragraph 23 thus (page 355) :

"Also, the statutory right which is given to financial corporations under Section 29 to sell the property has to be exercised consistently with the rights of a pari passu charge-holder in those favour a statutory charge is created by the proviso to Section 529 of the Companies Act when the company is in liquidation, Therefore, such a power can be exercised only with the concurrence of the official liquidator and the official liquidator is required to take the permission of the court before giving such concurrence, since he is an officer of the court and is required to act under the directions of the court while exercising his powers on behalf of the workers".

14. Again, while referring to the contention that in view of the provisions contained in Section 46B of the SFC Act, the provisions of Section 29 of the Act would prevail <ORG> observed thus (page 356 of 82 Comp Cas) :

"We, however, do not see any inconsistency between the provisions of Section 29 of the State Financial Corporations 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."

15. As stated above, the principle extracted above, laid down by <ORG> has been approved by the Division Bench of this court. Further, this court, keeping in view that an appeal against the earlier decision of this court in the case of <CITATION>  81 Comp Cas 19, was admitted; and <ORG>, while granting special leave to appeal, has directed the secured creditor to act jointly with the official liquidator, under the supervision and in accordance with the directions of the company judge for effecting the sale, distinguished the decision of this court in the case of <CITATION>  81 Comp Cas 19 and followed the decision of <ORG> in <CITATION>  82 Comp Cas 342, It is relevant to extract paragraphs 21 and 22 of the said judgment, which, in my view, is a direct answer to the contentions advanced by <NAME> and <NAME>. The said paragraphs read as hereunder (pages 13 to 15 of 94 Comp Cas) :

"Having due regard to the fact that an appeal against the decision of <ORG> of this High Court in <CITATION>  81 Corp Cas 19 is admitted and <ORG> has given certain directions while so granting special leave to appeal, directing the secured creditor to act jointly with the official liquidator under the supervision and in accordance with the directions of the learned company judge for effecting the sale, we are of the opinion that the other decisions referred to above and relied upon by Sri <NAME>, learned counsel for the <ORG>, the appellant, need to be distinguished firstly on the ground that <ORG> in <NAME>'s case  25 Comp Cas 344 did not have an occasion to consider the impact of Sections 529 and 529A of the Act on Section 537 of the Act, and, secondly, on the ground that the rest of the decisions were based mainly on the said decision of <ORG> in <NAME>'s case  25 Comp Cas 344. It is only Mrs. Justice <NAME> of <ORG>, as she then was, speaking for the Bench in <CITATION>  82 Comp Cas 342 who has dealt with every aspect of the matter concerning the sale of assets of a company in winding up when the secured creditor prefers to stand outside the winding up and enforces his security in exercise of the power under Section 29 of the SFC Act. We fully agree with the exposition of law as made by Mrs. Justice <NAME> in this regard.

It is no doubt true that on July 29, 1994, the appellant-<ORG> had taken over possession of the assets of the company under liquidation, acting under Section 29 of the SFC Act. It is also true that no provisional liquidator had been appointed under Section 450 of the Act. Nevertheless, by the time the appellant completed the sale transaction in favour of respondent No. 7 on September 30, 1995, the winding up order had already been passed on September 8, 1995, and the official liquidator had already come into the picture as liquidator of the company under Section 449 of the Act, There were workmen's dues to the tune of Rs. 80 lakhs. Because of the proviso to Sub-section (1) of Section 529 of the Act, the <ORG> is not the only secured creditor entitled to sell the security by invoking Section 29 of the SFC Act, the <ORG> has to contend with the pari passu charge in favour of the workmen's dues, the workmen being represented by the official liquidator. The official liquidator would, thus, be an interested party in the sale of security. The proviso to Sub-section (1) of Section 529 as also Section 529A of the Act, having created a pari passu charge in favour of the workmen, the same would affect the right of the appellant, the <ORG> to sell the security directly by itself by invoking 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 the pari passu charge-holder. Similarly, though the official liquidator, by virtue of Section 457(1) of the Act has the power to sell the property of the company in winding up, and as a pari passu charge-holder under Section 529 of the Act, he has the power to sell the said property with the sanction of the court to realise the charge, he cannot sell the property all by himself ignoring the secured creditors like the <ORG>. Thus, both the secured creditor, namely, the <ORG>, as also the official liquidator as the representative of the workmen, are to exercise the power to sell under the directions of the court. The aspect of repugnancy between the provisions of two Acts, i.e., the SFC Act and the Companies Act , and, in that situation, the provisions of the SFC Act having overriding effect over the provisions of the Act, by virtue of Section 46B of the SFC Act, is not to be seriously considered because there is no inconsistency between the provisions of the said two Acts. Section 29 of the SFC Act merely confers certain powers on the secured creditor. It does not deal with a situation where there is a pari passu charge-holder, The power to sell which has been given to the <ORG> under Section 29 of the SFC Act has to be exercised consistently with the right of the 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, <ORG> under Section 29 of the SFC Act being required to be exercised consistently with the right of the pari passu charge-holder in whose favour a 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 the 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. The learned company judge was, therefore, right in declining to approve the sale in favour of respondent No. 7 and giving fresh directions for resale of the property by the appellant, <ORG> by standing outside the winding up in association with the official liquidator right from the time of settling the terms of advertisement, and making the said resale subject to confirmation by the court."

(emphasis supplied)

16. This court, in paragraph 16 of the judgment, has also considered the decision of <ORG> in the case of Ranganathan [1955] 25 Comp Cas 344 and has observed as follows (pages 8 and 9 of 94 Comp Cas) :

"<NAME> relied upon a decision of <ORG> in <CITATION>  25 Comp Cas 344 reported in this regard. <ORG> was dealing with the provisions of Section 232 of the Indian Companies Act, 1913, analogous to the provisions of Section 537 of the Act. It was held therein that the secured creditor was outside the winding up and could realise his security without leave of the court. This decision of <ORG> certainly supports the case of the appellant, <ORG>. But the said decision had no provision corresponding to Sections 529 and 529A of the Act. Consideration of Section 537 of the Act ( section 232 of the Indian Companies Act, 1913) in the light of Sections 529 and 529A , therefore, did not arise before <ORG> in the said decision."

(emphasis supplied)

17. As can be seen from the discussion made by this court in the case of Karnataka State Industrial Investment and Development Corporation Limited [1998] 94 Comp Cas 1 following the decision of <ORG> in the case of <CITATION>  82 Comp Cas 342, this court has taken the view that in view of the amendment made to Section 529(1) and Section 529A by means of the Companies (Amendment) Act , 1985, since the workmen are given a pari passu right in respect of the security of the secured creditor, leave of the company court is necessary to sell the assets of the company even at the instance of the secured creditor of the company. I am in respectful agreement with the views expressed by this court in the case of Karnataka State. Industrial Investment and Development Corporation  94 Comp Cas 1 rendered following the decision of <ORG> in the case of Maharashtra State. <CITATION>  82 Comp Cas 342. I am also unable to accept the submission of Sri <NAME> that in view of the decision of <ORG> in the case of <CITATION>  86 Comp Cas 255 , the Division Bench decision of this court in the case of Karnataka State Industrial Investment and Development Corporation  94 Comp Cas 1 does not lay down the correct law. <ORG> in the case of <CITATION>  86 Comp Cas 255 relied upon by Sri <NAME> has only reiterated the principle laid down by it in Ranganathan  25 Comp Cas 344 which was considered by this court and also by <ORG> in the cases referred to by me earlier (see : para. 2 of the judgment). Therefore, I am of the view that the sale of the assets of the company made by the applicant in favour of the second respondent without the leave of the company court is void.

18. At this stage, it is necessary to consider the contention of Sri <NAME> and <NAME> that since the sale has been effected in view of the provisions contained in Sub-section (2) of Section 20 of the SIC Act, the decision of this court in the case of Karnataka State Industrial Investment and Development Corporation [1998] 94 Comp Cas 1, which was rendered only considering the provisions of the SFC Act , has no bearing as the provisions of the SFC Act , have overriding effect over the provisions of the Act, which is a general law. It is true that, as laid down by <ORG> in the case of <CITATION>  35 Comp Cas 755, the provisions of the special Act will override the provisions of the general Act in the event of conflict between the two enactments. Under these circumstances, the question that would arise for consideration is as to whether there is any conflict between the provisions contained in SIC Act, which is a special enactment, and the provisions of the Act ; and, in that event, the provisions of the SIC Act would prevail over the provisions of the Act as contended by Sri <NAME> and <NAME>.

19. I am of the view that there is no merit in the above submission of learned counsel. Sub-section (1) of Section 20 of the SIC Act provides for enquiry being conducted by the <ORG> and it confers power on the <ORG> to recommend to <ORG> for winding up of the company under certain circumstances set out in the said provision. Sub-section (2) of Section 20 of the SIC Act confers power on <ORG> to wind up the sick unit on the basis of the recommendation made by the <ORG>. Sub-section (3) of Section 20 confers power on <ORG> to appoint a liquidator for the purpose of winding up of such a company. However, subsection (4) of Section 20 of the SIC Act was relied upon by <NAME> and <NAME> in support of their plea that the <ORG> has absolute right to get the assets of the company sold and, therefore, since the sale in question of the company was caused to be effected by the <ORG>, leave of the company court was not required to be secured. No doubt, Sub-section (4) of Section 20 of the SIC Act confers power on the <ORG> to get the assets of the sick industrial company to be sold in such manner as it deems fit notwithstanding anything contained in Sub-section (2) or Sub-section (3) of Section 20 of the Act in such manner as it may deem fit and forward the sale proceeds to <ORG> for orders for distribution in accordance with Section 529A and other provisions of the Act. It is relevant to point out that Sub-section (4) of Section 20 of the SIC Act provides for non-obstante clause with regard to what is contained in Sub-section (2) and (3) of Section 20 of the Act, but it does not state that notwithstanding what is contained in the Act or any other law, the provisions of subsection (4) of Section 20 of the SIC Act shall prevail. However, Section 32 of the SIC Act, on which strong reliance has been placed, provides that the provisions of the SIC Act and of any rules or schemes made under the SIC Act shall have effect notwithstanding anything inconsistent therewith contained in any other law except the provisions of the Foreign Exchange Regulation Act , 1973, and the Urban Land (Ceiling and Regulation) Act , 1976, for the time being in force or in the memorandum or articles of association of an industrial company or in any other instrument having effect by virtue of any law other than the SIC Act. Therefore, the question that is required to be considered is whether there is any conflict between the provisions contained in Sub-section (4) of Section 20 of the Act, which gives power to the <ORG> to get the assets of the sick industrial unit sold and the provisions contained in the Act, in the matter of the sale of the assets of a company, in respect of which proceedings for winding up have been commenced. It is well settled that if the provisions contained in the two enactments can be read harmoniously and if such harmonious construction would subserve the purpose or objects contained in both the enactments, the court should proceed to harmoniously construct and interpret the provisions contained in both the enactments. While the secured creditor has a right to stand outside the winding up proceedings and get his security enforced ; and when the proceedings are pending before the <ORG>, the <ORG> also has undoubted rights in view of Sub-section (4) of Section 20 of the SIC Act notwithstanding what is provided in Sub-section (2) of Section 20 of the SIC Act to get the assets of such company sold, the question is whether it is not necessary in view of the pendency of the proceedings before the company court, to secure leave of the court for such a sale ? The power to grant permission for sale of the assets of the court in respect of a company, in respect of which winding up proceedings have commenced, is given to the court, Under these circumstances, there cannot be any doubt that the court will take into consideration not only the interest of the secured creditor, who is entitled to enforce his security by standing outside the winding up proceedings, but also the interest of the workmen, who are also given substantial rights for which a charge is created on the security of the secured creditor and also various other creditors of the company. If a sale is to be caused by the <ORG> in exercise of the power conferred under Sub-section (4) of Section 20 of the SIC Act, the <ORG> may be primarily guided by the interest of the secured creditor only. Under these circumstances, while I am of the view that in view of Sub-section (4) of Section 20 of the Act, the <ORG> has the undoubted right to get the assets of a sick industrial unit sold either during pendency of the proceedings before it or notwithstanding the power conferred on the court to appoint a liquidator, etc., leave of the company court would be necessary for disposal of the assets of a company in respect of which winding up proceedings have commenced. If, without the leave of the company court, the assets of the company are caused to be sold even by the <ORG>, in my view, such a sale would be void. I do not find any conflict between the provisions contained in the Act and the provisions contained in Sub-section (4) of Section 20 of the SIC Act. As stated by me earlier, while power is given to the <ORG> to get the assets of the company caused to be sold by it, what is required is that leave of the court has to be secured for such sale, if winding up of the company has already commenced. If such a construction is placed to the provisions contained in the Act and the SIC Act, it would protect the interest of everybody, who is interested in the affairs of the company and who has a claim against the company. Otherwise, if the assets of the company are sold for a price much less than the market value at the instance of the secured creditor through the exercise of the power by the <ORG>, it would seriously affect the interest of the workmen, who are given a pari passu right and for whose benefit, a charge is also created on the security of the secured creditor. In fact, the observation of <ORG> in the case of <CITATION>  86 Comp Cas 255 made at paragraph 6 supports my view. It is useful to refer to the said observation, which reads as hereunder (page 260) :

"The aforesaid questions arise because a secured creditor who has, initiated a suit or proceeding in a civil court is interested in realisation of his debt only, whereas the company court looks after the interest of all the creditors ; so too, the workmen's dues, which rank pari passu with debts due to secured creditors. This is brought home not only by Section 529A , which was inserted by the Companies (Amendment) Act , 1985, but also by the proviso to Sub-section (1) of Section 529 inserted by the same Amendment Act . The winding-up court does these acts through a liquidator, who has been given wide powers by Section 457 of the Act. As against this, a receiver appointed by a civil court on being approached by a secured creditor would basically look after the interest of that creditor, whose interest may in many cases be in conflict with that of the liquidator, as was acknowledged in Karamelli and Barnett Ltd.  1 Ch 203. We feel no difficulty in stating that in case of such conflict, the interest of the liquidator has to receive precedence over that of the receiver inasmuch as the former looks after the interest of a large segment of creditors along with that of workmen, whereas the latter confines his concern to the interest of the secured creditor on whose approach the receiver has been appointed . . . ."

(emphasis supplied)

20. It is, therefore, not possible to take a view that merely because the <ORG> consists of highly responsible and reputed members and the secured creditor also would be interested in securing a high price, always a fair price will be secured in respect of the assets of the company, caused to be sold by the <ORG>, as contended by learned counsel for the <ORG> and respondent No. 2.

21. Therefore, in the light of the above discussion, 1 am of the view that there is no conflict between the provisions contained in Sub-section (4) of Section 20 of the SIC Act and the provisions contained in the Act. In fact, the view taken by <ORG> of this court in the case of Karnataka State Industrial Investment and Development Corporation Limited [1998] 04 Comp Cas 1 following the decision of <ORG> in the case of <CITATION>  82 Comp Cas 342 ; , while considering Section 529 of the Act and Sections 29 and 46B of the SFC Act, which confer right on the secured creditor to enforce his security, in my view, would support the view I have taken while interpreting the provisions contained in Sub-section (4) of Section 20 of the SIC Act and the provisions of the Act, referred to above. At paragraph 20 of the decision, this court has observed as follows (page 13 of 94 Comp Cas) :

"Referring to the contention that because of Section 46B of the SFC Act, the provisions of Section 29 of the said Act would prevail over the provisions of Section 529 of the Companies Act, it was observed thus (page 356) :

'We, however, do not see any inconsistency between the provisions of Section 29 of the State Financial Corporations 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 pan 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 pan 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, his power to consent is subject to the sanction of the court'."

22. I am also unable to accept the submission of <NAME> and <NAME> that since the sale of the assets of the company was made prior to the date of the winding up order, leave of the company court was not required to be obtained. It is necessary to point out that Sub-section (2) of Section 441 of the Act, in unmistakable terms, states that in the circumstances other than those set out in Sub-section (1) of Section 441 , the winding up of the company by the court shall be deemed to commence at the time of presentation of the petition for winding up. The said provision reads as follows :

"441. Commencement of winding up by court.--(2) In any other case, the winding-up of a company by the court shall be deemed to commence at the time of the presentation of the petition for the winding up."

Section 537(1)(b) of the Act provides that when a company is being wound up by or subject to the supervision of the court, any sale held, without leave of the court, of any of the properties or effects of the company after such commencement, is void. Therefore, a combined reading of Sub-section (2) of Section 441 and Clause (b) of Sub-section (1) of Section 537 of the Act, makes it clear that even in cases where winding up petitions have been presented, if the sale of the assets of the company is made, such sale would be void even though there is no order of winding up.

23. In so far as the contention advanced on behalf of the applicant and the second respondent that every effort was made by the company and its director to get the sale of the assets of the company nullified by repeatedly filing writ petitions before this court and this court having rejected the writ petitions, it must be held that the sale of the assets of the company has been properly done and, therefore, the applicant is entitled to deliver the assets of the company to the second respondent pursuant to the sale held, is concerned, it is no doubt true that every effort was made by the company and its director to nullify the sale by repeatedly approaching this court, as referred to by me earlier. If the conduct of the company and its director is to be examined, certainly, they will not be entitled for any indulgence from the hands of this court. But, what this court is required to consider in this case is the validity of the sale held in the light of the provisions contained in the Act, referred to by me earlier. Since, I have taken the view that the sale held was invalid, merely because the company and its director have made every effort to nullify the sale by repeatedly invoking the jurisdiction of this court under Articles 226 and 227 of the Constitution of India, cannot be a ground to approve the sale, which is invalid in law. Therefore, I am unable to accept the submission of <NAME> and <NAME> that since the writ petitions filed by the company and its director having been rejected, the sale of the assets of the company must be held to be valid. It is also true as pointed by <NAME> and <NAME> that in a distress sale, the properties sold generally do not get the fair market price. The decision of <ORG> in the case of <ORG>, , relied upon by <NAME>, no doubt, supports their submission. But, when the validity of the sale is examined in the light of the provisions contained in the Act, in my view, the principle laid down by <ORG> in the case of <ORG>, , referred to by <NAME>, that in a distress sale, a fair market price is not secured, and therefore, the sale cannot be set aside, cannot be applied. The said decision was rendered while considering whether there was any material irregularity or illegality in the sale conducted.

24. In the light of the discussion made above, I am of the view that this application is liable to be rejected and the order dated October 31, 1996, directing the official liquidator to forthwith take charge of all the properties and effects of the first respondent-company, does not call for modification.

25. However, it is necessary to point out that since the second respondent has complied with the terms and conditions of sale and in all, deposited a sum of Rs. 2,80,00,000 (rupees two crores and eighty lakhs) on various dates and the said money has been in deposit with the <ORG>, when fresh steps are taken to sell the assets of the company, which are mortgaged/hypothecated to the <ORG>, jointly by the <ORG> and the official liquidator, the minimum sale price/bid amount that has to be fixed must be at least Rs. 3,00,000 (rupees three lakhs) more than Rs. 2,80,00,000 (rupees two crores and eighty lakhs), for which the assets of the company were sold to the second respondent, plus the interest that would accrue on the said amount taking into consideration the various dates of deposit made by the second respondent at the rate which is being charged by the <ORG>. Further, if no one offers to purchase the assets of the company exceeding the minimum bid amount, referred to above, the assets of the company, which are already sold to the second respondent, shall be confirmed in favour of the second respondent at Rs. 2,80,00,000 (rupees two crores and eighty lakhs) only. The process of sale shall be completed within two months from today, after fully complying with the procedure prescribed. It is also necessary to place on record the submission made by Sri <NAME> on behalf of the third respondent <NAME> that he will bear the expenses for conducting fresh sale, to be incurred by the official liquidator and the <ORG>. The said statement made by Sri <NAME> is made binding on the third respondent. The official liquidator shall secure appropriate directions from this court for sale of the assets of the company immediately.

26. Subject to the observations made above, the application is rejected.

27. However, no order is made as to costs.


<NAME>, J.

1. The applicants, Messrs. Allen Brothers and Co. (India), Ltd., obtained a Rule nisi on the 4th January 1921 calling upon the respondents Messrs. <NAME> and Co., to show cause why an order made by the Controller appointed under the Calcutta Rent Act, 1920, should not be set aside. This Rule was issued both under Section 115 of the Code and under Clause 15 of the Letters Patent.

2. The applicants are tenants of certain premises in Hare Street and hold under the respondents. Their complaint is that an application made by them to the Controller under Section 15 of the Rent Act, for a certificate certifying the standard rent of the said premises, has been dismissed contrary to the terms of the section, which oblige the Controller to fix the standard rent and to certify the same.

3. In my opinion, upon the question of merits, there is no answer to the applicants. The judgment of the Controller is before me. It appears that in Hare Street there is a large building which is numbered 3 4, 5 and 6, and there is some confusion on the part of many people as to which part of the whole building is properly designated by one or other of these numerals. It appears, however, that there is no doubt at all as to the rooms which were let to the applicants. They are occupied by Messrs. <NAME> and Co., and the three rooms in question which Messrs. <NAME> occupy under the applicants and which the applicants took from Messrs. <NAME> and Co. are. Easily ascertainable The Rent Controller in the course of his judgment says: "From the above it will be seen that there is no satisfactory evidence upon the record to prove the number of the premises comprising the three rooms let out to the applicants, whether the number of the premises is 4, and 5 or 5 and 6 or 4, 5 and 6, Hare Streets On this very ground the suit fails.

4. He also states that there is no satisfactory evidence before him to show what the rent of these identical rooms was in November 191.8. The judgment concludes by saying that, "in the circumstances stated above, as there is a confusion in the number of premises of which the rent is required to be standardized, I dismiss this application."

5. In my opinion, Section 15 of the Calcutta Rent Act makes it obligatory on the Rent Controller to grant a certificate certifying the standard rent. In the present case it is beyond dispute that the rooms in respect of which the application is made are perfectly certain, easily enough ascertainable, and are subject to no doubt at all. Either the Rent Controller or any Surveyor appointed by him could have been taken and shown the actual rooms which Messrs. <NAME> and Co. are occupying. It is nowhere suggested and it is not the fact that the Controller required the applicant to give him further particulars and that the applicant made any default in complying with such order. In these circumstances, it matters nothing whatsoever whether the premises in question have got three numbers or one number or have got no number at all, and there is no justification for the Rent Controller's refusal to comply with Section 15 of the Calcutta Rent Act. Nor can any such justification be extracted from the fact that it may be difficult, owing to confusion of numbers, to say at what rent these very three rooms were let in any previous period. By the terms of Section 15 the Controller may fix the standard rent at such amount as he deems just in any of a series of cases, and one of the cases in which he may act in that manner is thus defined: "where for any reason any difficulty arises in giving effect to this Act." For these reasons I do not think that there can be any serious question that if I have jurisdiction to do so I should send the case back to the Rent Controller with a direction to hear and determine the application according to law.

6. Mr. <NAME>, showing cause, takes as his main point the preliminary objection that this <ORG> has no power of superintendence and no revisional jurisdiction as. Regards the Controller. It is not, however, contended that such jurisdiction, if it exists in <ORG>, cannot properly be excercised by a Single Judge sitting on the Original Side in a case such as this where the premises are situated within the limits of the Ordinary Original Civil Juricdiction. This point of re visional jurisdiction has been considered and adjudicated on in more than one case on the Appellate Side, and on the Original Side before now a good many applications have been entertained for a revision of orders passed by the Rent Controller. Mr. <NAME> contended that the decisions, and in particular the decision which contains the fullest treatment of the matter, H. D. Chatterjee v. <NAME> 68 Ind. Cas. 274 : 26 C.W.N. 78 : 49 C. 528 : (1922) A.I.R. (c) 427 can be shown to proceed upon cases which are not in point and upon principles which are not sound. He also contended that insufficient attention had been paid to the fact that <ORG> is subject to a Rule making power which is vested, not in this <ORG>, but in <ORG>. For these reasons he asked leave to argue this question of jurisdiction, and, in the circumstances, I allowed that to be done.

7. The decisions of an Appellate Side Bench are, technically speaking, Sot binding upon me. This is owing to the fact that in many cases the law administered on the Original Side is not the same as the law administered with reference to cases arising in the Mofussil. The present question, however, is exactly the same on whichever side of the Court it arises. The only authority known to me as a guide upon this sort of question is the dictum of Mr. Justice <NAME> in the <CITATION> 9 C. 604 at p. 607 : 13 C.L.R. 142 : 4 Ind. Dec. ( N.S.) 1050. The learned Judge said that he was not prepared to say that he would consider every judgment of an Appellate Bench binding upon him when sitting on the Original Side, yet every such judgment should receive respectful consideration and careful attention and should be followed unless he was very clearly of the opinion that the conclusion arrived at was an erroneous one.

8. The questions raised, quite properly, by Mr. <NAME> are both numerous and difficult. I think it would be no recommendation of any one's opinion to say that he was very clearly of opinion that the contrary view was erroneous. I propose to deal with this matter fully and carefully both out of respect to Mr. <NAME> argument and because I think his client is entitled to this but, in my opinion, it is not true that in the end the question has been decided upon a wrong footing and it is a question on which, though with some difficulty, I incline to the opinion that the decision of <ORG> is right.

9. In the first place, it must be noted that the argument before me proceeded without either party calling into question the validity of the Calcutta Rent Act or the, validity of the Rules made thereunder The first question on this basis is as to what the local legislature has in fact done. In my opinion the Controller, in discharging his duty under Section 15 , and the President of the Tribunal, in discharging his duties under Section 18 , act as Courts of Justice. Whether they are <ORG> within the meaning of any particular enactment is another question but they are both <ORG> in the general sense; they ate authorised to decide judicially, and by judicial methods only, between, persons seeking their civil rights: Nilmoni Singh Deo v. <NAME> 9 C. 295 at pp. 298, 301 : 12 C.L.R. 361 : 9 I.A. 174 : 5 shome L.R. 130 : 4 Sar. P.C.J. 392 : 6 Ind. Jur : 547 : 4 Ind. Dec. (N.S) 846 (P.C.) Such functions as they perform under Sections 15 . And 18 are neither administrative nor ministerial. It is written large, both over the Act and the Rules, that the procedure, to be followed is in general the procedure." of <ORG>

10. By Section 18 , when the Controller has given a decision fixing the standard : rent, and in that event only, a certain right is; given to the parties. It is not called right of appeal but a right "to apply, for revision" of the Controller's order. As Section 24 provides that the procedure shall be that laid down in the Code for the, regular trial of suits "as nearly as may be," it seems that the right is to have a re-trail before a higher <ORG>. It is not what is, technically known as "revision" or "reference "and it does not seem to me exactly, the same thing as "appeal by way, of re-hearing" means in England. But, however the right in question is denominated or defined, its existence puts the Controller in the position of a <ORG> subordinated to another <ORG>, not simply as a matter of dignity or precedence, but in the sense that, the one <ORG> controls the other, to confirm, very or nullify the orders of the other. If I may adopt the language used in <CITATION> for India 61 Ind. Cas. 112 : 48 C. 766 at P. 766 : 25 C.W.N. 80 : 32 C.L.J. 433 "the Index of the relation of superior and inferior <ORG>" is there. The form of jurisdiction may or may not be one hitherto unknown in India as a form of appellate jurisdiction. It is by no means an unknown form elsewhere.

11. As regards the two classes of Courts that are mentioned in Section 18 , two features are clear: first, that the decision shall be final, secondly, in addition to a general power to make Rules "to carry out the purposes of the Act" <ORG> has a particular power to make Rules regulating the procedure of these Courts. This power must doubtless be read with Section 24 .

12. By Section 15 of the Indian High, <ORG> Act , 1861 now replaced by Section 107 of the Government of India Act, power of superintendence is given over all <ORG> subject to the appellate jurisdiction. By the respective Sections 9 and 106 of the same Statutes the several High <ORG> have such appellate jurisdiction as is vested in them by letters Patent. On turning to the fetters Patent to find what is the appellate jurisdiction one finds that it is "from the Civil <ORG> of the Bengal Division of the Presidency of Fort William" and "from all other <ORG> subject to its superintendence." These last Words appear to make a vicious circle but are explained by the fact that Section 9 of the Act, 1861, had transferred to <ORG> every power and authority vested in the <ORG> Which <ORG> superseded. As neither the Rent Controller nor the President of the Tribunal were <ORG>, known in 186, a right of superintendence can only be made out under the Letters Patent in one or other of two ways by establishing that it or some other form of appellate jurisdiction has been since granted with reference to the Rent Controller or the President; or, secondly, by establishing that <ORG> inherited a general jurisdiction over all <ORG> of civil jurisdiction established or to be. Established. "<ORG>," as has been stated, "has superintendence where it has appellate jurisdiction, and has appellate jurisdiction where it has superintendence " <CITATION> 27 B. 575 at P. 582 : 5 Bom. L.R. 562. But some jurisdiction must be shown before the rest can be inferred.

13. In my opinion the position is in no way altered if the question be considered upon the language of the Code. The word "subordinate" is not defined by the Code because Section 3 is not a definition. This section does not claim to be and is not intended to be exhaustive : <CITATION> 17 Ind. Cas. 676 : 37 B. 114 : 14 Bom. L.R. 947. Though not defined, the word "subordinate" plays an important part in the Code as may be seen from Sections 23 , 24 , 100 , 115 , 133  136 and 137 . There are also in the Code several phrases that may be contrasted and compared, thus : <ORG> of a grade inferior ( Section 3 ); <ORG> of highest grade ( Section 63 ); any <ORG> ( Section 113 ); <ORG> subject to their superintendence, ( Section 122 ); any <ORG> of Civil jurisdiction ( Section 141 ). The words "Civil <ORG>" in the Code appear to have a "special meaning though this again is nowhere defined. I take them to mean <ORG> exercising all the powers of <ORG> as distinguished from <ORG>s Which only exercise powers over Civil Matters of a special class or classes, e.g. <ORG> under Act X of 1859, and the Land Acquisition Judge. The two broadest phrases in the Code are to be found in Sections 113 and 141 . The latter in no way touches upon questions of subordination; the former does, because reference is a form of appellate jurisdiction <CITATION> for India 61 Ind. Cas. 112 : 48 C. 766 at P. 776 : 25 C.W.N. 80 : 32 C.L.J. 433. But Order XLVI cuts down its application and it does not apply to the Rent Controller or the President. It may be argued that <ORG> has superintendence over "any <ORG>" because it has power to alter the order and so to give a power of reference to "any <ORG>." Beyond this argument, which in reference to special statutory <ORG>s unknown to the Code seems very precarious, I can see nothing in the Code which even promises to be of any assistance on the present question unless it be that a comparison between Sections 23 and 24 appears to show that a <ORG> may be subordinate within the meaning of the Code in a purely administrative sense.

14. Mr. <NAME> in support of the Rule that all other <ORG> of civil jurisdiction are subordinate to <ORG> and under its appellate jurisdiction in a wide sense unless the <ORG> has expressly provided to the contrary contended it. I assume that, for the purposes of this proposition, some form of territorial, limit is presupposed and I pass over the difficulty that arises from the fact that such a limit may be imposed in various ways. The proposition may mean that if a new <ORG> was established for a new purpose and nothing was said to the contrary, then there would be an unlimited right of appeal in the narrow sense as well as subordination in other ways. But if this is not meant, then I think the proposition is seen to be indefinite and to stand in need of support and definition by authority. As a general proposition applicable to Bengal, it seems to me that on the face of the Act of 1861 and the Letters Patent no proposition so pimple and wide can possibly be correct. It is nowhere expressed and the several jurisdictions carefully defined and conferred are not to be extended or enlarged indefinitely upon general principles to the rigor of which His Majesty is in no way committed. The simple proposition is always tempting, yet I know of no case decided on this simple principle. In many of the decided cases it would have been a complete answer to the problem, yet the <ORG> have made heavy weather before arriving at another answer. As the present case arises within the Ordinary Original Jurisdiction it may be said that this principle was implicit in the authority of the Supreme <ORG> and that, if so, it is continued by Section 9 of the Act of 1861 and; by the, Government of India Act,

15. This has not been argued before me. My own consideration of the matter leads <NAME> to reject the argument. This depends upon the Charter of the Supreme Court of 1774. As Clause 21 applies only to the Courts and Magistrates therein specified as having been established or appointed by the Charter of 1753 it has no application here. The only other clause that can be founded on is Clause 4. As to this clause, both <NAME>, C.J., and <NAME>, J., in <ORG> v. <NAME> Amrita Bazar Patrika. In the matter of 20 Ind. Cas. 81 : 17 C.W.N. 1253 at pp. 1272, 1289 : 14 Cr.L.J. 321 12 C.L.J. 452 : 41 C. 713 were of opinion that it refers to the individual Judges and not to the Course. The frame of the Charter when the purview of its successive clauses is examined strongly supports this reading. I would say that nothing that I am. Now stating is intended to abridge by a single inch the doctrine laid down with reference to cases which are within the revisional power, that, there is no form of judicial injustice which this Court, if need be, cannot reach." <NAME> v. <NAME> 12 C.W.N. 678 at P. 680 : Cr.L.J. 499.

16. It remains; therefore, to enquire what is the Calcutta Rent a Controller as a Court is under <ORG> in any one of in which appellate jurisdiction can be exercised. The decisions of <ORG>, in particular the case already cited H.D. Chatterjee v. <NAME> 68 Ind. Cas. 274 : 26 C.W.N. 78 : 49 C. 528 : (1922) A.I.R. (c) 427. Deal with the problem in this way, in no way proceeding upon any more general principle.

17.The position under the Calcutta Rent Act of 1920 is this. The Act , to begin with, applies only to Calcutta in the sense of Municipal Calcutta, and the word "Calcutta" throughout the Act has that particular meaning. So far as I can find, the area to which the Act extends has never been enlarged since the Act was passed. The appointment of <ORG> is to be found in <ORG> of 5th May 1920, No. 24 T.M., and is "as Controller for Calcutta for the purposes of the said Act." The Rules made by <ORG> under the Act are dated 13th July 1020: the only amendment is dated 8th September 1921 and in no way affects the present question. The result is, therefore, that at present, taking the institution as it exists, no decision of the only Rent Controller appointed is in fact subject to revision by <ORG>. If ever the Act is extended to another area it will be in the option of <ORG> to appoint another officer as Controller for the new area or to appoint the same officer either as a separate office or by way of extension of the area over which his present jurisdiction holds. No doubt mere extension of his area by an administrative Act would put him within the control of <ORG>, As matters stand, the only facts connecting him in any manner with the appellate jurisdiction of <ORG> are these : that he is, as I think, subordinated to the President; that Awards of the <ORG> made under the Calcutta Improvement Act (Bengal Act V of 1911) are appeasable to this Court under Act XVIII of 1911; that in some. Cases the President himself gives decisions which are deemed to be decisions of the <ORG>; and that where the word "Judge," as distinct from "Court" appears in the I and Acquisition Act of 1894, the President is deemed to be the Judge. As between <ORG> on the one hand and <ORG> on the other, the question is, is this a link or a gap?

18. Certain lines of decisions have been thought to touch this question. I will refer first to the cases under the Rent Act (Act X of 1859). By that Act certain suits were made cognizable only by the Collector's <ORG> and upou the terms of the Act. In certain suits the judgment of the Collector was to be final; and in these, if the Deputy Collector tried them, an appeal lay to the Collector whose decision was to be final. In other suits an appeal lay to the Zilla Judge or the Sudder <ORG> according as the amount in the dispute was under or over Rs. 5,000. In 1861, therefore, the Sudder <ORG> possessed appellate jurisdiction over the Collector's <ORG> by the terms of the Act of 1859 itself and the High <ORG> inherited there with a power of superintendence. The cases were fully discussed in <CITATION> 11 Ind. Cas. 207 : 38 C. 832 : 15 C.W.N. 863 : 14 C.L.J. 284.

19. They show that a right of appeal however limited, will let in the full general power of super intendence, but the right of appeal in those cases is clearly given by the special Code itself and applies to cases within the special jurisdiction conferred thereby, I may observe here that in dealing with a long line of decisions the important point to observe is the principle upon which the authorities in the end settle down. That is far more important than general language used in the earliest cases. The earliest case was apparently a Full Bench case, <NAME> v. <NAME> 7 W.R. 520 : B.L.R. Sup. Vol. 714 where the order assailed was made under Section 151 of Act X. There was no complaint that the <ORG> of limited jurisdiction had exceeded its authority. The point was that the <ORG> had refused to do something on the ground that it had no power. In that case the judgment of Mr. Justice <NAME> showed by its reference to "cases in which no appeal lies to the Judge" that there is no reason to attribute the decision to any wider principle than I have mentioned; wider language was used in <NAME> v. <NAME> 10 W.R. 341. Where the Collector had in fact exceeded his jurisdiction but I do not read that allaying down that every <ORG> of limited jurisdiction must be under the superintendence of the High <ORG>; the true basis of the <ORG>'s interference under the Act of 1859 was considered in <NAME> v. <ORG> 23 Ind. Cas. 896 : 19 C.L.J. 300 : 18 C.W.N. 782 where it is rested on the provision for appeals. Perhaps, the neatest illustration of this reasoning is afforded by the case of <CITATION> 20 Ind. Cas. 420 : C. 518 : 17 C.L.J. 593 a decision under the Chota Nagpur Tenancy Act (Bengal Act VI of 1908) where a general power of revision was based on the fact that by Section 224 Sub-clause (2), a second appeal lay to this <ORG> in certain cases. These cases deal also with difficulties as to whether the Acts expressly or impliedly vested power of superintendence elsewhere or took it away. They show that the Rule making power or even greater powers vested elsewhere do not avail to take away those powers of the <ORG> which follow from its position as a <ORG> of Appeal. Though a provision that the Commissioner shall be the High <ORG> has this effect Darbari Panjiara v. Bhathi Roy 23 Ind. Cas. 883 : 41 C. 915 : 18 C.W.N. 575 : 19 C.L.J. 294 as also a provision that the appeal shall be to the Commissioner <NAME> v. <ORG> 23 Ind. Cas. 896 : 19 C.L.J. 300 : C.W.N. 782 These cases, therefore, are in my opinion, as Mr. <NAME> argued, of no very direct application to the case of the Rent Controller.

20. By the Land Acquisition Act of 1894 an appeal lies to <ORG> from any award of the <ORG> established by the Act. Leaving on one side the cases in which the Collector's duty was not a judicial duty, I come to those in which it has been held that, in acting under Section 18 , the Collector is a <ORG> and his proceedings are subject to revision. Administrator-General of Bengal v. Land Acquisition Collector 12 C.W.N. 241 and <CITATION> 13 Ind. Cas. 470 : 16 C.W.N. 927 : 16 C.L.J. 165 The later case simply followed the earlier and not without doubt. In the earlier case attention was almost entirely devoted to the question whether the Collector's function was judicial. The, reasoning on that assumption is very condensed but if this <ORG> is a <ORG> of Appeal from the award it would certainly seem to have superintendence over judicial proceedings for the initiation of the reference.

21. It is clear enough that, under all these special Statutes, appeal lies to <ORG>. "For the purposes of the application of the power of superintendence it is not necessary that an appeal should lie to this <ORG> in the very proceeding in which the power of superintendence is invoked" <NAME> v. <ORG> 23 Ind. Cas. 896 : 19 C.L.J. 300 : C.W.N. 782 If a case should arise by reason of an extension of the are under the Calcutta Rent Act, 1920, in which <ORG> should have jurisdiction a question would then emerge which the cases I have been referring to do not answer. That question, but for the specific right of appeal conferred by the Land Acquisition Act , would have arisen under it also. The question is this when a new and special jurisdiction is conferred upon <ORG> so as to make it for certain limited purposes a <ORG> of special jurisdiction, the powers and duties of which are defined by Statute, has <ORG>, in the absence of any special provision conferring appellate jurisdiction in any form, as regards those purposes, a right of superintendence arising out of the ordinary relationship between the two <ORG>s? As I understand the view of <ORG> in <NAME> v. <NAME> 68 Ind. Cas. 274 : 26 C.W.N. 78 : 49 C. 528 : (1922) A.I.R. (c) 427 {supra) they answer this question in the affirmative, aid I am in no way prepared to dissent. But the question at present is not solved by any reference even to this principle. From the Act of 1861, from the Letters Patent, and from the decisions, I draw this conclusion that it is not enough for the purposes of the Code or the Letters Patent which deal on definite principles with a regular order of <ORG>s, that from the limited nature of the powers conferred, or from a mere comparison with other <ORG>s, or from possible relationships there to not yet subsisting, a new <ORG> may be styled an "inferior <ORG>". An actual leadership to this <ORG> must be established: an existing thread of connecting authority must be disclosed. The President of the <ORG> is the person who is set up as a <ORG> by Section 18 of the Rent Act of 1920. Under the Calcutta Improvement Act of 1911, "<ORG>" is set up but that "<ORG>" is the <ORG> and not the President ( Section 70 ) The Act of the Governor-General in Council of the same year deals with appeals from, awards of the <ORG> as the preamble shows. For the purpose of determining what is the award of the <ORG> the President's decision is in certain cases the only thing that matters, and in certain cases he is entitled to sit alone and to exercise all powers of the <ORG> ( Section 77 ). In addition to that the Calcutta Improvement Act has made the President the "Judge" in the sense of the Land Acquisition Act wherever the word "Judge" occurs. Now, superintendence is over <ORG>s, not over jurisdictions. The present question must, it seems to me, be decided ultimately upon consideration whether the giving of a new jurisdiction to the President is to be regarded as a new jurisdiction conferred on an existing <ORG> or to be regarded as the setting Up of a new <ORG> for a new purpose. On that question I have entertained much doubt. The position is not quite the same as where a new jurisdiction is given to the Civil <ORG>s. The <ORG> or the President have no general jurisdiction at all. On the question whether there is one. <ORG> from which in one jurisdiction an appeal lays to this <ORG> or two <ORG>s, which should be regarded-as absolutely, separate, I have come to the conclusion that the decision of <ORG> has all the common sense of the matter even if it may be doubted whether it has all the strict logic on its side. After all, the President for some purposes is "the Judge" and is "the <ORG>;" appeals within the Calcutta Improvement Act lie mostly from his decisions; and in view of he fact that appeals from a Rent Controller's decisions may come as occasion arises either the Civil <ORG>s of the District or, in Calcutta, to the President, I am in no way prepared to hold that an opinion which has been entertained by some four or five Judges of this <ORG> is not the better opinion.

21. For these reasons or, perhaps, I should say, in these circumstances, the Rule-will be made absolute with costs.