In Brief
Metallic Soaps & Chemicals, a private company, obtained loans from Karnataka State Financial Corporation (KSFC), mortgaging its property. When the company defaulted, KSFC took possession and sold the assets before a winding-up order was made. After winding-up commenced, the liquidator sought to set aside the sale. The Supreme Court dismissed the appeal, holding that KSFC's rights under the special SFC Act to take and sell mortgaged assets are valid and cannot be invalidated by a subsequent winding-up order. However, the Court upheld that sale proceeds must be distributed according to the Companies Act, ensuring workmen's dues receive pari passu treatment alongside secured creditors—protecting workers' interests while respecting the corporation's legal remedies."
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