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2005 Supreme(SC) 996

Supreme Court Of India
P. VENKATARAMA REDDI AND B.P. SINGH, JJ.
PUNJAB NATIONAL BANK- Petitioner
Versus
KHANDELWAL TUBE MILLS KAMGAR SANGH AND OTHERS - Respondents.
SLP (C) No. 21043 of 2003,
Decided on August 5, 2004

Headnote:

Constitution of India, Article 226 - Workers' due -Priority over secured creditors - - Government resolution as to sale of movable and immovable property of company and payment out of sale proceed to the extent of 50% towards wages and 50% to bank - Validity of- High Court rightly held that order of Government had no legal sanctity - High Court erred in holding that workers' due should have priority over the claim of secured creditor - No discussion held and no reason given- Order of the High Court set asides- Matter remitted for fresh consideration. [Paras 4 and 6]

ORDER

1. This special leave petition arises out of an order dated 5-8-2003 passed by the Nagpur Bench of the Bombay High Court in Writ Petition No. 2243 of 2003. That writ petition was filed by the first respondent Union, praying for issuance of a writ of mandamus to implement the government resolution dated 11-10-2002. The writ petitioner also sought further direction to the State Government to frame a scheme in order to expedite the recovery of the dues of the workers. It appears that the 4th respondent Company has become non-functional since July 2000. A representation was made by the workers Union to the State Government seeking intervention of the Government for securing the wages due to them. By that time, the award of the Industrial Court, Nagpur, was given in favour of the workmen to the effect that the workers were entitled to receive their wages on 7th and 22nd of each month. While the representation was pending, it appears that the petitioner Bank had issued a notice under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. While so, the Government passed an order dated 11-10-2002 after calling a meeting of the representatives of the Bank, the Company and the workers. The order contemplated inter alia the sale of movable and immovable properties of the Company and payment out of the sale proceeds to the extent of 50% towards wages to the employees and the remaining 50% to the petitioner Bank. After this Governments order, the respondent Union also filed an application before the Labour Court under Section 33-C of the Industrial Disputes Act for the computation of the wages in terms of the earlier award dated 2-42002. The management of the Bank was not willing to abide by the government resolution. At that stage, the writ petition was filed in the High Court praying for reliefs stated supra.

2. The High Court by the impugned judgment has rightly held that the order of the Government has no legal sanctity and therefore, no mandamus can be issued directing implementation of the resolution. The High Court then took note of the proceedings initiated by the workmen under Section 33-C(2) in the Industrial Court, Nagpur and gave certain directions for the expeditious disposal of the applications. We are informed that the said applications have since been disposed of by the Industrial Court determining the wages payable to the workmen at Rs 2.41 crores.

3. The petitioner Bank is, however, aggrieved by the following directions, especially the underlined* portion of the High Courts judgment:

"If the Labour Court determines and computes the legal dues payable to the workers, it shall issue appropriate certificate under Section 33-C(4) of the Industrial Disputes Act, 1947 to the Collector directing the Collector to recover the said amounts in accordance with law. The Collector shall thereafter recover the amounts under the said certificate, a as expeditiously as possible, within a period of three months from the receipt of the certificate from the Labour Court. The Collector shall bear in mind that the workers dues have priority over the claims of the secured creditors."

4. It is seen that the High Court reached the conclusion that the workers dues should have priority over the claim of the secured creditors (such as the b Bank) without entering into any discussion and without giving any reasons. This issue which has evidently cropped up in the course of hearing of the writ petition is certainly a contentious issue. While the petitioner heavily relies on the provisions of the Securitisation Act, 2002, the learned counsel for the Workers Union submits that the workers dues payable under the Labour Courts order have priority in view of the fact that they are deemed to be arrears of land revenue recoverable by the Collector. Apparently, the High Court made the observation as above, without hearing full-fledged arguments in this behalf. It is, therefore, desirable t



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