JUDGMENT :

M.R. SHAH, J.

Writ Petition (C) No. 421 of 2019

1. By way of this writ petition under Article 32 of the Constitution of India, filed by the writ petitioner – Moser Baer Karamchari Union have prayed for an appropriate writ, direction or order striking down Section 327 (7) of the COMPANIES ACT , 2013 (hereinafter referred to as “Act, 2013”) as arbitrary and violative of Article 21 of the Constitution of India.

It is also prayed to issue an appropriate writ, direction or order in the nature of Mandamus so as to leave the statutory claims of the “workmen’s dues” out of the purview of waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code , 2016 (hereinafter referred to either as “IBC” or “Code”).

It is further prayed to issue an appropriate writ in the nature of Mandamus by giving a purposive interpretation to Section 53 of the IBC and pass necessary directions which will enable the petitioners to get their dues of 24 months released without any further delay.

Writ Petition (C) Nos. 777 and 712 of 2020

1.1 By way of these writ petitions under Article 32 of the Constitution of India, the respective writ petitioners have prayed that Clause 19(a) of the Eleventh Schedule of the IBC pursuant Section 255 of the IBC, be declared as unreasonable and violative of Article 14 of the Constitution of India as Clause 19(a) of the Eleventh Schedule of the IBC inserts sub-section (7) in Section 327 of the COMPANIES ACT , 2013, which puts statutory bar on the application of Sections 326 and 327 of the COMPANIES ACT , 2013, to the liquidation proceedings under the IBC.

It is further prayed that sub-section (7) of Section 327 of the COMPANIES ACT , 2013, be declared as unreasonable and violative of Article 14 of the Constitution of India as sub-section (7) of Section 327 of the COMPANIES ACT , 2013, which was inserted in Section 327 of the COMPANIES ACT , 2013 pursuant to Section 255 and the Eleventh Schedule of the Insolvency and Bankruptcy Code , 2016, Act 31 of 2016, creates unreasonable classification for the distribution of legitimate dues of workmen in the event of liquidation of the Company under the IBC and liquidation of Company under the provisions of the COMPANIES ACT , 2013.

It is also prayed that distribution of the workmen's due as envisaged under Section 53 (1)(b)(i) of the IBC, be declared as unreasonable and violative of Article 14 of the Constitution of India, as Section 53 (1)(b)(i) of the IBC limits the workmen's dues payable to workmen to twenty-four months only preceding the date of order of Liquidation and then rank the said workmen's dues equally with the secured creditors in the events such secured creditors has relinquished security in the manner set out in Section 52 of the IBC.

It is further prayed that settlement of Workmen Dues should be done in accordance with the reasonable principles laid down under Section 326 even in the event of liquidation under the IBC.

2. Shri K.V. Viswanathan, learned Senior Advocate has appeared as Amicus Curiae. Shri Gopal Sankaranarayanan, learned Senior Advocate, has appeared on behalf of the petitioner(s). Shri Balbir Singh, learned ASG has appeared on behalf of the respondent-Union of India.

3. Shri K.V. Viswanathan, learned Senior Advocate has first of all taken us to the legislative history of the COMPANIES ACT and the Preferential Payments and also the framing of the Insolvency and Bankruptcy Code .

3.1 It is submitted that the COMPANIES ACT , 1956, as it existed