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IN THE HIGH COURT OF JUDICATURE AT MADRAS
S.MANIKUMAR, V.BHAVANI SUBBAROYAN, JJ.
P.Balakrishnan and Others – Petitioners
Vs.
The Managing Director, M/s. Gold King Tex India Pvt. Ltd. and Others – Respondents
W.P.No.12501 of 2017 and WMP Nos.13293 & 13294 of 2017
Decided On : 04-09-2017
Employees Provident Fund Act, 1952 - Section 8 - SARFAESI Act, 2002 - Section 13(9) - Companies Act, 1956 - Section 529 A – Employment and Service matter – Back wages – Official Liquidator - Workmen’s dues - Overriding preferential payment - Winding up of a company - Claiming themselves, to be workers of Private Limited and their wages, have not been paid, for a considerable period, from 2013, and being aggrieved by action taken by Authorised Officer, State Bank of India, 2nd respondent, bringing both immovable and movable properties of 1st respondent/borrower, for auction, placing reliance on Section 529(A) of Act, 1956, and also inviting attention of this Court to attachment order under Section 8 of Act, 1952 against 1st respondent Company, petitioners/workers have sought for a writ of mandamus, directing Authorised Officer, State Bank of India, 2nd respondent, to pay pending wages and other dues, out of sale proceeds of machineries and instruments of Private Limited, 1st respondent - Whether dues of workmen as determined by Industrial Tribunal are required to be paid by applying principle under Section 529-A of Companies Act - Whether dues of ESI Corporation can have priority over dues of secured creditor - Held, Absence of any charge created by any statutory provision, such Crown debt cannot have precedence over a secured debt as apparent from several decisions of Supreme Court noticed hereinbefore - Therefore, claim of workmen that they have got a preferential right to be paid or a right to be paid at par as comprehended under Section 529-A with secured creditor is not acceptable - Their right could arise only after claim of secured creditors is satisfied because, at that stage, surplus amount would be refundable to borrower and obviously they can claim from such surplus amount, if any – Admittedly 1st respondent-Company has not been wound up nor any action is taken to wind up - 1st petitioner and two others are stated to have filed claim petitions before the labour Court - Petitioners cannot seek for a direction to 2nd respondent, to pay pending wages, and other dues, out of sale price of machineries and instruments of first respondent company, unless and until, borrower-Company been wound up - In light of decision of Honble Division Bench in W.P.No.8696 of 2009, etc. batch, Sub-Section (9) of Section 13 of SARFAESI Act, 2002, cannot be invoked, nor petitioners can seek any relief under Section 529A of Companies Act - Writ petition is dismissed.
S.MANIKUMAR, J.
Claiming themselves, to be the workers of M/s.Gold King Tex India Private Limited, Koundapalayam Village, Rayarpalayam Post, Namakkal and their wages, have not been paid, for a considerable period, from 2013, and being aggrieved by the action taken by the Authorised Officer, State Bank of India, Erode, Stressed Assets Management Brnach, Coimbatore, the 2nd respondent, bringing both immovable and movable properties of M/s.Gold King Tex India Private Limited, the 1st respondent/borrower, for auction, placing reliance on Section 529(A) of the Companies Act, 1956, and also inviting the attention of this Court to the attachment order under Section 8 of the Employees Provident Fund Act, 1952 dated 02.12.2015, against the 1st respondent Company, the petitioners/workers have sought for a writ of mandamus, directing the Authorised Officer, State Bank of India, Erode, Stressed Assets Management Brnach, Coimbatore, the 2nd respondent, to pay the pending wages and other dues, out of the sale proceeds of machineries and instruments of the M/s.Gold King Tex India Private Limited, 1st respondent. Petitioners have relied on a decision of the Hon'ble Supreme Court in Workers of M/s. Rohtas Industries Ltd. Vs. M/s.Rohtas Industries Ltd., reported in 1987 SCR (2) 1216.
2. Opposing the prayer sought for, Authorised Officer & Assistant General Manager, Stressed Assets Management Branch, Coimbatore, in his counter affidavit has submitted that the writ petition is not maintainable, in law and on facts. According to the Authorised Officer, the 1st respondent Company is not in liquidation and Section 13(9) of the SARFAESI Act, can be invoked, if only the company is in liquidation and under the control of the Official Liquidator and in such circumstances, sale proceeds shall be distributed in accordance with the provisions of Section 529 A of the Companies Act, 1956 (1/1956).
3. The Authorised Officer, has further submitted that there is no privity of contract between the petitioners and the bank, and therefore, the petitioners, as workers, cannot prevent the secured creditor from initiating action, under the SARFAESI Act, 2002, to recover a huge outstanding loan amount of Rs.38,35,00,000/- from the 1st respondent company. Reliance has also been made on the decision of this Court, in a batch of writ petitions viz., W.P.Nos.8693 of 2009 etc., batch dated 07.08.2009, wherein, this Court held that when there is no provision under the Industrial Disputes Act or under the Tamil Nadu Revenue Recovery Act, which makes the dues of a workmen, as first charge on the property.
4. The Authorised Officer, has stated submitted that the decision in M/s.Rohtas Industries Ltd. Vs. M/s.Rohtas Industries Ltd., reported in 1987 SCR (2) 1216, has been subsequently over ruled by a decision reported in Central Bank of India v. Siriguppa Sugars & Chemicals Ltd., reported in 2007 (8) SCC 353.
5. Added further, Mr.M.L.Ganesh, learned counsel for the bank submitted that though seven items of immovable properties were brought for auction on 13.02.2017, 24.03.2017, 26.05.2017 and 23.06.2017 respectively, none of them were sold. As regards, movable properties, he submitted that out of five lots, in the auction held on various dates, 06.04.2017, 26.05.2017, 23.06.2017 and 31.07.2013 respectively, three lots of movable properties have been sold for Rs.4.69 crores. He further submitted that still, a sum of Rs.16 Crores and above, is due and payable by the 1st respondent company.
6. Mr.M.L.Ganesh, learned counsel for the bank further submitted that as per the procedure contemplated under the SARFAESI Act, 2002, a fresh auction notice has to be issued. According to him, when such notice is issued, then as per Section 17(1) of the Act, petitioners can always approach the tribunal, for appropriate relief, but in any event, the petitioners cannot stall the action taken by the bank, for recovery of dues.
7. Per contra, Ms.D.Geetha, learned counsel for the writ petitioners su
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