The main legal point established in the judgment is that the compensation awarded under the Workmen’s Compensation Act takes priority over the provisions of the Companies Act, 1956, emphasizing the special nature of the former as a welfare legislation for workmen and their dependents.

HEMANT GUPTA, J. - Challenge in the present appeal is to an order passed by the learned Company Judge of this Court on 9.9.2004, whereby the claim of the appellants for satisfaction of Award of compensation under the provisions of the Workmen’s Compensation Act, 1923 (for short `Act’), in its entirety was dismissed holding that the dues of the appellants stand satisfied on pari passu basis with the dues of the other secured creditors.

2. The appellants are legal heirs of six workmen, who were amongst 8 workmen who died in an accident in the factory of the respondents on 26.12.1989. In an application to claim compensation under the Act, the Commissioner under the Act awarded to the appellants total sum of Rs. 5,34,298/-with interest as per the Award dated 20.12.1993.

3. On the other hand, the unit of respondent No.1(for short `the Company’) was taken up by the Haryana Financial Corporation in exercise of the powers conferred under Section 29 of the State Financial Corporation Act, 1951, on account of defaults committed by it in not discharging its liability. The respondent-Company was also ordered to be wound up on 4.2.1994 and the Official Liquidator attached to this Court, had taken over the assets of the Company.

4. In the process of settling the claim of secured creditors, the claim of the workmen was ordered to be satisfied on pari passu basis by the learned company Judge in his order dated 10.8.1999. The Corporation deposited the payment of said compensation on pari passu basis. The appellants filed an appeal against the said order passed by the learned Company Judge for the reason that the appellants have not been heard before passing such order. Such appeal was decided on 3.10.2000, when the following order was passed:-

“Learned counsel appearing on behalf of the applicant-appellants prays for permission to withdraw the appeal and the application for condonation of delay in filing the appeal, with liberty to move the Company Court for payment of compensation awarded to the deceased workmen, without prejudice to the plea that they are entitled to payment independently and not pari-passu with dues of the other creditors.

Leave and liberty granted.

The application and appeal are dismissed as withdrawn.”

5. The appellants claimed preferential payment in terms of Section 14-A of the Act through a separate application. The learned Company Judge has passed an order dated 9.9.2004 on such application filed by the appellants declining the claim of the appellants for satisfaction of workman’s claim in its entirety. The present appeal is directed against such order.

6. Learned counsel for the appellants has vehemently argued that the Commissioner under the Act has awarded a total sum of Rs.5,34,298/-on 20.12.1993 i.e. prior to the winding up order passed by this Court on 4.2.1994. Since the payment of compensation to the legal heirs of the deceased-workmen, is part of the social welfare legislation, therefore, the same will prevail over the general law contained in Sections 529 and 529-A of the Companies Act, 1956. Section 14A of the Act contemplates that in case of transfer of assets of an undertaking without satisfaction of the claim of the workmen, the amount of compensation shall be first charge on that part of the assets so transferred. Since, the sale of the assets of the Company is without satisfying the claim of workmen, therefore, such transfer shall not affect the right of the workmen to claim the compensation amount in its entirety.

7. On the other hand, Shri Kamal Sehgal, learned counsel for the Haryana Financial Corporation, has argued that the workmen’s dues rank pari passu in terms of Section 529A read with Section 529 of the Companies Act, 1956. The workmen dues include the compensation awarded to the workmen under the Act in terms of Clause (iii) of Section 529 of the Companies Act, 1956. Since such provisions have been inserted vide Companies (Amendment) Act 35 of 1985 i.e. much later than insertion of Se