Employee dues must be prioritized and fairly distributed according to established legal precedents, covering all affected employees.

J U D G M E N T

The petitioners are employed in the 4th respondent Company, which Company was sold in auction, conducted by the 1st respondent herein, pursuant to a certificate of recovery issued to the 2nd respondent. The sale proceeds while remaining with the 1st respondent, a claim of prior charge was raised by the State, with respect to sales-tax dues. The first charge of the State is declared unequivocally inCentral Bank of India v. State of Kerala and others in [ 2009 (4) SCC 94 ].

2. Some employees were before the Labour Court with a Claim Petition, which was allowed in Ext.P1. Two of them were impleaded in a Writ Petition filed by a Bank, a secured creditor; which was taken over by the 2nd respondent, against the claim of first charge raised by the State. The O.P (DRT) No. 6 of 2011 2 State filed an appeal as W.A No. 1661 of 2009, from the judgment in the Writ Petition which was disposed of on 15.12.2009 as per Ext.P4 judgment. The Division Bench of this court sustained the first charge of the State, but, however directed that 50% of the interest claimed be waived, since huge amounts were due to the employees as arrears of salary, retrenchment benefits ect.

2. In Ext.P4, it was also directed that, the amounts which were waived by the Division Bench, from the interest due to the State, should be retained with the 1st respondent for pro-rata distribution to the employees. The operative portion of Ext.P4 specifically computed Rs.11,44,437.50/- as the amounts so retained and directed that it, “should be first utilized to meet the employee's liability and balance, if any should be credited to the Bank account, along with the remaining amount”. The petitioners herein are aggrieved by Ext.P11 order of the 1st respondent, which declined the payment to the petitioners herein, for reason only of the O.P (DRT) No. 6 of 2011 3 direction in Ext.P4 being confined to Sri. A.O. Thomas and Sri. P.D Jose, who were sole party respondents in the Writ Appeal disposed of by Ext.P4. Such a view evidently is erroneous, since this Court by Ext.P4 judgment specifically directed the 'employee's dues' to be settled, which would take in all the employees of the Company, whose dues have been adjudicated and settled by a competent forum. In such circumstance, what remains is the only question of verifying the orders by which such claims were settled and the identification of the individual employees.

3. Ext.P11 shall stand set aside and the Recovery Officer shall re-consider the applications made by the petitioners herein, as also any other employee in accordance with the observations herein above. This shall be done within two months of the production of a certified copy of this judgment. The employees shall be given an opportunity to put forth their claims and the 1st respondent shall pass orders in each individual claim detailing the O.P (DRT) No. 6 of 2011 4 amounts granted and the reasons therefore or otherwise with reasons for rejection.

Writ Petition disposed of with the above directions.

Parties to suffer their costs.