IMPORTANT POINT
The workmen’s dues shall get priority over all other dues.

JUDGMENT

G. S. Singhvi, J.

1. Delay condoned.

2. Leave granted.

3. The question which arises for consideration in these appeals is whether priority given to the dues payable by an employer under Section 11 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (for short, ‘the EPF Act’) is subject to Section 529A of the Companies Act, 1956 (for short, ‘the Companies Act’) in terms of which the workmen’s dues and debts due to secured creditors are required to be paid in priority to all other debts.

4. For the sake of convenience, we have culled out the facts from the record of the appeal arising out of SLP(C) No. 7642/2011.

5. Messrs Esskay Pharmaceuticals Limited is a company registered under the Companies Act. It falls within the definition of ‘employer’ under Section 2(e) of the EPF Act. On account of the company’s failure to pay the dues under the EPF Act for the periods from March 1998 to May 1999 and June 1999 to August 2001, the competent authority passed two orders under Section 7A of the EPF Act and held that it was liable to pay Rs.14,96,751/-. The company appears to have paid a sum of Rs.4,02,126/- but did not pay the remaining amount despite the issue of demand notices dated 12.4.2001 and 19.4.2001 by the competent authority. The orders passed under Section 8F of the EPF Act, which were communicated to the bankers of the company also did not yield the desired result. The competent authority then issued warrant for attachment of the company’s property. This was followed by sale notice dated 20.9.2001.

6. Although, it is not clear from the record as to what happened to the sale notice, but this much is evident that after 2 years and about 4 months, the Enforcement Officer informed the appellant that the Gujarat High Court has passed order dated 11.3.2004 for winding up of the company and appointed Official Liquidator to look after its properties and clear the debts. The appellant then approached the Official Liquidator for payment of the amount determined under Section 7A of the EPF Act, but the latter did not give any response.

7. Company Application No. 356/2007 filed by the appellant for issue of a direction to the Official Liquidator to pay the amount payable by the employer under the EPF Act was dismissed by the learned Company Judge by relying upon the order passed by the Division Bench of the High Court in Company Application No. 216 of 1997 in Company Petition No.205 of 1996 and order dated 31.8.2005 passed in Company Application No.195 of 2005 - Regional Provident Commissioner-I v. M.A. Kuvadia, O.L. and others.

8. The appellant challenged the order of the learned Company Judge by filing an appeal but could not convince the Division Bench of the High Court to entertain his plea that the amount due from the employer is first charge on the assets of the company and is payable in priority to all other dues. The Division Bench relied upon the judgment of the co-ordinate Bench and held that the learned Company Judge did not commit any error by dismissing the application filed by the appellant.

9. Since the impugned judgment and the order passed by the learned Company Judge are entirely based on the order passed by another Division Bench in Company Application No. 216/1997 in Company Petition No. 205/1996, it will be appropriate to notice the ratio of that order. The same is as under:

“Section-530, Sub-section (1), clearly observes that in a winding up matter, subject to the provisions of Section-529(A), there shall be paid in priority to all other debts, dues of the Government, which are in the form of revenues, tax, etc. When Section-530 is made subordinate to Section-529(A), then, a Court is obliged to look into the material provisions as contained under Section-529(A). Section-529(A) clearly provides that notwithstanding anything contained in any other provision of the Companies Act or any other law for the time being in force, in the winding up of a company, workmen’s dues and debts due to t