Bombay High Court
Sarva Shramik Sangh vs Dena Bank And Ors on 26 May, 2025
Author: A. S. Chandurkar
Bench: A. S. Chandurkar
2025:BHC-AS:22210-DB
BHARAT
DASHARATH
WP-3511-2007.doc
PANDIT IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
Digitally signed by
BHARAT WRIT PETITION NO. 3511 OF 2007
DASHARATH
PANDIT
WITH
Date: 2025.05.26
CIVIL APPLICATION NO.2614 OF 2010
17:28:40 +0530 IN
WRIT PETITION NO. 3511 OF 2007
Sarva Shramik Sangh )
A Registered Trade Union having Head Office)
at Neelkanth Apartment, Opp. Dr. Bhadkamkar )
Hospital, Mahagiri, Thane 400 601 ) ... Petitioner
V/s
)
1] Bank of Baroda )
A Body Corporate constituted under the )
Banking Companies (Acquisition and Transfer)
of Undertakings) Act having its Head Office at)
Assets Recovery Branch, 3rd Pasta Lane, Colaba,)
Mumbai - 400 005. )
)
2] Dena Bank Assets Management Service,)
Dena Bank Assets Recovery Branch, 3 rd Pasta)
Lane, Colaba, Mumbai 400005. )
)
3] Indian Rubber Regenerating Co. Ltd.,)
Plot No.F2, Wagle Industrial Estate, Thane)
400 604. )
)
4] C.D.S. Construction Co. Pvt. Ltd. )
A private Limited Company duly registered)
under the provisions of the Companies Act,)
1956, and having its registered Office at)
Earnest House, 10th floor, 194, Nariman Point,)
NCPA Marg, Mumbai 400 021. )
)
5] State of Maharashtra )
through the Ministry of Labour, Mantralaya, )
Mumbai - 400 032 )
)
6] Deputy Commissioner of Labour Campion )
BDP-SPS
1/18
::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 :::
WP-3511-2007.doc
Compound, Nooribaba Darga Road, Near)
Mahakali Talao Thane (West) 400 601. )
)
7] Maharashtra General Kamgar Union, 252,)
Janata Colony, Ram Narayan Narkar Marg,)
Ghatkopar (East), Mumbai 400 077 )
)
8] Presiding Officer -1 )
Mumbai Debts Recovery Tribunal No.1, Scindia)
House, 5th floor, N.M. Marg, Ballard Estate, )
Mumbai 400 038. )
)
9] The Municipal Corporation )
through Municipal Commissioner )
Dr. Almeida Road, Panchapakhadi )
Thane 400 061. )
)
10] The Collector, )
Collector's Office, 1st floor, Court Naka, ) ...Respondents.
Thane (W) 400 601 )
Ms. Jane Cox with Mr. Yash S. Naik and Mr. Asim Sarode (Through VC)
a/w Mr. Rajabhau S. Chaudhari, Advocates for the petitioner/applicant.
Mr. Pranav Dessai i/b K.D. Shukla & Co., Advocate for the respondent
no.1.
Mr. J.P. Cama, Senior Advocate and Mr. Naushad Engineer, Senior
Advocate, Ms. Akansha Saxena, Mr. Murtuza Federal, Ms. Rashne Mulla-
Feroze and Mr. Sudharshan Satalkar i/b Federal & Company, Advocates
for the respondent no.4.
Mrs. Gauri R. Raghuwanshi, Assistant Government Pleader for the
respondent nos. 5, 6 and 10.
Mr. Ajit R. Pitale, Advocate for the respondent no.9.
****
CORAM : A. S. CHANDURKAR &
M. M. SATHAYE, JJ.
The arguments were concluded on : 06/05/2025
The judgment is pronounced on : 26/05/2025
JUDGMENT:(Per A. S. Chandurkar, J.) BDP-SPS 2/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc 1] In this writ petition filed under Article 226 of the Constitution of India, the petitioner - Sarva Shramik Sangh, a Trade Union registered under the provisions of the Trade Unions Act, 1926 has raised a challenge to the order dated 23/03/2004 passed by the learned Presiding Officer, Debts Recovery Tribunal-I below Exhibit-25 in Original Application No.125 of 2001 whereby the said application preferred by the workers of Indian Rubber Regenerating Company Limited. seeking their claim towards dues of wages from the sale proceeds of the property of the Company came to be rejected. The petitioner has also challenged the order dated 04/10/2005 passed by the learned Chairperson, Debts Recovery Appellate Tribunal in Appeal No.311 of 2024 by which the said appeal filed for challenging the order dated 23/03/2004 passed by the Debts Recovery Tribunal came to be dismissed as infructuous. In addition, sale of one of the properties of the Company is also sought to be challenged by the petitioner. 2] The facts relevant for considering the challenge raised in the writ petition are that the 3rd respondent - Indian Rubber Regenerating Company Limited - hereinafter referred to as "the erstwhile Company"
had obtained financial assistance from the 1 st respondent - Dena Bank which has now merged with the Bank of Baroda - hereinafter referred to as "the Bank". Since the dues of the Bank were not repaid, the Bank BDP-SPS 3/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc filed Suit No.1420 of 1984 invoking the original civil jurisdiction of this Court. The said suit came to be decreed on 26/03/1996 holding the Bank entitled to recover the decretal amount. By an order dated 18/12/1984, the Court Receiver was appointed on the hypothecated goods of the erstwhile Company. As the factory premises of the erstwhile Company had also been mortgaged with the Bank, possession of the same was taken in the execution proceedings. Suffice it to observe that the factory premises of the erstwhile Company was sold to the 4th respondent - C.D.S. Construction Company Pvt. Ltd. - hereinafter referred to as "the auction purchaser" on 27/08/2003. The consideration paid by the auction purchaser was Rs 2 crores. 3] Original Application No.125 of 2001 filed by the Bank against the erstwhile Company was pending before the Debts Recovery Tribunal. On 30/10/2003 the Bank moved an application below Exhibit-37 stating therein that as the Bank had appropriated the sale proceeds received pursuant to the auction in favour of the auction purchaser, the Bank did not desire to proceed further in the said proceedings. The Bank therefore sought permission to withdraw the Original Application and also to discharge the Receiver as appointed. On 23/03/2004 the learned Presiding Officer considered the application below Exhibit-25 preferred by the workers of the erstwhile Company seeking their share BDP-SPS 4/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc in the sale proceeds as well as the application below Exhibit-37 moved by the Bank for withdrawal of the Original Application. By the order passed below Exhibit-25, the learned Presiding Officer held that the erstwhile Company had not been subjected to any winding up proceedings nor was it under liquidation. As the factory premises had been exclusively mortgaged with the Bank, it held that the workmen's dues did not have priority over the amount of the sale proceeds. As the workers did not file any winding up proceedings nor did they seek execution of the Recovery Certificate issued in their favour, they were not entitled to claim precedence over the amount of sale proceeds of the factory premises that had been exclusively mortgaged with the Bank. The application below Exhibit-25 was accordingly rejected.
The learned Presiding Officer allowed the application at Exhibit- 37 and permitted withdrawal of the Original Application. The said proceedings accordingly came to be disposed of. The Maharashtra General Kamgar Union being aggrieved by the aforesaid order had preferred an appeal before the Debts Recovery Appellate Tribunal. On 04/10/2005 the learned Chairperson held that as Original Application No.125 of 2001 had been withdrawn, the appeal preferred by the Maharashtra General Kamgar Union had become infructuous. On that count the appeal came to be disposed of. As stated above, these orders are under challenge alongwith a prayer seeking to challenge the sale of BDP-SPS 5/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc the factory premises.
4] Ms. Jane Cox, learned counsel appearing for the petitioner in support of the writ petition submitted that the learned Presiding Officer committed an error in rejecting the application below Exhibit-25 preferred by the workers. According to her, the provisions of Section 73(1)(c) of the Code of Civil Procedure, 1908 (for short, "the Code") were not attracted to the facts of the present case in the light of admitted position that there was a mortgage deed executed by the erstwhile Company in favour of the Bank. It was submitted that the Presiding Officer was not justified in rejecting the application below Exhibit-25. In the given facts of the case admittedly the dues of the workers were not paid by the erstwhile Company and their claims remained unsettled. Placing reliance on the judgment of the Division Bench in Khandelwal Tube Mill Kamgar Sangh vs. Government of Maharashtra and Others, (2023) 176 FLR 966, it was submitted that even if no winding up proceedings had been initiated against the erstwhile Company, as the activities of the erstwhile Company had come to standstill, it ought to have been held that there had been constructive winding up of the erstwhile Company. On that basis, the learned Presiding Officer ought to have held that the dues of the workers had a priority in the matter of distribution of sale proceeds and appropriate BDP-SPS 6/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc orders in that regard ought to have been passed. Reference was also made to the provisions of Section 11 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 in that context. Merely on the ground that the factory premises had been auctioned, the same could not be a reason to deny the workers their dues. Reliance was placed on the decision in Assistant General Manager, Karnataka State Financial Corporation vs. General Secretary, Mysore Division Industrial Workers General Union and Others, 2013 INSC 211. Since the Original Application preferred by the Bank had been withdrawn without any adjudication, the sale of the factory premises in favour of the auction purchaser did not have the necessary legal effect. The learned Presiding Officer ought to have considered the claim of the workers independently. In this backdrop, reference was made to the decision of the Supreme Court in Central Bank of India vs. State of Kerala and Others, 2009 INSC 286. It was thus urged that on all these counts the impugned orders as well as sale in favour of the auction purchaser was liable to be set aside.
5] Mr. Pranav Dessai, learned counsel appearing for the Bank opposed the writ petition. According to him, the petitioner was not at all diligent in pursuing its alleged claim of workers dues notwithstanding the fact that on 21/09/1988 an order was passed in BDP-SPS 7/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc the proceedings under the Payment of Wages Act, 1936 against the erstwhile Company. Similarly, an order was also passed by the authority appointed under the Payment of Wages Act, 1936 at the behest of 169 workers. An order of attachment of immovable properties of the erstwhile Company came to be passed by the Tahsildar on 07/12/1989. However, the workers/representatives from the Maharashtra General Kamgar Union did not take any further steps in the matter. On the other hand, much prior to this order of attachment dated 07/12/1989, the factory premises had been mortgaged with the Bank on 20/12/1968. Since the erstwhile Company failed to pay the dues of the Bank, it had filed a suit for recovery of its dues which came to be decreed on 26/03/1996. It was in the execution proceedings that the factory premises came to be auctioned in favour of the auction purchaser on 07/08/2003. It was only in the year 2003 that the application for intervention was filed on behalf of the members of the petitioner-Union seeking intervention in Original Application No.125 of 2001. Prior thereto, a public notice was published on 10/07/2000 proposing the sale of the factory premises of the erstwhile Company in execution of the decree passed in Suit No.1420 of 1984. With the permission of the Debts Recovery Tribunal, the said property was sold on 27/08/2003. Since the dues of the Bank were recovered, it sought permission to withdraw the execution proceedings. The learned BDP-SPS 8/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc Presiding Officer while allowing such application rightly declined to intervene in the said proceedings. It was correctly found that the claim of the workers did not have any priority over the dues of the Bank. To substantiate his contentions in this regard, the learned counsel placed reliance on the decisions in Anil Dinmani Shankar Joshi vs. Chief Officer, Panvel Municipal Council, AIR 2003 Bombay 238, City Co-op Credit & Capital Ltd and Another vs. Official Liquidator of M/s. Satwik Electric Controls Pvt. Ltd., (2019) 4 Bom. CR 274 and Maharashtra State Cooperative Bank Limited vs. Babulal Lade and Others, 2019 INSC 1318. It was thus submitted that in absence of any order of winding up of the erstwhile Company, the workers could not claim any priority whatsoever over the dues of the Bank. He therefore submitted that the writ petition was liable to be dismissed. 6] Mr. J. P. Cama, learned Senior Advocate for the auction purchaser also opposed the writ petition. At the outset, he submitted that the auction sale was conducted after obtaining due permission of the learned Presiding Officer, Debts Recovery Tribunal. The sale that was conducted on 27/08/2003 was being challenged for the first time by the petitioner in the present writ petition. Since the sale had been duly completed about more than twenty years ago, the clock could not be put back as sought by the petitioner. Referring to the grounds of BDP-SPS 9/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc challenge raised by the petitioner in the writ petition, it was submitted that there was no claim whatsoever raised against the auction purchaser except for stating that the sale of the factory premises was illegal. It was not demonstrated as to how the said auction sale was bad in law. It was pointed out that the auction was conducted pursuant to the orders passed in the proceedings initiated by the Bank and not on the basis of any private treaty. Since the rights of an auction purchaser are duly recognized in law, the sale was not liable to be interfered with. In that regard, the learned Senior Advocate placed reliance on the decisions in Janatha Textiles and Others vs. Tax Recovery Officer and Another , 2008 INSC 699 and in Sadashiv Prasad Singh vs. Harendar Singh and Others , 2014 INSC 17. It was then submitted that there was a wide difference between the mode of recovery of an amount that is due and recoverable on account of arrears of land revenue and an amount that is recoverable as arrears of land revenue. In the latter case, it was only the procedure prescribed by the Maharashtra Land Revenue Code 1966 that was required to be followed for undertaking such recovery. The learned Senior Advocate also referred to the decision in Babulal Lade and Others (supra) in this regard. Nothing much would turn on the attachment by the Tahsildar way back in the year 1989 and such attachment was only in the nature of an assurance that in case any final order was passed, the same would become executable as held in Kerala BDP-SPS 10/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc State Financial Enterprises Ltd. vs. Official Liquidator, High Court of Kerala, 2006 INSC 678. It was thus submitted that the Debts Recovery Tribunal did not commit any error in permitting withdrawal of the original proceedings coupled with the fact that the Debts Recovery Appellate Tribunal dismissed the appeal preferred by the workers as infructuous on the ground that the original proceedings had been withdrawn. There was no case made out to interfere in exercise of writ jurisdiction. Reference was also made to the decision of the Constitution Bench in G. Veerappa Pillai, Proprietor, Sathi Vilas Bus Service, Porayar, Tanjore District, Madras vs. Raman and Raman Limited, Kumbakonam, Tanjore District and Others , 1952 INSC 15. It was thus urged that the writ petition was liable to be dismissed. 7] It may be stated that an opportunity was given to the petitioner to make its submissions in rejoinder. At that stage, a request was made on behalf of the petitioner that it intended to engage another counsel to represent it. Since Ms. Jane Cox, learned counsel representing the petitioner had been heard earlier, this Court expressed its displeasure on such request made by the petitioner for change of counsel mid-way of the hearing. On 29/04/2025, the following order was passed :-
"1. In the midst of the hearing, the learned Counsel for the Petitioner submitted that the Petitioner desires to BDP-SPS 11/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc engage another Counsel. The learned Counsel was apprised of the fact that the arguments on behalf of the Petitioner had concluded and that the arguments on behalf of the Respondent Nos. 1 to 4 were also heard. It is however submitted that in view of the instructions of the Petitioner, such request was being made to the Court.
2. We deprecate such request as made as the learned Counsel for the Petitioner had extensively argued the writ petition. This request is being made when the respondents have canvassed their submissions. Only out of deference, an opportunity to make submissions in rejoinder on behalf fo the Petitioner is granted.
3. Stand over to 05/05/2025 at 4.00 P.M."
In this backdrop, an opportunity to address the rejoinder was granted to the petitioner. Mr. Asim Sarode, learned counsel appearing on behalf of the petitioner submitted his note of arguments seeking to raise a challenge to the valuation of the factory premises at Rs 2 crores as according to him the market value of the said property was much higher. It was stated that if the factory premises would have been sold at the prevailing market value, the dues of the workmen would have been duly satisfied. Reference was also made to the Circular dated 16/07/2004 to point out that it was clarificatory in nature, thus having retrospective effect. An additional affidavit on behalf of the petitioner was also placed on record in that regard.
The Bank and the auction purchaser also filed additional BDP-SPS 12/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc affidavits opposing the stand taken by the petitioner in its additional affidavit.
8] In the aforesaid backdrop, we have heard the learned counsel for the parties at length and we have perused the documentary material on record. We have thereafter given due consideration to the respective submissions. In our considered view, no relief can be granted to the petitioner. We say so for the following reasons :-
(a) In lieu of the financial assistance granted by the Bank to the erstwhile Company, its immovable property came to be mortgaged on 20/12/1968. The mortgage includes that of the factory premises. This has taken place much prior to the order of attachment passed by the Tahsildar on 07/12/1989. It is no doubt true that pursuant to the adjudication in proceedings initiated for recovery of dues under the Payment of Wages Act, 1936 dated 21/09/1988, the said order of attachment came to be passed. However, it appears that the workers did not thereafter take steps to execute the order of attachment in accordance with law. In any event, the factory premises having been mortgaged with the Bank on 20/12/1968, it is clear BDP-SPS 13/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc that the Bank had a much prior charge over the factory premises of the erstwhile company. As held in Babulal Lade and Others (supra), any amount recoverable in the manner prescribed by Section 169(2) of the Maharashtra Land Revenue Code, 1966 would have priority only over all unsecured claims.
The claim of the Bank was secured by the mortgage dated 20/12/1968 in its favour. The attachment of the factory premises by the Tahsildar on 07/12/1989 would not take the case of the petitioner any further.
(b) The suit for recovery of dues as filed by the Bank was decreed on 26/03/1996. In proceedings seeking execution of decree, permission of the Debts Recovery Tribunal was sought to sell the mortgaged factory premises. It is thereafter on the basis of such permission that the factory premises was auctioned. A notice of public auction was issued on 10/07/2000 and ultimately the auction purchaser purchased the factory premises on 27/08/2003 for consideration of Rs 2 crores. The Debts Recovery Tribunal has accepted the sale. Thereafter, as the Bank realised its BDP-SPS 14/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc dues, it withdrew the Original Application. The Debts Recovery Tribunal permitted the same on 23/03/2004. For this reason, the order dated 23/03/2004 passed by the learned Presiding Officer permitting withdrawal of the Original Application cannot be faulted.
(c) As regards the application moved by the workers seeking intervention is concerned, the learned Presiding Officer was justified in holding that there was no order of winding up passed against the erstwhile Company. On that basis the dues of the workers would not have priority over the outstanding claim of the Bank. Though it can be said that the provisions of Section 73 of the Code may not be strictly attracted to the facts of the case, nothing much would turn on those observations in the absence of any order winding up of the erstwhile Company. Though the petitioner sought to urge that the ratio of the decision of this Court in Khandelwal Tube Mill Kamgar Sangh (supra) be applied to the case in hand, we find that the facts leading to the aforesaid decision are quite distinct. The secured creditor therein had BDP-SPS 15/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc agreed to the sale of the secured assets of the concerned Company and also to accept 50% of the sale proceeds during apportionment of its dues. The secured creditor however subsequently opposed the apportionment. It is in those peculiar facts that it was held that the amount realised from the sale proceeds of the secured assets ought to be distributed by following the modality prescribed under Sections 529 and 529A of the Companies Act, 1956. The ratio of the said decision therefore cannot be applied to the facts of the present case.
(d) The dismissal of the appeal preferred by the workers by the Debts Recovery Appellate Tribunal on 04/10/2005 also does not deserve to be interfered with since it is merely held that with the withdrawal of the Original Application preferred by the Bank, the appeal as preferred did not survive and was rendered infructuous.
(e) As regards prayer for declaring the sale of the factory premises to be illegal, we find that the auction BDP-SPS 16/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc sale was not made the subject matter of challenge before the Debts Recovery Tribunal. It is seen that for the first time, such challenge is sought to be raised now that too by amending the prayer clause in the writ petition. We do not find any specific ground pleaded by the petitioner to substantiate its challenge to the same. It is only by way of an additional affidavit that it is sought to be contended that the market value of the factory premises in the year 2000- 2003 was much higher than the consideration for which the factory premises was actually sold. It is to be borne in mind that the factory premises were auctioned under the directions of the Debts Recovery Tribunal after issuing public notice on 10/07/2000. The auction purchaser having purchased the factory premises in the auction, its rights stand crystalised in the light of the law laid down by the Supreme Court in Janatha Textiles and Others (supra). In absence of any specific challenge being raised earlier coupled with the lack of basic particulars, we are not inclined to examine such challenge especially when the auction has taken place on 27/08/2003 about four years BDP-SPS 17/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 ::: WP-3511-2007.doc before filing of the writ petition.
(f) In rejoinder, a contention as regards undervaluation of the factory premises that was auctioned was sought to be raised. We are not inclined to go into this contention for want of sufficient pleadings in that regard in the writ petition. We also find that this contention was not raised before the Debts Recovery Tribunal or the Debts Recovery Appellate Tribunal. The same having been raised for the first time in the writ petition is also in the realm of a disputed question of fact. We have therefore not considered the same at this belated stage. 9] For all these reasons we do not find any case whatsoever being made out for jurisdiction under Article 226 of the Constitution of India to be invoked. The writ petition is therefore dismissed. Rule stands discharged with no order as to costs. Pending Civil Application is also disposed of.
(M. M. SATHAYE, J.) (A. S. CHANDURKAR, J.) BDP-SPS 18/18 ::: Uploaded on - 26/05/2025 ::: Downloaded on - 26/05/2025 22:25:19 :::