Karnataka High Court
Mohan Kamalkar Sindgikar And Others vs Joshi Metal Industries, Bijapur And ... on 10 March, 1999
Equivalent citations: [1999(82)FLR876], ILR1999KAR2885, 1999(6)KARLJ347, (2000)ILLJ859KANT
Author: G. Patri Basavana Goud
Bench: G. Patri Basavana Goud
ORDER
1. 34 workmen of the first respondent-industrial establishment approached the Labour Court, Bijapur with a request under Section 33-C(2) of the Industrial Disputes Act, 1947 ('Act' for short) for computing the money due to each one of them in respect of the closure of the first respondent-establishment. By its order dated 31-1-1996, the Labour Court quantified the amount payable to each of the said 34 workmen. In pursuance thereof, a certificate under Section 33-C(1) of the Act also is issued, providing for recovery of the amounts concerned as arrears of land revenue. In the meantime, second respondent-Bank, in relation to the amounts that it had advanced to the first respondent on security of the assets of the first respondent that had been mortgaged by way of deposit of title deeds, obtained awards under Section 70 of the Karnataka Co-operative Societies Act, 1959, since the second respondent-Bank is a Co-operative Credit Bank. In the course of realising the amounts under the said awards, second respondent-Bank sought for and got the properties i.e., assets of the first respondent-establishment attached, and also brought them for sale. In the meantime, 10 out of 34 workmen approached this Court contending that the amounts due to them as quantified in the above said proceeding under Section 33-C(2) of the Act, should have priority out of the sale proceedings. By an interim order of this Court, conducting of sale was prohibited. Properties are yet to be sold.
2. There is no disputing the fact that the claim of the second respondent - secured creditor - certainly has a priority, and that it is only out of what remains after the secured debt is cleared that other considerations would arise. But in a situation analogous to the present one, the Supreme Court has dealt with the matter in a particular perspective that lends support to the claim of the workmen that the amounts due to them should have priority. I am referring to the said decision as relating to a situation analogous to the present one because, in the matter before the Supreme Court, the property concerned was the finished goods that bad been pledged to the financial institution concerned, whereas in the present case, it is the entire assets of the first respondent-industrial establishment. Other than this, there is not much difference between the facts of the two cases.
3. The question that arose before the Supreme Court was whether the banks, as secured creditors, could claim priority in respect of the amounts due to them from the industrial establishment concerned vis-a-vis the arrears of wages due to the workmen. This is how the Supreme Court dealt with that aspect:
"2. The learned Counsel appearing for the State Bank of India and other financial institutions attempted to contend that these goods which are the finished products lying in stock are pledged with these Banks and, therefore, they have a prior claim over the sale proceeds of these stocks and it was, therefore, contended that this could not be sold and the workers could not be paid off. On the other hand it was suggested that in fact a scheme has been drawn up to revive, the industry in the interests of the workers and the society in general and in that scheme of starting the industry again, financial problems may arise and if this stock is sold out and the money collected therefrom are paid out to the workers then it may create difficulties".
"3. It is no doubt true that these products the stock of which have been shown in the report and the value of which has been shown by the Liquidator as Rs. 91,77,000/- is pledged with Banks, is a priority in law in favour of the Banks but it also could not be disputed that these stocks were the products of this industry before its closure and, therefore, the workers also contributed their labour and it is the result of their hard work that these stocks could be produced and in our opinion, therefore, it could not be said that the wages and emoluments for the period up to closure would not rank in priority. It is also significant that after the closure in July 1984, till today in spite of the order passed by this Court, the workers have not been paid. Their subsistence and living is also perhaps of paramount importance and has to rank with highest priority. It is in view of this as it appears that the Government of India is keen to have a scheme for revival of this industry. Learned Counsel for the State of Bihar also frankly conceded that so far as payment to the workers is concerned, the State Government also desires that they should be paid their salaries. .... Looking td all the circumstances and taking a broad and humane view of the situation we are of the opinion that it would be just and proper that these goods which are lying in stock should be sold and out of the sale proceeds, the workers should be paid their dues up to the date of closure (from May 1984 to July 1984 i.e., 8th July, 1984) so that at least they will get something for subsistence".
The said decision of the Supreme Court was rendered in Workers of M/s. Rohtas Industries Limited v M/s. Rohtas Industries Limited.
4. In somewhat similar circumstances, the High Court of Gujarat in Textile Labour Association v State of Gujarat and Others, after referring to the above said decision of the Supreme Court in Rohtas case, supra, observed thus:
"22. Learned Counsel for the petitioner submitted that the secured creditor is exercising its right in accordance with law in staking the claim to the sale proceeds and in this view of the matter the High Court cannot give any direction contrary to law. It cannot be said that the directions sought by the petitioner would be contrary to law. The constitutional law and fundamental rights are part of the law and even within the Constitution, the fundamental rights have special importance and within the fundamental rights, right to life and liberty is the most fundamental of such rights. If for enforcement of such rights which is the fundamental law of the land, anything comes in conflict thereof, it has to give way to see that the fundamental rights guaranteed by the Constitution are not violated".
5. Viewed in the same perspective in which the Supreme Court and the Gujarat High Court viewed the matters respectively, I am of the opinion that the amount quantified to each of 34 workmen concerned herein, should have priority out of the sale proceeds, and it is only the remaining amount that can be adjusted towards the amounts due under the awards in favour of the second respondent-Bank.
6. Though only 10 workmen have approached this Court by these writ petitions, I am of the opinion that the direction to be issued should enure to the benefit of all the 34 workmen covered by the order of the Labour Court, Bijapur dated 31-1-1996 in Application No. 37 of 1995.
7. Petitions allowed. Out of the sale proceeds realised from the sale of properties of the first respondent, the amounts due to each of 34 workmen concerned in the order dated 31-1-1996 of the Labour Court, Bijapur, in Application No. 37 of 1995 shall be paid first, and only the balance, if any, shall be adjusted towards the amount due to the second respondent-Bank under the awards in favour of the said second respondent. The concerned property shall therefore be now brought to sale in accordance with the relevant provisions of law and the sale proceeds applied in terms stated above.