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We heard Mr. Jaideep Gupta, learned senior counsel appearing for the petitioners in S.L.P.(C) Nos. 6257-6258 of 2004, Mr. Rana Mukherjee, learned counsel appearing for the appellants in Civil Appeal Nos. 4101-4103 of 2004, Mr. Varinder Kumar Sharma, learned counsel, Mr. S.K. Begaria, leaned senior counsel, Mr. R.F. Nariman, learned senior counsel and Mr. Naresh Kumar, learned counsel appearing for the respondents. Mr. Jaideep Gupta, learned senior counsel appearing for petitioner No.1, M/s Niraj Trading Company and Raj Kumar Namani, petitioner No.4, submitted that the High Court has erred in holding that the dues shown against the members of Nemani Group were shown by themselves and that dues of the Nemani Group have not been adjudicated by the High Court or by the Registrar. He would submit that the High Court has failed to appreciate that the disbursement by Registrar took place after submission of the third report dated 10.4.1997 and the payment to pre-scheme unsecured creditors were available with the Registrar, Original side. According to Mr. Jaideep Gupta, the Division Bench should not make any discrimination amongst the same category of pre-scheme unsecured creditors mentioned in the list annexed to the scheme of management who have lodged their claims with the Registrar, Original side. Mr. Jaideep Gupta, learned senior counsel, submitted that the Judges of the Division Bench have erroneously concluded that the petitioners were not part of the pre-scheme creditors and that their names were not included in the list of pre-scheme creditors filed along with C.A.No.63 of 1987 and that the Bench has also erred in holding that the claims of the petitioner had not been adjudicated which was clearly contrary to the report of the Registrar, original side, which was accepted by both the Judges as well as the Division Bench. It was further submitted that at the present stage the workers do not have a right to oppose the payment to the Nemani Group out of the funds lying with the Registrar, original side. In the light of the above, Mr. Jaideep Gupta submitted that there is nothing on record justifying withholding of payments to be petitioner-group, who undoubtedly were pre-scheme creditors and whose claims had been finally adjudicated upon by the Registrar, original side, which adjudication has been upheld both by the learned single Judge as well as by the Division Bench. Further based on such adjudication all other unsecured creditors have been paid, while only 25% of the total amount due and payable to the petitioner- group has been directed to be paid by the learned single Judge by the order dated 8.3.2001. The funds available at the hands of the Registrar is far in excess not only of the 25% ordered to be paid but in excess of the entire claim of the petitioner-group. It was also submitted by Mr. Jaideep Gupta that a sum of Rs. 42 crores which was received by way of acquisition compensation is now with the company. This apart, the assets are also lying with the company. In these circumstances, it is submitted that it is only just and proper that the order passed by the learned single Judge be upheld and payments be made to the Nemani Group. It is also pertinent to notice that all other unsecured creditors including Jardine Henderson (the original management at the time when the winding up order was passed) and the Jain Jalan Group (being in management after 1994) have been fully paid their dues as unsecured creditors out of the funds in the hands of the Registrar, original side.

Mr. R.F. Nariman, learned senior counsel appearing for the Bengal Chatkal Mazdoor Union, submitted that as per the scheme, the workers were to be paid in a time bound schedule. The arrears of back wages were to be cleared within five months of the restarting of the mill. Several other dues, namely, gratuity, ESI, Provident Fund, Welfare Fund etc. were also to be cleared in the manner prescribed under the Scheme. However, these payments were not made by the Nemani Group and instead a large sum of money was paid to themselves.

It is alleged that the failure to pay the amounts is squarely on account of the Nemani Group and at the time when these arrears were mounting, they were paying themselves a greater sum of money than was due under the Scheme. The appellants cannot be allowed to take advantage of their own wrong. Mr. R.F. Nariman further submitted that the Scheme has to be read as a whole and in case payment is not made under one part of the Scheme, i.e. to the workers, the same Scheme cannot be relied upon to make a payment to the unsecured creditors. In this context, he relied on the judgment of this Court in the case of Workers vs. Rohtas Industries, (1987) 2 SCC 588 where this Court held that the claims of the workers have a priority even above those of secured creditors. Mr. R.F. Nariman drew out attention to Section 529 A of the Companies Act, 1956 for the proposition that the priority is to be given to the dues of the workers. Though the winding up order has been stayed, the provisions of Section 529 A of the Companies Act, 1956 will apply in letter if not in spirit. According to him, the provision is applicable in a winding up of an insolvent company and as per Section 441 of the Companies Act, 1956, winding up is deemed to commence upon the presentation of the petition for winding up. Further, in case the money is disbursed without regard to Section 529A of the Companies Act, 1956, and ultimately the stay of the winding up is lifted, there would be an effective annulment of the legislative mandate provided in Section 529A of the Companies Act, 1956.

3. Manager, Vijaya Bank, Padubidri, Dakshina Kannada vs. Regional Provident Fund Commissioner, Sub-Regional Office, Balmatta, Mangalore and Ors. 1999(5) Kar.L.J.459, para 7 (Karnataka High Court) At the very least, by virtue of Section 11(2), the claims of the Provident Fund authorities are akin to secured claims and, therefore, have a priority over the unsecured claims and that the amount of money lying with the Registrar is far less than the arrears of the Provident Fund department and, therefore, in consonance with the legislative mandate embodied in Section 11(2) of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, the money should first be paid to the provident fund authorities before they are disbursed to unsecured creditors. Concluding his arguments, Mr. R.F. Nariman submitted that in the present case, substantial justice has been done to the workers and no interference by this Court is called for. When dealing with an appeal under Article 136 of the Constitution of India, this Court comes to the conclusion that there is no failure of justice, it is not bound to decide and interfere even when a question of jurisdiction of the original Court of Tribunal is raised and even if the impugned judgment is wrong. The following rulings have been cited for the above proposition: