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creditors of an insolvent company.

12. The first limb of the proviso to sub-section (1) of Section 529 of the Companies Act states that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workmen's portion therein. Clause (c) of sub-

section (3) of Section 529 of the Companies Act states that the "workmen's portion", in relation to the security of any secured creditor of a company, means the amount which bears to the value of the security the same proportion as the amount of the workmen's dues bears to the aggregate of (i) the amount of workmen's dues; and (ii) the amounts of the debts due to the secured creditors. Thus, the first limb of the proviso to clause (c) of sub- section (1) of Section 529 of the Companies Act creates a statutory charge over the security of every secured creditor to the extent of the workmen's portion. In other words, every property or asset of an insolvent company, which is being wound up and which has been offered as a security to a secured creditor is subject statutorily to a pari passu charge in favour of the workmen to the extent of the workmen's portion by virtue of the proviso to sub-section (1) of Section 529 of the Companies Act. Therefore, the first limb of the proviso to sub-section (1) of Section 529 does not create any pari passu charge in favour of secured creditor over property or asset of the company which has not been given as security by the company to the secured creditor. Rather, the language of the first limb of this proviso makes it crystal clear that the security of every secured creditor created dehors the proviso to sub-section (1) of Section 529 of the Companies Act is statutorily subjected to a pari passu charge in favour of the workmen by the first limb of the proviso to sub-section (1) of Section 529 of the Companies Act.

(c) which provides that the portion of the debt due to the secured creditor as could not be realized because of the statutory charge created in favour of the workmen on the security of the creditor shall to the extent stated therein rank pari passu with the workmen's portion for the purposes of Section 529A of the Companies Act. Hence, clause

(c) of this proviso does not create a pari passu charge over properties or assets of the company which have not been offered to the secured creditor as security, but to the extent of the loss of security suffered by a particular secured creditor because of the statutory charge created in favour of the workmen, the secured creditor is ranked pari passu with the workmen for overriding preferential payment under Section 529A of the Companies Act.

clause (c) of the proviso to sub-section (1) of Section 529 pari passu with the workmen's dues. The effect of the non-obstante clause in the opening part of Section 529A of the Companies Act, therefore, is that notwithstanding anything in the Companies Act and any other law including the Insolvency Act, workmen's dues and dues of the secured creditor which could not be realized because of the pari passu charge in favour of the workmen under the proviso to sub-section (1) of Section 529 and only to the extent such dues rank pari passu with the dues of the workmen under clause (c) of the said proviso are paid in priority over all other dues.

28. Payment under Sections 529A(1)(a) and .

529A(1)(b) shall be made in priority to all other dues.

Amount of debt payable under Section 529A(1)(b) is to be determined, in terms of clause (c) of the proviso to Section 529(1). As held by the Apex Court, for such debt ranking pari passu with the workmen's dues for the purpose of Section 529A, two limbs of proviso to Section 529(1) are to be satisfied. In first limb, there must be security of Secured Creditor, whereupon pari passu charge shall be deemed in favour of workmen to the extent of workmen's portion therein and in the second limb the Secured Creditor must have opted to realize his security and during realization of security, the Secured Creditor must have been prevented from realizing the amount of workmen's portion in his security so as to rank the said debt pari passu with the workmen's dues for the purpose of Section 529A. In absence of security and exercise of option by Secured Creditor to realize the same, there will not be any debt equivalent to workmen's portion, realization whereof could not be made by the Secured Creditor and in such eventuality there will be no right of overriding preferential Co. Applications No.32/2016, 35/2016, 7/2018, 13/2018, 16/2018, 17/2018, 21/2018, 22/2018 and 23/2018 in Company Petition No.7 of 2001 payments under Section 529A(1)(b) in favour of Secured Creditor.