MOHAN KAMALKAR SINDGIKAR Vs. JOSHI METAL INDUSTRIES BIJAPUR

JUDGEMENT

(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.