SASIDHARAN PILLAI K V Vs. IOB

JUDGEMENT

(1.) Petitioners claim to be workmen of the 4th Respondent company, which is engaged in manufacture of veneers and allied products. The 4th Respondent company availed financial assistance from the 1st Respondent Bank by mortgaging its assets including the factory building and land appurtenant thereto, having an extent of 4.5 acres. It is stated that the Directors of the company are co-obligants in the loan transaction and properties belonging to them were also mortgaged for securing financial assistance. Consequent to default committed by the 4th Respondent in repayment, Respondents 1 and 2 initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short SARFAESI Act) and the assets of the 4th Respondent company, including the factory and industrial land, were put to auction as per Ext. P1 notification.

(2.) Contention of the Petitioners is that, if the factory is closed down pursuant to the sale proposed, the Petitioners Will be rendered jobless and their families will be put to starvation. It is contended that Respondents 1 and 2 are bound to satisfy all dues of the workmen, including benefits due as gratuity and E.P.F. contribution etc., based on provisions contained in Section 13(9) of the SARFAESI Act. The Petitioners had submitted a representation to the District Labour Officer in this regard and a conciliation proceedings was initialed thereon. According to Petitioners, huge amounts are due to them from the 4th Respondent company pertaining to various eligible benefits under the employment and that the 4th Respondent is making a collusive attempt with Respondents 1 & 2 to get rid of such liabilities. It is mentioned that the 1st Respondent Bank had filed application before the Debts Recovery Tribunal, Chennai, and obtained Recovery Certificate and DRC No: 115/2010 is pending disposal before that Tribunal. Under the above circumstances, the Petitioners are seeking to quash the proceedings under the SARFAESI Act as well as the proceedings initiated by the 1st Respondent Bank before the Debts Recovery Tribunal, Chennai. On the alternative the Petitioners are seeking directions for payment of benefits due to them, in case of closure of the company.

(3.) The Petitioners are total strangers, as far as the loan transaction is concerned. The loan in question was availed by the 4th Respondent company and its Directors. The loan is secured through mortgage of various assets of the company and the Directors. Respondents 1 and 2 are now proceeding against those secured assets by resorting to provisions under the SARFAESI Act. The Petitioners are now raising claims based on amounts allegedly due to them from the 4th Respondent. Admittedly, the alleged dues are not adjudicated or quantified by any competent authority empowered under the relevant labour legislations. Even assuming that there is any amount due to the Petitioners from the 4th Respondent which stands adjudicated and quantified, question arises as to whether the Petitioners are entitled to restrain the proceedings initiated under the SARFAESI Act or to claim priority in distribution with respect to amounts realized in proceedings under the SARFAESI Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short RDBFI Act).