PRAMOD CHOUDHARY Vs. STATE BANK OF INDIA

JUDGEMENT

(1.) The petitioners claim to be in employment with the respondent no.3- M/s. Coventry Spring & Engineering Company Limited (for short, the Company), a Company incorporated under the Companies Act, 1956 (for short, the Act of 1956). The said Company had obtained finance from the respondent no.1-State Bank of India (for short, the Bank). Since the Company could not repay its dues and its manufacturing activities were affected, on 27/7/2006 the Company issued a closure notice under the provisions of Sec. 25-O of the Industrial Disputes Act, 1947 (for short, the Act of 1947). The petitioners alongwith some other employees approached the Industrial Court by filing a complaint bearing Complaint (ULPN) No.277 of 2006 challenging the said closure notice. The Industrial Court by an interim order dtd. 23/4/2007 directed the Company to pay unpaid salaries to the said complainants and continue to pay such salaries regularly during the pendency of the complaint. In the meanwhile, the Bank on 9/8/2004 issued a notice to the Company and thereafter took possession of the said Company on 27/7/2006. The respondent no.2-Asset Reconstruction Company (India) Limited (for short, ARCIL) having been appointed as a trustee issued notice under Sec. 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Act of 2002) on 26/7/2006. By issuing a notice on 25/8/2007 ARCIL took possession of the assets of the Company and thereafter restrained its employees from entering the premises. The petitioners as employees made a request to ARCIL to pay their dues and on refusal to do so, a legal notice came to be issued on their behalf on 27/2/2008 and 5/4/2008. The Assistant Commissioner of Labour on 31/5/2008 issued a notice to the Authorised Officer, ARCIL to attend the meeting that was convened with a view to resolve the issues raised by the employees of the Company. ARCIL filed its reply stating therein that since the Company was not wound up, there was no liability on ARCIL to satisfy the dues of the employees. Ultimately on 24/10/2007 a sale certificate was issued by the Authorised Officer, ARCIL in favour of the respondent no.5-Galvanotek Industries Private Limited (for short, the Purchaser). It is in this context that the petitioners have filed this writ petition seeking their dues from the ARCIL with a prayer that the Bank and ARCIL ought to comply with the "Apportionment of Workmen's Dues Guidelines, 2004" (for short, the Guidelines of 2004). By amending the writ petition recovery of dues from the Purchaser have also been claimed.

(2.) Shri J. L. Bhoot, learned counsel for the petitioners after referring to the aforesaid facts and the documents on record submitted that the Authorized Officer, ARCIL was a trustee for the amount of sale consideration received by ARCIL pursuant to the sale of assets of the Company to the Purchaser. Referring to the provisions of Sec. 13(7) of the Act of 2002 it was submitted that the Purchaser having entered into the shoes of the Company and being the successorin-interest, it was also liable alongwith the Company to settle the dues of the employees. Reference was made to the statement indicating the amounts due to the workmen. Placing reliance on the decisions in Allahabad Bank vs. Canara Bank and anr. [2004 (4) SCC 406], Federal Bank Limited vs. Sagar Thomas [(2003) 10 SCC 733], D.S.Veer Ranji vs. Ciba Specialty Chemicals (I) Limited [2002 (1) BCR 29], Asset Reconstruction Company (India) Ltd. vs. M.H.Mills and Industries Ltd. and others [2012 (1) DRTC 807] and Union Bank of India vs. General Workers Union and another [2009 (2) CLR 772], it was submitted that the dues of the workmen would have a charge alongwith the dues of a secured creditor - the Bank. Even assuming that the Company was not wound up, it was still the liability of the Purchaser to satisfy such dues and unless those dues were satisfied, it would not be permissible for the Authorised Officer, ARCIL to give a clear title to the Purchaser. Since the Bank and the Authorized Officer, ARCIL were discharging statutory duties, the writ petition as filed was maintainable. Moreover, the records pertaining to the employees dues were available with the said Bank and Authorised Officer, ARCIL and hence outstanding dues ought to be paid. It was thus submitted that the prayers as made deserved to be granted.

(3.) Shri S. N. Kumar, learned counsel for the respondent no.2- Authorized Officer, ARCIL at the outset submitted that insofar as compliance with the Guidelines of 2004 was concerned, those Guidelines had been framed pursuant to the decision of this Court in Pandurang Keshav Gorwardkar and another vs. Paper and Pulp Conversions Ltd. and others [2004 (4) Mh.L.J. 932]. However, the said judgment was challenged before the Honourable Supreme Court and by the decision in Bank of Maharashtra vs. Pandurang Keshav Gorwardkar and others [2013 (3) Banker's Journal 36] the judgment of the Division Bench had been set aside. Consequently, the Guidelines of 2004 were no longer in operation. He further submitted that since the Company was not placed under liquidation, ARCIL was not obliged to distribute the sale proceeds received by it pursuant to the sale of the Company in favour of the Purchaser. He referred to the provisions of Sec. 19(19) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the Act of 1993) as well as Sec. 13(9) of the Act of 2002. The liability of ARCIL would arise only when an order of liquidation of the Company would be passed. ARCIL had sold the Company on "as is where is basis" and therefore the liability to pay the dues of the employees could not be saddled on ARCIL. Moreover, ARCIL was not a 'State' within the meaning of Article 12 of the Constitution of India and hence the writ petition against it was not maintainable. It was thus submitted that the writ petition was liable to be dismissed.