Textile
Labour Association & Anr Vs. The Official Liquidator & Anr [2004] Insc
245 (12 April 2004)
S. Rajendra
Babu, Dr. Ar. Lakshmanan & G.P. Mathur.
IN
I.A. NOS. 168-178 OF 1997 IN CIVIL APPEAL NO. 8530-40 OF 1983 RAJENDRA BABU, J.
:
This
Court in a set of appeals arising out of certain orders made in a batch of writ
petitions by a Division Bench of High Court of Gujarat in Association of
Natural Gas Consuming Industries & Ors. vs. Oil and Natural Gas Commission
& Anr., (1983) 24 (2) Gujarat Law Reports 1437, examined various aspects of
the matter in relation to price fixation and upheld the prices fixed by the
appellant and allowed the appeals.
However,
during the pendency of the appeals in this Court, the interim orders granted by
the High Court continued to be in operation and the respondents received gas at
Rs.1000/- per 1000M3.
In
I.A. No. 168-178 of 1997 filed by the Official Liquidator appointed in respect
of Ambica Mills Ltd. in Civil Appeal No. 8540-40 of 1983, this Court on
17.10.1997 held as under :- "All that is necessary to be said is that out
of the assets of the company under liquidation, the dues of ONGC Ltd., are
required to be paid off first and the question of making any payment to any
other creditor can arise only out of the surplus, if any, remaining after the
full dues of the ONGC Ltd. have been paid off. The High Court is, therefore, to
proceed with the matter in this manner. I.As stand disposed of." The
petitioners in these review petitions contend that an application had been made
before the High Court of Gujarat in Company Application No. 143 of 1997 in
Company Petition No. 121 in which the High Court directed that the Official
Liquidator should make an application before this Court after impleading the
company concerned; that pursuant thereto, he filed an application No. 168-178
seeking for permission to sell the immovable properties of the Company and to
disburse the sale proceeds in accordance with law;
that
to this application none of the Unions of the workmen or other workmen were impleaded
as respondents nor did the Official Liquidator in course of his application
raised any pleading regarding the priority of disbursement of sale proceeds or
application of Sections 529 and 529-A of the Companies Act; that Petitioner No.
1 before us is a labour Association representing the workmen of Shri Ambica
Mills Ltd. and petitioner No. 2 is labour Union representing the workmen of Ambica
Tubes, a division of Shri Ambica Mills Ltd.; that the workmen of these two
establishments have not received wages and employment benefits amounting to
more than Rs. 40 crores by their employer Shri Ambica Mills; that on 15.4.1987
this Court had directed ONGC to supply gas to its consumers subject to the
undertaking that they would not charge, encumber or alienate any of their
immovable assets without the leave of this Court; that Company Petition No. 66
of 1988 was filed for winding up of Shri Ambica Mills Ltd.; that, however,
during the pendency of this petition, a reference under the Sick Industrial
Companies (Special Provisions) Act, 1985 was filed before the Board for
Industrial and Financial Reconstruction ('BIFR' for short); that BIFR forwarded
its opinion to this Court under Section 20 of the Sick Industrial Companies
(Special Provisions) Act, 1985 to the effect that it was just and equitable
that the company should be wound up; that the opinion of BIFR was registered as
Company Petition No. 121 of 1995 and winding up order came to be passed on
17.1.1997 on Company Petition No. 66 of 1998 with Petition No. 121 of 1995 and
others. The petitioners made claim of the outstanding dues of the workmen of Shri
Ambica Mills and the Official Liquidator in this regard communicated to the
petitioners that he does not have any funds at his disposal and even if the amounts
are realised out of sale of the assets he would not be in a position to make
any payment to anybody including the workmen, except ONGC in view of the order
made by this Court in I.A. No. 168-178 in C.A. No. 8530-40 of 1983. Similar
letter was also sent to Vatva Industries Mazdoor Sabha on 12.8.1989. The
Textile Labour Association received that letter on 6.9.1999. It is only on
coming to know from the Official Liquidator that the workmen who are members of
the petitioners' association would not be able to get their dues, they sought
for intervention in the matter.
The
basic submission made before us is that the review petitioners were not parties
to the proceedings before this Court and on the passing of the winding up order
on 17.1.1997 the provisions of the Companies Act will come into force and will
be effective in the light of the decisions of this Court in UCO Bank vs.
Official Liquidator, High Court, bombay & Anr., 1994 (5) SCC 1; Industrial
Credit and Investment Corporation of India Ltd. vs. Srinivas Agencies &
Ors., 1996 (4) SCC 165; Allahabad Bank vs. Canara Bank & Anr., 2000 (4) SCC
406, and A.P. State Financial Corporation vs. Official Liquidator, 2000 (7) SCC
291.
Shri Raju
Ramachandran, learned Additional Solicitor General appearing for ONGC in these
review petitions, submitted that there is inordinate delay on the part of the
review petitioners in approaching this Court and, therefore, this Court should
recall its order condoning the delay in filing the review petitions. In this
context, it is contended that the review petitioners were aware of the
proceedings pending before this Court in the company proceedings in which they
sought for their participation and the High Court had directed them to take
appropriate steps in this Court and they did not do so till October, 1999 and
they filed review application only in August 2001; that, therefore, these
review petitions are not filed with due diligence.
It is
clear from the records that the order made by the High Court of Gujarat in
Company Application No. 193/95 had been filed by Vatva Industries Mazdoor Sabha.
The Textile Association were not made a party in these proceedings. No notice
was given to them. The Textile Association is a separate union of workmen and
had no knowledge of the proceedings with the High Court of Gujarat in relation
to Shri Ambica Mills filed by Vatva Industries Mazdoor Sabha. The participation
of the Vatva Industries Mazdoor Sabha in the High Court of Gujarat was only for
the purpose of disbursement of amounts realised from the sale of the finished
products and for payment of wages since September 1994 and bonus for 1994-95.
It is in these circumstances, it is stated that a direction had been issued by
the High Court of Gujarat to the Official Liquidator to make an application for
impleading necessary parties and to furnishing copies to them and the Official
Liquidator did not implead any of these parties. Therefore, no negligence can
be attributed to the writ petitioners in these cases and, therefore, the order
made condoning the delay does not require any reconsideration.
It is
next contended that inasmuch as mandamus had been issued by this Court as to
priority of claims in the matter of payment that mandamus will prevail over any
law. This Court examined the plenary powers of this Court arising under Article
142 of the Constitution of India in Supreme Court Bar Association vs. Union of
India & Anr., 1998 (4) SCC 409 and held that 'this Court in exercise of its
power under Article 142 cannot ignore any substantive statutory provision
dealing with the subject and it is only a residury power, supplementary and
complementary to the powers specifically conferred on this Court by statutes
exercisable to do complete justice between the parties wherever it is just and
equitable to do so. It is intended to prevent any obstruction to the stream of
justice'. Though the order of this Court in respect of which review is sought
for may be read as having been made pursuant to exercise of powers under
Article 142 of the Constitution, still the same will have to be read in the
light of the decision of this Court Supreme Court Bar Association vs. Union of
India & Anr. (supra).
The
effect of Sections 529 and 529A is that the workmen of the company become
secured creditors by operation of law to the extent of the workmen's dues
provided there exists secured creditor by contract. If there is no secured
creditor then the workmen of the company become unsecured preferential
creditors under Section 529A to the extent of the workmen dues.
The purpose
of Section 529A is to ensure that the workmen should not be deprived of their
legitimate claims in the event of the liquidation of the company and the assets
of the company would remain charged for the payment of the workers' dues and
such charge will be pari passu with the charge of the secured creditors. There
is no other statutory provision overriding the claim of the secured creditors
except Section 529A. This Section overrides preferential claims under Section
530 also. Under Section 529A the dues of the workers and debts due to the
secured creditors are to be treated pari passu and have to be treated as prior
to all other dues.
Therefore,
the law is clear on the matter as held in UCO Bank's case that Section 529A
will override all other claims of other creditors even where a decree has been
passed by a court.
Therefore,
claims, if any, of ONGC will have to be worked out in accordance with Sections
529 and 529A of the Companies Act as well. The contention advanced on behalf of
ONGC by Shri Raju Ramachandran that if a mandamus had been issued, it will
prevail over any law is not tenable and is rejected.
In the
result, we make it clear that order made by this Court on 17.10.1997 in I.A.No.
168-178/1997 in Civil Appeal No. 8530-40/1983 will have to be read subject to
provisions of Sections 529 and 529A of the Companies Act.
The
review petitions stand allowed in the manner stated above.
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