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Madras High CourtWP(MD)/16714/2014disposed of

Indian Overseas Bank, v. M/S Thiruchendur Murugan

2024-02-16Honourable Mrs Justice S.Srimathy40 pages

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT RESERVED ON : 20.12.2023 PRONOUNCED ON : 16.02.2024

CORAM

THE HONOURABLE MRS.JUSTICE S.SRIMATHY W.P.(MD)Nos.16714, 17225, 20679, 20681 and 21320 of 2014 and M.P.(MD)Nos.2, 2, 2, 2, 2, 3, 3, 3, 3, and 3 of 2014 W.P.(MD)No. 16714 of 2014:

Indian Overseas Bank, Through its Branch Manager, N.Paraippatti Branch, Vedachendur Taluk, Dindigul district.

... Petitioner vs.

1. M/s.Thiruchendur Murugan Spinning Mills, through its managing Director, N.Paraippatti (Post) Karur Road, Dindigul District.

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2.Baluchamy

3. T.Rajendran

4. R.Murugesan 5.M.Padmanabhan 6.S.P.Ramuthai 7.R.Ramuthai 8.C.Marimuthu 9.C.Savarior

10. A.Arumugam 11.N.Muthammal 12.Anandaraj 13.M.Subramani, 14.T.A.Mathiyalagan

15. A.Arumugam 16.R.Aachimuthu

17. M.Vellaichamy

18. A.Vasantha

19. K.Vellaichamy

20. P.Alagumalai 21.S.P. Murugesan

22. Bommusami

23. K.Muniyandi

24. S.Manickam 25.C.K.Laksmi 26.M.Murugan 27.K.Kaliammal 28.Thangam 29.M.Vijaya 2/40

30.V.Annadurai 31.S.Palanichamy 32.M.Mathalaimuthu 33.V.Subramani 34.A.Muthusamy 35.P.Balasubramaniam 36.V.Ponraj 37.K.Marimuthu 38.A.Karuppaya 39.B.Sheik Hussain 40.A.Murugan 41.M.S.Ganesan 42.K.P.Murugan 43.K.Ramakrishnan 44.R.Paramasivan 45.S.Kamaraj 46.P.Gunasekaran 47.P.Thirugengadam 48.S.Palanichamy 49.V.Krishnamurthy 50.Radha 51.The Assistant Commissioner of Labour, Controlling Authority under the Payment of Gratuity Act, Dindigul District.

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52.The Joint Commissioner of Labour/ Appellate Authority under Payment of Gratuity Act, Tiruchirappalli. ... Respondents PRAYER: Writ Petition filed under Article 226 of the Constitution of India for issuance of Writ of Certiorari, to call for the records of the respondent No.52 in P.G.Appeal Nos.102/2013 to 150/2013, dated 03.01.2014, on the file of the respondent no.52, to quash the same, thereby to allow the appeal filed by the petitioner.

For Petitioner : Mr.M.Senthil Kumar For R1 : No appearance For R2 to R50 : Mr.S.Sarvagan Prabhu For R51 and 52 : Mr.N.Muthuvijayan Special Government Pleader W.P.(MD)No. 17225 of 2014:

Indian Overseas Bank, Through its Branch Manager, N.Paraippatti Branch, Vedachendur Taluk, Dindigul district.

... Petitioner vs.

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1. M/s.Thiruchendur Murugan Spinning Mills, through its managing Director, N.Paraippatti (Post) Karur Road, Dindigul District.

2.P.Veluchamy

3. K.Palanichamy

4. A.Rengasamy 5.P.Murugesan 6.C.John Peter 7.P.Muthuraj 8.K.Aathimoolam 9.M.Vijayarajan

10. Suseela 11.M.Alagarsamy 12.Sivakami 13.T.M.Subbaiya 14.A.Subramani 15.M.Rajeswari 16.T.Palanisamy 17.S.Veerappan

18. A.Johnraj 19.A.Sundararaj 20.M.Radhakrishnan 21.K.Veerasami 22.A.Marudhanayagan 5/40

23.M.Vasudevan

24. R.Vijayarajan 25.P.Perumal 26.K.Venkadesh 27.Santhiyagu 28.P.Logamani 29.P.Govindaraj 30.M.Muniyammal 31.P.Sundaralingam 32.K.Selvaraj 33.S.Murugesan 34.M.Ramu 35.S.K.Murugan 36.N.P.Murugan 37.K.Lakshmi 38.K.Shanmugam 39.M.Kurumban 40.S.Malliga 41.S.Thangadurai 42.Louis Raja 43.S.Vincent 44.R.Ramasamy 45.Valarmathi 46.T.Manivel 47.P.Alagar 48.A.Palanichamy 49.Karuppaiya 50.S.John Peter 6/40

51.S.Alagumalai 52.The Assistant Commissioner of Labour, (Controlling Authority under the Payment of Gratuity Act), Dindigul District.

53.The Joint Commissioner of Labour/ Appellate Authority under Payment of Gratuity Act, Tiruchirappalli. ... Respondents PRAYER: Writ Petition filed under Article 226 of the Constitution of India for issuance of Writ of Certiorari, to call for the records of the respondent No.52 in P.G.Appeal Nos.151/2013 to 200/2013, dated 03.01.2014, on the file of the respondent no.53, to quash the same, thereby to allow the appeal filed by the petitioner.

For Petitioner : Mr.M.Senthil Kumar For R1 : No appearance For R2 to R51 : Mr.S.Sarvagan Prabhu For R52 and 53 : Mr.N.Muthuvijayan Special Government Pleader 7/40

W.P.(MD)No. 20679 of 2014:

Indian Overseas Bank, Through its Branch Manager, N.Paraippatti Branch, Vedachendur Taluk, Dindigul district.

... Petitioner vs.

1. M/s.Thiruchendur Murugan Spinning Mills, through its managing Director, N.Paraippatti (Post) Karur Road, Dindigul District.

2. K.P.Murugan 3.Girija 4.Muthukrishnan 5.R.Alagarsamy 6.Pappathi 7.P.Ponnusamy 8.V.Selvaraj 9.V.Thiyagarajan 10.P.Rengasamy 11.A.Yagappan 12.M.Mamundi 13.C.Ramasamy 14.B.Selvaraj 8/40

15.P.Ganesan 16.R.Perumal 17.N.Palraj 18.K.Jayabarathi 19.N.Sengodan 20.C.Periyasamy 21.R.Sekar 22.S.Sekar 23.K.Marimuthu 24.M.A.Murugan 25.R.Mohan 26.S.Radhakrishnan 27.M.Murugan 28.R.Kumar 29.C.Paramasivam 30.P.Mohanraj 31.A.Santhanam 32.P.Muthurakku 33.R.Mariammal 34.V.Ganesan 35.C.Rukumani 36.M.Subramani 37.P.Venkatachalam 38.R.Rajendran 39.M.Vijayan 40.k.Ramamurthy 41.K.Kaliyappan 42.M.V.Murugan 9/40

43.M.Palaniyammal 44.P.Ramalatchumi 45.K.Murudhai 46.S.Sikanan 47.V.Subramani 48.B.Thangaraj 49.G.Kasthuri 50.Chandru 51.M.Subbaiya 52.P.Udhayakumar 53.P.Mani 54.P.Muthusamy 55.K.Raman 56.N.Deivendran 57.A.Jothimurugan 58.S.A.Periyasamy 59.M.Pitchaimuthu 60.K.Paramasivam 61.P.Parthiban 62.Sakthivel 63.S.JohnBritto 64.S.Govindaraj 65.T,Dhandapani 66.P.Mariyappan 67.M.Chandrasekaran 10/40

68.The Assistant Commissioner of Labour, (Controlling Authority under the payment of Gratuity Act), Dindigul District.

69.The Joint Commissioner of Labour / Appellate Authority under payment of Gratuity Act, Thiruchirapalli. ... Respondents PRAYER: Writ Petition filed under Article 226 of the Constitution of India for issuance of Writ of Certiorari, to call for the records of the respondent No.69 in P.G.Appeal Nos.251/2013 to 316/2013, dated 03.01.2014 on the file of the respondent no.69, to quash the same, thereby to allow the appeal filed by the petitioner.

For Petitioner : Mr.M.Senthil Kumar For R1 : No appearance For R2 to R67 : Mr.S.Sarvagan Prabhu For R68 and 69 : Mr.N.Muthuvijayan Special Government Pleader 11/40

W.P.(MD)No. 20681 of 2014:

Indian Overseas Bank, through its Branch Manager, N.Paraippatti Branch, Vedachendur Taluk, Dindigul district.

... Petitioner vs.

1. M/s.Thiruchendur Murugan Spinning Mills, through its managing Director, N.Paraippatti (Post) Karur Road, Dindigul District.

2. Chitra 3.M.Theethai 4.P.K.Kannan 5.R.Muniyandi 6.M.Samidass 7.M.C.Pandiyan 8.P.Ramukalai 9.S.Pandiyammal 10.M.Kanagaraj 11.A.Periyasamy 12.B.Chinnakaman 13.Sesuraj 14.M.Ganesan 12/40

15.T.Parthasarathy 16.T.Venkittan 17.N.Muthukalai 18.V.Palanichamy 19.A.Jeyaraj Devasahayam 20.L.Raj 21.Mookayee Ammal 22.P.Alagumalai 23.A.Suresh 24.E.Subedhar Lane 25.C.Manickam 26.V.Ponram 27.K.Durayappa 28.S.Murugan 29.C.Paramasivam 30.S.M.Sivakumar 31.K.Soundararajan 32.N.Muthukrishnan 33.P.Easwaran 34.Kalavathi 35.Savadai Ammal 36.P.Murugesan 37.V.Perumal 38.P.Muthuraj 39.R.Manoharan 40.K.Thangavel 41.P.Mahalingam 42.M.Shanmugaraj 13/40

43.S.Ramasamy 44.N.V.Subramani 45.T.Gopalakrishnan 46.R.Soundararajan 47.B.Chinnaponnu 48.N.Rajendran 49.Jeyalakshmi 50.K.Perumal 51.S.Prabavathi 52.The Assistant Commissioner of Labour, (Controlling Authority under The payment of Gratuity Act), Dindigul Dsitrict.

53.The Joint Commissioner of Labour / Appellate Authority under payment of Gratuity Act, Thiruchirapalli. ... Respondents PRAYER: Writ Petition filed under Article 226 of the Constitution of India for issuance of Writ of Certiorari, to call for the records of the respondent No.53 in P.G.Appeal Nos.201/2013 to 250/2013, dated 03.01.2014 on the file of the respondent no.53, to quash the same, thereby to allow the appeal filed by the petitioner.

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For Petitioner : Mr.M.Senthil Kumar For R1 : No appearance For R2 to R51 : Mr.S.Sarvagan Prabhu For R52 and 53 : Mr.N.Muthuvijayan Special Government Pleader W.P.(MD)No. 21320 of 2014:

Indian Overseas Bank, Through its Branch Manager, N.Paraippatti Branch, Vedachendur Taluk, Dindigul district.

... Petitioner vs.

1. M/s.Thiruchendur Murugan Spinning Mills, through its managing Director, N.Paraippatti (Post) Karur Road, Dindigul District.

2. K.Muthuraj 3.D.Kamatchi 4.M.Ramu 5.S.Jeyamani 6.S.Joseph 7.K.Arumugam 8.D.Govindaraj 15/40

9.K.Ravichandran 10.A.Lazar 11.P.Kalyanasundaram 12.B.Dass 13.P.James 14.V.Alagiriswamy 15.M.K.Thangavel 16.S.Ravichandran 17.B.Vinotha 18.R.Saraswathi 19.P.Selvaraj 20.A.Arockiyadass 21.Soosaimanickam 22.S.Rathinam 23.L.Sagaya Shanthi 24.M.Subbaya 25.P.Chidambaram 26.S.Selvam 27.V.Murugan 28.A.Jayaraj 29.Manokaran 30.P.Murugan 31.S.Irudhayam 32.P.Arockiyasamy 33.V.Veerappan 34.K.Sellampandi 35.S.Mariyalouis 36.K.Muthukrishnana 16/40

37.A.Ganesan 38.K.Kalimuthu 39.Mariyamichael 40.P.Rathinam 41.S.Subramaniam 42.K.Kesavamurthy 43.P.Uppiliappan 44.P.Savoriyar 45.S.A.Palanichamy 46.D.M.Veerachamy 47.P.Mammari 48.P.Marudhai 49.G.Nagarajan 50.P.Nagarajan 51.P.Amudhavalli 52.K.Palanichamy 53.S.Mutthan 54.P.Natarajan 55.M.Palanivel 56.R.Balan 57.V.Raju 58.N.V.Ganesan 59.K.Karuppaiyee 60.The Assistant Commissioner of Labour, (Controlling Authority under the payment of Gratuity Act), Dindigul District.

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61.The Joint Commissioner of Labour / Appellate Authority under payment of Gratuity Act, Thiruchirapalli. ... Respondents PRAYER: Writ Petition filed under Article 226 of the Constitution of India for issuance of Writ of Certiorari, to call for the records of the respondent No.61 in P.G.Appeal Nos.39/2013 to 44/2013 and 50/2013 to 101/2013, dated 03.01.2014 on the file of the respondent no.61, to quash the same, thereby to allow the appeal filed by the petitioner.

For Petitioner : Mr.M.Senthil Kumar For R1 : No appearance For R2 to R59 : Mr.S.Sarvagan Prabhu For R60 and 61 : Mr.N.Muthuvijayan Special Government Pleader COMMON ORDER All these writ petitions are filed by Indian Overseas Bank and the issue in all these writ petitions are one and same, hence all the writ petitions are taken up and a common order is passed.

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2. The brief facts as stated in W.P.(MD)No.20679 of 2014 are that the petitioner bank granted financial assistance to the first respondent namely M/s. Thiruchendur Murugan Spinning Mills to the tune of Rs.2,20,00,000/- as early as 1994 for which the mill had mortgaged the immovable properties and also movable properties like machineries in favour of the Bank. The Bank has first charge over the movable and immovable properties. The first respondent mill became sick and closed from 04.12.1995. Since the loan amount was not repaid, the first respondent Mill loan account was declared as non performing asset. Thereafter, the Bank filed claim application in the Debts Recovery Tribunal, Madurai to recover a sum of Rs.2,79,88,741.10 paise in T.A.No.459 of 2007. The said the petition was pending and the Bank also initiated recovery proceedings by invoking the provisions under SARFAESI Act. Since the mill was not running, the Bank took physical possession of the movable and the immovable properties. 19/40

3. It was seen that before the Bank took possession, the employees of the first respondent were made jobless and they did not take steps to recover the terminal benefits from the first respondent. But the contention of the petitioner is that the Bank has not taken over the business of the first respondent but has taken possession of assets which was hypothecated and mortgaged to the bank to recover the dues. In the meanwhile, the bank has recovered a sum of Rs. 1,40,53,000/- after auctioning the properties of the first respondent. Even after adjusting realizable value of all securities of the 1st respondent, the petitioner has to receive a sum of Rs.81,62,283/- from the first respondent. As such the bank is not liable to pay the alleged dues payable to the employees the 1st respondent.

The respondents 2 to 67 have not initiated any action against the 1st respondent for recovery of the alleged terminal benefits. The respondents 2 to 67 along with other workmen had filed 273 Gratuity Applications claiming Gratuity from the respondent Mill and the petitioner.

relationship between the petitioner and the respondents 2 to 67, the petitioner bank is not liable to pay the same. The respondents 2 to 67 in order to harass the petitioner bank have created lot of obstacles while bringing the property for auction sale. In the Gratuity Application, the petitioner Bank had filed a counter affidavit. The 68th respondent who is the original authority under the Payment of Gratuity Act, without considering the legal and factual objection raised by the Bank has allowed the Gratuity Application, vide order, dated 28.10.2012. In the said order, the 68th respondent has given a finding that there is no direct employer employee relationship between the petitioner Bank and the Workmen but had held that there is a deemed employer employee relationship between the Bank and the Workmen, since the Bank is in control of the assets of the first respondent company. The contention of the bank is that the said finding is erroneous.

4. The first respondent had closed down the Mill as early as 04.12.1995 and 21/40

the respondents 2 to 67 have obtained employment elsewhere and had left the mill long back. The bank being a secured creditor is having first charge over the properties. Moreover, the Payment of Gratuity Act does not recognise a deemed employment. Aggrieved over the order, the petitioner bank preferred an appeal to the Appellate Authority, i.e. 69th respondent. The 69th respondent had passed an order, dated on 03.01.2014, confirming the original authority's order and dismissed the appeals.

The Appellate Authority has held that the Bank and the Workmen are having equal charge over the assets of the first respondent Mill (Pari passu) and that as per the peculiar circumstances of the case, the respondents 2 to 67 are entitled to get Gratuity amount only from the petitioner Bank according to the SARFEASI Act and section 529A(1)(a) of the Companies Act. The appellate authority has not applied its mind, without analysing the case on factual and legal basis has simply confirmed the order passed by the 68th respondent stating the order passed is just and correct.

respondent that the Payment of Gratuity Act overrides the provisions of SARFAESI Act is false and legally incorrect and also against law and equity. The Appellate Authority had not considered the fact that the workmen are entitled to claim the wages and other benefits only from the employer company or from its liquidator at the time of winding up of the company. The respondents 68 and 69 have virtually not considered the Section 13 (9) of SARFEASI Act and the Section 529 A(1)(a) of the Indian Companies Act. The bank is liable to pay the alleged dues of the workmen only in the event of liquidation, since there is no winding up proceedings against the first respondent, the petitioner bank is not liable to pay the same. Hence, aggrieved over the same, the petitioner bank has filed this writ petition.

5. The respondents relied on the contents of the petition filed before the Payment of Gratuity authority. The workmen had filed the petitions as well as 23/40

counter affidavit in the appeal before the appellate authority. The contention of the respondents 2 to 67 is that the first respondent Mill without any prior intimation had closed the Mill suddenly on 04.12.1995. The employees were under the impression that the Mill will start running shortly. Moreover, the management would provide all the monetary benefits applicable to the workers. The Bank had issued notice stating that for the recovery of debt, the properties would be sold through auction on 04.01.2008. On issuance of such notice, the workers had filed petition before the Assistant Commissioner of Labour. Before the Assistant Commissioner, the terms of settlement was issued on 10.03.2008, which is marked as Exhibit A 5 in which the Bank was directed to pay Rs.1000/- for each workmen.

On such payment, the workers will not interfere in the auction of land and machineries and other moveable.

Bank. In order to obtain the appropriate orders, this was agreed between the parties and the Bank has accepted. As per the said agreement, the Bank has paid Rs.1000/- to each workmen and thereafter, initiated proceedings to sell the properties of the Mill. Thereafter, the Workmen demanded the arrears of salary and filed petition before the High Court. Based on the orders of the High Court and also based on the orders of the District Collector at the time of selling the Mill, the bank has deposited Rs.8,90,115/- for 7 workmen who were declared as first debtor and the petitioner bank has agreed and deposited the said amount to the Assistant Commissioner of Labour and on deposition, the Assistant Commissioner of Labour has disbursed the same and the payment has been marked as one of the exhibits. It was agreed between the parties that on receiving such payment, the workmen should not interfere in the process of selling the Mill properties and that agreement was marked as exhibit A7. Since the workmen has continuously worked in the first respondent Mill, when the Bank has initiated 25/40

proceedings to sell the properties of the first respondent, the workmen have only demanded to pay the gratuity that is applicable to them. The Bank has agreed to pay the same at the time of negotiation. Now, the bank cannot turn around and say that the bank is not liable to pay the amount. After hearing the rival submissions of the 273 workers, a common order was passed by the Assistant Commissioner of Labour. Hence, the respondents 2 to 67 prayed to dismiss the writ petition.

6. Heard Mr.M.Senthil Kumar the Learned Counsel appearing for the petitioner Bank, Mr.S.Sarvagan Prabhu the Learned Counsel appearing for the respondents 2 to 67 and Mr.N.Muthuvijayan appearing for the respondents 68 and 69 and perused the records.

7. The contention of the petitioner Bank is that the workers had filed 26/40

petitions against the Bank whenever the Bank took steps to sell the properties which were mortgaged by the company for a debt of Rs.2,20,00,000/-. The workers stalled the proceedings initiated under SARFAESI Act. Further when the Bank carried out necessary formalities for bringing the property for auction sale the workers again stalled the auction sale and had approached the Assistant Commissioner of Labour in order to stall the selling of the properties. Thereafter, the Assistant Commissioner of Labour directed the Bank and the workmen for negotiation and it was agreed between the parties that the Bank has to pay Rs. 1000/- to all the workmen and on such payment the workmen shall not interfere in the SARFAESI proceedings and selling of properties. The parties have agreed before the Authority and the Bank has also paid Rs.

1,000/- to all the workmen. The further contention of the Bank is that after such payment as agreed before the Assistant Commissioner of Labour, the workers had approached the Labour Court, Trichy. In one such order, in the Claim Petition No.

A. Selvaraj, the Labour Court has passed an order directing the Mill as well as the Bank to pay Rs.5,28,493/- as arrears of salary. Likewise, several workmen obtained orders to pay the arrears of salary to them. The Bank has deposited Rs. 8,90,115/- for 7 such employees. Now, the workmen have started demanding the gratuity payment. Since the claim of the workers were continuing and it is never ending claims, the petitioner Bank resisted the claims of the workers and submitted that the Bank is not liable to pay, since workmen are entitled to claim the arrears of salary, gratuity and other statutory benefits from the Mill in which they were employed and not against the Bank. The worker may be entitled to claim from the proceeds of the sale of properties from the Bank, if the Mill was order for winding up before the appropriate authority.

In the present case, there is no winding up proceedings at all. The workers have not approached the appropriate authorities for winding up the company.

workers are not entitled to claim salaries, gratuity and other statutory benefits from the Bank. If the company is under the winding up proceedings, then the claim of the workmen is absolutely right and whatever assets available in the defunct company will be distributed on the principle of pari passu. In the present case, there is no winding up proceedings initiated, hence the claim of the workmen under the principles of "pari passu" cannot be entertained.

8. In order to consider the claim of the petitioner Bank the provisions under Section 13 (9) of SARFEASI Act and the Section 529A(1)(a) of the Indian Companies Act are relevant and the same is extracted hereunder: Section 13 (9) of SARFEASI Act:

13(9) 1[Subject to the provisions of the Insolvency and Bankruptcy Code, 2016, in the case of] financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the 29/40

rights conferred on him under or pursuant to sub-section (4) unless exercise of such right is agreed upon by the secured creditors representing not less than 2 [sixty per cent.]

after depositing the amount of such estimate dues with the liquidator: Provided also that in case the secured creditor deposits the estimated amount of workmen's dues, such creditor shall be liable to pay the balance of the workmen's dues or entitled to receive the excess amount, if any, deposited by the secured creditor with the liquidator: Provided also that the secured creditor shall furnish an undertaking to the liquidator to pay the balance of the workmen's dues, if any. Explanation.-For the purposes of this sub-section,- (a) "record date" means the date agreed upon by the secured creditors representing not less than 2 [sixty per cent.] in value of the amount outstanding on such date; (b) "amount outstanding" shall include principal, interest and any other dues payable by the borrower to the secured creditor in respect of secured asset as per the books of account of the secured creditor.

Section 529A(1) of Companies Act:

Section 529A. OVERRIDING PREFERENTIAL PAYMENTS (1) Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company - (a) workmen's dues; and (b) debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to sub-section (1) of section 31/40

529 pari passu with such dues, shall be paid in priority to all other debts.

(2) The debts payable under clause (a) and clause (b) of sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions."

9. The provisions under section 13(9) of SARFEASI Act states that the company in liquidation shall distribute the sale of secured assets in accordance to Section 529A of the Companies Act. The provisions under section 529A states that the worker due's and the secured amount shall be divided pari passu as stated in Section 529(1)(c). Under section 529(1)(c) it states as under: "(c) "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." 32/40

10. All the provisions states if the company is under liquidation then the principle of pari passu would be applicable for the secured creditor and workmen's due. Admittedly in the present case the workmen had not filed any winding up petition and any other creditor / secured creditor of the Mill has not filed any winding up petition. But non filing of winding up petition cannot be a ground to decline the workmen's due. The workmen's due is a statutory liability. Even both the SARFEASI Act and the Indian Companies Act grant ample protection to the workmen's due. Also both the Acts places workmen's due and the secured creditor on par. Therefore the claim of the petitioner bank cannot be entertained.

11. The next contention of the petitioner bank is that under Section 529 of the Companies Act, the workmen portion in relation to security of the secured creditor of the company means the amount which appears to the value of the 33/40

security, the same proposition as the amount of workmen due bears to the aggregate of the amount of the workmen's due and the amount of debts due to the secured creditor. Hence, the amount of the debt to the secured creditors ought to be added along with the workmen's due. Thereafter, based on the pari passu principle, the amount ought to be distributed. But this proportion cannot be taken into account, since there is an overriding provision under Section 529A. This contention of the petitioner bank cannot be accepted because even in the Section 529A the workmen's due is included and the workmen due is duly protected.

12. The next contention of the petitioner is that under the SARFAESI Act, the provisions of said Act will have overriding effect than other legislation. Since the SARFAESI Act is subsequent to the Payment of Gratuity Act, the SARFAESI Act will have overriding effect than the Payment of Gratuity Act, hence, the first charge should be granted to the bank alone. This contention of the bank is refuted 34/40

by the respondents since the Payment of Gratuity Act is having overriding effect than any other debts of the management and the wellness of the workmen should be prioritised than any other debt. This Court is of the considered opinion that the bank is dealing with the public money. On the other side the workmen are entitled to the gratuity which is a statutory payment. In the present case, the workmen without initiating any recovery proceedings from the management of the mill is making the entire claim against the Bank alone which is incorrect. As seen from the records, the bank has given the loan in the year 1994 and the mill was closed in the year 1995, from 1995 to 2008 the workmen have not initiated any action against the management.

The workmen have only stalled the proceedings of the Bank whenever the Bank has initiated proceedings under SARFAESI Act for taking physical possession and for selling the property, etc. It is also to be noted that the Bank has already paid Rs.1000/- for each employee and has also deposited a sum of Rs.

employees. In the present petition the employees are claiming the gratuity amount. As rightly pointed out by the Learned Counsel appearing for the Bank, the Bank has not taken the management of the company and the Bank is not running the company to claim salary and other benefits from the Bank. In order to recovery the loan the Bank had initiated proceedings to sell the properties to recovery the debts. In such circumstances, the bank has not stepped into the shoes of the management. Further the employees have not initiated winding up proceedings, the Bank is a secured creditor and the workmen claim cannot be neglected.

In the present case, it is not known whether the mill has no other means to pay the workmen and also it is not known whether the private properties of the Directors of Mill was attached in any proceedings to pay the workmen and the workmen have not whispered any details regarding this.

amount granted to the workmen ought to be reduced.

13. It is seen the bank is having a decree in its favour to the tune of Rs. 2,79,88,741.10/-. Based on the auction of the properties, the bank has recovered Rs.1,40,53,000/-. After adjusting to the loan, the balance payable to the bank is Rs.81,62,283/-. As per the official order, an amount of Rs.10,65,24,593/- with the future interest of 15.25% from 01.03.2015 is due to the bank. On the other side, 281 gratuity applications were filed before the Assistant Commissioner of Labour. Based on the order of the Assistant Commissioner of Labour, the Bank has deposited Rs.43,85,474/-. Thereafter, filed a statutory appeal before the Appellate Authority. The bank has also deposited to the tune of Rs.75,45,461/- in some other proceedings for salary. Since the employers have already received Rs.1000/- and some of the employees have received the arrears of salary, the bank cannot be burdened further. Therefore, in order to give quietus to the entire issue, the 37/40

workmen are entitled to Rs.42,00,000/- as gratuity, the Bank is entitled to the balance amount of Rs.1,85,474/- from Rs.43,85,474/-.

14. Therefore, this Court is fixing the amount as Rs.42,00,000/- to the workmen and the balance amount from the deposit of gratuity amount of Rs. 1,85,474/- shall be paid back to the bank. From the Rs.42,00,000/- that was deposited to the Assistant Commissioner of Labour, the said the authority shall disburse the same. Since the said amount is carrying interest based on interest, the workmen would be getting the same amount as claimed in their original application. Therefore, the workmen would not be at loss.

15. With the above said observation, the writ petitions are disposed of. No costs. Consequently, connected miscellaneous petitions are closed. Index : Yes / No 16.02.2024 Internet : Yes NCC : Yes / No Tmg 38/40

To 1.The Assistant Commissioner of Labour, (Controlling Authority under the payment of Gratuity Act), Dindigul District.

2.The Joint Commissioner of Labour / Appellate Authority under payment of Gratuity Act, Thiruchirapalli.

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S.SRIMATHY, J Tmg 16.02.2024 40/40