BIJAPUR MAHALAXMI URBAN CO-OPERATIVE CREDIT BANK LTD v. MOHAN KAMALAKAR AND OTHERS
2003-01-28
S.R.NAYAK
body2003
DigiLaw.ai
NAYAK, J. ( 1 ) THE Bijapur Mahalaxmi Urban Co-operative Credit Bank limited, which was the 2nd respondent in the Writ Petitions, feeling aggrieved by the common order made by a learned Single Judge of this Court in W. P. No. 15677/96 and W. P. Nos. 15988 to 15996/96 has preferred these Writ Appeals. ( 2 ) THE above Writ Petitions were filed by Respondents-1 to 10 herein, praying for a declaration that the petitioners claim in regard to their wages and other emoluments as awarded by the Labour court, Bijapur, by order dated 31. 1. 1996 in Application No. 37/1995 will have precedence and priority over the claims put forward by the appellant-Bank and for consequential direction to the Appellant-Bank and the Assistant Registrar of the Co-operative Societies and recovery Officer, Bijapur, the 12th respondent herein not to appropriate the properties and assets of the Joshi Metal Industries, bijapur, the 11th respondent herein. Learned Judge, placing reliance on the Judgment of the Apex Court reported in WORKERS OF M/s. ROHTAS INDUSTRIES LTD. , vs M/s. ROHTAS INDUSTRIES LTD. ,1 allowed the Writ Petitions and directed that out of the sale proceeds, the amounts due to the petitioners and the remaining 24 workmen concerned should be paid first and that the balance, if any, should be adjusted towards the amount due to the Appellant- Bank. ( 3 ) BACKGROUND facts leading to the filing of the Writ Appeals may briefly be noted as under: the petitioners and 24 others claiming to be the workers in the establishment of the 11th respondent filed an application under section 33-C (2) of the Industrial Disputes Act, 1947 (for short the act) for computing money due to each one of them consequent upon the closure of the 11th respondent-Industry. The Labour Court, bijapur, by its order dated 31. 1. 1996 quantified the amount payable to each of the said 34 workmen. In pursuance of the said order, a certificate under Section 33-C (1) of the Act was also issued, for recovery of the amounts as arrears of land revenue.
The Labour Court, bijapur, by its order dated 31. 1. 1996 quantified the amount payable to each of the said 34 workmen. In pursuance of the said order, a certificate under Section 33-C (1) of the Act was also issued, for recovery of the amounts as arrears of land revenue. In the meantime, the Appellant-Bank in regard to the amounts that it had advanced to the 11th respondent on security of the assets of the Industry by creating the mortgage by way of deposit of title deeds moved the registrar under the provisions of the Karnataka Co-operative societies Act, 1959 and an Arbitrator came to be appointed by the registrar and he passed an award under Section 70 of the Cooperative societies Act, 1959. Since the 11th respondent-Industry did not honour the award passed by the Arbitrator under Section 70 of the Karnataka Co-operative Societies Act, the Appellant-Bank took steps to sell the properties already attached by issuing sale notification dated 2. 5. 1996 fixing 17/6/1996 for auction. At that stage, the respondents-1 to 10 preferred the present Writ Petitions praying for the reliefs as already noticed above. ( 4 ) BEFORE learned Single Judge, on behalf of the petitioners, it was contended that since the amount awarded by the labour Court, bijapur on an application made under Section 33-C (2) of Act have priority in terms of enforcing the liability against the sums of money, that may be recovered by sale of the assets of the 11th respondent industries. Learned Judge though opined that the appellant-Bank being a secured creditor certainly has the priority over the other creditors, however, placing reliance on the Judgment cited supra, allowed the Writ Petitions and issued directions noticed above. ( 5 ) WE have heard learned Counsel appearing for the parties. Learned Counsel for the Appellant-Bank contended that learned judge has erred in law in applying the Judgment of the Apex Court cited above and that the said Judgment is not applicable at all to the facts of the case. Learned Counsel would highlight that it is nobodys case that the Appellant-Bank in the course of Execution of the award passed by the Arbitrator under Section 70 of the Karnataka co-operative Societies Act, sought to sell commodities or goods manufactured by the 11th respondent-Industries.
Learned Counsel would highlight that it is nobodys case that the Appellant-Bank in the course of Execution of the award passed by the Arbitrator under Section 70 of the Karnataka co-operative Societies Act, sought to sell commodities or goods manufactured by the 11th respondent-Industries. Learned Counsel contended that it is an admitted case that what was sought to be sold in execution of the award are nothing but plant and machinery of the Industries and not any manufactured goods. On the other hand, learned Counsel appearing for the workmen-Writ Petitioners, would contend that in terms of the provisions of sub-section (2) of section 33-C of the Act, the claims of the workmen have first priority on the sums of money that may be realized out of the sale of the assets of the 11th respondent-Industry. Learned Counsel for workmen would also draw our attention to the provisions of sub-section (1) of section 32 of the Karnataka Co-operative Societies Act, 1959 which falls within Chapter V and which deals with privileges of the Cooperative societies and maintain that in terms of the above provisions, the claims of the workmen have priority over the claim of the appellant-Bank. ( 6 ) HAVING heard learned Counsel for the parties, the only question that arises for decision is whether the claim of the Workmen should have priority over the claim of the Bank. We are of the considered opinion that the Judgment of the Supreme Court in the case of M/s rohtas Industries Ltd. , (Supra) has no application at all to the facts of these cases. We say this because, the Supreme Court in the said Judgment has opined that even in respect of the product which was sought to be sold in execution, the Bank being the secured creditor, its claim has a priority in law. Having said it, the Apex Court was however, pleased to observe that in the manufacture of the products in stock which were admittedly manufactured by the industry concerned, there was contribution of labour by the workmen. In that view of the matter, the Apex Court opined that it could not be said that the wages and emoluments for the period up to closure would not rank in priority.
In that view of the matter, the Apex Court opined that it could not be said that the wages and emoluments for the period up to closure would not rank in priority. As pointed out supra, the assets which are sought to be sold by way of public auction or otherwise in this case are not the manufactured goods, but they are lands, plant and machinery of the Industry. In that view of the matter and having regard to what the Apex Court itself has stated in the beginning of para 3 of the judgment, it should be held that the Bank being the secured creditor, its claim has priority over the claims put forward by workmen. ( 7 ) WE do not find any merit in the contentions of learned Counsel appearing for the workmen. Sub-section (1) of Section 33-C reads as follows: 33-C Recovery of money due from an employer: (1) where any money is due to a workman from an employer under a settlement or an award or under the provisions of (Chapter V-A or Chapter V-B), the workman himself or any other person authorised by him in writing in this behalf, or in the case of the death of the workman, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government is satisfied that any money is so due, it shall issue a certificate for that amount to the collector who shall proceed to recover the same in the same manner as an arrears of land revenue. Provided that every such application shall be made within one year from the date in which the money became due to the workman from the employer. Provided further that any such application may be entertained after the expiry of the said period of one year, if the appropriate government is satisfied that the applicant had sufficient cause for not making the application within the said period. ( 8 ) SUB-SECTION (1) of Section 33-C does not deal with priority of claims at all.
Provided further that any such application may be entertained after the expiry of the said period of one year, if the appropriate government is satisfied that the applicant had sufficient cause for not making the application within the said period. ( 8 ) SUB-SECTION (1) of Section 33-C does not deal with priority of claims at all. What sub-section (1) provides is that, if a money is due to a workman by virtue of an award or a settlement under the provisions of Chapter V-A or Chapter V-B, the concerned workman or his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government to issue a certificate and if the appropriate Government satisfies itself, about any money due to such applicant, it would issue a certificate to that effect that the amount due to the workman or his legal heir should be collected by the collector as arrears of land revenue. We are at a loss to understand how that provision would come to the aid of the workmen to establish the priority over claims of secured creditors who have acquired the right over the mortgaged properties well before establishment of the Industry and creation of the relationship of employer and employed between 11th respondent and petitionersworkmen. Similarly, we do not find any merit in the contention of learned Counsel for the workmen based on the provisions of subsection (1) of Section 32 of the Karnataka Co-operative Societies act, 1959. Sub-section (1) of Section 32 of the Karnataka Co-operative societies Act reads as follows: Section 32. First Charge of Co-operative Society on certain assets. (1) Notwithstanding anything contained in any law for the time being in force, but subject to any prior claim of the government in respect of land revenue or any money recoverable as land revenue, any debt or outstanding demand owing to a cooperative society by any member or past member or deceased member shall be a first charge upon the crops and other agricultural produce, cattle, fodder for cattle, agricultural or industrial implements or machinery, raw materials for manufacture and any finished products manufactured from such raw materials, belonging to such member, past member or farming part of the estate of the deceased member, as the case may be.
( 9 ) SUB-SECTION (1) of Section 32 of the Act essentially deals with the rights of the Co-operative Societies and not the rights of employees of Co-operative Societies. No doubt sub-section (1) impliedly provides that debts due to Co-operative Societies shall be a first charge in the matter of money recoverable by it. Since we are not called upon to decide competing claims of the Co-operative society and the Appellant-Bank, there is no scope for applying the provisions of sub-section (1) of Section 32 of the Co-operative societies Act to the facts of this Case. ( 10 ) IN conclusion we cannot sustain the order of learned Single judge. In the result, the writ appeals are allowed and the order of the learned Single Judge is set aside and Writ Petition Nos. 15677, 15988 to 15996/96 are dismissed with no order as to costs. --- *** --- .