R. S. GARG, J. ( 1 ) THE present matters have been placed before us because the learned single Judge, by his Order dated 3rd July, 2001 passed on Company Application No. 216 of 1997 in Company petition No. 21 of 1984, found that there was a conflict of views in two judgements of the Supreme Court and as certain important issues were involved in the matter, the matter be decided by the Division Bench, the learned single Judge, accordingly, made the reference. The three questions, which have been referred to us, are as under:"1. Whether the judgement of the Honble Supreme Court in STATE BANK OF BIKANER and JAIPUR Vs. NATIONAL IRON and STEEL ROLLING CORPORATION reported in 1995 AIR SCW 214 is binding or whether the judgement of the Honble Supreme Court in the case of DENA BANK Vs. BHIKHABHAI PRABHUDAS PAREKH and CO. , reported in 2000 (4) Supreme Today 5000 is binding to this case. 2. Whether amount standing to the credit of the workers regarding their contribution to Employees State Insurance Act in the books of the Mill Company (In Liquidation) is impressed with the character of a Trust and hence, it does not form part of the assets of the company and the Liquidator is bound to pass the same in priority before any distribution of the assets of the company is made by him? 3. Whether the property/assets of the Company which has already been mortgaged or earmarked by the secured creditors and when the Company is in the liquidation whether the Liquidator was having that equity alone and whether the entire amount was required to be paid to the secured creditors or the applicant is entitled to priority over the said dues in this behalf? ( 2 ) LEARNED Counsel for the Employees State Insurance corporation (SESI Corporation") submitted that Section-40, read with Section-94, of the Employees State Insurance Act, 1948 (hereinafter referred to as Sthe ESI Act") makes clear that any sum deducted by the principal employer from the wages under the Act shall be deemed to have been entrusted to the principal employer by the employee for the purpose of paying the contribution in respect of which it was deducted and as the dues of the ESI Corporation would have priority over other debts under Section-530 of the Companies Act, 1956 and as the amount, deducted by the Company from the salary/wages of the workmen towards the contribution, tantamounts to revenue of the State, the ESI Corporation even at this stage is entitled to recover the money from the official Liquidator, who is the holder of the securities of the Company. ( 3 ) LEARNED Counsel for the Secured Creditors jointly submitted that Section-530 of the Companies Act is subject to Section-529 (A), therefore, after the dues payable under section-529 (A) of the Companies Act are paid, the question of priority does not arise. ( 4 ) FOR proper appreciation of the arguments of the parties, we propose to refer to the provisions of Section-40 and section-94 of the ESI Act and the provisions of Section- 529 (A) and Section-530 of the Companies Act, 1956. The same read as under:"40. Principal employer to pay contributions in the first instance. (1) The principal employer shall pay in respect of every employee, whether employed directly by him or by or through an immediate employer, both the employers contribution and the employees contribution. (2) Notwithstanding anything contained in any other enactment but subject to the provisions of this Act and the regulations, if any, made thereunder, the principal employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employees contribution by deduction from his wages and not otherwise: Provided that no such deduction shall be made from any wages other than such as relate to the period or part of the period in respect of which the contribution is payable, or in excess of the sum representing the employees contribution for the period. (3) Notwithstanding any contract to the contrary, neither the principal employer nor the immediate employer shall be entitled to deduct the employers contribution from any wages payable to an employee or otherwise to recover it from him. (4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted. (5) The principal employer shall bear the expenses of remitting the contribution to the Corporation. ""94. Contributions, etc. due to Corporation to have priority over other debts. There shall be deemed to be included among the debts which under Sec. 49 of the Presidency-towns Insolvency Act, 1909 (3 of 1909), or under Sec. 61 of the Provincial Insolvency Act, 1920 (5 of 1920), or under any law relating to insolvency in force in the territories which, immediately before the 1st November, 1956, were comprised in a Part B State, or under Sec. 530 of the Companies Act, 1956 (1 of 1956) are, in the distribution of the property of the insolvent or in the distribution of the assets of a company being wound up, to be paid in priority to all other debts, the amount due in respect of any contribution or any other amount payable under this Act the liability wherefore accrued before the date of the order of adjudication of the insolvent or the date of the winding-up, as the case may be. "section-529 (A) of the Companies Act reads as under:"529a. (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) workmens 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 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. "section-530 (1) (a) of the Companies Act, which is necessary for disposal of this reference, reads as under:"530. (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. "section-530 (1) (a) of the Companies Act, which is necessary for disposal of this reference, reads as under:"530. (1) In a winding up, subject to the provisions of section 529a, there shall be paid in priority to all other debts (a) all revenues, taxes, cesses and rates due from the company to the Central or a State Government or to a local authority at the relevant date as defined in clause wÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w¢â‚Âu wÆ’u¢w¢ââ‚Å¡uÂw¢ââ‚žu¢wÆ’i’w†ââ‚â„¢wÆ’u¢w¢ââ‚Å¡uÂw‚u wÆ’i’w‚u¢wÆ’u¢w¢â‚Âc¡w‚uÂwÆ’u¢w¢â‚Âc¾w‚u¢wÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w‚u¢wÆ’u¢w¢â‚Âc¡w‚uÂwĉâ‚Å¡w‚u wÆ’i’w†ââ‚â„¢wĉâ‚Å¡w‚u¢wÆ’i’w‚u¢wÆ’u¢w¢ââ‚Å¡uÂw…u¡wĉâ‚Å¡w‚uÂwÆ’i’w‚u¢wÆ’u¢w¢ââ‚Å¡uÂw…u¾wĉâ‚Å¡w‚u¢wÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w¢â‚Âu wÆ’u¢w¢ââ‚Å¡uÂw¢ââ‚žu¢wÆ’i’w†ââ‚â„¢wÆ’u¢w¢ââ‚Å¡uÂw…u¡wÆ’i’w¢â‚Âc¡wĉâ‚Å¡w‚u¢wÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w¢â‚Âc¡wĉâ‚Å¡w‚u¢wÆ’i’w†ââ‚â„¢wĉâ‚Å¡w‚u¢wÆ’i’w‚u¢wÆ’u¢w¢ââ‚Å¡uÂw…u¡wĉâ‚Å¡w‚uÂwÆ’i’w¢â‚Âu¦wĉâ‚Å¡w‚u¡wÆ’i’w†ââ‚â„¢wÆ’u¢w¢ââ‚Å¡uÂw…u¡wÆ’i’w¢â‚Âc¡wĉâ‚Å¡w‚uÂwÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w‚u¢wÆ’u¢w¢â‚Âc¡w‚uÂwĉâ‚Å¡w‚u¦wÆ’i’w†ââ‚â„¢wÆ’u¢w¢ââ‚Å¡uÂw…u¡wÆ’i’w¢â‚Âc¡wĉâ‚Å¡w‚u¡wÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w¢â‚Âu wÆ’u¢w¢ââ‚Å¡uÂw¢ââ‚žu¢wÆ’i’w†ââ‚â„¢wÆ’u¢w¢ââ‚Å¡uÂw‚u wÆ’i’w‚u¢wÆ’u¢w¢â‚Âc¡w‚uÂwÆ’u¢w¢â‚Âc¾w‚u¢wÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w¢â‚Âc¡wĉâ‚Å¡w‚u¢wÆ’i’w†ââ‚â„¢wĉâ‚Å¡w‚u¢wÆ’i’w‚u¢wÆ’u¢w¢â‚Âc¡w‚uÂwĉ₦w‚u¡wÆ’i’w¢â‚Âc¡wĉâ‚Å¡w‚uÂwÆ’i’w†ââ‚â„¢wÆ’u¢w¢ââ‚Å¡uÂw‚u¦wÆ’i’w¢â‚Âc¡wĉâ‚Å¡w‚u¡wÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w¢â‚Âu wÆ’u¢w¢ââ‚Å¡uÂw¢ââ‚žu¢wÆ’i’w†ââ‚â„¢wĉâ‚Å¡w‚u¢wÆ’i’w‚u¢wÆ’u¢w¢ââ‚Å¡uÂw…u¡wĉâ‚Å¡w‚uÂwÆ’i’w¢â‚Âu¦wĉâ‚Å¡w‚u¡wÆ’i’w†ââ‚â„¢wĉâ‚ w¢â‚Ââ„¢wÆ’i’w‚u¢wÆ’u¢w¢â‚Âc¡w‚uÂwĉ₦w‚u¡wÆ’i’w†ââ‚â„¢wÆ’u¢w¢ââ‚Å¡uÂw…u¡wÆ’i’w¢â‚Âc¡wĉâ‚Å¡w‚u© of sub-section (8), and having become due and payable within the twelve months next before that date; * * * * *"from a perusal of Section-40 of the ESI Act, it would be clear that the principal employer shall pay in respect of every employee, whether employed directly by him or by or through an immediate employer, both the employers contribution and the employees contribution. The employer under the Act is obliged to deduct the employees contribution from the wages payable to the employee and after adding his own contribution, will have to send the said amount to the ESI Corporation. Sub-section (4) of section-40 makes it clear that any sum deducted by the principal employer from wages under the ESI Act shall be deemed to have been entrusted to the principal employer by the employee for the purpose of paying the contribution in respect of which it was deducted. It is clear from the language employed in Sub-section (4) of Section-40 of the esi Act that the amount, which has been deducted from the wages payable to the employee, shall be deemed to be entrusted to the principal employer and the principal employer would be obliged to remit the said amount, along with his own contribution, to the ESI Corporation. ( 5 ) IN a given case where the employer does not remit the contribution, deducted from the wages of the employees, and his own contribution, to the ESI Corporation, then, the ESI corporation may issue notices to the defaulting employer, may attach his property or may also proceed against him by taking a criminal action. ( 6 ) SECTIONS 85 (A) and 85 (B) of the ESI Act would make it clear that where there is a failure to pay contribution, a punishment can be awarded, there can be enhanced punishment in certain cases after the previous conviction, and where the employer fails to pay the amount due in respect of any contribution, the Corporation may recover from the employer by way of penalty such damages not exceeding the amount of arrears as may be specified in the regulations. It appears that despite armed with such armoury, the ESI Corporation did not do anything for 14 long years and woke up only after the Company came under liquidation. If the Corporation has been made for providing services to the employees, then, its officers should not sit tight in the ivory chambers, but, should walk on the roads, see the reality of life and suffer the heat of the day, and take an action against the defaulters. ( 7 ) IN a case where the employer becomes insolvent or in case of a Company being wound up, the ESI Corporation dues will have to be paid in priority over the other dues. Section-94 provides that the contribution, etc. due to the Corporation will have priority over other debts. From the heading of the section, it appears that the dues of the Corporation relating to contribution would have priority over all other debts, but, if we look into the body of the Section, it would clearly appear that these shall be deemed to be included among the debts which under Section-530 of the companies Act, 1956 are in distribution of the property/assets of the Company being wound up, be paid in priority to all other debts, the amount due in respect of any contribution or any other amount payable under the ESI act, the liability wherefore accrued before the date of the order of adjudication of the insolvent or the date of winding up. It is not correct to say that while distributing the properties/ assets of the Company, the ESI Corporation would have priority over all other debts or dues. The ESI corporation would have priority when the assets of the company under winding up are being distributed under Section- 530 of the Companies Act. ( 8 ) SECTION-530 of the Companies Act says that in a winding up, subject to the provisions of Section-529 (A), these shall be paid in priority to all other debts (a) all revenues, taxes, cesses and rates due from the Company to the Central or a State Government or to a local authority at the relevant date, as defined in clause (c) of sub-section (8), and having become due and payable within the twelve months next before that date. ( 9 ) WITHOUT entering into the controversy that whether the amount due to the ESI Corporation would be revenue, tax or cess, for the present, we simply presume that the same would come under the definition of revenues, etc. and proceed to decide the issue. ( 10 ) SECTION-530, Sub-section (1), clearly observes that in a winding up matter, subject to the provisions of Section- 529 (A), there shall be paid in priority to all other debts, dues of the Government, which are in the form of revenues, tax, etc. When Section-530 is made subordinate to Section- 529 (A), then, a Court is obliged to look into the material provisions as contained under Section-529 (A ). Section-529 (A) clearly provides that notwithstanding anything contained in any other provision of the Companies Act or any other law for the time being in force, in the winding up of a company, workmens dues and debts due to the secured creditors to the extent such debts rank under clause (c) of the proviso to sub-section (1) of Section-529 pari passu with such dues, shall be paid in priority to all other debts. ( 11 ) SECTION-529 (A) has been introduced in the year 1985. It starts with a non-obstante clause. It clearly provides that snotwithstanding anything contained in any other provision of the Act or any other law for the time being in force". A true understanding of Section-529 (A) would make clear that the provisions of Section-529 (A) shall override the provisions contained in Section-530. It starts with a non-obstante clause. It clearly provides that snotwithstanding anything contained in any other provision of the Act or any other law for the time being in force". A true understanding of Section-529 (A) would make clear that the provisions of Section-529 (A) shall override the provisions contained in Section-530. Not only this, the provisions contained in Section-529 (A) shall override the provisions contained in the ESI Act because the ESI Act is an Act of 1948, while the amendment in the Companies Act has been made in the year 1985 and with the fullest knowledge that it was to override the provisions contained in Section- 530. If Section-94 of the ESI Act and Section-530 of the companies Act are made subordinate to Section-529 (A), then, section-529 (A) shall march over the rights of others to which the others are entitled either under the special laws or under Section-530 of the Companies Act. A combined/conjoint reading of Section-529 (A) of the Companies act would make clear that in a matter of winding up, the workmens dues and the debts due to the secured creditors to the extent such debts rank under clause (c) of the proviso to Sub-section (1) of Section-529 (A) pari passu with such dues, shall be paid in priority to all other debts. If such dues and debts are paid in full and even thereafter, some money is left with the Official Liquidator for its distribution, then, such money can be distributed under section-530 of the Companies Act. When such a situation crops up, the State Government or the Central Government or the Local Authority may file their claim before the learned company Judge and at that point of time, they may say that in view of their preferential right, either under the Local act or under Section-530 of the Companies Act, they be paid. ( 12 ) THE Question No. 1 referred to us, at this stage, does not arise and does not assume any importance. The two cases, which have been referred into the order of reference, i. e. State Bank of Bikaner and Jaipur vs. National Iron and Steel rolling Corporation, reported in 1995 0 AIR (SCW) 214 and yet another judgement of the Supreme Court in the case of Dena bank vs. Bhikhabhai Prabhudas Parekh and Co. The two cases, which have been referred into the order of reference, i. e. State Bank of Bikaner and Jaipur vs. National Iron and Steel rolling Corporation, reported in 1995 0 AIR (SCW) 214 and yet another judgement of the Supreme Court in the case of Dena bank vs. Bhikhabhai Prabhudas Parekh and Co. , reported in 2000 (4) Supreme Today 5000 = 104 Company Cases 157, were on different footings; those were the cases where the Supreme court was confronted with the provisions of the Sales Tax act and the Supreme Court had observed that the Government dues shall or shall not have priority in the case of recovery over all other dues. In the present case, the question that which of the judgements should be followed by the learned single Judge, does not arise. The Companies Act is a complete Code in itself. It provides that in what manner a Company Petition is to be entertained, how a Company is to be taken up for winding-up, in what manner an Official Liquidator is to be appointed, how the Official Liquidator shall enter upon the properties belonging to the Company and after the property comes under the hands of the Official Liquidator in what manner, it shall be distributed. Section-529 (A) and Section- 530 of the Companies Act provide for a clear scheme in relation to distribution of the properties belonging to the company. In a case where some assets are left after satisfying the claims of the claimants under Section-529 (A) of the Companies Act, the question of the Government dues or the taxes or the priority attached to them, shall arise. In the present case, it is yet to be decided by the learned single Judge that whether the claims lodged by the ESI corporation are for recovery of the Government revenues, taxes, cesses and rates due from the Company. Unless that question is decided by the learned single Judge, the question of priority also cannot be decided even for the purposes of Section-530 of the Companies Act. ( 13 ) SO far as Question Nos. Unless that question is decided by the learned single Judge, the question of priority also cannot be decided even for the purposes of Section-530 of the Companies Act. ( 13 ) SO far as Question Nos. 2 and 3 referred for answer are concerned, in our considered opinion, before taking any priority in the matter of recovery or to get the money straight from the Official Liquidator, it would be necessary for the ESI Corporation to prove to the satisfaction of the court that the amount due to them comes within the scope of section-530 (1) of the Companies Act. After the Company Court is satisfied, then, it will have to enquire that whether the amount, so deducted from the wages payable to the employees, was kept in a separate account and whether such amount was transferred to the Official Liquidator. In a given case, if no cash amount is transferred to or is received by the official Liquidator, then, the question of the amount standing to the credit of the workers would lose its importance. Even otherwise, if the ESI Corporation wants to say that certain properties were purchased from the amount of the contribution received by the employer and thereafter, a mortgage was created over the same, and that became the subject of security for the secured creditors, then, the corporation will have to lead positive evidence to the satisfaction of the learned Company Judge, who, if records a finding that a particular property was purchased from the contribution money and thereafter, a mortgage was crated over it, would certainly be entitled to give priority to the dues of the ESI Corporation. Simply because certain amounts have been deducted from the wages payable to the workmen/employees, the same would not become the security in the hands of the Official Liquidator. In the present case, it is to be seen that the mortgages were created somewhere in the year 1975 and the deductions are for the year 1979 to the year 1993. Much before the liability to make the payment of the contribution arose, mortgages were already created. In the present case, it is to be seen that the mortgages were created somewhere in the year 1975 and the deductions are for the year 1979 to the year 1993. Much before the liability to make the payment of the contribution arose, mortgages were already created. ( 14 ) IN reference to Question No. 2, we shall only say that if the amount is kept in a separate account with the Company, then, the same shall be treated to be in Trust and it shall not form part of the assets of the Company and the liquidator will be required to/bound to pay the said amount in priority to the ESI Corporation before any distribution of the assets of the Company is made by him, but, in a case where such amount is not kept in cash in any separate account and the Official Liquidator does not receive the said amount, then, the procedure provided under Section- 529 (A), read with Section-530, of the Companies Act will have to be followed. ( 15 ) THE third question referred for our answer is that the properties/assets of the Company, which have already been mortgaged or earmarked by the secured creditors and when the company is in liquidation, whether the Liquidator would have that equity alone and whether the entire amount would be required to be paid to the secured creditors or the ESI corporation would be entitled to priority over the said dues in this behalf. In absence of Section-529 (A), the answers certainly could be in favour of the ESI Corporation. Since after introduction of Section-529 (A) and amendment to Section-530 of the companies Act, the legal position is changed. When the official Liquidator acquires or possesses the securities mortgaged with the secured creditors, then, the Official liquidator would be obliged to observe the provisions of section-529 (A) and Section-530 of the Companies Act. The question of equity would not arise because in a case where the securities/properties/assets are not sufficient to discharge the liability of the creditors described under section-529 (A) of the Companies Act, the question of payment under Section-530 of the Act would not arise. Section-530 of the Companies Act would come into operation only after the liability under Section-529 (A) is discharged and some money is still left. ( 16 ) WE accordingly answer the reference. Section-530 of the Companies Act would come into operation only after the liability under Section-529 (A) is discharged and some money is still left. ( 16 ) WE accordingly answer the reference. Let all the matters be placed before the learned single Judge. .