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2006 DIGILAW 508 (GUJ)

BANK OF INDIA v. JASHWANTBHAI GIRDHARLAL PAREKH

2006-08-17

H.K.RATHOD

body2006
H. K. RATHOD, J. ( 1 ) HEARD learned Advocate Mr. D. M. Parikh for applicant learned Advocate mr. P. C. Master for opponent No. 1 and 2 and learned AGP Mr. L. B. Dabhi for; opponents No. 3 and 4 and Mr. M. S. Rao for opponent No. 5. ( 2 ) LEARNED Advocate Mr. D. M. Parikh who is appearing for the applicant Bank of india being third party has submitted that the present applicant is secured creditor and the proceedings in respect of its dues are pending before the DRT at Bombay. He also submits that applicant has obtained interim orders from the DRT against the transfer/sale of the property of opponent No. 5. He also submitted that such stay is in operation but the company is not wound up by the bombay High Court but winding up proceedings are pending before the Bombay high Court. He also submits that winding up proceeding is not filed by the applicant bank of India. He also submits that if this property is sold, then, it will create lot of complication, multiplicity of proceedings. He also submits that the valuable right of the applicant will be adversely affected if the dues of the workers towards gratuity are secured by opponents No. 1 and 2. He also submits that considering the facts, claim of workers cannot adversely affect valuable right of the Bank of India as a secured creditor. He submits that it is likely to result into complications. He also submits that section 529/529a of the Companies Act would not come into play because winding up orders have not been passed uptil now by the bombay High Court but it will come into effect only after winding up orders are passed by the High Court of Bombay. Therefore, it is his contention that the workers are not entitled to have right of pari passu on priority so long as the winding up orders have not been passed by the High Court of bombay. He also submits that in the facts of this case, right of secured creditor cannot be adversely affected and these facts have not been brought to the notice of this court when this court passed order on 5. 5. 2006 in sca No. 9985 of 2006. He also submits that in the facts of this case, right of secured creditor cannot be adversely affected and these facts have not been brought to the notice of this court when this court passed order on 5. 5. 2006 in sca No. 9985 of 2006. He referred to the relief prayed in Miscellaneous Civil application and prayed to consider the relief prayed for in review application and to grant the permission so interest of the parties can be protected. Review application has been filed by the applicant Bank of India against the order of this court dated 5. 5. 2006. He relied upon section 13 (10) of the securitisation Act. He also relied upon the provisions of Order 47 Rule 1 of the Code of civil Procedure. He relied upon two decisions one reported in AIR 1999 GUJARAT 193 IN case OF ORIENTAL TEXTILE MILLS ltd. V. BHARAT K. PATEL AND others REPORTED IN AIR 1999 gujarat 193 AND THE ANOTHER IS AIR 2005 SC 1814 IN CASE OF ANDHRA BANK v/s. OFFICIAL LIQUIDATOR AND another. He also submits that Order 47 rule l (a) of the Code of Civil Procedure, gives right to any person to file such review application before this Court. Therefore, he requested this Court to grant permission and to entertain prayer made in review application filed by the applicant bank. Except these submissions, no other submission was made by the learned advocate Mr. Parikh on behalf of the bank and except the two decisions referred to herein above, no other decision was referred to by the learned Advocate Mr. Parikh before this court. ( 3 ) LEARNED AGP Mr. Dabhi appearing for the authority has submitted that the statutory authority has acted as per recovery certificate issued by the controlling authority and direction issued by this court. Learned advocate Mr. Master appearing for the workman submits that the order of the controlling authority is based on the consent and no payment is made by the company to the workers, therefore, request was made to the controlling authority to issue recovery certificate which has been issued and not implemented by the statutory authority, therefore, before filing petition, legal notice was served to the company and statutory authority but no response was shown by either of the authorities and Company and therefore ultimately special civil application no. 9985 of 2006 was filed by the petitioner- union i. e. Present opponents No. 1 and 2 before this court and this court has rightly passed order dated 5. 5. 2006 directing the authority to enforce recovery certificate against the company. He also submits that the proceedings of the concerned bank are pending and the right to receive gratuity amount is protected under the provisions of the Payment of Gratuity Act,1972. According to his submission, amount of gratuity cannot be attached by any decree or order of any authority/court under section 13 of the Act and under section 14 of the Act, any agreement or any law which is adversely affecting right to receive gratuity is not operating against right to receive amount of gratuity of workers. Therefore, he submitted that no permission can be given to the applicant which would otherwise adversely affect right of the workers to receive gratuity which has been due since 2002. Therefore, it is his submission that the application filed by the bank may be rejected. ( 4 ) NO submission has been made by the learned Advocate Mr. Rao in respect of the application filed by the Bank of India. ( 5 ) IN view of the submissions of the learned Advocates for the parties, it is necessary to consider the relief prayed for by the applicant in CA NO. 9488 of 2006. Therefore, para 12 of the Civil Application no. 9488 of 2006 is reproduced as under:12 (A) That the Honourable Court may be pleased to grant a leave to apply to the applicants in filing the Misc. Civil application for clarification /modification/issuing directions in the matter against the judgment and order dated 0. 5. 2006 passed in Special Civil Application No. 9985 of 2006, read with order dated 27. 6. 2006, passed in misc. Civil Application No. 1642 of 2006;12 (B) The Honourable Court may be pleased to grant any other and further relief as deemed just and expedient in the facts of the case. "para 13 relief clause in aforesaid miscellaneous civil Application is reproduced as under:13 (A) The Honourable Court may be pleased to recall and/or review and/or clarify and/or modify and pass a fresh judgment and order in place of order dated 5. 5. 2006 passed in Special Civil Application No. 9985 of 2006 read with order dated 27. 6. 2006 passed in misc. 5. 2006 passed in Special Civil Application No. 9985 of 2006 read with order dated 27. 6. 2006 passed in misc. Civil Application No. 1642 of 2006 after considering the aspects mentioned herein above in this application and be further pleased to issue a direction that no third party rights shall be created in the properties of the opponent No. 5, charged and mortgaged to the applicant without first discharging the dues of the applicant and if at all the secured properties are required to be sold, the same should be sold only by a receiver to be appointed by the DRT-a, mumbai or by the Official Liquidator which may be appointed by the Bombay High Court in Company Petition No. 735 of 2004 or in the alternative by a committee consisting of the, the receiver to be appointed by DRT-1, mumbai, the Official Liquidator to be appointed by the Bombay High Court and the representatives of the Secured Creditors and the recognized union of workmen and the distribution of the value received should be done strictly in terms of the security interest of the secured creditors and others as if the company has not gone into liquidation. 13 (B) Pending admission, hearing and final disposal of this application, the honourable Court may be pleased to stay the judgment and order dated 5. 5. 2006 passed in Special Civil Application No. 9985 of 2006 read with order dated 27. 6. 2006 passed in misc. Civil Application No. 1642 of 2006 and be further pleased to restrain the opponents no. 3 and 4 to take any further steps in selling the assets and properties of the opponent no. 5 which are secured by hypothecation or mortgage to the applicant; the Honourable Court may be pleased to grant any other and further relief as deemed just and expedient in the facts of the case. "in Civil Application (St) No. 13260 of 2006, applicant has prayed for following relief in para 12 :12 (A) The Honourable Court may be pleased to condone the delay of 71 days in preferring the Misc. Civil Application. 12 (B) Pending admission, hearing and final disposal of this appeal, the Honourable court may be pleased to restrain the opponents No. 3 and 4 from proceeding any further in the matter of sale of properties of the Opponent No. 4 in pursuance of orders dated 5. 5. Civil Application. 12 (B) Pending admission, hearing and final disposal of this appeal, the Honourable court may be pleased to restrain the opponents No. 3 and 4 from proceeding any further in the matter of sale of properties of the Opponent No. 4 in pursuance of orders dated 5. 5. 2006 and 27. 6. 2006 passed in SCA no. 9985 of 2006 and Misc. C. A. No. 1642 of 2006 respectively and public Advertisement dated 16th July, 2005 in news papers sandesh and Divya Bhaskar, Surat edition. The Honourable Court may be pleased to grant any other and further relief as deemed just and expedient in the facts of the case. Now, I am considering the various provisions which have been relied upon by learned Advocate Mr. Parikh in his submissions, whether such provisions are applicable to the facts of this case or not. Section 13 (10) of the Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002 is required to be referred to. Therefore, same is reproduced as under:"13. Enforcement of security interest- (10) Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery tribunal having jurisdiction or a competent court, as the case may be, for recovery of the balance amount from the borrower. "provisions of Section 529 and 529a of the Companies Act read as under:529. "provisions of Section 529 and 529a of the Companies Act read as under:529. (1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to : (a) debts provable; (b) the valuation of annuities and future and contingent liabilities; and (c) the respective rights of secured and unsecured creditors; as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent; [provided that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workmen s portion therein and, where a secured creditor, instead of relinquishing his security and proving his debt, opts to realise his security, (a) the liquidator shall be entitled to represent the workmen and enforce such charge; any amount realised by the liquidator by way of enforcement of such charge shall be applied rateably for the discharge of workmen s dues; and (c) so much of the debt due to such secured creditor as could not be realised by him by virtue of the foregoing provisions of this proviso or the amount of the workmen s portion in his security, whichever is less, shall rank pari passu with the workmen s dues for the purposes of section 529a. ] all persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company, may come in under the winding up, and make such claims against the company as they respectively are entitled to make by virtue of this section; [provided that if a secured creditor instead of relinquishing his security and proving for his debt proceeds to realise his security, he shall be liable to pay his portion of the expenses incurred by the liquidator (including a provisional liquidator, if any) for the preservation of the security before its realization by the secured creditor. ] [explanation : for the purposes of this proviso, the portion of expenses incurred by the liquidator for the preservation of a security which the secured creditor shall be liable to pay shall be the whole of the expenses less an amount which bears to such expenses the same proportion as the workmen s portion in relation to the security bears to the value of the security. ]for the purposes of this section, section 529a and section 530, - (a) "workmen" in relation to a company, means the employees of the company, being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947) (B) "workmen s dues", in relation to a company, means the aggregate of the following sums due from the company to its workmen, namely :-all wages or salary including wages payable for time or piece work and salary earned wholly or in part by way of commission of any workman, in respect of services rendered to the company and any compensation payable to any workman under any of the provisions of the Industrial disputes Act, 1947 (14 of 1947); all accrued holiday remuneration becoming payable to any workman, or in the case of his death to any other person in his right, on the termination of his employment before, or by the effect of, the winding up order or resolution; unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, or unless the company has, at the commencement of the winding up, under such a contract with insurers as is mentioned in section 14 of the Workmen s compensation Act, 1923 (8 of 1923), rights capable of being transferred to and vested in the workman, all amounts due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any workman of the company; all sums due to any workman from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the workmen, maintained by the company; (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 portion as the amount of the workmen s dues bears to the aggregate of-the amount of workmen s dues; and the amounts of the debts due to the secured creditors;529a. (1) Notwithstanding anything contained in any other provisions 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 529 pan passu with such dues, shall be paid in priority to all other debts. 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 ab ate in equal proportions. ]. Now, I am considering two decisions which have been relied upon by learned advocate Mr. Parikh and also considering the, fact whether two decisions which have been relied upon by Mr. Parikh are applicable to the facts of present case or not. In CONTINENTAL TEXTILE LTD. V/s. BHARAT K. PATEL, AIR 1999 gujarat 193, it has been observed as under: (A) Constitution of India, Art. 226 -REVIEW - HIGH COURT - Review of order passed in writ proceedings - High Court has plenary jurisdiction under Art. 226 -Application for review - Not restricted to O. 47, R. 1 and S. 151, C. P. C. Civil P. C. (5 of 1908), S. 151, O. 47, r. 1. ( 6 ) WHERE a writ petition is disposed of and a Miscellaneous Civil Application seeking review of the order passed therein is sought, such an application cannot be strictly said to be under provisions of O. 47, r. (1) or under Section 151 of C. P. C. Even in a disposed matter when a Miscellaneous civil Application is filed seeking review of the order passed in Writ proceedings it is essentially an application under Art. 226 of the Constitution of India and there is nothing in Art. 226 of the Constitution of India which excludes the High Court from exercising the power of review. The Court has a plenary urisdiction to review the order to prevent the miscarriage of justice by correcting the grave error committed by it. The Court has a plenary urisdiction to review the order to prevent the miscarriage of justice by correcting the grave error committed by it. (Para 21) (B) Constitution of India, Art. 226 -REVIEW - Review - Order in writ petition abtained making false statements of fact in affidavits filed by parties - Same amounting to abuse of process of Court - Both parties not coming to Court with clean hands - Order to obtained set aside on review. In ANDHRA BANK V. OFFICIAL liquidator AND ANOTHER, AIR 2005 SC 1814 , apex court observed as under:"observations in ALLAHABAD BANK v/s. CANARA BANK, 2000 AIR SCW 1347 air 2000 SC 1535 : 2000 CLC 913, overruled. The language of S. 529-A of companies Act (1956) is clear and unequivocal, in terms whereof the workmen s due or the debts due to the secured creditors to the extent such debts rank under Cl. (c)of the proviso to sub-section (1) of S. 529 pari passu with such dues shall have priority over all other debts. Once the workmen s portion is worked out in terms of proviso (c)of sub-section (1) of S. 529, indisputably the claim of the workmen as also the secured creditors will have to be paid in terms of s. 529-A. The illustration appended to Cl. (c)of sub-section (3) of S. 529 is a clear pointer to the effect that the amount of debts due to the secured creditors should be taken into consideration for the purpose of ascertaining the workmen s portion of security. Hence, it cannot be said that the workmen s dues have complete priority over all other creditors, secured and unsecured because of S. 529-A (1) (a ). (2002) 2 Cal HN 412, Reversed. Observations in ALLAHABAD BANK v/s. CANARA BANK, AIR 2000 SC 1535 : 2000 AIR SCW 1347 : 2000 CLC 913, overruled. NATIONAL TEXTILE WORKERS union V. P. R. RAMAKRISHNAN, AIR 1983 SC 75 , Disting. (Paras 19, 21, 22, 23, 24, 25, 26)In terms of the provisions under Ss. 529-A and 529 of Companies Act, the secured creditors have two options (i) they may desire to go before the Company Judge; or (ii) they may stand outside the winding up proceedings. The secured creditors of the second category, however, would come within the purview of S. 529-A (l) (b) read with proviso (c) appended to S. 529 (1 ). 529-A and 529 of Companies Act, the secured creditors have two options (i) they may desire to go before the Company Judge; or (ii) they may stand outside the winding up proceedings. The secured creditors of the second category, however, would come within the purview of S. 529-A (l) (b) read with proviso (c) appended to S. 529 (1 ). The workmen s portion as contained in proviso (c) of sub-section (3) of S. 529 in relation to the security of any secured creditor means the amount which bears to the value of the security in the same proportion as the amount of the workmen s dues bears to the aggregate of (a) workmen s due, and (b) the amount of the debts due to all the creditors. The plea that in a situation of this nature, what was necessary to be considered by the company Judge was to find out the amount in relation whereto the appellant in the instant case was raising its claim as a secured creditor, namely, 135 lakhs vis-a-vis the aggregate of the amount of the wokmen s dues of 19 crores and the claim of any other secured creditor was not required to be taken into consideration cannot be accepted. Thus, when a matter is not pending before the tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act (1993) in terms of S. 19 (19) thereof, the secured creditors would not get priority per se as it is qualified by the words in accordance with the provisions of S. 529-A. the claims of the secured creditors, are, thus, required to be considered giving priority over unsecured creditors but their claim would be pari passu with the workmen. Section 446 of the Companies Act indisputably confers a wide power upon the Company Judge, but such a power can be exercised only upon consideration of the respective contentions of the parties raised in a suit or proceeding or any claim made by or against the company. A question of determining the priorities would also fall for consideration if the parties claiming the same are before the Court. " ( 7 ) I have considered provisions and decisions as referred above which are relied upon by learned Advocate Mr. Parikh. A question of determining the priorities would also fall for consideration if the parties claiming the same are before the Court. " ( 7 ) I have considered provisions and decisions as referred above which are relied upon by learned Advocate Mr. Parikh. I have considered the prayer clauses in aforesaid three applications filed by the Bank of India in Special Civil Application No. 9985 of 2006. Bank of India was not a party before the controlling authority who has passed consent order granting amount of gratuity in favour of the workers. Initially Bank of India filed civil suit claiming amount of loan with interest from the company which was ultimately transferred to the Debt Recovery tribunal at Bombay. Claim of the Bank of india against the company including the property is separate claim. Question is whether the Bank of India being third party is entitled to file such an application before this court or not when this court has merely directed the statutory authority to act in accordance with law and to implement / execute order of recovery certificate issued by the controlling authority at Navsari. This court has not determined any right of the bank of India or curtailed any right of the bank of India and this court has also not passed any order which would adversely affect right of the Bank of India but this court has granted relief to workers in light of section 8, 13 and 14 of Gratuity Act, 1972 wherein statutory authority has failed in performance of their statutory duties to recover the amount of gratuity from the company. Bank of India is claiming that the bank is a secured creditor but according to this court, this question will arise only after the winding up orders are passed by the bombay High Court. So long as such proceedings are pending before the DRT at bombay and interim orders are operating in favour of the applicant bank, the applicant bank has no locus to file such an application before this court with a prayer to review /recall order of this court dated 5. 5. 2006. Bank of India is not at all necessary party in the proceedings because in this petition only right which has been crystallized by the controlling authority on the basis of consent has to be recovered from the company. 5. 2006. Bank of India is not at all necessary party in the proceedings because in this petition only right which has been crystallized by the controlling authority on the basis of consent has to be recovered from the company. Manner and mode has to be decided by the statutory authority and it is not a function of this court how to recover the amount while applying the provisions of the Bombay land Revenue Code and it is for the authority to decide and it is not the function of this court to examine the question as to whether the authority has been rightly performing the functions as per the recovery certificate issued by the controlling authority at Navsari. Therefore, considering the provisions of section 8, 13 and 14 of the payment of Gratuity Act, same are reproduced as under:"8. Recovery of gratuity.- If the amount of gratuity payable under this Act is not paid by the employer within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon (at such rate as the Central government may, by notification, specify), from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto. Provided that the controlling authority shall, before issuing a certificate under this section, give the employer a reasonable opportunity of showing cause against the issue of such certificate; provided further that the amount of interest payable under this section shall, in no case, exceed the amount of gratuity payable under this Act. 9. Protection of gratuity No gratuity payable under this Act and no gratuity payable to an employee employed in any establishment, factory, mine, oilfield, plantation, port, railway company or shop exempted under section 5] shall be liable to attachment in execution of any decree or order of any civil, revenue or criminal court. 10. Act to override other enactments, etc.- The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act. 10. Act to override other enactments, etc.- The provisions of this Act or any rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or in any instrument or contract having effect by virtue of any enactment other than this Act. " ( 8 ) THERE is no law that until an employee tolerate such an order he is not entitled to the benefits of his retirement. If this would be the position of law, post retirement pecuniary benefits will not be paid and only because an employee challenges the order, he would invite suffering himself. Post retirement pecuniary benefits are benevolent in nature. No interpretation is possible where a benevolent provision would be defeated. After making the payment a condition of service, employee becomes a trustee in respect of the sum due and it has to assist employee to get it as early as possible so that the employee utilises the same in post retirement period. Intention of parliament in Payment of Gratuity Act is also the same. Procedural matters cannot be treated as pre-condition to get the benefit. When such a question comes to Court, it become obligatory for the Court to protect interest of the employee without causing detriment to the employer. [brundaban sahu V. OSRT CORPORATION LTD. , 1992 LAB IC 1335; 1992 LLR 696 (ORI)]. ( 9 ) THE employer is not entitled to withhold the gratuity on the pretext that the employee is in occupation of the land belonging to the employer. The amount by way of gratuity due to an employee cannot be withheld otherwise than by fulfilling the conditions contained in sections 4 (6), 13 and 14 of the Payment of Gratuity Act. Under the A ct, the employer is entitled to withhold the gratuity of an employee under section 4 (6) of the Act. That apart, the legislature itself has granted statutory protection for payment of gratuity to an employee by enacting section 13 under which no gratuity payable under the Act is liable to attachment in execution of any decree or order of any civil, revenue or criminal court. Section 14 of the Act and Rules made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than the Act or in any instrument or contract having effect by virtue of any enactment other than the Act. Section 14 of the Act and Rules made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than the Act or in any instrument or contract having effect by virtue of any enactment other than the Act. It was held that even if it is assumed that the land in question belongs to the employer the refusal to surrender cannot be treated as failure to settle the account by the employer thereby forming a basis for withholding disbursal of arrears of gratuity [travancore PLYWOOD INDUSTRIES ltd. V. REGIONAL JOINT LABOUR commissioner, 1996 LAB IC 1403; (1996)2 LLJ 85; (1996) 1 CUR LR 770 (KER)] ( 10 ) IN SATHIYABAMA AND OTHERS V. M. PALANISAMY AND OTHERS, reported IN 2004-II-LLJ. PAGE 403, it has been observed by the Madras High Court as under:"as regards the gratuity, in a decision in Calcutta Dock Labour Board V/s. Sandhya mitra AIR 1985 SC 996 : 1985 (2) SCC 1 :1993-III-LLJ (Suppl)-412, the Supreme Court, in a case very similar to the case on hand held that the gratuity payable to a dock worker under a scheme, is not liable to attachment. In that case, one Md. Saflur Rehman was the employee of the Calcutta Dock Labour Board. He was entitled to gratuity. The respondent before the Supreme Court filed a suit for recovery of the amounts against legal representatives of the said Md. Safur Rehman and prayed for attachment of the gratuity payable to the said employee. The Board objected to it. The Chief Judge of the Small causes Court overruled the objection. Against that the appellants moved the High court at Calcutta and contended that the gratuity payable to the workman was not liable to attachment. A Division Bench of the high Court of Calcutta affirmed the order of the Chief Judge of the Small Causes Court. On appeal by the Board the Supreme Court referred to Section 13 and 14 of the Payment of Gratuity Act and held that the preamble of the Act clearly indicates the legislative intention that the Act sought to provide a scheme for payment of gratuity to all employees like the employee of the Calcutta dock Labour Board and that the gratuity payable to him squarely came within the purview of the Act and was entitled to immunity under Section 13 of the Act. The supreme Court, therefore, allowed the appeal and held that the view of the High Court that the gratuity payable to Md. Saflur rehman was liable to attachment was erroneous. This being the legal position, I am bound to follow the same. ( 11 ) IT is, therefore, clear that these amounts which are payable to employees, so that they would not be left resourceless at the time of retirement are exempted for attachment, whether they are payable to the employee or to his legal representatives. The various decisions referred to above also indicate that whether the employee has retired or has become insolvent or has died the character of these amounts do not change so long as they are in the hands of the employer. The immunity from attachment is complete. The object of the provisions are to see that the employee gets these amounts after his retirement or his heirs get them after the employee s death. Since the scheme is a beneficial one, the authority viz. the employer is a trustee for those sums and is bound to object to the attachment. The second respondent has rightly maintained its stand against the attachment. There can be no legal justification for classifying or describing such deposits or amounts differently after the employee s death or retirement, so long as they are with the employer, there is protection from attachments. Provident Fund amounts, pension and other compulsory deposit retain their character until they reach the hands of the employee. Any other view cannot be taken considering the conditions in which such exemption provisions operate and the class of persons they were intended to benefit. IN one of the decisions, even the pay order had been made out but it had not left the hands of the employer, the plead of the person seeking attachment on the ground that, really nothing further was required, was in vain. It still had not reached the employee and as the learned Judge picturesquely put it, "a miss is a good as a mile". ( 12 ) IN PRABHAKAR RAO T. V/s. REGISTRAR OF CO-OPERATIVE societies, GOVERNMENT OF A. P. AND others REPORTED IN 2004-I-LLJ- PAGE 131, it has been observed as under:"11. It still had not reached the employee and as the learned Judge picturesquely put it, "a miss is a good as a mile". ( 12 ) IN PRABHAKAR RAO T. V/s. REGISTRAR OF CO-OPERATIVE societies, GOVERNMENT OF A. P. AND others REPORTED IN 2004-I-LLJ- PAGE 131, it has been observed as under:"11. Petitioner-employee of respondent-co-operative Rank was not paid the gratuity payable to him, which was held in fixed deposit and not allowed to be withdrawn by the petitioner on the ground that proceedings under Section 60 of the A. P. Co-Operative societies Act, 1964 were pending against him. Hence, his writ petition challenging the withholding of the gratuity amount by the respondents. The High Court allowed the petition. It observed, referring to Section 60 of the Code of Civil Procedure 1908 and section 13 of the Payment of Gratuity Act, 1972 and Rule 52 (5) (o) of the A. P. Cooperative Societies Rules, 1964, and Rule 14 of the Payment of Gratuity Rules, 1972 that there was complete protection against attachment or recovery of gratuity amount payable to retired employees, in any manner. " ( 13 ) THE contention of learned advocate mr. Parikh is to review/recall the order passed by this Court on 5. 5. 2006. In light of such submission, whether the review application filed by the third party is maintainable or not and whether there is any error pointed out by the applicant Bank or not? Therefore, legal aspects of review/recall have been considered by me by relying and referring decisions of apex court and high Court which are as under: ( 14 ) IN HARIDAS DAS V. SMT. USHA rani BANK and ORS. , 2006 AIR SCW 1771, apex court observed as under:13. In order to appreciate the scope of a review, Section 114 of the CPC has to be read, but this section does not even adumbrate the ambit of interference expected of the Court since it merely states that it "may make such order thereon as it thinks fit". The parameters are prescribed in Order xlvii of the CPC and for the purpose of this lis, permit the defendant to press for a rehearing "son account of some mistake or error apparent on the face of the records or for any other sufficient reason". The parameters are prescribed in Order xlvii of the CPC and for the purpose of this lis, permit the defendant to press for a rehearing "son account of some mistake or error apparent on the face of the records or for any other sufficient reason". The former part of the rule deals with a situation attributable to the applicant, and the latter to a jural action which is manifestly incorrect or on which two conclusions are not possible. Neither of the postulate a rehearing of the dispute because a party had not highlighted all the aspects of the case or could perhaps have argued the more forcefully and/or cited binding precedents to the Court and thereby enjoyed favourable verdict. This is amply evident from the explanation in Rule 1 of the Order XLVII which states that the fact that the decision on a question of law on which the judgment of the Court is based has been reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of such judgment. Where the order in question is appealable the aggrieved party has adequate and efficacious remedy and the Court should exercise the power to review its order with the greatest circumspection. This Court in m/s. Thungabhadra Industries Ltd. (in all the appeals) V. The Government of Andhra pradesh represented by the Deputy commissioner of Commercial Taxes, anantpur ( AIR 1964 SC 1372 ) held as follows :"there is a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could be characterised as vitiated by "error apparent". A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected, but lies only for patent error. Where without any elaborate argument one could point to the error and say here is a substantial point of law which stares one in the face, and there could reasonably be no two opinions entertained about it, a clear case of error apparent on the face of the record would be made out. " ( 15 ) IN MEERA BHANJA V. SMT. " ( 15 ) IN MEERA BHANJA V. SMT. NIRMALA KUMARI CHOUDARY ( AIR 1995 sc 455 ) it was held that :"it is well settled that the review proceedings are not by way of an appeal and have to be strictly confined to the scope and ambit of Order 47, Rule 1, C. P. C. In connection with the limitation of the powers of the Court under Order 47, Rule 1, while dealing with similar jurisdiction available to the High Court while seeking to review the orders under Article 226 of the Constitution of India, this Court, in the case of Aribam tuleshwar Sharma V. Aribam Pishak sharma, AIR 1979 SC 1047 , speaking through Chinnappa Reddy, J. , has made the following pertinent observations (para 3) : it is true there is nothing in Article 226 of the Constitution to preclude the High court from exercising the power of review which inheres in every Court of Plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by it. But, there are definitive limits to the exercise of the power of review. The power of review may be exercised on the discovery of new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the person seeking the review or could not be produced by him at the time when the order was made; it may be exercised where some mistake or error apparent on the face of the record is found; it may also be exercised on any analogous ground. But, it may not be exercised on the ground that the decision was erroneous on merits. That would be the province of a Court of Appeal. A power of review is not to be confused with appellate power which may enable an Appellate Court to correct all manner of errors committed by the Subordinate Court. But, it may not be exercised on the ground that the decision was erroneous on merits. That would be the province of a Court of Appeal. A power of review is not to be confused with appellate power which may enable an Appellate Court to correct all manner of errors committed by the Subordinate Court. "a perusal of the Order XLVII, Rule 1 show that review of a judgment or an order could be sought : (a) from the discovery of new and important matters or evidence which after the exercise of due diligence was not within the knowledge of the applicant; (b) such important matter or evidence could not be produced by the applicant at the time when the decree was passed or order made; and (c) on account of some mistake or error apparent on the face of record or any other sufficient reason. " ( 16 ) AS regards reliance of Mr. Parikh on order 47 Rule (1) of the Code of Civil procedure, law is settled on this aspect and order 47-Rule (1) of CP Code is not strictly applicable to writ proceedings as per the division Bench decision of this court in case of AHMEDABAD ELECTRICITY COMPANY ltd. V. MUNICIPAL CORPORATION OF the CITY OP AHMEDABAD and ORS. 2003 (1) GLR PAGE 397. It has been observed in the said judgment as under:"the power to review its decision under Art. 226 of the Constitution inheres in the High Court and provisions of Order 47, civil PC do not strictly apply to writ proceedings and exercise of that power is discretionary. 2003 (1) GLR PAGE 397. It has been observed in the said judgment as under:"the power to review its decision under Art. 226 of the Constitution inheres in the High Court and provisions of Order 47, civil PC do not strictly apply to writ proceedings and exercise of that power is discretionary. An application inviting the high Court under Article 226 to review its decision when it is filed after a long lapse of time without any proper explanation for the delay, High Court would be justified in rejecting the application on that ground alone as that would be sound exercise of discretion (para 7)There can be no disagreement with the proposition that there is nothing in Art. 226 of the Constitution to preclude High court from exercising power of review which inheres in every Court of plenary jurisdiction to prevent miscarriage of justice or to correct grave and palpable errors committed by it and on the ground of principles of natural justice the petition for review can be entertained under the plenary jurisdiction by the writ Court, (para 11)It has to be kept in view that an error apparent on the face of record must be such an error which must strike one on mere looking at the record and would not require any long drawn process of reasoning on points where there may conceivably be two opinions. " ( 17 ) IN case of JAGANNATH AND others V. LAND ACQUISITION officer AND REVENUE DIVISIONAL officer, PALANI AND OTHERS, reported IN (2006) 3 MLJ 196 (DB, madras HIGH COURT), it has been observed as under :"civil Procedure Code (5 of 1908), order 47, Rule 1 - Power of review - When can be exercised - Review cannot be treated as an appeal in disguise - Power can be exercised only to correct an error apparent on the face of the record -Not to correct an erroneous decision - An error which has to be fished out and searched cannot be called an error apparent on the face of the record -Petition by unpaid seller of immovable property to be impleaded as a party in an appeal arising out of a reference under the land Acquisition Act - Dismissed by a division Bench of the High Court on the ground that he was not a necessary or proper party - Review Application filed against the order - No error apparent on the fa ce of the record found - All pleas raised in review petition not raised earlier before the Division bench - Held, review petition not maintainable. " ( 18 ) LEARNED Advocate Mr. Parikh has placed reliance on the apex court decisions as referred to above which are not applicable to the facts of this case in view of the other three decisions of the apex court on the same subject (1) TEXTILE LABOUR association AND ANOTHER V. THE official LIQUIDATOR AND ANOTHER, air 2004 SC 2336 , (2) ICICI BANK LTD. V/s. SIDCO LEATHER LTD. and ORS. REPORTED IN 2006 AIR SCW 2361 (3) 2006 air SCW 2900 IN CASE OF RADHESHYAM ajitsaria and ANR. V. BENGAL chatkal MAZDOOR UNION and ORS. In view of the observations made in the aforesaid three decisions, law is very much clear that the workers are having privilege to recover the said amount from the company against any other dues including the secured creditors. However, I am referring to the said three decisions only on the ground to make it clear the legal position which was advanced by the learned Advocate mr. Parikh before this Court. Looking to the facts of this case, winding up proceedings are still pending to be decided by the Bombay high Court. However, I am referring to the said three decisions only on the ground to make it clear the legal position which was advanced by the learned Advocate mr. Parikh before this Court. Looking to the facts of this case, winding up proceedings are still pending to be decided by the Bombay high Court. However, so long the order of winding up of company is not passed, question of pari passu distribution of due amount of applicant bank being a secured creditor does not arise. Question of priority is also not arising since the said winding up proceedings are not finalized. Proceedings which have been initiated by the applicant bank before the DRT at Bombay a re independent proceedings and still right of the applicant bank has to be examined on merits by the DRT. So, right of the applicant bank is still to be examined by the DRT Bombay but as against that, right of the workmen has already been examined and crystallized on merits to receive the amount of gratuity on the basis of the consent given by the company and enforcement of recovery certificate is the result of consent order. Therefore, these are distinct and independent proceedings carried out by the workers against the company. Amount of gratuity is already protected under section 13 and 14 of the Payment of Gratuity Act, 1972 which amounts to statutory protection against claim of gratuity of workers and pendency of proceedings before DRT Bombay cannot adversely affect right of the workers to receive amount of gratuity from the company. So, looking to the present situation, applicant bank has no locus to challenge the enforcement of recovery certificate against the company. Applicant bank has, by filing application, prayed to make clarification in the order dated 5/5/2006 but intention of the applicant bank is otherwise, not to clear the complication but to create complication and confusions as well as multiplicity of proceedings between the workers, company and the applicant bank. Such efforts cannot be entertained, encouraged by this court when the applicant bank was not a party before the controlling authority and in special civil application No. 9985 of 2006 wherein order dated 5/5/2006 was passed by this court. Therefore, such an attempt of the applicant bank cannot be entertained. Such efforts cannot be entertained, encouraged by this court when the applicant bank was not a party before the controlling authority and in special civil application No. 9985 of 2006 wherein order dated 5/5/2006 was passed by this court. Therefore, such an attempt of the applicant bank cannot be entertained. ( 19 ) IN TEXTILE LABOUR ASSOCIATION AND ANOTHER V. THE official LIQUIDATOR AND ANOTHER, air 2004 SC 2336 , it is observed by apex court as under:"8. The effect of Sections 529 and 529-A 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 529-A to the extent of the workmen dues. The purpose of Section 529-A 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 529-A. This Section overrides preferential claims under Section 530 also. Under Section 529-A 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. 9. Therefore, the law is clear on the matter as held in UCO Bank s case that section 529-A will override all other claims of other creditors even where a decree has been passed by a Court. " ( 20 ) IN ICICI BANK LTD. V. SIDCO leather LTD. and ORS. REPORTED IN 2006 AIR SCW 2361, apex court observed as under in Head Note (A):"it is only with a view to bring the workman s dues Pari passu with the secured creditors, S. 529a was enacted. S. 529a no doubt contains a non obstante clause but in construing the provisions thereof, it is necessary to determine the purpose and object for which the same was enacted. The non-obstante nature of a provisions although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy. S. 529a no doubt contains a non obstante clause but in construing the provisions thereof, it is necessary to determine the purpose and object for which the same was enacted. The non-obstante nature of a provisions although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy. Only because the dues of the workmen and the debt due to the secured creditors are treated pari passu with each other, the same by itself, would not lead to the conclusion that the concept of inter se priorities amongst the secured creditors had thereby been intended to be given a total go by. " ( 21 ) IN RADHESHYAM AJITSARIA and anr. V. BENGAL CHATKAL MAZDOOR union and ORS. , REPORTED IN 2006 AIR scw 2900, the apex court has held that if the company is not wound up, then, section 529a would not apply. In paragraph 39, 46, 49 and 60 of the judgment, apex court observed as under:"39. The above facts clearly go to show and administer that the workers do not have a right to oppose the payment to all unsecured creditors out of the funds lying with the Registrar, Original Side, High Court. The reasons for our conclusion are as under: (a) By order of this Court the said funds are meant for disbursement only for unsecured creditors. Separate arrangements have been made under the scheme for payment of other dues including workers dues. The said scheme sanctioned in 1989 is still in operation and the present Committee of Management is operating under the same scheme. (b) Since 1994, i. e. After the Petitioner group was superseded by the Jain Jalan group, no demands of any nature relating to any outstanding payments were ever raised by the Workers. (c) In any event, it has been clearly recorded in the order dated November 18, 2004 whereby the said Chetan Choudhary group has been allowed to continue in management, that the said Chetan choudhary Group is being allowed to be continued on the same terms and conditions as under the original sanctioned scheme, thus, making them liable to make payments of all dues past or present. (d) Therefore, the company being a running concern, the alleged dues of the workers cannot be claimed against any specific member of the management committee. (d) Therefore, the company being a running concern, the alleged dues of the workers cannot be claimed against any specific member of the management committee. The dues, if any, are against the company and not against any individual members of the Committee of Management. There is no question therefore of holding up payment due to the unsecured creditors on the grounds that workers dues are alleged to be outstanding. (e) Further, since the company still continues to function, Section 529-A of the companies Act cannot be pressed into service by the workers. The protection of section 529-A is available only when a company has been wound up, Official Liquidator has taken over the assets and disbursements are being made by the Official Liquidator in course of the winding up of the company. There is no question of the worker claiming a preferential right or payment while a company is running and carrying on business in the usual course and incurring daily expenses and liabilities. "in any event since the Company is functioning as a going concern on and from the date of implementation of the scheme of Arrangement as formulated and approved by the High Court as well as this court, the question of the workers at this stage when the winding up proceedings have been permanently stayed under section 466 of the Companies Act, 1956 to state to have a better claim by virtue of section 529a of the Companies Act, 1956 does not and cannot arise. The workers having a priority over creditors can come into play only for the winding up process is in motion and the official Liquidator take steps to formalize the winding up. In the instant case, after the scheme had been sanctioned, the question of winding up would arise only if the order of permanent stay granted was to be lifted on any party s complaining of failure of the scheme or inability on the part of the company to make payments either in terms of the scheme or otherwise. The contention to the contrary raised by Mr. Nariman has no force. The contention to the contrary raised by Mr. Nariman has no force. " ( 22 ) IN our view, the provisions as contained in section 529a of the Companies act, 1956 are not applicable in the facts and circumstances of the case as the order of winding up has been stayed and the company is being run under the Scheme as a going concern. ( 23 ) IT was contended by the respondent that for the purposes of sections 441 and 529a of the Companies Act, the phrase in winding up should refer to in the course of winding up . In our view, this cannot be the position because if so, no part of the fixed or movable or any other as sets of the company including raw material and working capital can be alienated by the company in the usual course of its business activities only such time as the winding up proceedings are permanently stayed. This would mean that no order could ever be made exploring the possibility of running the company as a going concern during the pendency of the winding up proceedings. Such an interpretation would not only contrary to the interest of the workers and the industry as a whole but would not be pragmatic and would be contrary to long settled practice in the Company jurisdiction. ( 24 ) IN view of the aforesaid provisions of the Act, amount of gratuity has been protected by the statutory provisions which cannot be attached in execution of any decree or order of any civil, revenue or criminal court. Section 14 is having overriding effect in respect of all other enactments. Provisions of this Act or rule made therein shall have effect notwithstanding anything inconsistent contained in any enactment other than this act. Therefore, amount of gratuity which has been due in favour of workers has been protected by the provisions under the payment of Gratuity Act, 1972. In view of these facts, bank has already filed appropriate proceedings before the DRT at Bombay which are pending. It is also necessary to note that proceedings for winding up are also pending before the High Court of Bombay. It is also necessary to note one important aspect that even in case of SICA Act, 1985 also, for recovering the amount of gratuity, there is no bar of section 22 of the SICA act, 1985. It is also necessary to note that proceedings for winding up are also pending before the High Court of Bombay. It is also necessary to note one important aspect that even in case of SICA Act, 1985 also, for recovering the amount of gratuity, there is no bar of section 22 of the SICA act, 1985. Therefore, in view of these facts, right of the workers has been crystallized by the controlling authority on the basis of the consent given by opponent company and it must be satisfied by the company and if the company is not able to satisfy, then, statutory authority is having legal obligation to implement the same in accordance with law by executing recovery certificate. Therefore, according to my opinion, present application is not liable to be entertained by this court and the same is liable to be rejected. ( 25 ) AS regards decisions cited by the learned Advocate Mr. Parikh, same are not applicable to the facts of this case because court has made observation on the ground that the order in writ petition obtained by the petitioner making false statements of fact in affidavit filed by the parties which is amounting to abuse of process of court. In view of such facts of the said cases, this court entertained review application. However, same is not the case of the applicant in this application. The Applicant bank being third party, filed such review application. It was not the case before the high Court in reported decision as referred above. It is not the case of the applicant that the order dated 5/5/2006 was obtained by petitioner by making false statements of fact. It is also the decision of the apex court that if the petition is decided finally, then, miscellaneous civil application cannot be entertained by this court while exercising powers under Article 226 of the Constitution of India. In STATE OF U. P. V. SHRI brahm DATT SHARMA AND ANOTHER, air 1987 SC 943 , apex court observed as under:"10. The High Court s order is not sustainable for yet another reason. Respondent s writ petition challenging the order of dismissal had been finally disposed of on 10/8/1984, thereafter nothing remained pending before the High Court. No miscellaneous application could be filed in the writ petition to revive proceedings in respect of subsequent events after two years. The High Court s order is not sustainable for yet another reason. Respondent s writ petition challenging the order of dismissal had been finally disposed of on 10/8/1984, thereafter nothing remained pending before the High Court. No miscellaneous application could be filed in the writ petition to revive proceedings in respect of subsequent events after two years. If the respondent was aggrieved by the notice dated 29/1/1986 he could have filed a separate petition under Art. 226 of the Constitution challenging the validity of the notice as it provided a separate cause of action to him. The respondent was not entitled to assail validity of the notice before the High Court by means of a miscellaneous application in the writ petition which had already been decided. The High Court had no jurisdiction to entertain the application as no proceedings were pending before it. The High Court committed error in entertaining the respondent s application which was founded on a separate cause of action. When proceedings stand terminated by final disposal of writ petition, it is not open to the Court to reopen the proceedings by means of a miscellaneous application in respect of a matter which provided a fresh cause of action. If this principle is not followed there would be confusion and chaos and the finality of proceedings would cease to have any meaning. " ( 26 ) THEREFORE, looking to the facts of this case,decisions cited by Mr. Parikh are not applicable and the decision of apex court reported IN AIR 2005 1814 IN CASE OF andhra BANK V. OFFICIAL liquidator AND ANOTHER, is not applicable to the facts of this case. In the said case, assets and properties of Tobacco division of Duncan Agro Industries Ltd. Were transferred to its subsidiary New Tobacco. In the facts of this case, no such factual situation has been arising because winding up proceedings are still pending before the bombay High Court and no winding up orders have been passed by the Bombay high Court and, therefore this decision is also not applicable to the facts of this case. ( 27 ) NOW looking to the facts of this case, bank is not a party to proceedings either before the controlling authority at Navsari or in SCA NO. ( 27 ) NOW looking to the facts of this case, bank is not a party to proceedings either before the controlling authority at Navsari or in SCA NO. 9985 of 2006 before this court and this court has, considering inaction of the statutory authority in performing their legal obligation, merely directed authority to execute/implement recovery certificate in accordance with law and, therefore, Order 47 (1) (a) of CPC would not be applicable to the facts of this case because by passing order dated 5/5/2006, this court has not passed any decree or order against the bank of India. Legal right being secured creditor has to be decided by DRT and so long there is no decision on merit given by the DRT except interim order protecting the interest of bank of India, therefore, there is no decision given by DRT on merits. Further, it is required to be noted that the interim stay which is obtained by the applicant Bank of India is operating against the Company only and it is not operating against the dues of workers concerned and also not against the statutory authorities namely Collector, Navsari as well as the Mamlatdar, Gandevi. Concerned workmen are not a party before the DRT at bombay and they are also not a party before the Bombay High Court in winding up proceedings. The proceedings initiated by the applicant bank before the DRT at Bombay against the company are pending and yet not finalized. Therefore, right of the applicant bank against the company is not crystallized since the merits are yet to be examined by the DRT Bombay. Proceedings for winding up are also pending before the Bombay High court. Therefore, section 529a would not be helpful and applicable to the facts of this case. ( 28 ) AS regards the contention raised by mr. Parikh about the provisions of section 13 (10) of the Securitisation and reconstruction of Financial Assets and enforcement of Security Interest Act, 2002. Recently, Kerala High Court has considered the relevant provisions of the Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002 in light of the provisions of section 11 Sub section (2) of the Employees Provident funds and Miscellaneous Provisions Act, 1952, ("epf Act, 1952" for short ). Recently, Kerala High Court has considered the relevant provisions of the Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002 in light of the provisions of section 11 Sub section (2) of the Employees Provident funds and Miscellaneous Provisions Act, 1952, ("epf Act, 1952" for short ). It is necessary to note that the provisions of section 11 of the EPF Act, 1952 are having priority against any kind of dues and having overriding effect against the company/establishment. Said aspect has been discussed. Relevant provisions of section 11 of the EPF Act, 1952 is reproduced as under:"11. Priority of payment of contributions over other debts.- (1) Where any employer is adjudicated insolvent or being a company, an order for winding up is made, the amount due - (a) from the employer in relation to an establishment to which any scheme or the insurance scheme applies in respect of any contribution payable to the fund or, as the case may be, the insurance fund, damages, recoverable under section 14b, accumulations required to be transferred under sub section (2) of section 15 or any charges payable by him under any other provisions of this Act or of any provisions of the Scheme or the insurance Scheme or (b) from the employer in relation to exempted establishment in report of any contribution to the provident fund or any insurance fund (in so far as it relates to exempted employees) under the rules of the provident fund or any insurance fund, any contribution payable by him towards the pension fund under sub section (6) of section 17, damages recoverable under section 14b or any charges payable by him to the appropriate Government under any provisions of this Act or under any of the conditions specified under section 17, shall, where the liability therefore has accrued before the order of adjudication or winding up is made, be deemed to be included among the debts which under section 49 of the Presidency towns Insolvency act, 1909 (3 of 1909) or under section 6 of the Provincial Insolvency Act, 1920 (5 of 1920)or under section 530 of the Companies Act, 1956 (1 of 1956) are to be paid in priority to all other debts in the distribution of the property of the insolvent or the assets of the company being wound up, as the case may be. [explanation : - In this sub section and in section 17, sinsurance fund means any fund established by an employer under any scheme for providing benefits in the nature of life insurance to employees, whether linked to their deposits in provident fund or not, without payment by the employees of any separate contribution or premium in that behalf. ] without prejudice to the provisions of sub-section (1), if any amount is due from an employer (whether in respect of the employee s contribution (deducted from the wages of the employee) or the employer s contribution, the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being in force,b e paid in priority to all other debts. " ( 29 ) KERALA High Court has examined the issue, almost similar provisions of the EPF act, 1952 in comparison to section 13 and 14 of the Gratuity Act, 1972 in case of Bank of India and Provident Fund Commissioner, [2006 (110) FLR 66]. Relevant observations made by Kerala High Court in para 15 to 18 are reproduced as under:"15. However, a survey of the provisions of the SARFAESI Act would show that it does not provide for any statutory charge. In the absence of any statutory charge being provided by the SARFAESI Act, the statutory first charge created by section 11 (2) of the EPF Act gives a clear priority to such charge under the EPF Act over other charges including any right or mode of enforcement available to the bank under the sarfaesi Act. SO much so, the first charge created by the EPF Act has precedence over any right of the bank under the SARFAESI Act. 16. To consider the issue further, it is appropriate to survey a few provisions of the SARFAESI Act. What is provided under section 13 (1) of the SARFAESI Act is that notwithstanding anything contained in section 69 or section 69a of the Transfer of property Act, any security interest created in favour of any secured creditor may be enforced, in accordance with the provisions of the said Act, by the creditor. What is provided under section 13 (1) of the SARFAESI Act is that notwithstanding anything contained in section 69 or section 69a of the Transfer of property Act, any security interest created in favour of any secured creditor may be enforced, in accordance with the provisions of the said Act, by the creditor. Section 2 (zf)defines the security interest to mean right, title and interest of any kind, whatsoever, upon property created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31. The security interest does not thus amount anything better than what could be a charge or a mortgage, in the context of this case, for the purpose of Transfer of Property Act. The creation of a statutory first charge by a provision like section 11 (2) of the EPF Act gives a clear priority even against those charges created by the act of parties and even statutorily created charges, without any statutorily declared priority or preference. The assets may also be a part of a security interest, as defined in section 2 (zf) of the SARFAESI Act. So much so, the provisions of section 11 (2)of the EPF Act impinges on the right of any secured creditor, as defined in section 2 (zd)of the SARFAESI Act to act under section 13 (1) of the A ct in relation to any property of defaulter under the EPF Act without acceding to the first charge for dues under the EPF Act. "17. In this context, it is worthwhile to refer to the decision of the Apex Court in state Bank of Bikaner and Jaipur V/s. National Iron and Steel Rolling Corporation and others [ (1995) 2 SCC 19 ], wherein a near similar provision under the Rajasthan Sales tax Act was considered. That provision also provided for a first charge, coupled with non-obstante clause. The Apex Court held that the statutory charge provided under section 11-A of the Rajasthan Sales Tax Act, 1954 will prevail over, even an early mortgage of the same property. In holding so, the decision of the Apex Court in DATTATREYA shankar MOTE AND OTHERS V/s. ANAND CHINTAMAN DATAR AND others [ (1974) 2 SCC 799 ], was relied on. The Apex Court held that the statutory charge provided under section 11-A of the Rajasthan Sales Tax Act, 1954 will prevail over, even an early mortgage of the same property. In holding so, the decision of the Apex Court in DATTATREYA shankar MOTE AND OTHERS V/s. ANAND CHINTAMAN DATAR AND others [ (1974) 2 SCC 799 ], was relied on. It was held as imperative, that when a first charge is created by operation of law over any property, that charge will have precedence over any existing mortgage. Following the said decision, the conclusion is irresistible that the first charge created by section 11 (2)of the EPF Act has priority over any right of the bank referable to SARFAESI Act. 18. It has to be remembered that, as noticed by the Division Bench of this Court in KFC s case (supra), section 11 (2) of the epf Act declares that the amount due as contribution to the employees Provident fund is first charge on the assets of the establishment and that, notwithstanding anything contained in any other law for the time being in force, it shall be paid in priority against all other debts. This is a facet of the epf Act that goes a step further that what is provided in section 36 of the SARFAESI act. The reason for this is obvious. While the secured creditors would have to be held entitled to recover the dues from a secured debtor, the provident fund payable to workers is of greater moment, since it is a matter of terminal social security benefit made available by statute to the working class. Taking into consideration that EPF Act is a social benefit legislation and the evil of the consequence of provident fund dues being defeated by prior claims of secured or unsecured creditors, the Legislature took care to declare that irrespective of when a debt is created, the dues under the EPF Act would always remain the first charge and shall be paid first out of the assets of the establishment. In the result, this Writ petition fails and the same is accordingly dismissed. No costs. " ( 30 ) RECENTLY, this aspect has again been considered by the Division Bench of the bombay High Court in INDUS AGRO products V. UNION OF INDIA and ORS. , 2006 II CLR 582. In the result, this Writ petition fails and the same is accordingly dismissed. No costs. " ( 30 ) RECENTLY, this aspect has again been considered by the Division Bench of the bombay High Court in INDUS AGRO products V. UNION OF INDIA and ORS. , 2006 II CLR 582. Relevant observations made by the Division Bench of Bombay High Court in para 1, 2 and 4 are reproduced as under:"1. A purchaser in a sale conducted by the State Financial Corporation has challenged an attachment levied under the employees Provident Fund and miscellaneous Provisions Act, 1952. The issues that have been canvassed before the high Court here relate to (i) the meaning and extent of the first charge statutorily created by Section 11 (1) of the EPF Act, 1952; (ii) whether as the petitioner contends, the charge cannot be enforced in the hands of a purchaser in a sale conducted under the state Financial Corporation Act, 1951 ; and (iii) whether the charge and the priority created by Parliament in the payment of PF dues is confined to insolvency and winding up alone. We have declined to accept the line of argument pressed before us. The first charge on the assets of the establishment created by Parliament while enacting section 11 (2) of the EPF Act, 1952 and the priority enunciated there is given overriding effect, notwithstanding anything to the contrary contained in any law for the time being in force. The charge and the priority are founded on overriding social welfare principles; protecting the terminal benefits of industrial workers over other competing claims. W decline to read down Parliament s mandate. Finally, we hold that the terms of the sale put the petitioner on notice that this was a sale on an as is where is basis. For the reasons which we now elucidate, we decline to interfere, in our jurisdiction under article 226 of the Constitution. 2. Is section 11 (2) confined to insolvency and winding up ? on behalf of the petitioner and msfc, it was submitted that sub section (2)must apply only in those situations which are covered by sub section (1) namely where an employer is adjudged insolvent or where the employer being a company is being wound up. That construction however cannot be accepted for a number of reasons. on behalf of the petitioner and msfc, it was submitted that sub section (2)must apply only in those situations which are covered by sub section (1) namely where an employer is adjudged insolvent or where the employer being a company is being wound up. That construction however cannot be accepted for a number of reasons. First and foremost, the words without prejudice to the provisions of sub section (1) are intended to indicate that the provisions of section (2) shall not dilute the operation of sub section (1 ). Consequently, the priority which is created by sub section (1) in the distribution of the property of an insolvent or of the assets of a company which is being wound up is not disturbed by the first charge or the priority which is created by sub section (2 ). Secondly, interpreting the words of sub section (2) as they stand, the provision is intended to apply if any amount is due from an employer whether in respect of the employer s own contribution or the employer s contribution for which a deduction has been made from the wages. Once any such amount is due, parliament has provided that it shall be deemed to be a first charge on the assets of the establishment and be paid in priority to all other debts notwithstanding anything contained in any other law for the time being in force. To read sub section (2) as subservient to sub section (1) or as a provision which operates in the same field as sub section (1) would render sub section (2)largely otiose. Such a construction cannot be accepted since it would be contrary to the plain and grammatical meaning that attaches to the words used in sub section (2) of section 11. The words if any amount is due from the employer must be given a full and untrammeled construction. The deeming fiction in sub section (2) by which a first charge is created on the assets of the establishment must be taken to its logical conclusion and must comprehend within its ambit all the consequences which can reasonably be construed to emanate therefrom. Sub section (2) is not a proviso to sub section (1) but is a provision that stands by itself to lend teeth to the recoverability of the dues of the employees by way of contribution. 4. Sub section (2) is not a proviso to sub section (1) but is a provision that stands by itself to lend teeth to the recoverability of the dues of the employees by way of contribution. 4. Statement of Objects cannot override plain statutory construction. On behalf of the MSFC, however, it is submitted that the judgments of the kerala High Court and of the Division Bench of this Court are not correct and that sub section (2) was intended to operate only in a situation where an establishment is wound up. It was emphasised from the Statement of Objects and Reasons appended to the Bill resulting in Amending Act 40 of 1973 that the National Commission of Labour had recommended that arrears of Provident fund should be made a first charge on the assets of the establishment at the time of its winding up. Similarly, when the Act was amended by Amending Act 33 of 1980, the statement of Objects and Reasons contained a reference to the effect that provision was being made for treating the entire amount of arrears of Provident Fund dues as a first charge on the assets of the establishment in the event of its liquidation. Now in assessing this submission it becomes necessary to advert to what is perhaps a basic principle of statutory interpretation. Reference to the Statement of objects and Reasons accompanying the enactment of a law is permissible for understanding the background, the antecedent state of affairs, the surrounding circumstances in relation to a statute, and the evil which the Statute sought to remedy (Sanghvi Jeevraj Ghewar Chand V/s. Secretary Madras Chillies Grains and Kirana merchants Workers Union, AIR 1969 SC 530 , virji Ram Sutaria V. Nathalal Premji bhanvadia AIR 1970 SC 765 , Shiv Kirpal singh V. W Giri, AIR 1970 SC 2097 , secretary Regional Transport Authority V/ s. DP Sharma AIR 1989 SC 509 and devadoss (Dead) V. Vera Makali Amman koli Athlur AIR 1998 SC 750 ). It is equally well settled that the Statement of Objects and Reasons cannot be used to determine the true meaning and effect of the substantive provisions of the statute. A Statement of objects and Reasons cannot be used except for the limited purpose of understanding the background and the antecedent state of affairs leading to the legislation. It is equally well settled that the Statement of Objects and Reasons cannot be used to determine the true meaning and effect of the substantive provisions of the statute. A Statement of objects and Reasons cannot be used except for the limited purpose of understanding the background and the antecedent state of affairs leading to the legislation. Hence it would be impermissible for this court to restrict the operation of the plain and grammatical meaning of the words contained in sub section (2) of section 11 with reference to the statement of Objects and Reasons. Similarly, a reference therein to the report of the national Commission of Labour can at the highest indicate the historical antecedents, the surrounding circumstances or the mischief which was intended to be remedied. In interpreting the language of a statute, it is trite law that it is the language that has to be construed. An effort was made to submit that the words be paid in priority to all other debts must have meaning only to insolvency or winding up. The charge that is created by sub section (2) and the mandate that the amount due shall be paid in priority to all other debts cannot however be restricted only to a situation of insolvency or winding up. Clearly sub section (2) cannot be so construed or restricted. " ( 31 ) IN view of the aforesaid two decisions, one of Kerala High Court and the other of the Bombay High Court, read with the provisions of section 11 of the EPF Act, 1952 as well as considering the provisions of section 13 and 14 of the Gratuity Act, 1972, claim of the workers for the amount of gratuity is having overriding effect and priority to all other dues and it is not necessary to apply only in case when the company is wound up by the Company court. Therefore, contention raised by the learned Advocate Mr. Parikh by placing reliance on the provisions of the securitization Act, 2002 cannot be accepted. Claim of the workers has been crystallized by the controlling authority and their claim is required to be satisfied by the company and if not then from the properties of the company even though proceedings have been filed by the applicant being third party are pending in the DRT at Bombay and operating stay against property of the company. Claim of the workers has been crystallized by the controlling authority and their claim is required to be satisfied by the company and if not then from the properties of the company even though proceedings have been filed by the applicant being third party are pending in the DRT at Bombay and operating stay against property of the company. So right of workers is having priority. It is a statutory right, charge and priority founded on overriding social welfare principles protecting terminal benefits of industrial workers over other competing claims. ( 32 ) THEREFORE,submission made by the learned advocate Mr. Parikh is rejected. Therefore, in view of these facts and back ground of the case and considering various decisions on the subject as referred to above, according to my opinion, there is no substance in this application and the same is liable to be rejected. Hence these application is dismissed. Since leave has not been granted by this court, rest of the applications also stand dismissed. Opponents collector Juna Thana Navsari and mamlatdar Gandevi are directed to enforce recovery certificate against company as per the time granted by this court in Extension application No. 1642 of 2006 by order dated 27/6/2006 filed by the State of Gujarat, subject to directions issued by this Court in sca No. 17251 of 2006 dated 17/8/2006. ( 33 ) REGISTRY of this Court is directed to send a copy of this order immediately to the district Collector, Navsari and Mamlatdar, gandevi for executing the recovery certificate against the company immediately, in accordance with law.