1993 (9) TMI 363 - HC - Indian Laws

Summary

Issues Involved:
1. Payment of salary to workers from the sale proceeds of finished goods.
2. Application of Article 21 of the Constitution of India.
3. Rights of secured creditors versus workers' wages.
4. Maintainability of the petition under Article 226 of the Constitution.
5. Precedential value of the Supreme Court judgments cited.
6. Priority of workers' wages over secured creditors' claims.
7. Distribution ratio of sale proceeds between workers and the bank.

Detailed Analysis:

1. Payment of Salary to Workers from Sale Proceeds:
The Textile Labour Association sought a direction for the payment of wages to workers from the sale proceeds of finished goods. The State Bank of Saurashtra, a secured creditor, resisted this petition, asserting its first charge on the current assets of the company, including finished goods. The court noted that the workers had not been paid wages for several months, totaling Rs. 1,19,75,000/-. The court had previously ordered the sale of goods, realizing Rs. 47,62,721/-.

2. Application of Article 21 of the Constitution of India:
The petitioner relied on Article 21, which guarantees the right to life and personal liberty. The court observed that Article 21 is not restricted to enforcement against the State only and can be invoked against any person, including private parties. The right to life includes the right to livelihood, and the court cannot ignore the dire economic conditions faced by the workers due to non-payment of wages.

3. Rights of Secured Creditors versus Workers' Wages:
The respondents argued that the bank's rights as a secured creditor could not be overridden unless authorized by law. The court referred to the Supreme Court judgment in Rohtas Industries, which prioritized workers' wages over secured creditors' claims, emphasizing the workers' contribution to producing the goods. The court held that the subsistence and living of workers are of paramount importance and should rank with the highest priority.

4. Maintainability of the Petition under Article 226 of the Constitution:
The respondents contended that the petition was not maintainable under Article 226 against private parties. The court rejected this argument, stating that Article 226 empowers the High Court to issue writs to any person for enforcing fundamental rights. The court emphasized that the right to life and livelihood of 2700 workers and their families was at stake, and the petition was maintainable.

5. Precedential Value of the Supreme Court Judgments Cited:
The respondents argued that the Supreme Court's judgments in Rohtas Industries should not be treated as precedents as they were passed under peculiar circumstances. The court disagreed, noting that the Supreme Court had reaffirmed its view that saving human lives should be paramount. The court held that it was justified in adopting the same reasoning and approach in the present case.

6. Priority of Workers' Wages over Secured Creditors' Claims:
The court reiterated that the workers' right to wages for the period they had worked ranked with the highest priority. The Supreme Court had recognized a kind of lien on the goods produced by the workers' labor. The court emphasized that the fundamental right to life and livelihood must be enforced, even if it conflicts with the secured creditors' claims.

7. Distribution Ratio of Sale Proceeds between Workers and the Bank:
The respondents suggested that the workers should receive only 60% of the sale proceeds, based on a previous offer by the petitioner union. The court rejected this contention, noting that the offer was made under duress and the circumstances had changed. The court directed that the entire sale proceeds be used to pay the workers' wages for the period they had worked.

Conclusion:
The court allowed the petition and directed that the workers be paid their wages for the period they had worked from the sale proceeds of Rs. 47,62,721/-. The court did not issue directions for wages for subsequent periods or interest due to insufficient funds. The respondent bank was ordered to pay costs of Rs. 1000/-. The court stayed the order until November 2, 1993, to allow the bank to obtain an interim order from the Supreme Court, failing which the payment to workers was to be made immediately.