2018 (6) TMI 1564 - HC - Indian Laws

Non-payment of the salary of staff of the petitioners institutions - petitioners were told to file an undertaking that upon receipt of the amount from the State Government, they shall first disburse the salaries of their staff before clearing any other claims - defeating the legitimate dues of the teachers - Held that - It is not for this court to express any opinion on whether the amount, which is brought in this court, can be taken away by the Management or can the State Government be permitted to adjust the same towards its other dues or the amount as such constitutes the dues of either the Department of Income Tax or the secured creditors to whom, admittedly, the petitioner says, it owes certain money. Equally, we find that merely because an undertaking is given to this court in this writ petition and the amount is brought in this court and from which appropriations and adjustments will now be made does not mean the legal and statutory powers and rights of those, who are not before this court, cannot be adversely affected. These rights cannot be said to be prejudiced, much less adversely by any order in these petitions. Since the amount has now been credited to the account of the State of Maharashtra and the account of this court in the RBI is now debited, as is clear from the certificate tendered today, let the State Government retain that sum till 5th July, 2018 with it without making any adjustment or appropriation towards its outstanding dues nor it should remit the same to the Management - matters placed on 5th July, 2018.

Summary

Issues:
1. Extension of time to file undertaking by petitioners.
2. Deposit of a significant sum in court by State Government.
3. Misappropriation of scholarship funds by institution.
4. Delay in disbursement of scholarship funds by State Government.
5. Financial crunch faced by institutions due to non-remittance of funds.
6. Non-payment of staff salaries by institutions.
7. Legal battle between management and Income Tax Department.
8. Concerns regarding attachment of funds by Income Tax Department.
9. Potential collusion between Income Tax Department and State Government.
10. Rights of creditors and secured creditors in the matter.

Issue 1 - Extension of time to file undertaking:
The petitioners sought an extension of time to file an undertaking, which was granted by the court. The affidavit-cum-undertaking was filed in compliance with the court's order.

Issue 2 - Deposit of a significant sum in court by State Government:
The State Government was directed to deposit a substantial amount in the court, which was certified by the Registrar. The court ordered the amount to be retained by the State Government pending further directions.

Issue 3 - Misappropriation of scholarship funds by institution:
The court noted that scholarship funds meant for beneficiaries were misappropriated by the institution due to enrollment of bogus students. The State Government changed its policy to ensure direct disbursement of funds to beneficiaries.

Issue 4 - Delay in disbursement of scholarship funds:
Despite a prescribed time schedule, the State Government failed to disburse scholarship funds even after the academic session ended. This delay caused financial strain on institutions, affecting staff salaries.

Issue 5 - Financial crunch faced by institutions:
The court criticized the State Government for creating a chaotic situation by not remitting scholarship funds promptly. Institutions struggled to pay staff salaries due to the delayed disbursement of funds.

Issue 6 - Non-payment of staff salaries by institutions:
Institutions were directed to prioritize clearing staff salaries upon receiving funds from the State Government. Failure to pay salaries led to institutions being put in a non-admission category.

Issue 7 - Legal battle between management and Income Tax Department:
Ongoing legal proceedings between the management and the Income Tax Department raised concerns about the attachment of funds deposited by the State Government.

Issue 8 - Concerns regarding attachment of funds by Income Tax Department:
The management expressed concerns that if funds were credited to their account, they could be attached by the Income Tax Department due to pending legal matters and attached bank accounts.

Issue 9 - Potential collusion between Income Tax Department and State Government:
There were apprehensions of collusion between the Income Tax Department and the State Government to prevent disbursement of funds, potentially affecting the rights of teachers awaiting salary payments.

Issue 10 - Rights of creditors and secured creditors:
The court emphasized that the legal and statutory rights of creditors and secured creditors should not be prejudiced by any order in the petitions. It directed the State Government to retain the sum pending further directions.

In conclusion, the judgment addressed various issues related to the misappropriation and disbursement of scholarship funds, non-payment of staff salaries, legal battles, concerns about fund attachment, and the rights of creditors. The court directed the State Government to retain the deposited sum and await further directions, ensuring that all parties' rights and obligations were duly considered and protected.