9911796707
TMI Blog1994 (7) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... tory charge in their favour on all available securities forming part of the assets of the company in liquidation so that the workmen also share the securities pari passu with the secured creditors. The workmen contribute to the growth of the capital and must get their legitimate share in the assets of the company when the situation arises for its closure and distribution of its assets first among the secured creditors due to winding up of the company. The aforesaid amendment made in the Act is a statutory recognition of this principle equating the legitimate dues of the workmen with the debts of the secured creditors of the company. To achieve this purpose, it is necessary that the amended provision must apply to all available securities wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government to introduce necessary legislation so that legitimate dues of workers rank pari passu with secured creditors in the event of closure of the company and above even the dues to Government The resources of companies constitute a major segment of the material resources of the community and common good demands that the ownership and control of the resources of every company are so distributed that in the unfortunate event of its liquidation, workers, whose labour and effort constitute an invisible but easily perceivable part of the capital of the company are not deprived of their legitimate right to participate in the produce of their labour and effort It is accordingly proposed to amend sections 529 and 530 of the Companies Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.]" [Emphasis supplied] *Inserted by the Companies (Amendment) Act, 1985. 3. The contention of the appellant, a secured creditor, which was accepted by the learned company Judge but, on appeal, has been rejected by the Division Bench of the High Court in the impugned order in Appeal No. 920 of 1991, dated 16-10-1991, was that the aforesaid amendment including the above-quoted proviso is inapplicable in the present case since the decree had been obtained by the appellant prior to the above amendment made in the Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor which remained unrealised on the date of the amendment. The clear object of the amendment is that the legitimate dues of workers must rank pari passu with those of secured creditors and above even the dues of the Government. This literal construction of the proviso is in consonance with, and promotes, the avowed object of the amendment made. On the contrary, the construction of the proviso suggested by the learned counsel for the appellant, apart from being in conflict with the plain language of the proviso also defeats the object of the legislation. 6. The existence of the security on the date the amendment came into effect creates a pari passu charge in favour of the workmen upon that security. It is only if the security has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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