9911796707
TMI Blog2005 (8) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... IR SCW 214 is binding or whether the judgment of the Hon ble Supreme Court in the case of Dena Bank v. Bhikhabhai Prabhudas Parekh Co., 2000 (4) Supreme Today 5000/104 Comp. Cas. 157 is binding to this case. 2. Whether amount standing to the credit of the workers regarding their contribution to Employees State Insurance Act in the books of the Mill company (In Liquidation) is impressed with the character of a trust, and hence, it does not form part of the assets of the company and the Liquidator is bound to pass the same in priority before any distribution of the assets of the Company is made by him? 3. Whether the property/assets of the Company which has already been mortgaged or earmarked by the secured creditors and when the company is in the liquidation whether the Liquidator was having that equity alone and whether the entire amount was required to be paid to the secured creditors or the applicant is entitled to priority over the said dues in this behalf?" 2. Learned Counsel for the Employees State Insurance Corporation ("E.S.I. Corporation") submitted that section 40, read with section 94, of the Employees State Insurance Act, 1948 (hereinafter referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted. (5) The principal employer shall bear the expenses of remitting the contribution to the Corporation." "94. Contributions, etc. due to Corporation to have priority over other debts . There shall be deemed to be included among the debts which under section 49 of the Presidency-towns Insolvency Act, 1909 or under section 61 of the Provincial Insolvency Act, 1920 or under any law relating to insolvency in force in the territories, which immediately before the 1st November, 1956, were comprised in a Part-B State, or under section 530 of the Companies Act, 1956 are in the distribution of the property of the insolvent or in the distribution of the assets of a Company being wound-up, to be paid in priority to all other debts, the amount due in respect of any contribution or any other amount payable under this Act, the liability wherefore accured before the date of the order of adjudication of the insolvent or the date of the winding-up, as the case may be." Section 529(A) of the Companies Act read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n contribution to the E.S.I. Corporation, then the E.S.I. Corporation may issue notices to the defaulting employer, may attach his property or may also proceed against him by taking a criminal action. 6. Sections 85(A) and 85(B) of the E.S.I. Act would make it clear that where there is a failure to pay contribution, a punishment can be awarded, there can be enhanced punishment in certain cases after the previous conviction, and where the employer fails to pay the amount due in respect of any contribution, the Corporation may recover from the employer by way of penalty such damages not exceeding the amount of arrears as may be specified in the regulations. It appears that despite armed with such armoury, the E.S.I. Corporation did not do anything for 14 long years and woke up only after the Company came under liquidation. If the Corporation has been made for providing services to the employees, then its Officers should not sit tight in the ivory chambers, but, should walk on roads, see the reality of life and suffer the heat of the day, and take an action against the defaulters. 7. In a case where the employer becomes insolvent or in case of a Company being wound-up, the E.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing in force, in the winding-up of a Company, workmen s dues and debts due to the secured creditors to the extent such debts rank under clause ( c ) of the proviso to sub-section (1) of section 529 pari passu with such dues, shall be paid in priority to all other debts. 11. Section 529(A) has been introduced in the year 1985. It starts with a non-obstante clause. It clearly provides that "notwithstanding anything contained in any other provision of the Act or any other law for the time-being in force". A true understanding of section 529(A) would make clear that the provisions of section 529(A) shall override the provisions contained in section 530. Not only this, the provisions contained in section 529(A) shall override the provisions contained in the E.S.I. Act, because the E.S.I. Act is an Act of 1948, while the amendment in the Companies Act has been made in the year 1985 and with the fullest knowledge that it was to override the provisions contained in section 530. If section 94 of the E.S.I. Act and section 530 of the Companies Act are made subordinate to section 529(A), then section 529(A) shall march over the rights of others to which the others are entitled either ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims of the claimants under section 529(A) of the Companies Act, the question of the Government dues or the taxes or the priority attached to them, shall arise. In the present case, it is yet to be decided by the learned Single Judge that whether the claims lodged by the E.S.I. Corporation are for recovery of the Government revenues, taxes, cesses and rates due from the Company. Unless that question is decided by the learned Single Judge, the question of priority also cannot be decided even for the purposes of section 530 of the Companies Act. 13. So far as question Nos. 2 and 3 referred for answer are concerned, in our considered opinion, before taking any priority in the matter of recovery or to get the money straight from the Official Liquidator, it would be necessary for the E.S.I. Corporation to prove to the satisfaction of the Court that the amount due to them comes within the scope of section 530(A) of the Companies Act. After the Company Court is satisfied, then it will have to enquire that whether the amount, so deducted from the wages payable to the employees, was kept in a separate account and whether such amount was transferred to the Official Liquidator. In a give ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
