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TMI Blog2011 (10) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... r satisfaction of Award of compensation under the provisions of the Workmen's Compensation Act, 1923 (for short 'Act'), in its entirety was dismissed holding that the dues of the appellants stand satisfied on pari passu basis with the dues of the other secured creditors. 2. The appellants are legal heirs of six workmen, who were amongst 8 workmen who died in an accident in the factory of the respondents on 26.12.1989. In an application to claim compensation under the Act, the Commissioner under the Act awarded to the appellants total sum of Rs. 5,34,298/- with interest as per the Award dated 20.12.1993. 3. On the other hand, the unit of respondent No.1(for short 'the Company') was taken up by the Haryana Financial Corporation in exercise of the powers conferred under Section 29 of the State Financial Corporation Act, 1951, on account of defaults committed by it in not discharging its liability. The respondent-Company was also ordered to be wound up on 4.2.1994 and the Official Liquidator attached to this Court, had taken over the assets of the Company. 4. In the process of settling the claim of secured creditors, the claim of the workmen was ordered to be satisfied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The workmen dues include the compensation awarded to the workmen under the Act in terms of Clause (iii) of Section 529 of the Companies Act, 1956. Since such provisions have been inserted vide Companies (Amendment) Act 35 of 1985 i.e. much later than insertion of Section 14-A in the Act vide Act No. 8 of 1958 with effect from 1.6.1959, therefore, the provisions of latter statute, i.e. Companies Act shall prevail over the provisions of the Act. It is also argued that in terms of Section 46-B of the State Financial Corporation Act, 1951 inserted by the Act No. 56 of 1956 on 1.10.1956, the dues of the Corporation have to be paid in priority, notwithstanding any other law in force, which includes the provisions in the Act i.e. Section 14-A. It is contended that keeping in view the constitutional scheme, if two Central Statutes have been given overriding effect, it is the latter statute, which prevails, as the legislature, while enacting such latter statute is deemed to have legislated the same, considering the earlier law. 8. Before, we discuss the respective arguments of the learned counsel for the parties, certain statutory provisions are required to be reproduced:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withstanding anything contained in any other provision 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 pari passu with such dues, shall be paid in priority to all other debts. (2) 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 abate in equal proportions.]" S. 529 Application of Insolvency rules in winding up of insolvent Companies (1) ** ** ** (3) For the purposes of this section, section 529A and section 530, ( iii ) 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another Statute. 12. The Hon'ble Supreme Court in Life Insurance Corporation of India v. D.J. Bahadur AIR 1980 SC 2181, was dealing with the conflict between two statutes i.e. Industrial Disputes Act, 1947 and the Life Insurance Corporation Act, 1956. The Supreme Court found that the Industrial Disputes Act, is a benign measure which seeks to pre-empt industrial tensions, provide the mechanics of dispute resolutions and set up the necessary infrastructure so that the energies of partners in production may not be dissipated in counter-productive battles and assurance of industrial justice may create a climate of goodwill. It was held as under:- "To sum up, the personality of the whole statute, be it remembered, has a welfare basis, it being a beneficial legislation which protects labour, promotes their contentment and regulates situations of crisis and tension where production may be imperilled by untenable strikes and blackmail lock-outs. The mechanism of the Act is geared to conferment of regulated benefits to workmen and resolution, according to a sympathetic rule of law, of the conflicts, actual or potential, between managements and workmen. Its goal is amelioration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asthra State Cooperative Bank Ltd. v. Assistant Provident Fund Commissioner [2009] 10 SCC 123, the Supreme Court held that the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (for short the EPF Act) is a social welfare legislation intended to protect the interest of the weaker sections of the Society i.e. the workers employed in factory and other establishments, therefore, it is imperative for the Courts to give a purposive interpretation to the provisions contained therein keeping in view the Directive Principles of State Policy embodied in Articles 38 and 43 of the Constitution. In the aforesaid case, the controversy was whether the assets of the Sugar Mills pledged by the borrower in favour of the appellant-Bank could be attached and sold for realization of the provident fund dues payable by the employer under the EPF Act. The Court was considering Section 11(2) of the EPF Act inserted vide Act No. 40 of 1973 with a non-obstante clause . The Court referred to earlier judgment in Organo Chemical Industries v. Union of India [1979] 4 SCC 573, and held to the following effect:- "31. We shall now consider the question whether the provision contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of delay, the employer is statutorily liable to pay interest in terms of Section 17 of the Act. Therefore, there is no plausible reason to give a restricted meaning to the expression "any amount due from the employer" and confine it to the amount determined under Section 7-A or the contribution payable under Section 8. The Court rejected the contention that the amount of interest does not form part of the amount due from the employer for the purposes of Section 11(2) of the Act. 16. In Central Bank of India v. State of Kerala [2009] 4 SCC 94, the provisions of Section 14A of the Act vis- -vis the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short the 'DRT Act') and Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short the 'Securitization Act'), came up for consideration. The Court found that neither the DRT Act nor the Securitization Act can be invoked for declaring that the first charge is created in favour of Banks, Financial Institutions and other secured creditors for recovery of their dues or enforcement of security, as the case may be as such provision is not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the compensation payable to the workmen or their dependents in the case of an unfortunate event of losing life by the workmen, priority has been given to the payment of such compensation under Section 14-A of the Act. Though sub-section (3) of Section 529 of the Act, deals with the workmen dues which includes the amount due in respect of compensation or liability for compensation under the said Act, but if workmen's dues are payable to the workmen in terms of the Award prior to sale of assets, such dues have to be given priority in terms of Section 14-A of the Act. The definition of the workmen's dues as contained in Section 529(3) includes the compensation payable to the workmen even after sale of assets of the Company but the preference is to the Award before the sale of assets of the Company. Such special provisions will prevail over the general provisions of the Companies Act. The expression employer in Section 14A shall include its transferees' such as State Financial Corporation, therefore, in terms of such provisions, the liability accrued prior to transfer of asset has to be met from the asset alone. 20. The Companies Act, 1956 was amended in the year 1985 vide Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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