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TMI Blog2013 (2) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitted by the fourth respondent in repayment, respondents Nos. 1 and 2 initiated proceedings under SARFAESI Act and the assets of the fourth respondent-company were put to auction – petitioners are seeking to quash the proceedings under the SARFAESI Act as well as the proceedings initiated by the first respondent-bank before the Debts Recovery Tribunal, Chennai – On the alternative the petitioners are seeking directions for payment of benefits due to them, in case of closure of the company. Held that:- Section 13(9) clears that the workmen of a company, who claim priority in distribution of assets by virtue of section 529A of the Companies Act, are not entitled to raise any objection against proceedings initiated by the secured creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance from the first respondent-bank by mortgaging its assets, including the factory building and land appurtenant thereto, having an extent of 4.5 acres. It is stated that the directors of the company are co-obligants in the loan transaction and properties belonging to them were also mortgaged for securing financial assistance. Consequent to default committed by the fourth respondent in repayment, respondents Nos. 1 and 2 initiated proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "the SARFAESI Act") and the assets of the fourth respondent-company, including the factory and industrial land, were put to auction as per exhibit P1 notification. 2. The conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he loan in question was availed by the fourth respondent-company and its directors. The loan is secured through mortgage of various assets of the company and the directors. Respondents Nos. 1 and 2 are now proceeding against those secured assets by resorting to provisions under the SARFAESI Act. The petitioners are now raising claims based on amounts allegedly due to them from the fourth respondent. Admittedly, the alleged dues are not adjudicated or quantified by any competent authority empowered under the relevant labour legislations. Even assuming that there is any amount due to the petitioners from the fourth respondent, which stands adjudicated and quantified, the question arises as to whether the petitioners are entitled to restrain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the secured creditors about the workmen's dues, for the above said purpose. Section 529A of the Companies Act, 1956, deals with distribution of assets and its priorities in case of companies which are ordered to be wound up. The said provision prescribes priority with respect to workmen's dues. 5. In the case at hand, neither the fourth respondent-company has been wound up nor any proceedings has been initiated for winding up of the said company. Therefore it is evident that none of the provisos to section 13(9) is applicable in this case. Learned counsel for the petitioners had placed reliance on the decision of the apex court in National Textile Workers' Union v. P. R. Ramakrishnan [1983] 53 Comp Cas 184 and also on the decision in All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any manner. He further points out that in paragraph 54 of the judgment in Allahabad Bank's case (supra), it is clearly mentioned that if a company, which is implicated as a defendant in a proceedings under the RDBFI Act, against which no order of winding up has been issued, is only like any other defendant, and if in such case any question arises before the Tribunal with respect to priority in distribution of any amount realised, the Tribunal need to decide such questions bearing in mind only the principles underlying in section 73 of the Code of Civil Procedure, 1908. It is observed that section 22 of the RDBFI Act confers wider powers on the Tribunals to decide such questions of priorities, subject only to principles of natural justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hennai could not be allowed. So also this court will not be justified in directing the respondents to effect payment of any sum to the petitioners as workmen's dues, out of amounts if any recovered in proceedings initiated against the secured assets under the SARFAESI Act. Therefore the writ petition deserves no merit and the same is accordingly dismissed. 8. However, it is made clear that on the event of the fourth respondent-company being wound up or any proceedings for winding up being initiated against the company, the petitioners will be at liberty to seek appropriate reliefs in accordance with the provisions of the Companies Act, read with the relevant provisions in the SARFAESI Act and the RDBFI Act. It is further made clear that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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