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TMI Blog1998 (11) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... n 17 17:47:57 IST 2018 appeals, to set aside the order disbursing the amount of ₹ 1,500/per workman on adhoc basis but they confine their claim to relief in the appeals to the question of release of like amount in favour of the secured creditors in whose favour the assets realised had been made security against their dues. 4. Mr.Vasavada and Mr Mehta appearing for the workers' union have stated that so long as the order of the learned Company Judge for disbursing some amount on adhoc basis is not disturbed, they do not oppose the prayer of the appellant for release of the like amount in favour of the secured creditors ,if such order is made by this court in these proceedings. 5. It has been urged by the learned counsel for the secured creditors that in fact, realisation of the security to which the secured creditors have a right,have been made subject to the workers' charge under Section 529 of the Companies Act. The entire money except to the extent of worker's charge created under statute is the money of secured creditors until the same is fully satisfied. In releasing like amount in their favour,as to the workmen, which is lying with the Official Liquidator , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment, wages or salary of employees due for a period not exceeding four months within immediately 12 months next before the relevant date that is to say date of winding up, was only eligible for such preferential payment, in addition to all accrued holidays' remuneration becoming payable to the employee on termination of his employment. In the scheme of things, all employees were classified as one class for the purpose of such distribution irrespective of the fact whether they were workmen or not within the meaning of section 2 (s) of the Industrial Disputes Act,1947. Thus, the realisation of securities by the secured creditors while remaining outside winding up, remained with the secured creditors to be adjusted against their dues in the first instance. Only if there was excess realisation then their dues that the Official Liquidator could reach such excess amount. In such case too,the workers would get any payment against their dues only if realisation by the Official Liquidator in course of winding up proceedings exceeded the preferential payments enumerated in Section 530 . 10. By Act No.35/85, a vital change in the scheme was brought about.Firstly by enacting proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of any property of the company, workmen too have a contribution and is not result of capital investment only, and to that extent such property must be made available for worker dues in their own right. 11. With the amendments noticed above, what emerges is that where a secured creditor stands outside winding up ,instead of relinquishing his securities is entitled to realise the same by remaining outside winding up proceedings and is not required to prove his debt before the Official Liquidator,and when realisation of security is made ,which prior to amendment, he was entitled to appropriate in the first instance exclusively and only after satisfaction of debt due to him , the excess was to go to Official Liquidator for winding up proceedings and he was to rank as unsecured creditor for any part of debt due to him remaining unsatisfied, after the amendment,he is obliged to carve out workmen's portion in the security to be worked out in light of the illustration in this behalf referred to above which is to be determined by the Official Liquidator. If realisation of the securities outside winding up is sufficient to discharge the debt due to secured creditor after satisfying wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t matter, workers can enforce their charge against realisation of security, the extent of their proportion in the security has to be determined with reference to the total amount due to the secured creditors and total amount due to the workers on the relevant date that is to say- as on the date of winding up. Security by way of pari passu charge in favour of the workers is created ex hypothesi simultaneously with making of winding up order by operation of statute and rights of secured creditors are made subject to workmen's portion in such security in respective ratio as on that date though such determination may take place at a later date after the Official Liquidator has received relevant information about existing dues to the secured creditors and the claims of the workers to be satisfied from realisation of the company's assets. Until this is done, there is no basis on which enforcement of charge can take place.The position cannot be different from where such security is realised by the concerned secured creditor himself and amount is received by him or realisation of the security is allowed by the creditors to be made through the office of the Official Liquidator in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g such assets over which a secured creditor holds a mortgage, charge or lien as a security for any debt due to him, he is put under an obligation to pay expenses incurred by the liquidator or provisional liquidator as the case may be , for preserving such security before its realisation. This position was not obliterated but altered to the extent ,as discussed above by declaring the workers as sharer in the realisation of security by creating a charge in their favour for securing realisation of their dues in proportion to value of total secured creditors. By these provisions, so far as position of secured creditors to remain outside and their right to realise security outside winding up proceedings is concerned, without requirement to prove their debt in winding up proceedings remain unaffected. Their right to appropriate entire realisation to the exclusion of all other until his claim is fully satisfied was curtailed to the extent workers were made co-sharers to appropriate such realisation to the extent a charge in their favour was created for workers' portion . Simultaneously, to the extent secured creditors' claim remain unsatisfied due to workers participating, the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 529A will not be possible. 15. With these precincts,if we examine the order under appeal, we find that there is no determination of workers' portion in the security held by secured creditors as required under Section 529. Ordinarily, until that is done, the stage for enforcing workers' charge and appropriating realisation from securities towards discharge of such liability cannot be made. The amount to be appropriated cannot be known and determined. Even while workman's portion in the security is determined, the payment to workers individually cannot be made over until he proves his claim in winding up proceedings whether for the purpose of enabling the liquidator to determine worker's porition in security and enforce workman's charge therein, necessary for worker's participation in such security or to claim any payment from liquidator as creditor of the company under section 529A. In the winding up proceedings, under Rule 147 of the Company (Court) Rules, Official Liquidator is under an obligation to issue a notice inviting creditors to prove their debts or claims informing that failure to prove or lodge the proof of claim by the date fixed for that purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rompt distribution of realisation in his hands without increasing the burden of winding up and give immediate relief to creditors amongst whom workman stand first in queue.Workmen and for tha tmastter agencies representing themk will serve this object well by lodging the claim in proper manner before the liquidator for their admittance and not adopt practice of making applications for adhoc payments de hors proof of such claims, which invariably results in delay in disbursement of realisation . which has to wait until verification of the claim. No disbursement may be possible in the absence of lodging of claim. That will also result in speedy completion of winding up process. 16. However, for the present purpose, we find from the statement made in the order as well as the information furnished during the course of arguments ,that claim on behalf of workmen has been lodged. Though dispute exists about the exact quantification of workers' dues ,determination of which is necessary to determine workmen's portion in security of creditors ,even to the extent the claims are admitted as on the date of winding up , the workers' portion in the security does not work out less tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eprive the secured creditors of their legitimate claim to appropriate realisation of securities indefinitely and to disburse any amount out of such realisation on adhoc basis. Ofcourse, to the extent expenses incurred by official liquidator to preserve such securities has been made liability of secured creditors for whose payment mortgage, charge or lien has been created , the same may be appropriated in the first instance from the realisation of such assets before secured creditors can claim appropriation of the same. 17. In the aforesaid premises, it cannot be said that in the matter of distribution,secured creditors can be differently treated. On the other hand,as observed above, the amount is held by the Official Liquidator on account for secured creditors only for the purpose of enforcing charge in workman's portion of security. . It is because of non-determination of workers' portion therein that the amount is not being handed over to the secured creditors after retaining the amount for satisfying the workers' charge therefrom. But that should not work contrary to the interest of the secured creditors, so as not to make over them the payment even tothe extent ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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