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TMI Blog2024 (6) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provision of law, the appellate court is to exercise the power of appellate jurisdiction if the order is passed on erroneous consideration of the factual aspect. The purpose of Section 529-A is to ensure that the workmen should not be deprived of their legitimate claims in the event of the liquidation of the company and the assets of the company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors. In the light of the definition of the vested right , it is evident that right accrues to person or persons attached to an institution or building or anything whatsoever, meaning thereby, if an incumbent is claiming a vested right, he is to substantiate before the court of law that the right has been created in his favour by an order passed by the competent authority in accordance with law. It is evident that in the instant case, the workmen never raised the claim of interest and no such claim of interest was ever adjudicated upon. The payments have been made to the workmen in priority against sale proceeds of unsecured assets of the company in compliance of the order dated 12th August 2016. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Company in liquidation and the same was decreed awarding a sum of Rs. 14,96,29,240/- in favour of the 236 workmen for the wages for the period from 01/08/1997 to 04/08/2003 along with retrenchment compensation and gratuity. 5. The company went in liquidation on 05/08/2003. The appellants along with other 236 workmen filed their claim within the stipulated period as per the award prepared by the learned Labour Court, Hazaribag. The learned official Liquidator on 15/12/2006 admitted the proof of debt of Rs. 14,96,29,240/- for 236 workmen under section 529A of the Companies Act, 1956 and notice of admission of proof was issued to workmen vide memo no. OL/JHR/117/Sett/02. 6. The official Liquidator sold the unsecured assets of the company situated in other parts of the Country and received a sum of Rs. 8,51,01,000/-. The workmen by way of filing interlocutory application being I.A No 1511/2008 on 06/05/2008 prayed for payment of their balance debt from the sale proceeds on the unsecured assets on priority basis, since, the secured creditors have no charge over unsecured assets, the same was opposed by the Secured creditors. The amount of Rs. 8,51,01,000/- which relates to the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposit account since the year 2008 and accruing interest as per the Banking rates and the said interest amount may be given to them because their claim for payment on priority basis was finally affirmed on 12/08/2016 by the Company Court after long eight years. 13. The learned Official Liquidator submitted his reply vide its reports dated 24/8/2017 and 27/11/2017 that secured creditors were wrongly paid Rs. 4,09,50,478/- from the sale of unsecured assets for which they were not entitled and hence made a prayer for recovery of the excess amount paid to them. 14. The Official Liquidator further pleaded that the workmen are entitled for payment of interest under Rule 179 of the Companies Act, 1959 at the rate of 2 percent on the total dividend paid to the workmen and the secured creditors have received interest, liquidation damages, claimed over draft and over draft interest on the said deposited amount. 15. The Secured creditors had also submitted their reply submitting that workmen are not entitled for grant of any statutory interest under section 179 of the Companies (Court) Rules, 1959 because secured creditors have not received their debt fully during the liquidation proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g for the respondents has raised the following grounds in defending the impugned order:- (i) Learned Court has taken into consideration the fact by rejecting the claim of the appellants on the ground that the claim has been decided and the same has attained its finality, as per the order dated 12th August, 2016 and hence, without challenging the said order, the subsequent prayer made by filing the interlocutory application being I.A. No. 7469 of 2016 for making payment of the statutory interest cannot be said to be just and proper. It has been submitted that the learned court by taking into consideration the aforesaid fact, if has rejected the said claim, which cannot be said to suffer from an error. (ii) The learned counsel has taken the ground by referring to the finding so recorded by the learned Court regarding the argument of claim based upon the pari passu principle and in that view of the matter, both the secured creditor and the workmen are to be treated at par but the said principle will not be applicable so far as the interest part is concerned, as has been dealt with by the Court by distinguishing the ratio laid down by the Hon ble Apex Court rendered in the case of Vija ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal and forum for the same in respect of any order made in the matter of the winding up of a company by the High Court having jurisdiction in the matter. 26. Further, it is settled position of law that while exercising the power of appeal under the provision of law, the appellate court is to exercise the power of appellate jurisdiction if the order is passed on erroneous consideration of the factual aspect. 27. This Court, is now adverting to the facts of the case. 28. It is evident from the pleading as referred hereinabove that the company went in liquidation on 05/08/2003 and the appellants along with other workmen filed their claim within the stipulated period as per the award prepared by the learned Labour Court, Hazaribag. The Official Liquidator admitted the proof of debt of Rs. 14,96,29,240/- for 236 workmen under section 529A of the Companies Act, 1956 and accordingly, notice of admission of proof was issued to workmen. 29. Further, it is evident that the Official Liquidator sold the unsecured assets of the company situated in other parts of the Country and received a sum of Rs. 8,51,01,000/-. The workmen by way of filing interlocutory application being I.A No. 1511/2008 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the workmen for grant of statutory interest, which is the subject matter of the instant appeals. 36. Thus, in the backdrop of aforesaid facts, the admitted position herein is that the appellants are workmen, who had claimed the arrears of salary but the same was being discarded on the ground that the first right is of the secured creditor. But, the aforesaid issue has been settled by round of litigations and the workmen and the secured creditor have been treated to be pari passu, in view of the provision of Section 529 of the Companies Act. 37. At this juncture, this Court thinks fit to discuss the effect of Section 529 of the Act 1956. The effect of Sections 529 and 529-A is that the workmen of the company become secured creditors by operation of law to the extent of the workmen's dues provided there exists secured creditor by contract. If there is no secured creditor then the workmen of the company become unsecured preferential creditors under Section 529-A to the extent of the workmen's dues. 38. The purpose of Section 529-A is to ensure that the workmen should not be deprived of their legitimate claims in the event of the liquidation of the company and the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the workmen only with respect to the arrears of salary. After the subsequent time having been elapsed, one interlocutory application being I.A. No. 7469 of 2016 has been filed seeking therein the statutory interest which is to be paid in favour of the workmen also on the ground that the secured creditor and the workmen are to be treated as pari passu. 42. The aforesaid prayer has been refused on the ground that the aforesaid ground has not been raised while pressing the application, based upon that, the order dated 12.08.2016 has been passed, which has also not been challenged. 43. In the backdrop of the aforesaid facts and the rival contention of the learned counsel for the parties, the issue in the instant case which requires adjudication by this Court is that: whether the workmen claim parity with respect to the payment of interest on the basis of principle of pari passu, will be said to be acceptable Or whether the prayer of the workmen for grant of statutory interest in accordance with Rule 156 of the Companies (Court) Rules, 1959 is tenable in law and facts or not? 44. There is no dispute that the workmen and the secured creditor has been said to be pari passu for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed expectation or the so- called vested right cannot be countenanced against public interest and convenience which are sought to be served by amendment of the law. 51. Thus, vested right is a right independent of any contingency. Such a right can arise from a contract, statute or by operation of law. A vested right can be taken away only if the law specifically or by necessary implication provide for such a course. 52. In the light of the definition of the vested right , it is evident that right accrues to person or persons attached to an institution or building or anything whatsoever, meaning thereby, if an incumbent is claiming a vested right, he is to substantiate before the court of law that the right has been created in his favour by an order passed by the competent authority in accordance with law. 53. Reference in this regard may be made to the judgment as rendered by the Hon ble Apex Court in the case of MGB Gramin Bank Vrs. Chakrawarti Singh, reported in [(2014) 13 SCC 583] wherein at paragraphs 11, 12 and 13, the Hon ble Apex Court has observed, as follows: 11. The word vested is defined in Black's Law Dictionary (6th Edn.) at p. 1563, as: Vested . fixed; accrued; set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers by which the same may be substantiated. These affidavits are to be in Form 66. 56. The workmen may, under R. 152, submit one proof in Form 67 for all the claims annexing therewith a schedule setting forth their names and amounts severally due to them. Rule 154 provides that the value of debts and claims against the company shall, as far as it is possible, be estimated according to the value thereof on the date of the order of winding up of the company or where before the presentation of the petition for winding up. A resolution has been passed for voluntary winding up on the date of passing of such resolution. 57. Rule 156 provides for interest to the creditors which shall not exceed 4% per annum to that date from the time when the debts or sum was payable. If the debt or sum, is payable by virtue of written instrument at a certain time and if payable otherwise then from the time when a demand in writing has been made. 58. Under Rule 159, the Official Liquidator is required to examine every proof and the grounds of the debt and he may call for the production of voucher if any referred to in the affidavit of proof or require further evidence in support of the debt. Acceptance a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ravelled to the Apex Court, it was argued that the High Court committed error in accepting the contention of the respondent that there was no agreement between the parties to pay interest and it had not been informed about the adjustment of payments made by it towards interest. In these factual scenario, the Hon ble Apex Court at para-34 of the said judgment held as under :- 34. Section 433 of the Companies Act does not state that the debt must be precisely a definite sum. It has not been disputed before us that failure to pay the agreed interest or the statutory interest would come within the purview of the word debt . It is one thing to say that the amount of debt is not definite or ascertainable because of the bona fide dispute raised thereabout or there exists a dispute as regards quantity or quality of supply or such other defences which are available to the purchaser; but it is another thing to say that although the dues as regards the principal amount resulting from the quantity or quality of supply of the goods stands admitted but a question is raised as to whether any agreement had been entered into for payment of interest or whether the rate of interest would be applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary. 69. As we have discussed in preceding paragraphs that Section 483 provides that the appeals from any order or decision in the matter of the winding up of a company by the court, shall lie to the same court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or decision of the court in cases within its ordinary jurisdiction. The use of the word shall make it clear that the right of appeal conferred by the provision is as of right. The provision provides clearly for a remedy and is not intended to limit or control the exercise of the powers of the court, and hence, appeal under Section 483 has to be treated and proceeded with like any other civil appeal. Reference in this regard may be taken from the judgment as rendered by the Hon ble Apex court in the case of Bolin Chetia Vrs. Jogadish Bhuyan, reported in (2005) 6 SCC 81. The relevant paragraph of the said judgment is being referred as under:- 13. In S.P. Khanna v. S.N. Ghosh [1976 Tax LR 1740 (Bom)] Section 483 of the Companies Act, 1956 came up for the consideration of the Division Bench of the Bombay High Court. Section 483 provides that the appeals from any orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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