NDLI: Bank of Maharashtra Vs. Pandurang Keshav Gorwardkar & Ors

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Recovery of debts of company by bank
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7 Referred Case 8
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993: ss. 17 and 19 (19) of 1993 Act r/w ss.529(1)(c), proviso and 529-A of Companies Act - Recovery of debts of company by bank/financial institution - Claim of workmen - Held: Where a company is in liquidation, a statutory charge is created in favour of workmen in respect of their dues over security of every secured creditor and this charge is pari passu with that of secured creditor - Such statutory charge is to the extent of workmen's portion in relation to security held by secured creditor of debtor company - This position is equally applicable where assets of company have been sold in execution of recovery certificate obtained by bank or financial institution against debtor company. when it was not in liquidation but before the proceeds realised from such sale could be fully and finally disbursed, the company had gone into liquidation - Relevant date is the date of winding up order and not the date of sale - Where the sale of security has been effected in execution of recovery certificate issued by DRT, distribution of undisbursed proceeds has to be made by DRT alone in accordance with s. 529A of Companies Act and by other forum or authority - Where debtor company is not liquidation, s.19(19) does not come into operation at all - Companies Act, 1956 - ss. 529(1)(c) proviso, and 529-A - Interpretation of Statutes - Legislation by reference - Legislation by incorporation.s. 19(19) of 1993 Act read with ss. 529-A and 529(1)(c), proviso of Companies Act - Company in liquidation - Debt of bank/financial institution and claim of workmen - Held: Once the company is in winding up, the only competent authority to determine workmen's dues and quantify workmen's portion is the liquidator, who has to act under supervision of company court- s.19(19) of the 1993 Act does not clothe ORT with jurisdiction to determine workmen's claims against debtor company - Certain incidental and ancillary powers given to ORT do not encompass power to adjudicate upon or decide dues of workmen of debtor company.In the case filed by the appellant-Bank for recovery of its dues against a company, the Debts Recovery Tribunal gave its judgment on 19.7.2001 and issued the recovery certificate on 21.8.2001. Consequently, the Recovery Officer, ORT, on 22.1.2004, auctioned the movable properties of the Company. By order dated 8.10.2004, the Company was ordered to be wound up and Official Liquidator was appointed. The workmen of the Company filed a writ petition before the High Court seeking a direction to the Recovery Officer to recover the amount of Rs.3 crores from the appellant Bank realized by it from sale of movables of the Company and for a direction to the Recovery Officer to adjudicate the claims dues of the workmen/employees and release the amount due to them in priority over all the claims. The High Court held that the jurisdiction to determine the payment and its priorities was totally vested with the ORT under the Act and the workmen should approach the ORT for determination of their claim and consequential payment. The High Court also issued guidelines to ORT for determination of priorities.The Bank filed C.A.No.7045 of 2005. C.A. No.7046 of 2005 was filed by Indian Banks Association. The Division Bench before which the appeals were listed, felt that the question: "whether the claims of the workmen who claimed to be entitled to payment pari passu have to be considered by the official liquidator or whether their claims have to be adjudicated upon by the Debts Recovery Tribunal was likely to arise in a large number of cases and, therefore, referred the matter for consideration by a larger Bench.
Judge	Honble Mr. Justice R. M. Lodha
Neutral Citation	2013 INSC 317
Petitioner	Bank Of Maharashtra
Respondent	Pandurang Keshav Gorwardkar & Ors
SCR	[2013] 3 S.C.R. 269
Judgement Date	2013-05-07
Case Number	7045

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