skc 1 WP-6326-11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 6326 OF 2011 Kolhapur District Central Co-operative Bank Ltd. Kolhapur ..Petitioner versus State of Maharashtra & Ors. ..Respondents Mr. Tejpal S. Ingale for Petitioner. Mrs. M. P. Thakur - Assistant Government Pleader for State - Respondent Nos. 1 to 3. Mr. Chetan G. Patil for Respondent No. 4. Mr. J. Shekhar for Respondent No. 5. Mr. S. S. Patwardhan for Respondent Nos. 6 and 7. CORAM : D. D. SINHA & A. R. JOSHI, JJ. 12 August 2011. P.C. : Heard the learned counsel for the parties. 2. The petitioner bank is seeking declaration that the petitioner bank has got a better claim to refund of the outstanding crop loan dues from the sugarcane bills of the agriculturists who have supplied sugarcane to the respondent no.4 sugar factory from the sale proceeds of sugar stock of the skc 2 WP-6326-11 respondent no.4 sugar factory. The issue in the present petition so far as the entitlement to receive the amount based on priority is involved in writ petition nos. 4533 of 2011 and 4539 of 2011. 3. The learned Assistant Government Pleader made a statement before this Court in the said petitions that the Collector shall distribute the amount out of the sale consideration received after selling the sugar stock of the respondent no.4 sugar factory in view of the law declared by this Court in Order dated 6th February 2008 rendered in writ petition no. 7936 of 2007 [Kolhapur District Central Co-operative Bank Ltd. vs. The State of Maharashtra & Ors.] as well as Order dated 31st January 2011 rendered in writ petition no. 4774 of 2010 and bunch of other petitions [Kolhapur District Central Co-operative Bank Ltd. vs. The State of Maharashtra & Ors.], and the Apex Court in the case of Central Bank of India vs. Siriguppa Sugars and Chemicals Limited [ (2007)8 SCC 353 ]. We have already considered the law declared by the Apex Court in the case of Central Bank of India and passed an Order dated 12th August 2011 in writ petition nos. 4533 and 4539 of 2011 and disposed of the writ petitions. In view of the statement made by the learned Assistant Government Pleader that the Collector after taking into consideration the law declared by this Court, based on the decision of the Apex Court, appropriate steps will be skc 3 WP-6326-11 taken while distributing the amounts of sale proceeds to The Navhind Cooperative Credit Society Limited to whom part of the sugar stock was pawned, sugarcane growers and the workmen.. 4. In the instant case the counsel for the petitioner has submitted that the petitioner bank has a better claim and priority to receive the amount than the respondent nos. 6 and 7. In order to substantiate this contention, reliance was placed on the decision of the Apex Court in the case of Maharashtra State Cooperative Bank Limited vs. Assistant Provident Fund Commissioner & Ors. [ (2009)10 Supreme Court Cases 123 ] . 5. We have considered the contentions canvassed by the learned counsel and perused the decision of the Apex Court cited by the petitioner bank. Relevant observations of the Apex Court so far as the issue in the present case is concerned are in paragraphs 56, 57 and 58, which reads thus : “56. In Central Bank of India v. Siriguppa Sugars & Chemicals Ltd. an interim order passed by the Division Bench of the Karnataka High Court, directing disbursement of certain amount realised from sale of stocks of sugar owned by Respondent 1 company, which was held under pledge by the appellant bank, came up for consideration before this Court. The Labour skc 4 WP-6326-11 Commissioner had passed an order under Section 33-C of the Industrial Disputes Act in respect of the dues of the workmen. The same was challenged by Respondent 1, by filing a writ petition. The Cane Commissioner also passed orders for recovery of the amount due from Respondent 1 company for being paid to the sugarcane growers for the cane supplied by them. During the pendency of the writ petition, the authority concerned took possession of the stock of sugar which was pledged with the appellant bank. The appellant bank got itself impleaded as party to the writ petition. As the stock of sugar was likely to lose its value by being stored indefinitely, the High Court directed sale thereof. The writ petition was finally dismissed by the learned Single Judge. 57. During the pendency of the appeal, the Division Bench made an interim order directing disbursement of a portion of the sale proceeds to the Labour Commissioner and the Cane Commissioner for being paid to the employees of the company and sugarcane cultivators. The bank challenged the interim order by contending that as the sugar was pledged with it, the High Court could not have ordered disbursement of a portion of the price. After making reference to various judgments including Bank of Bihar vs. State of Bihar and Karnataka Pawnbrokers’ Assn. v. State of Karnataka this Court held : (Siriguppa Sugars & Chemicals Ltd. skc 5 WP-6326-11 Case, SCC pp. 360-61, para 17). “17. Thus, going by the principles governing the matter propounded by this Court, there cannot be any doubt that the rights of the appellant Bank over the pawned sugar had precedence over the claims of the Cane Commissioner and that of the workmen. The High Court was, therefore, in error in passing an interim order to pay parts of the proceeds to the Cane Commissioner and to the Labour Commissioner for disbursal to the cane growers and to the employees. There is no dispute that the sugar was pledged with the appellant Bank for securing a loan of the first respondent and the loan had not been repaid. The goods were forcibly taken possession of at the instance of the revenue recovery authority from the custody of the pawnee, the appellant Bank. In view of the fact that the goods were validly pawned to the appellant Bank, the rights of the appellant Bank as pawnee cannot be affected by the orders of the Cane Commissioner or the demands made by him or the demands made on behalf of the workmen.Both the Cane Commissioner and the workmen in the absence of a liquidation, stand only as unsecured creditors and their rights cannot prevail over the rights of the pawnee of the goods.” skc 6 WP-6326-11 58. The above referred judgments do not have any bearing on these appeals because in both the cases, the Court dealt with the right of unsecured creditors vis-a- vis secured creditors i.e. the bank in whose favour the goods had been pledged / mortgaged. Moreover, in neither of the cases, a provision analogous to Section 11 of the Act was considered by the Court.” Plain reading of the observations made by the Apex Court in the above referred paragraphs shows that the Apex Court has considered the decision referred in Central Bank of India vs. Siriguppa Sugars & Chemicals Ltd. [ (2007) 8 SCC 353) and thereafter in paragraph 58 has categorically observed that the said judgment did not have any bearing on these appeals because in both the cases the Court dealt with the right of unsecured creditors vis-a-vis secured creditors i.e. the bank in whose favour the goods had been pledged / mortgaged. Moreover, in neither of the cases, a provision analogous to Section 11 of the Act was considered by the Court and therefore the Apex Court has no occasion to take a different view expressed by the Apex Court in Central Bank's case. 6. In the instant case the petitioner could not point out as to how the decision of the Apex Court in case of Maharashtra Cooperative Bank Limited would affect priorities carved out and fixed by the decision of skc 7 WP-6326-11 Central Bank of India’s case to receive the amount, hence writ petition dismissed. (D. D. SINHA, J.) (A. R. JOSHI, J.)