(1) wp1756-09 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO. 1756 OF 2009 WITH REVIEW APPLICATION (STAMP) NO. 24854 OF 2010 IN WRIT PETITION NO. 5690 OF 2004 The Maharashtra State Cooperative Bank Limited PETITIONER VERSUS The State of Maharashtra & others RESPONDENTS ..... Mr. R.N. Dhorde, advocate holding for Mr. P.S. Dighe, advocate for the Petitioner. Mrs. A.V. Gondhalekar, A.G.P. for the Respondent-State. Mr. A.N. Irpatgire, advocate holding for Mr. G.N. Chincholkar, advocate for Respondent No. 4. Mr. K.B. Choudhari, advocate for Respondent No. 5. ..... CORAM : B.R. GAVAI AND M.T. JOSHI, JJ. DATED : 4th OCTOBER, 2011 ORAL ORDER: 1. Rule. Rule made returnable forthwith and heard finally, by consent. 2. The petitioner, which is the Apex (2) wp1756-09 Cooperative Bank in the State of Maharashtra, by the present writ petition, wants that the notice issued by Respondent No. 5 - the Assistant Provident Fund Commissioner for recovery of the Employees' Provident Fund be declared as illegal. It further wants that an Arbitrator should be appointed to settle the dues of the workers of the liquidated Sugar Factory i.e. Marathwada Sahakari Sakhar Karkhana Limited (for short, "the Sugar Factory"). 3. Respondent No. 3- Collector, Hingoli was appointed as a Liquidator of the said Sugar Factory under the provisions of the Maharashtra Cooperative Societies Act. The petitioner is its main secured creditor. The Respondent No. 3 started liquidation proceedings and by selling the assets of the Sugar Factory, a total amount of Rs. 15.88 crores has been realized by the Liquidator. When the proceeding of liquidation was going on, the present petitioner challenged the said action in view of the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as "the Securitisation (3) wp1756-09 Act"). It claimed that in view of the provisions of the Securitisation Act, the petitioner being the Creditor was entitled to obtain the possession of the Sugar Factory. In that regard, Writ Petition bearing No. 5689/2004 was filed. Ultimately, however, consent terms were executed between all the concerned including the Respondent No. 4 - Workers' Union of the liquidated Sugar Factory, which came to be accepted by this Court in that Writ Petition on 4th May, 2006. 4. In the consent terms, the parties agreed inter alia that from the sale proceeds, after paying the workmen's dues, the balance amount be kept in separate joint account opened in the name of the Authorized Officer of the petitioner Bank and the Liquidator. Thereafter, the parties would obtain orders from this Court for the purposes of action to be taken for appropriation of the balance of the amount. As regards determination of the workers' dues, Clause No. (d) of the consent terms is as under: (4) wp1756-09 "The Authorized officer of the Bank and the Liquidator shall decide the amount of expenditure incurred during the liquidation proceedings and shall recover the same and after the amount payable to employees shall be arrived at in consultation with the office bearers of Employees Union, by Authorized officer of the Bank and the Liquidator and pay the same." 5. The petitioner Bank now submits that the Liquidator has determined the amount of dues of the workers at Rs. 9,65,42,570/- without consultation with the Authorized Officer of the petitioner Bank. Further, on 26th September, 2007, the Recovery Officer of the Respondent No. 5 - the Assistant Provident Fund Commissioner had informed the Liquidator to pay an amount of Rs. 2,30,75,162/- for the period of May, 1995 to November, 2000. In a meeting held in the office of the Hon'ble State Minister for Cooperation, it was decided to pay an amount of Rs. 4.27 crores towards the workers' dues. The petitioner Bank agreed for the same. However, it is not now possible to pay the Provident Fund arrears. The amount of Rs. 4.27 crores is already (5) wp1756-09 disbursed by the Liquidator without any consultation. The petitioner Bank has repeatedly requested the Liquidator to return the balance of the amount in the joint account of the petitioner and the Liquidator. The Liquidator, however, informed that in view of pendency of Writ Petition No. 5690/2004, he would not deposit the amount (This writ petition is filed by the petitioner Bank which is pending and in which applicability of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is in question). Under the circumstances, claiming that the Provident Fund Authority had no authority to issue notice and that the Liquidator is bound to return the entire balance amount to the joint accounts, the petitioner Bank wants that the notice be declared as illegal and an Arbitrator should be appointed to settle the dues of the workers. 6. The parties, however, vide their consent terms, accepted by this Court, have clearly agreed that from the sale of the Assets and Liabilities of the Sugar Factory, firstly workers' dues would be paid. The determination of the amount is to be made (6) wp1756-09 by the Authorized Officer of the petitioner Bank and the Liquidator. The contesting respondents have placed before us the Minutes of the Meeting, dated 4th November, 2009. The meeting took place in presence of the Authorized Officer of the petitioner by the Liquidator wherein the representatives of the Workers' Union as well as the representative of the Sugar Commissioner were present. The Minutes show that the Labour Welfare Officer of Dongarkada Sahakari Sakhar Karkhana had calculated the claim of the workers at Rs. 8,77,00,000/- which includes an amount of Rs. 4.27 crores already paid. Further, the original arrears of Rs. 2.30 crores of the Provident Fund dues had now increased due to accrual of interest to Rs. 9.87 crores, was also informed. The Authorized Officer of the petitioner Bank, however, submitted in the meeting that certain deficiencies are there in calculation of the amount. When the Liquidator/Collector asked for the details of the deficiencies, the Authorized Officer of the petitioner Bank did not give any details and, therefore, the meeting was adjourned. (7) wp1756-09 7. All these facts would show that in view of the agreement between all the concerned, now the petitioner Bank cannot challenge the payment of arrears towards Provident Fund subscription of the workers and their other dues on priority basis. In view of the consent terms, the Liquidator as well as the Authorized Officer of the petitioner Bank will have to arrive at an amount to be paid to the workers and the Provident Fund Commissioner and only thereafter, the balance amount would be paid to the petitioner Bank and/or any other creditors as per the law. 8. Mr. R.N. Dhorde, learned counsel appearing for the petitioner, however, placed reliance on the ratio in the decision in "Andhra Bank v. Official Liquidator and another" AIR 2005 S.C. 1814. In that case, in a winding-up proceeding under the Companies Act, overriding preferential payments to the secured creditors were directed to be considered by negativating the claim that the workmen's dues would have complete priority over all other creditors. In the present case, however, we are dealing with the (8) wp1756-09 concession made by the petitioner Bank that the workers' dues would be first determined and paid and thereafter, dues either of the secured creditors i.e. of the petitioner Bank or other creditors would be considered. In view of these facts, the ratio in the case of "Andhra Bank" (supra) has no application in the present case. 9. In view of above discussion, the petition stands dismissed. Rule is discharged accordingly. The Review Application (St.) No. 24854/2010 to be listed after January, 2012. [M.T. JOSHI, J.] [B.R. GAVAI, J.] npj/wp1756-09