THE HONOURABLE SRI JUSTICE A.GOPAL REDDY and THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU W.P.No.22547 of 2005 Date of Order: 04-11-2009 Between: State Bank of Hyderabad rep. by its Chief Manager, Mr. Mohd. Ameeruddin ..Petitioner And 1. The Recovery Officer, Employees Provident Fund Organisation, Sub-Regional Office, Nizamabad and others. ..Respondents The Court made the following Order: THE HONOURABLE SRI JUSTICE A.GOPAL REDDY and THE HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU W.P.No.22547 of 2005 Oral Order: (Per Honourable Sri Justice A.Gopal Reddy) 1. The notice of sale of immovable property by auction issued by the Employees Provident Fund Organisation—1st respondent is under challenge in the present writ petition. It is contended that the said notice is in violation of Sections 17, 18, 25, 31 and 34(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short Act 51/2003) and also in violation of the order passed by the 2nd respondent—Recovery Officer, Debts Recovery Tribunal, Hyderabad in C.P.No.17/2003 in R.P.No.48/2002 in O.A.No.963/1999 dated 18-08-2003. 2. The facts, in nutshell, which are not in dispute and give rise to filing the present writ petition, are as under: 3. Petitioner-Bank filed O.A.No.963 of 1999 (old O.A.No.793/97) for recovery of secured debt which was allowed on 31- 12-2001 and Recovery Certificate was issued by the Debts Recovery Tribunal, Hyderabad—2nd respondent on 18-03-2002 for recovery of Rs.1,74,47,560/- due to the petitioner—Bank. On issuance of said certificate, mortgaged properties were attached by an order dated 12-11-2002 by the Debts Recovery Tribunal, Hyderabad. On issuing attachment order, the 1st respondent filed C.P.No.17 of 2003 in R.P.No.48 of 2002 in O.A.No.963 of 1999 before the Debts Recovery, Hyderabad claming Rs.28,81,636/- towards statutory dues from the 4th respondent from the auction purchase money representing the proceeds of Debt Recovery Tribunal (DRT) auction dated 30-05-2003 held in the DRT account for onward disposal to the Bank. The two points that arise for consideration in the claim petition are as under: “1. Whether the claim of Recovery Officer representing EPF Organisation under Employees Provident Fund and Miscellaneous Provisions Act, 1952 prevail over the claim of the bank/secured debtor? and 2. Whether Section 34 of the Act will have overriding effect of other Acts.” Both the points were answered against the 1st respondent and dismissed the claim petition, which has become final. Thereafter, the 4th respondent— Management filed W.P.No.8205 of 2004 questioning the statement of account filed before the Tribunal, which was dismissed on 28-04-2004. 4. On dismissal of the said writ petition the 3rd respondent—Workers Union filed W.P.No.3262 of 2004 to declare the auction sale notice issued by the Debt Recovery Tribunal dated 10-01-2003 proposing to hold auction for sale of land, building etc. consequent to the Recovery Certificate issued by the 2nd respondent as illegal & void; against the market value of the property and in collusion with the 1st respondent to deprive the workmen of their arrears of wages, etc. in terms of Memorandum of Understanding between the 4th respondent—Management and 3rd respondent—Workers Union on 05-04-1997; to set aside the same and consequently re-auction the property and first pay the arrears of wages and other benefits payable to workmen in terms of Memorandum of Understanding dated 05-04-1997 and in terms of Memorandum of settlement dated 1501202993 by treating the claim of the workmen as preferential claim over and above the secured and unsecured creditors including the 3rd respondent (Petitioner—Bank). 5. The 4th respondent—Management filed W.P.No.4320 of 2004 to declare the impugned proceedings dated 12-02-2004 as illegal and consequently set aside the same and further direct the 1st respondent therein to initiate action against the 2nd respondent therein for issuing different valuation certificates in respect of properties of the petitioner (Respondent No.4) to facilitate under valuing the property by the 6th respondent therein and to declare the action of the petitioner—Bank in not furnishing the statement of accounts in respect of petitioner’s liability or otherwise facilitate the petitioner to settle the same by paying the amounts legally payable and to set aside the sale of the properties which is the subject matter of auction sale notice issued by the DRT dated 10-01-2003. 6. Both the writ petitions were dismissed by the learned Division Bench of this Court by a common order dated 17-01-2005 observing that the sale has become final and properties have also been registered in favour of auction purchaser, viz., S.V.S.Real Estates, Armoor and Bank has to appropriate the amounts; and negatived the plea of the 3rd respondent—Workers’ Union granting liberty to workmen to approach the appropriate Forum under the Industrial Dispute Act, 1947 and secure their payment. If the sale has become final, it is open for the workmen to proceed against the employer personally, which can be decided by the Forum and cannot be gone into in a writ petition; and granted liberty to the 4th respondent—Management to approach the appropriate authority or the Forum under the Income Tax Rules or any other Rules, if it so chooses, by filing an appeal. The said order has become final. Thereafter, the present sale notice has been issued by the 2nd respondent attaching the properties, which are already subject matter of attachment order, dated 12-11-2002. 7. We have heard the learned counsel for the petitioner—Bank and also Sri Y.Ravindra for respondent No.1, Sri A.Rajasekhar Reddy, Standing Counsel for Central Government, for respondent No.2, Sri Nandigam Krishna Rao for 3rd respondent—Workers’ Union and Dr.K.Lakshminarasimha for the 4th respondent--Management. 8. Learned counsel for the petitioner—Bank contends that in view of Section 34 of Act 51/1993 all the secured debts due to the banks or financial institutions will prevail over the statutory liability under the provisions of other Acts. Therefore, the dues to the secured creditor will have a priority over the other debts. 9. Sri Nandigam Krishna Rao, learned counsel appearing for the 3rd respondent--Workers Union contends that if the bank sells Ac.6.18 gts. property, which is admitted that square yard will be valued at Rs.2,000/- to 3,000/-, it will fetch more than 5 crores, but the bank debt is only 1,74,47,560/- and after appropriating the amount due to it, the recovery officer will have a charge over the balance amount. 10. This writ petition was earlier disposed of on the undertaking given by the Bank agreeing to deposit the due amounts under the sale notice dated 13-10-2005 wherein it was notified that 4th respondent has defaulted an amount of Rs.18,40,431/- towards penal damages for the period 06/77 to 09/85 excluding interest and costs in accordance with the provisions of Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. 11. It is now fairly well settled Act 51/1993 being a special law its provisions will prevail over the general and earlier laws. (See ALLHABAD BANK v. CANARA BANK (2000) 4 SCC 406 and RAGHUNATH RAI BARAJA v. PUNJAB NATIONAL BANK (2007) 2 SCC 230). 12. It is not disputed that amounts due under EPF is a previous enactment. In view of overriding effect of Section 34 of Act 51/993, dues of secured creditor under the Act will prevail over other dues including statutory liability under Employees’ Provident Funds & Miscellaneous Provisions Act, 1952. 13. Once debt is due to the bank in which proceedings are initiated under the Act 51/1993 where Recovery Certificate has been issued and the properties were attached, the same will prevail over the subsequent attachment made by the 2nd respondent through impugned notice and the same is liable to be set aside. 14. Accordingly, the impugned notice dated 13-10-2005 issued by the 1st respondent is set-aside on condition of the petitioner—Bank deposits the dues payable on account of Employees Provide Fund pertaining to the 4th respondent as claimed by the 1st respondent in the impugned notice, soon after realisation of sale proceeds of the immovable property admeasuring Ac.6.18 gts. in Sy.Nos.408 and 409 situated at Housing Board Colony, near Inspection Bungalow, Armoor Nizamabad District, pertaining to the 4th respondent and thereafter appropriate the balance amount towards its loan account. If the sale proceeds of part of the property is satisfied for the amount due to the Bank, it is needless to say that the 2nd and 4th respondents will have a charge over the property for due recovery of the amount and also 3rd respondent for the amounts due under the settlement, if any. However, petitioner—Bank should furnish statement of account about the appropriation of sale proceeds received by it on sale of the properties. 15. The writ petition is accordingly allowed. No costs. The Rule is made absolute. _________________ A.GOPAL REDDY, J. __________________________ SAMUDRALA GOVINDARAJULU,J. 04-11-2009 Murthy