IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 15.02.2011 CORAM: THE HON’BLE MR.JUSTICE K.CHANDRU W.P.No.37702 of 2007, W.P.No.26625 of 2010, M.P.No.1 of 2007 and M.P.No.1 of 2010 Sree Karthikeya Industries Workers Union, Rep. By its Secretary. ...Petitioner in both WPs Vs 1.Commerical Tax Officer, Office of the CTO, SIDCOT, Ranipet, Vellore District. ...R1 in W.P.No.37702/2007 2.The Branch Manager, Tamilnadu Industrial Investement Corporation Ltd., 73/A, Katpadi Main Road, Gandhi Nagar, Vellore – 632 006. ...R1 in W.P.No.26625/2010 2.Sri Karthikeya Industries, Rep. By its Managing Partner, P.Anbalagan. ...R2 in both WPs Prayer :Petitions under Article 226 of the Constitution of India praying for a Writ of mandamus, directing the 1st respondent to pay the workmen a sum of Rs.28,02,433.18 towards closure compensation bonus, leave salary and gratuity from out of the sale proceeds, pursuant to the auction sale fixed by the 1st respondent on 26.12.2007 and 25.11.2010 respectively for the sale of both movable and immovable properties belonging to the 2nd respondent situated at Plot Nos.87 and 132, SIDCO Industrial Estate, SIPCOT, Ranipet Vellore Dist. and to remit the dues to PF & ESI Authorities with a statement of accounts. For Petitioner : Mr.V.Ajoy Khose (in both WPs) For Respondents : Mr.K.Radhakrishnan,G.A.(T) for R1 in W.P.No.37702/2007 Mr.A.Ramesh Kumar for R1 in W.P.No.26625 of 2010 https://hcservices.ecourts.gov.in/hcservices/ O R D E R These writ petitions came to be posted on being specially ordered by the Hon'ble Chief Justice vide order dated 04.01.2011. 2. The petitioner is the same Trade Union in both the writ petitions. The first writ petition (W.P.No.37702/2007) was filed in the year 2007. The petitioner sought for a direction to the first respondent Commercial Tax Officer, Ranipet to pay a sum of Rs.28,02,433.18 towards the closure compensation bonus, leave salary and gratuity from out of the sale proceeds, pursuant to the auction sale fixed by the first respondent on 26.12.2007 in as much as he has brought both the movable and immovable properties belonging to the second respondent company situated at Plot Nos.87 and 132, SIDCO Industrial State, SIPCOT, Ranipet. 3. The said writ petition was admitted on 20.12.2007. Pending further orders, this Court directed the first respondent Commercial Tax Officer to set apart amounts allegedly due to the workers represented by the petitioner Union. When the matter came up for final disposal, the Assistant Commissioner, Commercial Tax, Ranipet produced a copy of the communication sent to the Principal Secretary and Commissioner of Commercial Taxes, dated 22.12.2010 stating that the arrears towards Commercial Tax payable by the second respondent worked out to Rs.85,03,542/- and the properties were attached as early as 10.08.2005. Twice auctions were conducted ie., on 12.08.2005 and 05.10.2010. In both occasions, there were no bidders and finally the auction got postponed to 06.01.2011. 4. It is the case of the petitioner Trade Union that the second respondent was manufacturing Polythene Fabric which are used for preparing Polythene bags. The workmen and the Management entered into a settlement for revision of wages from time to time and the last Wage Settlement expired on 31.03.2001. A further settlement was signed on 13.02.2003 under Section 12(3) of the Industrial Disputes Act for a period of three years. Thereafter, as the wage were not revised, the petitioner Union raised a dispute before the Government Labour Oficer, Vellore. Despite several conciliation notices, the second respondent did not appear and they also laid off the workers from 01.03.2006 to 31.03.2006. This was followed by a lock out. But it was labelled as 'suspension of operation' with effect from 01.04.006. The declaration of lock out/suspension of operation was in contravention of Section 33(1) (a) of the I.D.Act They are also having dues to be paid to the PF and ESI Department. 5. It was further stated that without making payments to the workers which are due and payable, the first respondent Commercial Tax Department pursuant to their attachment order brought the entire property to sale towards adjustment of their dues. If the entire properties are sold and appropriated by the CT Department, there will be nothing left for the workers represented by the petitioner Union. Their claims for wages and gratuity are protected by Section 25J(2) of the I.D.Act and Section 14 of the Payment of https://hcservices.ecourts.gov.in/hcservices/ Gratuity Act and are free from attachment. Therefore, they have filed the writ petitions seeking for a direction to the first respondent to set apart the amounts due to the workmen. 6. It is an admitted case of the petitioner that they have not moved any authority for computing the amounts due to the workers. In fact, the dispute before the Government Labour Officer is regarding denial of employment to the workmen on account of lock- out and not by way of 'suspension of operation'. In any event, in the absence of any order of any Court computing the amounts due to the workmen and in the absence of any attachment orders passed against the same properties, the petitioner filing a writ petition to secure their alleged dues cannot be entertained by this Court. 7. In the counter affidavit filed by the first respondent dated Nil (January 2011), it was stated that under Section 24(2) of the Tamil Nadu General Sales Tax Act Act, 1959, the State has got priority over all other claims. It is only after satisfying the claim made by the State, if any amounts are left, then the workmen may get their dues depending upon their priorities. 8. Even while the said writ petition was pending, the same Trade Union filed the second writ petition being W.P.No.26675 of 2010 once again seeking for a similar prayer, this time against the Tamil Nadu Industrial Investment Corporation Ltd. (TIIC). This Court did not admit the writ petition. But however, on notice being issued to the respondents, directed the first respondent to set apart a sum of Rs.28,02,433.18 towards the dues payable to the workers from out of the sale proceeds that may be recovered in the auction proposed to be conducted on 25.11.2010. 9. It is not clear that in the absence of any valid decree in favour of the workmen as to how they can file a writ petitions against the other creditors namely the Commercial Tax Department and TIIC and then ask for certain amounts to be set apart towards their dues. First of all, the dues themselves were not ascertained by any Court including the Labour Court or by the Payment of wages Authority or Gratuity Authority. With reference to the dues payable to the Sales Tax, vis-à-vis the claim made by the banking companies either under the DRT Act or under the SARFAESI Act, the Supreme Court had an occasion to consider the said issue vide its judgment in Central Bank of India v. State of Kerala and others reported in (2009) 4 SCC 94. IN paragraph 210, the Supreme Court observed as follows:- "210. We are in complete agreement with the Division Bench that statutory first charge created in favour of the State under Section 26-B of the Kerala Act has primacy over the right of the Bank to recover its dues." 10. Likewise, the dues payable to the PF department as against the claim made by the banking companies under the SARFAESI Act, the https://hcservices.ecourts.gov.in/hcservices/ Supreme Court had an occasion to consider the said issue in Maharashtra State Cooperative Bank Limited v. Assistant Provident Fund Commissioner and others reported in (2009) 10 SCC 123. In paragraphs 68 and 69, the Supreme Court observed as follows:- "68. As mentioned earlier, sub-section (2) was inserted in Section 11 by Amendment Act 40 of 1973 with a view to ensure that payment of provident fund dues of the workers are not defeated by the prior claims of the secured and/or of the unsecured creditors. While enacting sub-section (2), the legislature was conscious of the fact that in terms of existing Section 11 priority has been given to the amount due from an employer in relation to an establishment to which any scheme or fund is applicable including damages recoverable under Section 14-B and accumulations required to be transferred under Section 15(2). The legislature was also aware that in case of delay the employer is statutorily responsible to pay interest in terms of Section 17. Therefore, there is no plausible reason to give a restricted meaning to the expression "any amount due from the employer" and confine it to the amount determined under Section 7-A or the contribution payable under Section 8. 69. If interest payable by the employer under Section 7-Q and damages leviable under Section 14 (sic Section 14-B) are excluded from the ambit of expression "any amount due from an employer", every employer will conveniently refrain from paying contribution to the Fund and other dues and resist the efforts of the authorities concerned to recover the dues as arrears of land revenue by contending that the movable or immovable property of the establishment is subject to other debts. Any such interpretation would frustrate the object of introducing the deeming provision and non obstante clause in Section 11(2). Therefore, it is not possible to agree with the learned Senior Counsel for the appellant Bank that the amount of interest payable under Section 7-Q and damages leviable under Section 14-B do not form part of the amount due from an employer for the purpose of Section 11(2) of the Act." Taking advantage of this passage, Mr.Ajoy Khose learned counsel for the petitioner contended that since the workers due towards PF is still pending, a direction may be issued to the PF and ESI authorities to proceed to attach the properties of the employer and https://hcservices.ecourts.gov.in/hcservices/ bring it to sale so that the workers may atleast will get their PF amounts. 11. First of all, such a request is outside the scope of this case as the PF Department is not before this Court to ascertain its dues. Even otherwise, it is always open to the PF Department to exercise their power to recover in terms of Section 11(2) of the PF Act. But under no circumstances, the petitioner Union by filing a writ petition can create a charge over the properties. It was rather unfortunate that even though more than 4 years have elapsed since the filing of the first writ petition, the petitioner Trade Union had not moved any authorities to compute the amounts due and payable to the workmen represented by them. On the contrary, they have only come up with a second writ petition with a similar prayer challenging the auction brought by the TIIC. Even assuming that the respective recovery officer brough the property to sale, the petitioner can make appropriate application before the Recovery Officer and stake their claim for the amount due to be paid to them by R-2. 12. In the light of the above, this Court is not inclined to entertain the writ petitions. Hence, both the writ petitions will stand dismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petitions are closed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar svki To 1.Commerical Tax Officer, Office of the CTO, SIDCOT, Ranipet, Vellore District. 2.The Branch Manager, Tamilnadu Industrial Investement Corporation Ltd., 73/A, Katpadi Main Road, Gandhi Nagar, Vellore – 632 006. 1 cc To Mr.A.Ramesh Kumar , Advocate, SR.11211/11 1 cc To Mr.V.Ajoy Khose , Advocate, SR.11265/11 1 cc To Spl.Government Pleader SR.11211/11 W.P.No.37702 of 2007 and W.P.No.26625 of 2010, rb(co)pmk.03.03.2011 https://hcservices.ecourts.gov.in/hcservices/