IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION WRIT WRIT WRIT PETITION NO. 2626 OF 2007 PETITION NO. 2626 OF 2007 PETITION NO. 2626 OF 2007 Dyes & Chemical Workers Union ..Petitioner V/s. Asset Reconstruction Company (I) Ltd. and Securitisation Company & Ors. ..Respondents ...... Ms. Gayatri Singh for the Petitioner Mr. Faisal Sayyed with Sandip Babar i/by M/s. M.K. Ambalal & Co. for Respondent No.1 Mr. C.U. Singh, Sr.Adv. i/by A.K. Jalisatgi for the Respondent No.2 Mr. Aspi Chinoy, Sr. Adv. with Sowjanya Menon & Sutapa Shah i/by Nirmal Devnani for Respondent No.3 Mr. G.W. Mattos, A.G.P. for Respondent No.4 Mr. Prashant Chavan i/by Navdeep Vora for Respondent No.5 ...... CORAM CORAM CORAM : SHRI J.N.PATEL & : SHRI J.N.PATEL & : SHRI J.N.PATEL & SHRI SHRI SHRI K.K.TATED, JJ. K.K.TATED, JJ. K.K.TATED, JJ. DATE DATE DATE : 1ST AUGUST, 2008. : 1ST AUGUST, 2008. : 1ST AUGUST, 2008. P.C.: . Heard. 2. The Petitioner Deyes & Chemical Workers Union who claims to represent the workmen of M/s. J.D. Orgochem Ltd., Respondent No.2, have approached this Court by invoking extraordinary jurisdiction of this Court to prevent Respondent nos.2 and 3 from dismantling the plant, machinery and structure of their Turbhe factory and from granting conversion of user in respect of plot Nos. D-54/2,, D-54/3, D-55 and D-56, and other : 2 : ancillary reliefs. 3. It is the case of the Petitioner that the Turbhe factory of Respondent no.2 has been taken over by the Asset Reconstruction Company (India) Limited i.e. Respondent No.1 who has by a resolution passed under the provision of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 sold the subject property i.e. machinery (movable) of Turbe factory to Respondent No.3. 4. The main contention of the Petitioner is that the workers have a claim over the assets of the company which has been now sold to Respondent No.3. It is the contention of the learned counsel for the Petitioner that the workers are entitled for disbursement of the sale proceeds in accordance with the provisions of Section 529 and 529-A of the Companies Act but the Respondent No.1 has disposed off the property and allegedly appropriated the amount for disbursing it to the secured creditors without taking into consideration the claim of the workers. 5. The learned counsel appearing for the Petitioner has placed reliance on the decision of the Supreme Court in : 3 : the case of UCO Bank V/s. Official Liquidatior, High UCO Bank V/s. Official Liquidatior, High UCO Bank V/s. Official Liquidatior, High Court, Court, Court, Bombay and Anr. Bombay and Anr. Bombay and Anr. reported in Supreme Court Cases (1994) 5 in respect of her case. On the other hand, it has been contended on behalf of the Respondents, particularly Respondent No.1 that the Respondent No.1 have proceeded in the matter in accordance with law and have rightly disposed off the property i.e. movable assets of Turbhe factory of Respondent No.2 to Respondent No.3. 6. The learned counsel appearing for Respondent No.2-company has drawn our attention to the fact that even if it is accepted that there are dues outstanding to be paid to the workers, the Respondent No.2-Company has two more units, which are functional and they are not chosen to go for winding up of the company and in substance the provisions of Section 529-A of the Companies Act, are not attracted in this case. 7. In so far as the learned counsel appearing for Respondent No.3 is concerned, he has placed reliance on the case of M/s.Transcore V/s. Union of India & Anr. M/s.Transcore V/s. Union of India & Anr. M/s.Transcore V/s. Union of India & Anr. reported reported reported in AIR 2007 S.C. 712 in AIR 2007 S.C. 712 in AIR 2007 S.C. 712, wherein the Supreme Court has held that Section 13(6) inter alia provides that any transfer of secured asset after taking : 4 : possession or after taking over of management of the business, under Section 13(4), by the bank / Financial Institution shall vest in the transferee all rights in relation to the secured assets as if the transfer has been made by the owner of such secured asset. Therefore, Section 13(6) inter alia provides that once the bank / financial institution takes possession of the secured asset, then the rights, title and interest in that asset can be dealt with by the bank / financial institution as if it is the owner of such an asset. In other words, the asset will vest in the bank / financial institution free from all encumbrances and the secured creditor would be entitled to give a clear title to the transferee in respect thereof. 8. It is, therefore, contended that in so far as Respondent No.3 is concerned, the transaction gives a clear title to Respondent No.3 in so far as the assets which have been transferred by sale provide for negotiations under the sale agreement and, therefore, the Petitioner cannot seek any Writ, order or direction from this Court to prevent Respondent No.3 from taking possession of the movable assets which stands transferred in favour of Respondent No.3 by removal the same from factory at Turbhe. : 5 : 9. The learned counsel appearing for the Petitioner points out that even an agreement of sale provides that the sale is on the basis of "as is where is and what is" basis alongwith the liabilities as well as parties which clearly mentions the dues payable to the workmen. 10. It is not disputed that various disputes are pending between the workmen and Respondent No.2 before the Labour Court / Industrial Tribunal. 11. The learned counsel for the Respondent No.2 points out to this Court that in so far as Turbhe factory is concerned, there has been a settlement with the workmen which is placed on record. There is an arrangement between the workmen of Turbhe factory as per the communication which is placed on record by the Petitioner himself at Exhibit-B Exhibit-B Exhibit-B at page 60 at the compilation and that the workers have been paid the amount of Rs. 70,805/- which is to be paid to each workman as per part I of the table. So far as the dues mentioned in part II are concerned, they are required to be paid as and when the Company will financially be in a position to discharge the said liability and that this arrangement has been accepted and the workers have : 6 : agreed not to raise any dispute of any sort in the intervening period and whatever dispute has been raised between the parties and pending before any authority would stand settled. 12. In this Petition we are not concerned with the arrangement between the workmen of Respondent No.2, which is placed on record at Exhibit-B Exhibit-B Exhibit-B and that would be the subject matter to be dealt separately. We are only restricting ourselves to the rights of Respondent No.3 as a purchaser of the movable assets of Respondent No.2’s factory unit at Turbe, which has been disposed off by Respondent No.1. 13. This Court finds that the Petitioners are not entitled for the reliefs sought herein; firstly, the worker’s dues are yet to be crystalized and secondly, the Respondent No.2 Company has not yet gone for winding up. In so far as the movable assets are concerned, which have been disposed off by Respondent No.1, the discharge of liability of secured creditors in the proceedings initiated by Respondent No.1, the claim of workers has no priority right over the secured creditors, which is also settled by the recent decision of the Supreme Court in the case of Central Bank of Central Bank of Central Bank of : 7 : India India India V/s. Siriguppa Sugars and Chemicals Ltd. and V/s. Siriguppa Sugars and Chemicals Ltd. and V/s. Siriguppa Sugars and Chemicals Ltd. and Ors. Ors. Ors. 2007 (39) 2007 (39) 2007 (39) wherein it is clearly held that :- "18. 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." (emphasis supplied) 14. Thus, going by principles governing the matter, we find that there cannot be any doubt that the rights of the Respondent No.3 over the sold movable property had precedence over the claims of the workmen. 15. Therefore, we do not find any merits in the Petition and the same is dismissed. : 8 : (J.N. (J.N. (J.N. Patel, J.) Patel, J.) Patel, J.) (K.K. (K.K. (K.K. Tated, J.) Tated, J.) Tated, J.)