Maharashtra State Co-Op.Bank Ltd vs Assistant P.F.Commr.& Anr

3. We shall first notice the facts from the record of the appeal arising out of S.L.P.(C ) No.15243/2007.

4. During crushing season 2000-2001, the appellant advanced loan of Rs.4000 lacs to Kannad Sahakari Sakhar Karkhana Limited (hereinafter described as `the Sugar Mill'). For securing repayment of the loan and interest, the management of the Sugar Mill executed necessary documents including deed of pledge dated 5.3.2001, the relevant portions of which are extracted below:-

4. We undertake to insure the stocks/goods/commodities for their full value with an Insurance Company approved by the said Bank and will get the policy issued in the name of the said Bank.

7. The loan shall bear interest at ____ percent per annum. If the rent of the godown, the expenses in connection with insurance and other expenses if any not paid by us, the same shall be debited to our loan account and shall bear interest at the same rate. This interest shall be payable with half yearly rests on 30th June and 31st December or earlier immediately when the stocks/goods/commodities are relieved.

5. On the same day i.e., 5.3.2001, the management of the Sugar Mill also executed promissory note for payment of Rs.40 crores with interest @ 15.50% with half yearly rests.

7. The appellant challenged the warrant of attachment and consequential action taken by the Enforcement Officer in Writ Petition No.6824/2005, mainly on the ground that in view of the deed of pledge executed by the management of the Sugar Mill, the sugar bags which were lying under its lock and key, could not have been attached for realization of the dues of provident fund etc. During the pendency of the writ petition, the Assistant Commissioner filed Civil Application No.2739/2006 for sale of the sugar bags. At the hearing of that application, learned counsel appearing for the appellant-bank referred to the orders passed in Writ Petition No.3413/2005 and connected cases for conducting joint auction of the attached goods i.e., sugar bags. After taking note of his submission, the Division Bench of the High Court passed order dated 1.12.2006, the relevant portions of which are as under:-

11. We may now notice some facts from the record of the other appeal.

12. The appellant advanced Rs.2000 lacs to Gangapur Sahakari Sakhar Karkhana Ltd. during crushing season 2002-

03. For securing the payment of the loan, the management of the Sugar Mill executed three deeds on 2.1.2003, 6.2.2003 and 4.4.2003 and pledged the sugar bags lying in the godowns. Simultaneously, three promissory notes were executed for payment of the amounts specified therein with interest at the rate of 13.5 per cent per annum with half yearly rests. The terms and conditions of these deeds are similar to deed of pledge dated 5.3.2001 executed by the management of Kannad Sahakari Sakhar Karkhana Ltd. On account of failure of the employer to pay the dues of provident fund etc., the competent authority passed orders under Sections 7A, 7Q and 14B of the Act and held it liable to pay total sum of Rs.9,11,72,892/- towards the dues of provident fund, interest and damages. After some time, the Assistant Commissioner issued warrant of attachment dated 15.9.2003 which was duly executed by the Enforcement Officer on 22.9.2003.

(d) The information in respect of the number, pendency or disposal of the Appeal shall be given by the Sugar Factory to the Registrar General when the said Appeal is disposed of.

(e) In case the said appeal filed by the Sugar Factory is dismissed by the Appellate authority, then the amount of Rs.3,56,79,065/- will have to be transferred to the Assistant Provident Fund Commissioner and the Registrar General is hereby directed, accordingly, to transfer it.

(g) In view of the above directions and the disbursement of the amount, the order passed by the Assistant Provident Fund Commissioner attaching the assets, Bank Accounts and sugar bags etc. of the Sugar Factory is hereby quashed and set aside and the Sugar Factory is at liberty to deal with the said assets in accordance with their own Resolution and decisions keeping in mind the directions."

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40. The next point which requires consideration is whether the sugar bags pledged with the appellant-bank constitute assets of the establishment within the meaning of Section 11(2) of the Act.

48. In the result, the appeals are dismissed.

49. Although, while issuing notice in the special leave petitions and passing order of status quo, the Court had made it clear that in the event of dismissal of the special leave petitions, the amount shall be paid by the petitioner (appellant herein) with interest at the rate which may be fixed by the Court, we do not consider it just and proper to saddle the appellant-bank with the liability of interest because price of the sugar sold pursuant to the High Court's order remained deposited with its Registrar General and the appellant-bank did not have the benefit of utilizing the same.