Case: A.G.M, Karnataka State Financial Corpn Vs. Gen.Sec.,Mysore Div.Ind.Work.Uni

3. The short facts leading to the present special leave petition are this wise: The respondent No.1 is a Trade Union registered under the Trade Unions Act, 1926 and was representing the workmen of the industrial concern known as Mysore Panel and Boards Pvt. Ltd. This company closed down its manufacturing activities sometime in January, 2002, leaving some 83 workmen jobless. Consequent upon the closure of the said company, there were various statutory and legal dues of the workmen, and for that purpose they filed Applications under Sectionof the Industrial Disputes Act, 1947 as well as under the Payment of Gratuity Act. Those applications were allowed by the concerned authorities. Thus, one Application was allowed by order dated 4.3.2005 for a claim ofanother Application was allowed by the order dated 30.8.2005 for a claim of Rs.16,66,585/and the third Application filed under the Payment of Gratuity Act was allowed by order dated 13.9.2005 for a sum ofresulting into total dues of Rs.Having waited sufficiently, the respondent Trade Union wrote to the Deputy Commissioner of the Mysore District, Mysore by its letter dated 28.8.2008 seeking recovery of these amounts.4. It so transpired that the Deputy Commissioner, Mysore District was not quick enough in taking the necessary steps, whereas the petitioner Corporation which had its claim against this company, proceeded to sell the leasehold rights of the company for realizing the amount of Rs.The claim of the workmen as aforesaid was for Rs.Fearing that the amount recovered by the sale of the leasehold rights of the company will seriously erode the dues of workmen, the respondents filed a writ petition before the High Court. The first prayer in the writ petition was for issue of a writ of mandamus or direction to the Deputy Commissioner, Mysore District to take immediate steps to proceed against the Company for recovery of statutory and legal dues of the workmen as arrears of land revenue by selling the assets of the Company. Prayer (b) of the writ petition was to seek writ of mandamus or direction or order to the Karnataka State Financial Corporation, which is the petitioner herein, not to appropriate the sale proceeds from the sale of machinery and other assets (realized pursuant to the public auction) and to apportion the same to satisfy the claims of the workmen in accordance with law.5. The learned Single Judge of the Karnataka High Court dismissed this writ petition, though the appeal therefrom was allowed by a Division Bench of the High Court. Being aggrieved by the judgment and order passed by the Division Bench of the High Court, the present special leave petition has been filed by the petitioner.

Court's reasoning:
10. In the present case, as we have noted above, the workmen had their rights adjudicated way back in the year 2005, and the Court concerned had held that they were entitled to their dues under Sectionof the Industrial Disputes Act, 1947 as well as under the Payment of Gratuity Act. Unfortunately, the Labour Commissioner had not proceeded with the proceedings for realizing the claims of the workmen which he was expected to realize from the sale proceeds of the assets of the company. Merely because the appellant Financial Corporation subsequently sold the properties, that by itself cannot destroy the rights of the workmen which they had under the orders passed by the competent Courts. Under Sectionthe provisions of the State Financial Corporations Act shall be applicable in addition to, and not in derogation of any other law for the time being applicable to an industrial concern. The High Court compared the claim of the petitioner with the claims of the workmen where a company goes into liquidation and held that the dues of the workmen shall have preference. The comparison has to be seen with proper perspective and that has to be seen on the backdrop of Sectionof the Act. We do not find any error in the order passed by the High Court.