The Indian Banks Association was number a party to the proceedings before the High Court or before the DRT but it has preferred appeal, after permission was granted, as in its view the impugned judgment if implemented would have far reaching implications on the banking industry as a whole.
604/1986 before the Bombay High Court in 1986 for winding up of the Company.
In 1984 85, the Company faced liquidity problems.
On 14.01.1987, the companypany petition was admitted.
The Company, however, disputed their claim.
As regards legal heirs of one of the deceased directors, it was directed that they would be liable only to the extent they inherited the property from their predecessor in interest.
The suit was transferred to the DRT III in 1999 and was numbered as original application number 344/1999.
Of that amount, Rs.
1,17,55,000/ and number to disburse the same either to the 2nd respondent or to any other person till and until the claim of the workers is determined.
The workmen made an application in the companypany petition No.
On 22.01.2004, the Recovery Officer auctioned the movable properties of the Company and received an amount of Rs.
By an order dated 08.10.2004, the Company has been ordered to be wound up by the Bombay High Court and official liquidator has been appointed as liquidator of the Company with the usual powers under the Companies Act.
In the same year, a reference was made by the Company to the Board for Industrial and Financial Reconstruction, New Delhi BIFR under Section 15 1 of Sick Industrial Companies Special Provisions Act, 1985 for short, SICA .
In the recovery proceedings, the workmen employees of the Company through their Association made an application on 17.9.2003 and prayed that they be allowed to intervene in the matter and their claims be registered before any auction takes place.
On 19.07.2001, the DRT III allowed the original application made by the Bank by directing the Company and its Directors to pay jointly, severally and personally a sum of Rs.
In the recovery certificate, it was directed that the Recovery Officer shall realize the amount as per the certificate in the manner and mode prescribed under Sections 25 and 28 of the 1993 Act from the certificate debtors as specified in the certificate.
The facts and circumstances on which the workmen relied before the High Court are these The Company had taken loan from the Bank somewhere in 1980.
The workmen also sent a numberice to the Company and its Managing Director requesting them to pay their dues.
3 crores were disbursed to the Bank on 10.03.2004 and remaining amount of Rs.
While granting leave on that day, the Bench was of the view that the question whether the claims of the workmen who claimed to be entitled to payment pari passu have to be companysidered by the official liquidator or whether their claims have to be adjudicated upon by the Debts Recovery Tribunal for short, DRT is likely to arise in a large number of cases where recoveries are sought to be made pursuant to the certificates issued by the DRT and, therefore, these appeals required companysideration preferably by a Bench of three Judges.
On 1.9.1993, BIFR passed an order for winding up of the Company.
The DRT III further directed in its judgment that in the event of failure of the Company and its Directors to pay the amount to the Bank, as directed, the Bank shall be entitled to sell hypothecated and mortgaged and other immovable and movable properties of the Company and the Directors and the sale proceeds shall be appropriated towards due amount.
25,39,08,282.79 with future interest thereon at the agreed rate and companyt in the Court of Civil Judge, Senior Division, Panvel.
25,49,91,756.94 with companyt and interest at the rate of 6 per annum with quarterly rests from the date of application till its realization.
The Company was closed in 1992.
In or about 1995, the Bank filed a suit against the Company and its Directors for recovery of a sum of Rs.
1,70,55,000/ was kept aside towards the likely claim of the workmen of the Company.
On 18.06.2004, the workmen filed a writ petition before the Bombay High Court for the reliefs as numbered above.
M. LODHA,J. These two appeals from the Bombay High Court came up before a two Judge Bench B.P. Singh and R.V. Raveendran, JJ.
The Company challenged the order of the BIFR before the appellate authority but was unsuccessful.
The Bank opposed the application of the workmen before the Company Court and submitted that any restraint on the sale of the Companys assets would adversely affect the interest of number only the secured creditors but also the workmen.
Consequent upon the Judgment dated 19.7.2001, the DRT III issued recovery certificate on 21.08.2001.
604/1986 before the Bombay High Court on 19.03.2004 for appointment of Provisional Liquidator and for staying further proceedings before the DRT III arising out of the above recovery proceedings.
4,70,55,000/ by way of sale proceeds.
on 21.11.2005.
3 crores from Bank of Maharashtra the Bank which was allowed to be withdrawn being the money realised from the sale of movables of the Company and for issuance of further direction to the Recovery Officer to adjudicate the claims dues of the workmen employees as per the list annexed with the writ petition and after adjudication, in priority over all the claims, release the amount due to them.
This is how these appeals have companye up before us.
One of the creditors of the Company filed a companypany petition being Company Petition No.
As will appear, the High Court was companycerned with the writ petition filed by the workmen employees of Paper and Pulp Conversions Ltd. for short, Company praying therein that direction be issued to the Recovery Officer, Debt Recovery Tribunal, Mumbai III for short DRT III to recover the amount of Rs.
The workmen employees also prayed in the writ petition for direction to the Central Government to make rules laying down procedure to be followed by the Recovery Officer under Recovery of Debts due to Banks and Financial Institutions Act, 1993 for short, 1993 Act .
The appellant in one appeal is Bank of Maharashtra and in the other, Indian Banks Association.
As a matter of fact, the main appeal is by Bank of Maharashtra.
