GENERAL MANAGER, KARNATAKA STATE FINANCIAL CORPORATIONversusGENERAL SECRETARY, MYSORE DIVISION INDUSTRIAL WORKERS GENERAL UNION AND ORS.

                         [2013] 2 S.C.R. 744


A     ASSTT. GENERAL MANAGER, KARNATAKA STATE
                  FINANCIAL CORPORATION
                                v.
    GENERAL SECRETARY, MYSORE DIVISION INDUSTRIAL
           WORKERS GENERAL UNION AND ORS.
B       (Special Leave Petition (Civil) No. 8684 of 2010)
                           APRIL 03, 2013
           [H.L. GOKHALE AND RANJAN GOGOi, JJ.)

C        STATE FINANCIAL CORPORATIONS ACT, 1951,

         s. 46-8 -Industrial concern closed down - Recovery of
    dues of workmen as also of State Financial Corporation -
    Held: Workmen had their rights adjudicated in the year 2005,
D   and court had held that they were entitled to their dues uls. 33-
    C of the Industrial Disputes Act as well as under Payment of
    Gratuity Act -- Labour Commissioner did not proceed with the
    proceedings for realizing claims of workmen which he was
    expected to realize from sale proceeds of assets of company
E   -- Merely because appellant Financial Corporation
    subsequently sold the properties, that by itself cannot destroy
    rights of workmen as held by competent courts - Under s.46-
    8, provisions of 1951 Act shall be applicable in addition to,
    and not in derogation of any other law for the time being
    applicable to an industrial concern -- High Court compared
F   claim of petitioner with claims of workmen where a company
    goes into liquidation and held that dues of workmen shall
    have preference -- Comparison has to be seen with proper
    perspective and that has to be seen on the backdrop of s. 46-
    8 -- There is no error in the order of High Court - Industrial
G   Disputes Act, 1947 - ss.33-C- Payment of Gratuity Act, 1972.

         Central Bank of India vs. Sriguppa Sugars & Chemicals
    Ltd. and Ors. 2007(8) SCR 898 = (2007) 8 sec 353 and

H                                 744
A.G.M., KARNATAKA STATE FINANCIAL CORPN. v. GEN. 745
SEC., MYSORE DIV. IND. WORKERS GENERAL UNION

Union of India and· Ors. vs. Sicom Limited and Another, 2008      A
              =
(17)SCR 120 (2009) 2 SCC 121 -distinguished.
                     Case Law Reference:
     2007 (8) SCR 898         distinguished          para 7
                                                                  B
     2008 (17) SCR 120        distinguished          para 7
     CIVIL APPELLATE JURISDICTION : Special Leave
Petition (Civil) No. 8684 of 2010.

    From the Judgment and order dated 16.12.2009 of the           c
High Court of Karnataka at Bangalore in WA No. 1382 of 2009.

     Kiran Suri, S.J. Amith, Nakibur Rahman Barbuiya for the
Petitioner.

     V.N. Raghupathy, Shailesh Madiyal, Muthu Kumar K.V.,         D
Anitha Shenoy for the Respondents.

    The following order of the Court was delivered

                            ORDER
                                                                  E
     1. Heard Ms. Kiran Suri, learned counsel for the appellant
in support of this petition and Mr. Raghupathy, learned counsel
appearing for the respondent Trade Union.

     2. This special leave petition seeks to challenge the        F
judgement and order dated 16.12.2009 rendered by a Division
Bench of the Karnataka High Court in Writ Appeal No.1382/
2009 whereby the writ appeal filed by the respondents was
allowed, and the order passed by the learned Single Judge of
the High Court dismissing Writ Petition No.4529/2009 filed by     G
the respondent was set aside.

      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
                                                                  H
    746      SUPREME COURT REPORTS                   [2013] 2 S.C.R.


A 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
B the workmen, and for that purpose they filed Applications under
  Section 33-C of 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 of
c Rs.4,71,781/-, another 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 of Rs.7,78,696/-, resulting
  into total dues of Rs.29, 17,062/-. Having waited sufficiently, the
D 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,
E   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.24,00,000/-. The claim
    of the workmen as aforesaid was for Rs.29,17,062/-. Fearing
    that the amount recovered by the sale of the leasehold rights
F   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
G   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
H   from the sale of machinery and other assets (realized pursuant
                                                           l-

 A.G.M., KARNATAKA STATE FINANCIAL CORPN. v. GEN. 747
 SEC., MYSORE DIV. IND. WORKERS GENERAL UNION

to the public auction) and to apportion the same to satisfy the      A
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                 B
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.

      6. The submission of Ms. Kiran Suri, learned counsel for
 the appellant Corporation is that under Section 29 of the State     C
 Financial Corporations Act, 1951, the Financial Corporation
 has a right to take over the management or possession of the
 properties or both of the industrial concern, and this right has
 precedence over all other claims. She relies upon Section 31
 of the said Act which gives special provisions for enforcement      D
-of the claims of the Financial Corporation. Ms. Suri criticises
 the judgment of the High Court which looked into the proviso
 to Section 529 of the Companies Act, 1956 under which the
 dues of the workmen are given a precedence. The submissiOn
 of Ms. Suri was that unless the liquidation proceedings are         E
 taken, the rights of the workmen under Section 529 of the
 Companies Act cannot fructify, and until then those rights cannot
 have any precedence over the rights of the State Financial
 Corporation under Sections 29 & 31 of the State Financial
 Corporations Act, 1951.                                             F

       7. The learned counsel relies upon a few decisions of this
'Court. Firstly, on Central Bank of India vs. Sriguppa Sugars
 & Chemicals Ltd. and Ors., (2007) 8 sec 353. In that case,
 this Court has held that the rights of the appellant Bank had
 precedence over the workmen's dues and the statutory rights,        G
 like that of the Cane Commissioner. She relies upon particularly
 paragraphs 16 and 17 of the said judgment where it has been
 held that the rights of the appellant Bank cannot be affected by
 the orders of the Cane Commissioner and both the Cane
 Commissioner, and the workmen, in the absence of a                  H
    748      SUPREME COURT REPORTS                   [2013] 2 S.C.R.


A liquidation, stand only as unsecured creditors and their rights
  cannot prevail over the rights of the workmen. She has also
  relied upon the decision of this Court in the case of Union of
  India and Ors. vs. Sicom Limited and Another, (2009) 2 SCC
  121, and particularly paragraphs 16 and 23 thereof. In
8 paragraph 23, Section 46-8 which deals with the rights of the
  State Financial Corporation, has been referred to, and it is held
  that the non obstante clause in that Section will not only prevail
  over the contract but also other laws.

C       8. We may we refer to Section 46-8 of the State Financial
    Corporations Act, 1951 which reads as follows:

          "468. Effect of Act on other laws.- The provision of this Act
          and of any rule or orders made thereunder shall have effect
          notwithstanding anything inconsistent therewith contained
D         in any other law for the time being in force or in the
          memorandum or articles of association of an industrial
          concern or in any other instrument having effect by virtue
          of any law other than this Act, but save as aforesaid, the
          provisions of this Act shall be in addition to, and not in
E         derogation of, any other law for the time being applicable
          to an industrial concern." (emphasis supplied)

        9. The two authorities relied upon by Ms. Suri will have to
  be looked at in a proper perspective. As far as the judgment
F of this Court in Central Bank of India (supra) is concerned, the
  Court has not discussed the provision of Section 46-8 and
  particularly, the later part thereof, which specifically lays down
  that the provisions of the State Financial Corporations Act,
  1951 shall be applicable in addition to, and not in derogation
  of any other laws for the time being applicable to an industrial
G concern. Similarly, the judgment in Sicom Limited (supra),
  though refers to the provision of Section 46-8 of the State
  Financial Corporations Act, 1951, does not deal with the effect
  thereof.

H         10. In the present case, as we have noted above, the
A.G.M., KARNATAKA STATE FINANCIAL CORPN. v. GEN. 749
SEC., MYSORE DIV. IND. WORKERS GENERAL UNION
workmen had their rights adjudicated way back in the year           A
2005, and the Court concerned had held that they were entitled
to their dues under Section 33-C of 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        B
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              c
Section 46-B, the 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
                                                                    0
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 Section
46-B of the Act. We do not find any error in the order passed
by the High Court. This special leave petition is, therefore,
dismissed.                                                          E

R.P.                                          SLP dismissed.