(BY SHRI DATTATRAY KALE, ADVOCATE) v. Official Liquidator reported in (2004) 9 SCC 741 has rejected the application

(BY SHRI DATTATRAY KALE, ADVOCATE) .....PETITIONER AND

HUKUMCHAND MILLS (IN M/S LIQUIDATION) INDORE THROUGH OFFICIAL LIQUIDATOR OLD CIA BUILDING 1ST FLOOR OPP. GPO RESIDENCY AREA INDORE (MADHYA PRADESH) SHEELNATH CAMP LTD. STATE OF MADHYA PRADESH THROUCH CHIEF S E C R E T A R Y INDUSTRIES DEPARTMENT VALLABHA PRADESH) (MADHYA BHAWAN BHOPAL M/S KOTAK MAHINDRA BANK LTD. THROUGH MANAGING DIRECTOR OFFICE 27 BKC-C-27 G BLOCK BANDRA KURLA COMPLEX BANDRA (E) MUMBAI (MAHARASHTRA) (NONE FOR THE RESPONDENTS) This appeal coming on for admission this day, Justice Vivek Rusia .....RESPONDENTS passed the following: ORDER

The appellant has filed this present Company Appeal under Section 2 483 of the Companies Act, 1956 being aggrieved by the order dated

16.08.2023, whereby the Company Judge has disposed of I.A. No.5924/2004 pending in Company Petition No.19 of 2001.

Facts of the case reveal that the appellant is partnership Firm engaged in the business of cloths. In the year 1991, the appellant / Firm supplied Grey Cotton Fabrics to M/s Hukumchand Mills Limited (Company in liquidation) for the purpose of processing. The appellant / Firm filed Civil Suit No.3274/1992 before the High Court of Judicature at Bombay, in which ex parte judgment and decree was passed on 21.07.2000 alternatively for recovery of the price of grey cloths.

03. The I.D.B.I. Bank also filed a civil suit against the Company in liquidation i.e. Civil Suit No.2084/1995 for recovery of loan, by which entire properties of Company in liquidation was attached and a Receiver was appointed. In the said pending suit, appellant / Firm filed an application for releasing the goods, which was allowed vide order dated 12.11.1997.

During he pendency of the said suit / execution proceeding, Company Petition No.19 of 2001 for winding up the Company in liquidation was filed before this Court. this Court appointed Official Liquidator, who was handed over the possession of the Mill by the Receiver appointed by the High Court of Judicature at Bombay.

The appellant / Firm approached the Official Liquidator in the year 2002 and requested for inspection of the goods, however, the Official Liquidator with the permission has sold the entire goods lying in the factory, including the goods belonging to the appellant / Firm. In the pending company petition, appellant / Firm filed an application under Section 446 (1) & (2) r/w 3 section 529 of the Companies Act to grant a leave to prosecute the execution proceeding or in alternate to direct the Official Liquidator to pay the price of the goods to the appellant / Firm on priority basis. The appellant also filed a claim before the Official Liquidator for recovery of Rs.36,39,439/- and the same has been allowed as an ordinary claim. The learned Company Judge vide impugned order dated 16.08.2023 relying on the provisions of Section 529-A of the Companies Act and the judgment passed by the Apex Court in the case of Textile Labour Association v/s Official Liquidator reported in (2004) 9 SCC 741 has rejected the application by holding that the appellant / Firm cannot be given preference over the workmen's dues and the debt due to the secured creditors. The learned Company Judge has also held that the decree sought to be executed by the appellant / Firm shall be subject to the provision of Sections 529-A & 530 of the Companies Act.

Shri Dattatray Kale, learned counsel for the appellant submits that the appellant / Firm is not claiming any dues from the assets of the Company. The appellant is seeking execution of decree for recovery of its goods or the price of goods. The decree passed by the High Court should be given preference over all other dues of the secured creditors, even the dues of the workmen, therefore, the Company Judge has wrongly rejected the application.

We have heard learned counsel for the appellant at length and perused the record.

The provisions of Section 529-A of the Companies Act clearly provides that notwithstanding anything contained in any other provision of this Act or any law for the time being in force, in the winding up of a company, the workmen's dues shall be paid in priority to all other debts. The Apex Court in the case of Textile Labour Association (supra) , has considered 4 the provisions of Section 529-A of the Companies Act and held that the workmen of a company become secured creditors by operation of law. The purpose of Section 529-A is to ensure that the workmen should not be deprived of their legitimate claims in the event of liquidation of the company and the assets of the company would remain charged for the payment of workers' dues. Therefore, we do not found any ground to interfere with the order passed by the Company Judge.