THE MAHARASHTRA STATE CO-OPERATIVE BANK LTD.V. BABULAL LADE & ORS. versus BABULAL LADE & ORS.

THE MAHARASHTRA STATE CO-OPERATIVE BANK LTD.V. BABULAL LADE & ORS. versus BABULAL LADE & ORS.

Employees' dues arising from a recovery certificate under s.50 of the MRTU & PULP Act, though recoverable as arrears of land revenue, do not have priority over the secured creditor (the appellant bank) as there is no statutory ‘first charge’; s.529A of the Companies Act does not apply to cooperative societies due to...

Source-derived case information.

Parties
Appellant: The Maharashtra State Co-operative Bank Ltd.; Respondents: Babulal Lade & Ors.
Jurisdiction
India
Judgment Date
04 December 2019
Procedural Posture
Civil Appeal / Final Judgment on Appeal From High Court Order
Outcome
Appeal disposed of; High Court's judgment modified.
Legal Topics
Priority of Claims, Secured Creditors, Employees' Dues, Distribution of Sale Proceeds, Cooperative Societies, Statutory Interpretation
Banking Law Labour Law Insolvency and Company Law Priority of Claims Secured Creditors Employees' Dues Distribution of Sale Proceeds Cooperative Societies +1 more

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Parties

The Maharashtra State Co-operative Bank Ltd.

Appellant

Babulal Lade & Ors.

Respondents

Procedural Posture

Civil Appeal / Final Judgment on Appeal From High Court Order

Legal Issues

  1. 1 Whether employees' dues can take precedence over the claim of secured creditor under SARFAESI Act.
  2. 2 Whether s.529A of the Companies Act applies to cooperative societies in liquidation.
  3. 3 Scheme for distribution of sale proceeds when contract to the contrary exists.

Ratio Decidendi

Employees' dues arising from a recovery certificate under s.50 of the MRTU & PULP Act, though recoverable as arrears of land revenue, do not have priority over the secured creditor (the appellant bank) as there is no statutory ‘first charge’; s.529A of the Companies Act does not apply to cooperative societies due to the express bar under s.167 of the Societies Act; the scheme of sale proceeds distribution under SARFAESI Act can be displaced by a contract, and in this case, the sale letter and sale certificate constitute such a contract whereby the appellant bank undertook to pay the employees' dues from sale proceeds; all other statutory dues related to employees are to be paid by the...

Court Disposition

Appeal disposed of; High Court's judgment modified.

Orders

  • The Appellant-Bank must pay employees' dues out of the sale proceeds from the auctioned property as per its contractual undertaking.
  • Recovery certificate issued by Industrial Court may be executed against Appellant-Bank; Collector to recover such dues within six months from the date of this order.