Priority over deducted wages in liquidation: amount to be released to the society, secured by fixed deposit pending appeal.

Amounts deducted from employees' wages and payable to a co-operative credit society were considered in the context of section 50(3) of the Gujarat Co-operative Societies Act, which treats default in remittance as creating personal liability and recovery as arrears of land revenue with priority akin to wages in arrears. The competing claim was that the sums should fall within the liquidation priority framework for workmen's dues and secured creditors. Without finally determining the merits of either claim, the amount was ordered to be paid to the society during the appeal, but safeguarded by placement in fixed deposit, thereby declining interim retention in the liquidation process.

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Issues: Whether the amount deducted from employees' wages and payable to the co-operative credit society should, pending the appeal, be released to the society or retained in the liquidation process in view of the competing claim under the priority regime.

Analysis: The claim was examined in the context of section 50(3) of the Gujarat Co-operative Societies Act, under which default in remitting deducted amounts makes the employer personally liable and the sum recoverable as arrears of land revenue, with priority akin to wages in arrears. The competing contention was that the amount would attract the statutory scheme governing workmen's dues and secured creditors, so that it could not be dealt with independently of the liquidation distribution. In view of this controversy, and without finally deciding the merits of the rival claims, the appropriate course was to secure the amount by directing its payment to the society subject to protection by fixed deposit.

Conclusion: The amount was directed to be paid to the respondent society during the pendency of the appeal, subject to its being kept in fixed deposit, and the request for stay was declined in effect.

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