Workmen's priority over secured asset sale proceeds arises only after liquidation and final dues adjudication.

Section 529A of the Companies Act, 1956 does not create an immediate right to earmark sale proceeds of secured assets for workmen's dues unless the company is in liquidation and those dues have been finally adjudicated. Here, no winding up order had been passed, the workmen's dues under the Industrial Disputes Act, 1947 were still unfinalised, and the secured assets had already been sold under the SARFAESI Act with no established surplus for distribution. The prior objection based on non-impleadment of the company did not survive after service was attempted, but that procedural issue did not justify the substantive relief sought. Limited protective restraint was nevertheless granted against alienation or encumbrance of assets.

---

---

Issues: Whether, in the absence of a winding up order and pending adjudication of the workmen's dues, the workmen could insist that a portion of the sale proceeds of the secured assets be set apart for payment of their dues; and whether the impugned order dismissing the writ petition for non-impleadment of the company could be sustained.

Analysis: The claim for priority under section 529A of the Companies Act, 1956 was held to arise only where the company is in liquidation. On the facts, no winding up order had been passed and the computation of the workmen's dues under the Industrial Disputes Act, 1947 had also not attained finality. The sale of the secured assets had already been completed under the SARFAESI Act, 2002 and the realised amount was stated to be insufficient, leaving no established surplus for distribution. The earlier objection that the company was not impleaded no longer survived after service was attempted on the company, but that procedural defect did not by itself justify grant of the substantive relief sought by the union.

Conclusion: The demand to earmark sale proceeds for immediate payment of workmen's dues was not accepted, as section 529A was not yet attracted and the dues had not been adjudicated. The Court nevertheless restrained the company from alienating or encumbering its assets until workers' dues were satisfied and left the appellant free to pursue other legal remedies.

Final Conclusion: The writ appeal was not allowed on the main monetary claim, but limited protective relief was granted in aid of the workmen's dues.

Ratio Decidendi: In the absence of a winding up order and of final adjudication of workmen's dues, section 529A of the Companies Act, 1956 does not confer an immediate right to insist on distribution of sale proceeds from enforcement of secured assets.

---