Workmen's compensation priority prevails over pari passu distribution where the claim crystallised before sale of assets.

Compensation due to the dependents of deceased workmen under the Workmen's Compensation Act, 1923 was treated as protected by a statutory first charge on transferred assets when the claim had crystallised before sale of the employer's assets. That special protection was held to prevail over the general distribution scheme under Sections 529 and 529-A of the Companies Act, 1956, so the compensation could not be confined to a pari passu rank with secured creditors. The decision applies the principle that a special beneficial social welfare statute overrides a general winding-up provision, even where both contain non-obstante clauses.

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Issues: Whether compensation awarded under the Workmen's Compensation Act, 1923 to the dependents of deceased workmen, where the award preceded sale of the company's assets, could be denied full priority on the footing that the workmen's claim had to rank only pari passu with secured creditors under Sections 529 and 529-A of the Companies Act, 1956 and the State Financial Corporation Act, 1951.

Analysis: Section 14-A of the Workmen's Compensation Act, 1923 creates a statutory first charge on the transferred assets for compensation due before the transfer, and that protection reflects a social welfare enactment intended to secure the dependents of workmen who suffer death or disablement in the course of employment. Sections 529 and 529-A of the Companies Act, 1956 deal with winding up and preferential distribution of workmen's dues, but they cannot be construed so as to curtail the special protection specifically conferred by Section 14-A where the compensation award had already crystallised before sale of the assets. The Court treated the compensation claim as distinct from ordinary workmen's dues for winding-up distribution and applied the principle that a special beneficial statute prevails over a general provision, even where both contain non-obstante clauses.

Conclusion: The compensation awarded under the Workmen's Compensation Act, 1923 was payable in full to the dependents of the deceased workmen and could not be confined to a pari passu distribution with secured creditors.

Final Conclusion: The order of the Company Judge was set aside and the financial corporation was directed to satisfy the compensation award with interest in full within the time granted by the Court.

Ratio Decidendi: Where compensation under the Workmen's Compensation Act, 1923 had accrued before transfer or sale of the employer's assets, the special first-charge protection under that Act prevails over the general winding-up distribution scheme under the Companies Act, 1956.

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