Bank liable for workers' dues despite asset sale pre-liquidation. Court rejects exemption claim, orders deposit.

The court held that Kotak Mahindra Bank Ltd. is liable to deposit Rs. 2,53,977.20 with the Official Liquidator towards workers' dues within four weeks. The Bank's argument that the sale of assets prior to the appointment of the Provisional Liquidator exempted it from this obligation was rejected. The court emphasized that the statutory charge for workers' dues under Section 529A of the Companies Act, 1956 applies based on the date of the winding-up order, not the date of sale. The application for a stay of this order was also denied.

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Issues Involved:
1. Liability of Kotak Mahindra Bank Ltd. to deposit workers' dues.
2. Applicability of Section 529A of the Companies Act, 1956.
3. Character of the amount received by the Bank post the appointment of the Provisional Liquidator.

Summary:

1. Liability of Kotak Mahindra Bank Ltd. to deposit workers' dues:
The Official Liquidator sought directions for Kotak Mahindra Bank Ltd. to deposit Rs. 86,89,421/- towards workers' dues. The Bank disputed the liability, arguing that the properties were sold prior to the appointment of the Official Liquidator, thus negating the application of Section 529A of the Companies Act, 1956. However, the Official Liquidator maintained that the workers have a pari-passu charge under Section 529A, necessitating the Bank to deposit the said amount.

2. Applicability of Section 529A of the Companies Act, 1956:
The court examined the statutory charge created in favor of workmen under Sections 529 and 529A, which mandates that workmen's dues rank pari-passu with secured creditors' claims. The Bank's argument that the sale of assets prior to the appointment of the Provisional Liquidator exempted it from this obligation was rejected. The court cited Supreme Court judgments to affirm that the relevant date for determining the distribution ratio is the date of the winding-up order, not the date of sale.

3. Character of the amount received by the Bank post the appointment of the Provisional Liquidator:
The Bank received Rs. 18,06,210/- on 12th November 2008, after the Provisional Liquidator's appointment. The court held that this amount, representing lease rent, constituted an asset of the company in liquidation. Hence, the statutory charge for workers' dues under Section 529A applied to this amount as well.

Conclusion:
The court ordered Kotak Mahindra Bank Ltd. to deposit Rs. 2,53,977.20/- with the Official Liquidator towards the workmen's dues within four weeks. The application for a stay of this order was rejected.

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