TaxTMI 
TaxTMI 
TaxTMI 
2013 (7) TMI 1255
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....t fund dues. Shri M.Y. Deshmukh, learned counsel for the petitioner argued that the Division Bench of the High Court committed an error by relying upon the judgment in Maharashtra State Cooperative Bank Limited v. Assistant Provident Fund Commissioner and others (2009) 10 SCC 123 because the subject matter of that case was an interlocutory order passed by the High Court permitting joint auction of the sugar bags which had been attached by the Provident Fund authorities. Learned counsel emphasised that this Court should not have decided the issue relating to priority of the dues of the workers under Section 11(2) of the 1952 Act because the main petition was pending before the High Court. He then argued that the judgment in Maharashtra State Cooperative Bank Limited v. Assistant Provident Fund Commissioner and others (supra) should be treated as per incurian because while deciding the matter this Court did not consider the provisions of Sections 3, 3D and 3E of the Essential Commodities Act, 1955 (for short, 'the 1955 Act') and various clauses of the Sugarcane (Control) Order, 1966, which cast a duty upon the producer to pay price of sugarcane to the growers. He lastly argued tha....
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.... reliance on paras 67 and 73 of the judgment of this Court in Transcore v. Union of India5. Another argument of the learned Senior Counsel is that, at best, the amount determined under Section 7-A can be treated as first charge on the assets of the establishment but the interest payable under Section 7-Q and damages levied under Section 14-B cannot be recovered by invoking Section 11(2) of the Act" This Court extensively referred to the provisions of the 1952 Act (paragraphs 19 to 24) and judgments in Builders Supply Corporation v. Union of India (1965) 2 SCR 289, UCO Bank v. Official Liquidator, High Court of Bombay (1994) 5 SCC 1, State Bank of Bikaner and Jaipur v. National Iron and Steel Rolling Corporation (1995) 2 SCC 19, Dena Bank v. Bhikhabhai Prabhudas Parekh and Company (2000) 5 SCC 694, A.P. State Financial Corporation v. Official Liquidator (2000) 7 SCC 291, Recovery Officer and Assistant Provident Fund Commissioner v. Kerala Financial Corporation (2002) 3 LLJ 643 (Kerala High Court), State of M.P. v. State Bank of Indore (2002) 10 SCC 441, Textile Labour Association v. Official Liquidator (2004) 9 SCC 741, Central Bank of India v. State of Kerala (2009) 4 SCC 94, an....
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....e owner of the sugar bags." The Court then referred to the judgments in Lallan Prasad v. Rahmat Ali (1967) 2 SCR 233 and Bank of Bihar v. State of Bihar (1972) 3 SCC 196 and observed: "The ratio of the abovenoted two judgments is that in a contract of pawn the property pledged should be actually or constructively delivered to the pawnee and pawnee has only a special property in the pledge but the general property remains with the pawner and wholly reverts to him on discharge of debt. The right to property vests in the pledgee only so far as necessary to secure his debt. We, therefore, hold that the deeds of pledge executed by the management of the Sugar Mills as security for repayment of loan etc. did not have the effect of transferring of the ownership of the sugar bags to the appellant-bank and the Recovery Officer did not commit any illegality by attaching the same and the High Court was fully justified in directing payment of a portion of the sale price to the Assistant Commissioner for being appropriated towards the provident fund dues of the workers." The Court finally dealt with the question whether the interest payable in terms of Section 7-Q and damages impo....
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.... payment of the amount due is delayed and also pay damages, if there is default in making contribution to the Fund. If any amount payable by the employer becomes due and the same is not paid within the stipulated time, then the employer is required to pay interest in terms of the mandate of Section 7-Q. Likewise, default on the employer's part to pay any contribution to the Fund can visit him with the consequence of levy of damages. As mentioned earlier, sub-section (2) was inserted in Section 11 by Amendment Act No. 40 of 1973 with a view to ensure that payment of provident fund dues of the workers are not defeated by the prior claims of the secured and/or of the unsecured creditors. While enacting sub-section (2), the legislature was conscious of the fact that in terms of existing Section 11 priority has been given to the amount due from an employer in relation to an establishment to which any scheme or fund is applicable including damages recoverable under Section 14-B and accumulations required to be transferred under Section 15(2). The legislature was also aware that in case of delay the employer is statutorily responsible to pay interest in terms of Section 17. There....
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....er" appearing in Section 11(2) is not confined to amount determined under Section 7-A or contribution payable under Section 8 but covers even interest payable under Section 7-Q, damages leviable under Section 14-B and accumulation required to be transferred under Section 15(2) of the Employees' Provident Fund and Misc. Provisions Act, 1952. In our opinion, a reading of the Supreme Court decision in this case would demonstrate that the questions raised before us are squarely covered and answered therein. In this behalf, reference can be made to the following observations in the Hon'ble Supreme Court decision :- "66. Section 11 gives statutory priority to the amount due from the employer vis-a-vis all other debts. Clause (a) of sub- section (1) of Section 11 is applicable to cases where an employer is adjudicated insolvent or, being a company, an order of its winding up is made. In that situation, the amount due from the employer in relation to an establishment to which any scheme or the Insurance Scheme applies in respect of any contribution payable to the Fund or, as the case may be, the Insurance Fund, damages recoverable under Section 14-B, accumulations require....
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....he fact that in terms of existing Section 11 priority has been given to the amount due from an employer in relation to an establishment to which any scheme or fund is applicable including damages recoverable under Section 14-B and accumulations required to be transferred under Section 15(2). The legislature was also aware that in case of delay the employer is statutorily responsible to pay interest in terms of Section 17. Therefore, there is no plausible reason to give a restricted meaning to the expression "any amount due from the employer" and confine it to the amount determined under Section 7-A or the contribution payable under Section 8. 69. If interest payable by the employer under Section 7-Q and damages leviable under Section 14(sic Section 14-B) are excluded from the ambit of expression "any amount due from an employer", every employer will conveniently refrain from paying contribution to the Fund and other dues and resist the efforts of the authorities concerned to recover the dues as arrears of land revenue by contending that the movable or immovable property of the establishment is subject to other debts. Any such interpretation would frustrate the object of in....