ORDER
K. Chandru, J.
1. These writ petitions are filed by the Trade Union and an employee seeking for a direction to the first respondent bank to set apart Rs. 3 Crores towards the dues of the employees represented by the petitioner Union from out of the sale proceeds of the assets of the second respondent Company. A tender notice dated 12.12.2005 was issued by the first respondent bank in terms of Section 13(4) of the SARFAESI Act and the same was published in the Daily Thanthi News Paper on 13.12.2005 wherein the property of the second respondent was sought to be brought in auction. In that notice, it was clearly stated by the Authorised Officer the dues recoverable from the second respondent, which are as follows:
Sales Tax Department - Rs. 555.88 lakhsEPF Department - Rs. 6.29 lakhsESI Department - Rs. 16.35 lakhsDues to SIPCCOT - Rs. 1.28 lakhsWorkers' Due - Rs. 90 lakhs
All these figures were promptly stated. However, it is the apprehension of the workmen that the moneys which were realised by the first respondent should be completely set apart.
2. In fact, according to Mr. D. Hari Paranthaman, learned Counsel appearing for the petitioners, the petitioners' claim have been made before the Government under Section 33(C)(1) of the Industrial Disputes Act, 1947 [for short, 'I.D. Act'] for recovery of Revenue Certificate as the factory has been closed without the prior permission of the Government under Section 33(O) of the I.D. Act and the other statutory dues of the workmen is also yet to be paid. Therefore, prior charge over the property should be created and the bank should not be allowed to sell the properties.
3. An individual worker has also filed a petition being W.P.No. 10501 of 2006 stating that he is not the member of the said Union and, therefore, he was forced to file a separate petition and that the amount towards his dues from out of the sale proceeds should also be set apart.
4. We have heard the arguments of Mr. Hari Paranthaman, learned Counsel appearing for the petitioner Trade Union in the earlier writ petition, Mr. P. Raghunathan, learned Counsel appearing for the petitioner workman in the latter writ petition and Mr. Jeyesh Dola, learned Counsel appearing for the first respondent and have perused the records.
5. The sale by the Authorised Officer under Section 15(4) of the SARFAESI Act is not to be appropriated only towards the dues of the bank. The SARFAESI Act only provides for securing the available assets, which are pledged towards the Bank dues to be kept in tact and also if necessary, to be sold in public auction towards the realisation of the dues to the Bank. However, Section 13 of the SARFEASI Act provides for a complete procedure that the method by which sale can be made and Section 13(7), (9) and (10) reads as follows:
(7) Where any action has been taken against a borrower under the provisions of Sub-section (4), all costs, charges and expenses which, in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall, in the absence of any contract to the contrary, be held by him in trust, to be applied, firstly, in payment of such costs, charges and expenses and secondly, in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests.
(9) In the case of financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under or pursuant to Sub-section (4) unless exercise of such right is agreed upon by the secured creditors representing not less than three-fourth in value of the amount outstanding as on a record date and such action shall be binding on all the secured creditors:
Provided that in the case of a company in liquidation, the amount realised from the sale of secured assets shall be distributed in accordance with the provisions of Section 529-A of the Companies Act, 1956 (1 of 1956):
Provided further that in the case of a company being wound up on or after the commencement of this Act, the secured creditor of such company, who opts to realise his security instead of relinquishing his security and proving his debt under proviso to Sub-section (1) of Section 529 of the Companies Act, 1956 (1 of 1956), may retain the sale proceeds of his secured assets after depositing the workmen's dues with the liquidator in accordance with the provisions of Section 529-A of that Act:
Provided also that the liquidator referred to in the second proviso shall intimate the secured creditor the workmen's dues in accordance with the provisions of Section 529 of the Companies Act, 1956 (1 of 1956) and in case such workmen's due cannot be ascertained, the liquidator shall intimate the estimated amount of workmen's dues under that section to the secured creditor and in such case the secured creditor may retain the sale proceeds of the secured assets after depositing the amount of such estimated dues with the liquidator:
Provided also that in case the secured creditor deposits the estimated amount of workmen's dues, such creditor shall be liable to pay the balance of the workmen's dues or entitled to receive the excess amount, if any, deposited by the secured creditor with the liquidator:
Provided also that the secured creditor shall furnish an undertaking to the liquidator to pay the balance of the workmen's dues, if any.
Explanation.- For the purposes of this subsection,-
(a) 'record date' means the date agreed upon by the secured creditors representing not less than three-fourth in value of the amount outstanding on such date;
(b) 'amount outstanding' shall include principal, interest and any other dues payable by the borrower to the secured creditor in respect of secured asset as per the books of account of the secured creditor.
(10) Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application in the form and manner as may be prescribed to the Debts Recovery Tribunal having jurisdiction or a competent Court, as the case may be, for recovery of the balance amount from the borrower.
6. Therefore, if any amount is recovered by the Authorised Officer appointed by the first respondent, the moneys can be distributed only in terms of the provisions of the Act and certainly, all the amount cannot goes only towards the dues to the first respondent bank. The learned Counsel appearing for the bank also submitted that the moneys due towards the worker will also be paid after the moneys were collected and no first preference can be given to the workman's dues.
7. In the light of the above provisions of the Act being made clear towards the realisation of the amounts due and the distribution of the amount, the apprehension raised by the workmen has no basis. Accordingly, we dispose of the writ petitions by directing the first respondent to disburse the amount strictly in terms of the provisions of the Act. However, there will be no order as to costs.