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Bombay High Court
Sarva Shramik Sangh vs Dena Bank And Ors on 26 May, 2025
Author: A. S. Chandurkar
Bench: A. S. Chandurkar
2025:BHC-AS:22210-DB
BHARAT
DASHARATH
WP-3511-2007.doc
PANDIT IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
Digitally signed by
BHARAT WRIT PETITION NO. 3511 OF 2007
DASHARATH
PANDIT
WITH
Date: 2025.05.26
CIVIL APPLICATION NO.2614 OF 2010
17:28:40 +0530 IN
WRIT PETITION NO. 3511 OF 2007
Sarva Shramik Sangh )
A Registered Trade Union having Head Office)
at Neelkanth Apartment, Opp. Dr. Bhadkamkar )
Hospital, Mahagiri, Thane 400 601 ) ... Petitioner
V/s
)
1] Bank of Baroda )
A Body Corporate constituted under the )
Banking Companies (Acquisition and Transfer)
of Undertakings) Act having its Head Office at)
Assets Recovery Branch, 3rd Pasta Lane, Colaba,)
Mumbai - 400 005. )
)
2] Dena Bank Assets Management Service,)
Dena Bank Assets Recovery Branch, 3 rd Pasta)
Lane, Colaba, Mumbai 400005. )
)
3] Indian Rubber Regenerating Co. Ltd.,)
Plot No.F2, Wagle Industrial Estate, Thane)
400 604. )
)
4] C.D.S. Construction Co. Pvt. Ltd. )
A private Limited Company duly registered)
under the provisions of the Companies Act,)
1956, and having its registered Office at)
Earnest House, 10th floor, 194, Nariman Point,)
NCPA Marg, Mumbai 400 021. )
)
5] State of Maharashtra )
through the Ministry of Labour, Mantralaya, )
Mumbai - 400 032 )
)
6] Deputy Commissioner of Labour Campion )
BDP-SPS
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Compound, Nooribaba Darga Road, Near)
Mahakali Talao Thane (West) 400 601. )
)
7] Maharashtra General Kamgar Union, 252,)
Janata Colony, Ram Narayan Narkar Marg,)
Ghatkopar (East), Mumbai 400 077 )
)
8] Presiding Officer -1 )
Mumbai Debts Recovery Tribunal No.1, Scindia)
House, 5th floor, N.M. Marg, Ballard Estate, )
Mumbai 400 038. )
)
9] The Municipal Corporation )
through Municipal Commissioner )
Dr. Almeida Road, Panchapakhadi )
Thane 400 061. )
)
10] The Collector, )
Collector's Office, 1st floor, Court Naka, ) ...Respondents.
Thane (W) 400 601 )
Ms. Jane Cox with Mr. Yash S. Naik and Mr. Asim Sarode (Through VC)
a/w Mr. Rajabhau S. Chaudhari, Advocates for the petitioner/applicant.
Mr. Pranav Dessai i/b K.D. Shukla & Co., Advocate for the respondent
no.1.
Mr. J.P. Cama, Senior Advocate and Mr. Naushad Engineer, Senior
Advocate, Ms. Akansha Saxena, Mr. Murtuza Federal, Ms. Rashne Mulla-
Feroze and Mr. Sudharshan Satalkar i/b Federal & Company, Advocates
for the respondent no.4.
Mrs. Gauri R. Raghuwanshi, Assistant Government Pleader for the
respondent nos. 5, 6 and 10.
Mr. Ajit R. Pitale, Advocate for the respondent no.9.
****
CORAM : A. S. CHANDURKAR &
M. M. SATHAYE, JJ.
The arguments were concluded on : 06/05/2025
The judgment is pronounced on : 26/05/2025
JUDGMENT:
(Per A. S. Chandurkar, J.)
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1] In this writ petition filed under Article 226 of the Constitution of
India, the petitioner – Sarva Shramik Sangh, a Trade Union registered
under the provisions of the Trade Unions Act, 1926 has raised a
challenge to the order dated 23/03/2004 passed by the learned
Presiding Officer, Debts Recovery Tribunal-I below Exhibit-25 in
Original Application No.125 of 2001 whereby the said application
preferred by the workers of Indian Rubber Regenerating Company
Limited. seeking their claim towards dues of wages from the sale
proceeds of the property of the Company came to be rejected. The
petitioner has also challenged the order dated 04/10/2005 passed by
the learned Chairperson, Debts Recovery Appellate Tribunal in Appeal
No.311 of 2024 by which the said appeal filed for challenging the
order dated 23/03/2004 passed by the Debts Recovery Tribunal came to
be dismissed as infructuous. In addition, sale of one of the properties of
the Company is also sought to be challenged by the petitioner.
2] The facts relevant for considering the challenge raised in the writ
petition are that the 3rd respondent – Indian Rubber Regenerating
Company Limited – hereinafter referred to as “the erstwhile Company”
had obtained financial assistance from the 1 st respondent – Dena Bank
which has now merged with the Bank of Baroda – hereinafter referred
to as “the Bank”. Since the dues of the Bank were not repaid, the Bank
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WP-3511-2007.docfiled Suit No.1420 of 1984 invoking the original civil jurisdiction of this
Court. The said suit came to be decreed on 26/03/1996 holding the
Bank entitled to recover the decretal amount. By an order dated
18/12/1984, the Court Receiver was appointed on the hypothecated
goods of the erstwhile Company. As the factory premises of the
erstwhile Company had also been mortgaged with the Bank, possession
of the same was taken in the execution proceedings. Suffice it to
observe that the factory premises of the erstwhile Company was sold to
the 4th respondent – C.D.S. Construction Company Pvt. Ltd. – hereinafter
referred to as “the auction purchaser” on 27/08/2003. The
consideration paid by the auction purchaser was Rs 2 crores.
3] Original Application No.125 of 2001 filed by the Bank against the
erstwhile Company was pending before the Debts Recovery Tribunal.
On 30/10/2003 the Bank moved an application below Exhibit-37
stating therein that as the Bank had appropriated the sale proceeds
received pursuant to the auction in favour of the auction purchaser, the
Bank did not desire to proceed further in the said proceedings. The
Bank therefore sought permission to withdraw the Original Application
and also to discharge the Receiver as appointed. On 23/03/2004 the
learned Presiding Officer considered the application below Exhibit-25
preferred by the workers of the erstwhile Company seeking their share
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WP-3511-2007.docin the sale proceeds as well as the application below Exhibit-37 moved
by the Bank for withdrawal of the Original Application. By the order
passed below Exhibit-25, the learned Presiding Officer held that the
erstwhile Company had not been subjected to any winding up
proceedings nor was it under liquidation. As the factory premises had
been exclusively mortgaged with the Bank, it held that the workmen’s
dues did not have priority over the amount of the sale proceeds. As the
workers did not file any winding up proceedings nor did they seek
execution of the Recovery Certificate issued in their favour, they were
not entitled to claim precedence over the amount of sale proceeds of the
factory premises that had been exclusively mortgaged with the Bank.
The application below Exhibit-25 was accordingly rejected.
The learned Presiding Officer allowed the application at Exhibit-
37 and permitted withdrawal of the Original Application. The said
proceedings accordingly came to be disposed of. The Maharashtra
General Kamgar Union being aggrieved by the aforesaid order had
preferred an appeal before the Debts Recovery Appellate Tribunal. On
04/10/2005 the learned Chairperson held that as Original Application
No.125 of 2001 had been withdrawn, the appeal preferred by the
Maharashtra General Kamgar Union had become infructuous. On that
count the appeal came to be disposed of. As stated above, these orders
are under challenge alongwith a prayer seeking to challenge the sale of
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4] Ms. Jane Cox, learned counsel appearing for the petitioner in
support of the writ petition submitted that the learned Presiding Officer
committed an error in rejecting the application below Exhibit-25
preferred by the workers. According to her, the provisions of Section
73(1)(c) of the Code of Civil Procedure, 1908 (for short, “the Code”)
were not attracted to the facts of the present case in the light of
admitted position that there was a mortgage deed executed by the
erstwhile Company in favour of the Bank. It was submitted that the
Presiding Officer was not justified in rejecting the application below
Exhibit-25. In the given facts of the case admittedly the dues of the
workers were not paid by the erstwhile Company and their claims
remained unsettled. Placing reliance on the judgment of the Division
Bench in Khandelwal Tube Mill Kamgar Sangh vs. Government of
Maharashtra and Others, (2023) 176 FLR 966, it was submitted that
even if no winding up proceedings had been initiated against the
erstwhile Company, as the activities of the erstwhile Company had come
to standstill, it ought to have been held that there had been constructive
winding up of the erstwhile Company. On that basis, the learned
Presiding Officer ought to have held that the dues of the workers had a
priority in the matter of distribution of sale proceeds and appropriate
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WP-3511-2007.docorders in that regard ought to have been passed. Reference was also
made to the provisions of Section 11 of the Employees Provident Fund
and Miscellaneous Provisions Act, 1952 in that context. Merely on the
ground that the factory premises had been auctioned, the same could
not be a reason to deny the workers their dues. Reliance was placed on
the decision in Assistant General Manager, Karnataka State Financial
Corporation vs. General Secretary, Mysore Division Industrial Workers
General Union and Others, 2013 INSC 211. Since the Original
Application preferred by the Bank had been withdrawn without any
adjudication, the sale of the factory premises in favour of the auction
purchaser did not have the necessary legal effect. The learned Presiding
Officer ought to have considered the claim of the workers
independently. In this backdrop, reference was made to the decision of
the Supreme Court in Central Bank of India vs. State of Kerala and
Others, 2009 INSC 286. It was thus urged that on all these counts the
impugned orders as well as sale in favour of the auction purchaser was
liable to be set aside.
5] Mr. Pranav Dessai, learned counsel appearing for the Bank
opposed the writ petition. According to him, the petitioner was not at
all diligent in pursuing its alleged claim of workers dues
notwithstanding the fact that on 21/09/1988 an order was passed in
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WP-3511-2007.docthe proceedings under the Payment of Wages Act, 1936 against the
erstwhile Company. Similarly, an order was also passed by the authority
appointed under the Payment of Wages Act, 1936 at the behest of 169
workers. An order of attachment of immovable properties of the
erstwhile Company came to be passed by the Tahsildar on 07/12/1989.
However, the workers/representatives from the Maharashtra General
Kamgar Union did not take any further steps in the matter. On the
other hand, much prior to this order of attachment dated 07/12/1989,
the factory premises had been mortgaged with the Bank on
20/12/1968. Since the erstwhile Company failed to pay the dues of the
Bank, it had filed a suit for recovery of its dues which came to be
decreed on 26/03/1996. It was in the execution proceedings that the
factory premises came to be auctioned in favour of the auction
purchaser on 07/08/2003. It was only in the year 2003 that the
application for intervention was filed on behalf of the members of the
petitioner-Union seeking intervention in Original Application No.125 of
2001. Prior thereto, a public notice was published on 10/07/2000
proposing the sale of the factory premises of the erstwhile Company in
execution of the decree passed in Suit No.1420 of 1984. With the
permission of the Debts Recovery Tribunal, the said property was sold
on 27/08/2003. Since the dues of the Bank were recovered, it sought
permission to withdraw the execution proceedings. The learned
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WP-3511-2007.docPresiding Officer while allowing such application rightly declined to
intervene in the said proceedings. It was correctly found that the claim
of the workers did not have any priority over the dues of the Bank. To
substantiate his contentions in this regard, the learned counsel placed
reliance on the decisions in Anil Dinmani Shankar Joshi vs. Chief
Officer, Panvel Municipal Council, AIR 2003 Bombay 238, City Co-op
Credit & Capital Ltd and Another vs. Official Liquidator of M/s. Satwik
Electric Controls Pvt. Ltd., (2019) 4 Bom. CR 274 and Maharashtra
State Cooperative Bank Limited vs. Babulal Lade and Others, 2019
INSC 1318. It was thus submitted that in absence of any order of
winding up of the erstwhile Company, the workers could not claim any
priority whatsoever over the dues of the Bank. He therefore submitted
that the writ petition was liable to be dismissed.
6] Mr. J. P. Cama, learned Senior Advocate for the auction purchaser
also opposed the writ petition. At the outset, he submitted that the
auction sale was conducted after obtaining due permission of the
learned Presiding Officer, Debts Recovery Tribunal. The sale that was
conducted on 27/08/2003 was being challenged for the first time by the
petitioner in the present writ petition. Since the sale had been duly
completed about more than twenty years ago, the clock could not be
put back as sought by the petitioner. Referring to the grounds of
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that there was no claim whatsoever raised against the auction purchaser
except for stating that the sale of the factory premises was illegal. It
was not demonstrated as to how the said auction sale was bad in law. It
was pointed out that the auction was conducted pursuant to the orders
passed in the proceedings initiated by the Bank and not on the basis of
any private treaty. Since the rights of an auction purchaser are duly
recognized in law, the sale was not liable to be interfered with. In that
regard, the learned Senior Advocate placed reliance on the decisions in
Janatha Textiles and Others vs. Tax Recovery Officer and Another , 2008
INSC 699 and in Sadashiv Prasad Singh vs. Harendar Singh and Others ,
2014 INSC 17. It was then submitted that there was a wide difference
between the mode of recovery of an amount that is due and recoverable
on account of arrears of land revenue and an amount that is recoverable
as arrears of land revenue. In the latter case, it was only the procedure
prescribed by the Maharashtra Land Revenue Code 1966 that was
required to be followed for undertaking such recovery. The learned
Senior Advocate also referred to the decision in Babulal Lade and
Others (supra) in this regard. Nothing much would turn on the
attachment by the Tahsildar way back in the year 1989 and such
attachment was only in the nature of an assurance that in case any final
order was passed, the same would become executable as held in Kerala
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WP-3511-2007.docState Financial Enterprises Ltd. vs. Official Liquidator, High Court of
Kerala, 2006 INSC 678. It was thus submitted that the Debts Recovery
Tribunal did not commit any error in permitting withdrawal of the
original proceedings coupled with the fact that the Debts Recovery
Appellate Tribunal dismissed the appeal preferred by the workers as
infructuous on the ground that the original proceedings had been
withdrawn. There was no case made out to interfere in exercise of writ
jurisdiction. Reference was also made to the decision of the
Constitution Bench in G. Veerappa Pillai, Proprietor, Sathi Vilas Bus
Service, Porayar, Tanjore District, Madras vs. Raman and Raman
Limited, Kumbakonam, Tanjore District and Others , 1952 INSC 15. It
was thus urged that the writ petition was liable to be dismissed.
7] It may be stated that an opportunity was given to the petitioner
to make its submissions in rejoinder. At that stage, a request was made
on behalf of the petitioner that it intended to engage another counsel to
represent it. Since Ms. Jane Cox, learned counsel representing the
petitioner had been heard earlier, this Court expressed its displeasure on
such request made by the petitioner for change of counsel mid-way of
the hearing. On 29/04/2025, the following order was passed :-
“1. In the midst of the hearing, the learned Counsel for
the Petitioner submitted that the Petitioner desires toBDP-SPS
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apprised of the fact that the arguments on behalf of the
Petitioner had concluded and that the arguments on
behalf of the Respondent Nos. 1 to 4 were also heard. It
is however submitted that in view of the instructions of
the Petitioner, such request was being made to the
Court.
2. We deprecate such request as made as the learned
Counsel for the Petitioner had extensively argued the
writ petition. This request is being made when the
respondents have canvassed their submissions. Only out
of deference, an opportunity to make submissions in
rejoinder on behalf fo the Petitioner is granted.
3. Stand over to 05/05/2025 at 4.00 P.M.”
In this backdrop, an opportunity to address the rejoinder was
granted to the petitioner. Mr. Asim Sarode, learned counsel appearing
on behalf of the petitioner submitted his note of arguments seeking to
raise a challenge to the valuation of the factory premises at Rs 2 crores
as according to him the market value of the said property was much
higher. It was stated that if the factory premises would have been sold
at the prevailing market value, the dues of the workmen would have
been duly satisfied. Reference was also made to the Circular dated
16/07/2004 to point out that it was clarificatory in nature, thus having
retrospective effect. An additional affidavit on behalf of the petitioner
was also placed on record in that regard.
The Bank and the auction purchaser also filed additional
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affidavits opposing the stand taken by the petitioner in its additional
affidavit.
8] In the aforesaid backdrop, we have heard the learned counsel for
the parties at length and we have perused the documentary material on
record. We have thereafter given due consideration to the respective
submissions. In our considered view, no relief can be granted to the
petitioner. We say so for the following reasons :-
(a) In lieu of the financial assistance granted by the
Bank to the erstwhile Company, its immovable
property came to be mortgaged on 20/12/1968. The
mortgage includes that of the factory premises. This
has taken place much prior to the order of attachment
passed by the Tahsildar on 07/12/1989. It is no doubt
true that pursuant to the adjudication in proceedings
initiated for recovery of dues under the Payment of
Wages Act, 1936 dated 21/09/1988, the said order of
attachment came to be passed. However, it appears
that the workers did not thereafter take steps to
execute the order of attachment in accordance with
law. In any event, the factory premises having been
mortgaged with the Bank on 20/12/1968, it is clear
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WP-3511-2007.docthat the Bank had a much prior charge over the
factory premises of the erstwhile company. As held in
Babulal Lade and Others (supra), any amount
recoverable in the manner prescribed by Section
169(2) of the Maharashtra Land Revenue Code, 1966
would have priority only over all unsecured claims.
The claim of the Bank was secured by the mortgage
dated 20/12/1968 in its favour. The attachment of the
factory premises by the Tahsildar on 07/12/1989
would not take the case of the petitioner any further.
(b) The suit for recovery of dues as filed by the Bank
was decreed on 26/03/1996. In proceedings seeking
execution of decree, permission of the Debts Recovery
Tribunal was sought to sell the mortgaged factory
premises. It is thereafter on the basis of such
permission that the factory premises was auctioned. A
notice of public auction was issued on 10/07/2000
and ultimately the auction purchaser purchased the
factory premises on 27/08/2003 for consideration of
Rs 2 crores. The Debts Recovery Tribunal has
accepted the sale. Thereafter, as the Bank realised its
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dues, it withdrew the Original Application. The Debts
Recovery Tribunal permitted the same on 23/03/2004.
For this reason, the order dated 23/03/2004 passed by
the learned Presiding Officer permitting withdrawal of
the Original Application cannot be faulted.
(c) As regards the application moved by the workers
seeking intervention is concerned, the learned
Presiding Officer was justified in holding that there
was no order of winding up passed against the
erstwhile Company. On that basis the dues of the
workers would not have priority over the outstanding
claim of the Bank. Though it can be said that the
provisions of Section 73 of the Code may not be
strictly attracted to the facts of the case, nothing much
would turn on those observations in the absence of
any order winding up of the erstwhile Company.
Though the petitioner sought to urge that the ratio of
the decision of this Court in Khandelwal Tube Mill
Kamgar Sangh (supra) be applied to the case in hand,
we find that the facts leading to the aforesaid decision
are quite distinct. The secured creditor therein had
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agreed to the sale of the secured assets of the
concerned Company and also to accept 50% of the
sale proceeds during apportionment of its dues. The
secured creditor however subsequently opposed the
apportionment. It is in those peculiar facts that it was
held that the amount realised from the sale proceeds
of the secured assets ought to be distributed by
following the modality prescribed under Sections 529
and 529A of the Companies Act, 1956. The ratio of
the said decision therefore cannot be applied to the
facts of the present case.
(d) The dismissal of the appeal preferred by the
workers by the Debts Recovery Appellate Tribunal on
04/10/2005 also does not deserve to be interfered
with since it is merely held that with the withdrawal
of the Original Application preferred by the Bank, the
appeal as preferred did not survive and was rendered
infructuous.
(e) As regards prayer for declaring the sale of the
factory premises to be illegal, we find that the auction
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sale was not made the subject matter of challenge
before the Debts Recovery Tribunal. It is seen that for
the first time, such challenge is sought to be raised
now that too by amending the prayer clause in the
writ petition. We do not find any specific ground
pleaded by the petitioner to substantiate its challenge
to the same. It is only by way of an additional
affidavit that it is sought to be contended that the
market value of the factory premises in the year 2000-
2003 was much higher than the consideration for
which the factory premises was actually sold. It is to
be borne in mind that the factory premises were
auctioned under the directions of the Debts Recovery
Tribunal after issuing public notice on 10/07/2000.
The auction purchaser having purchased the factory
premises in the auction, its rights stand crystalised in
the light of the law laid down by the Supreme Court in
Janatha Textiles and Others (supra). In absence of
any specific challenge being raised earlier coupled
with the lack of basic particulars, we are not inclined
to examine such challenge especially when the auction
has taken place on 27/08/2003 about four years
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before filing of the writ petition.
(f) In rejoinder, a contention as regards
undervaluation of the factory premises that was
auctioned was sought to be raised. We are not
inclined to go into this contention for want of
sufficient pleadings in that regard in the writ petition.
We also find that this contention was not raised before
the Debts Recovery Tribunal or the Debts Recovery
Appellate Tribunal. The same having been raised for
the first time in the writ petition is also in the realm of
a disputed question of fact. We have therefore not
considered the same at this belated stage.
9] For all these reasons we do not find any case whatsoever being
made out for jurisdiction under Article 226 of the Constitution of India
to be invoked. The writ petition is therefore dismissed. Rule stands
discharged with no order as to costs. Pending Civil Application is also
disposed of.
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