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TMI Blog2017 (4) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 On account of serious defaults and irregularities in repayment against the credit facilities, account of respondent No.2 was classified as non-performing account on 31.07.2009. 2.4 The petitioner Bank, therefore, under the provisions of the SARFAESI Act, 2002 issued notice under Section 13(2) of the Act on 05.10.2009, whereby demand of Rs. 5,17,87,035/- was made. 2.5 The petitioner-Bank attempted to take over possession of the mortgaged and hypothicated properties, but as handing over of the peaceful possession was resisted by the respondent-Company and its Directors, the petitioner-Bank took over symbolic possession of such mortgaged and hypothicated immovable properties on 20.03.2010. 2.6 The petitioner-Bank thereafter filed OA No.172 of 2010 before the Debts Recovery Tribunal-II, Ahmedabad for issuance of recovery certificate under the provisions of the RDDB Act. The said OA came to be decreed in favour of the petitioner-Bank. 2.7 The properties mortgaged to the petitioner-Bank included factory premises of respondent No.2, admeasuring 6227 sq. mtr. with shed and machinery located in plot No.17/18 bearing revenue survey No.92 and other of village Sachin, Tal. Choryashi, Dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Division Bench of Kerala High Court on the point of precedence of EPF Act, where Section 11(2) creates first charge, the Apex Court held as under:- "126.While enacting the DRT Act and Securitisation Act, Parliament was aware of the law laid down by this Court wherein priority of the State dues was recognized. If Parliament intended to create first charge in favour of banks, financial institutions or other secured creditors on the property of the borrower, then it would have incorporated a provision like Section 529A of the Companies Act or Section 11(2) of the EPF Act and ensured that notwithstanding series of judicial pronouncements, dues of banks, financial institutions and other secured creditors should have priority over the State's statutory first charge in the matter of recovery of the dues of sales tax, etc. However, the fact of the matter is that no such provision has been incorporated in either of these enactments despite conferment of extraordinary power upon the secured creditors to take possession and dispose of the secured assets without the intervention of the Court or Tribunal. The reason for this omission appears to be that the new legal regime envisages transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and diversion for their own purposes, the scheme would be damnified by traumatic starvation of the Fund, public frustration from the failure of the project and psychic demoralisation of the miserable beneficiaries whey they find their wages deducted and the employer get away with it even after default in his own contribution and malversation of the workers' share. "Damages" have a wider socially semantic connotation than pecuniary loss of interest on non-payment when a social welfare scheme suffers mayhem on account of the injury. Law expands concepts to embrace social needs so as to become functionally effectual. 40. The measure was enacted for the support of a weaker sector viz. the working class during the superannuated winter of their life. The financial reservoir for the distribution of benefits is filled by the employer collecting, by deducting from the workers' wages, completing it with his own equal share and duly making over the gross sums to the Fund. If the employer neglects to remit or diverts the moneys for alien purposes the Fund gets dry and the retirees are denied the meagre support when they most need it. This prospect of destitution demoralises the worki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, reasonable to take the view that the statutory first charge created on the assets of the establishment by sub-section (2) of Section 11 and priority given to the payment of any amount due from an employer will operate against all types of debts." 5.2 Similarly, in a later judgment in the case of Maharashtra State Cooperative Bank Limited Vs. Kannad Sahakari Sakhar Karkhana Limited & Ors., reported in (2014) 14 SCC, 456, again dealing with the provisions of the EPF Act, the Apex Court reiterated the law laid down in the case of Maharashtra State Cooperative Bank Limited Vs. Assistant Provident Fund Commissioner & Ors (supra) and held in para-10 as under:- "10. The provisions of the Essential Commodities Act and the orders framed thereunder do not have any bearing on the interpretation of Section 11(2) of the 1952 Act, which was inserted by Amendment Act 40 of 1973. Those provisions have been enacted to ensure timely payment of price by the producer of sugar to the cane growers. They do not deal with the issue of payment of compensation of provident dues or the question whether such dues have priority over other debts. The fact that the petitioner is a scheduled bank also d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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