BANK OF MAHARASHTRA versus PANDURANG KESHAV GORWARDKAR & ORS

Citation: [2013] 3 S.C.R. 269 · Decided: 07-05-2013 · Supreme Court of India · Bench: RAJENDRA MAL LODHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

(2013] 3 S.C.R. 269 
BANK OF MAHARASHTRA 
v. 
PANDURANG KESHAV GORWARDKAR & ORS. 
(Civil Appeal No. 7045 of 2005) 
MAY 7, 2013 
[R.M: LODHA, J. CHELAMESWAR AND 
MADAN B. LOKUR, JJ.] 
RECOVERY OF DEBTS DUE TO BANKS AND 
A 
B 
FINANCIAL INSTITUTIONS ACT, 1993: 
C 
ss. 17 and 19 (19) of 1993 Act rlw ss.529(1)(c), proviso 
and 529-A of Companies Act - Recovery of debts of 
company by bank/financial institution - Claim of workmen -
Held: Where a company is in liquidation, a statutory charge 
0 
is created in favour of workmen in respect qf their dues over 
security of every secured creditor and this charge is pari passu 
with that of secured creditor - Such statutory charge is to the 
extent of workmen's portion in relation to security held by 
secured creditor of debtor company - This position is equally E 
applicable where assets of company have been sold in 
execution of recovery certificate obtained by bank or financial 
institution against debtor company. when it was not in 
liquidation but before the proceeds realised from such sale 
could be fully and finally disbursed, the company had gone 
into liquidation - Relevant date is the date of winding up order 
F 
and not the date of sale - Where the sale of security has been 
effected in execution of recovery certificate issued by DRT, 
distribution of undisbursed proceeds has to be made by DRT 
alone in accordance with s. 529A of Companies Act and by 
oo other forum or authority -
Where debtor company is not G 
in liquidation, s.19(19) does not come into operation at all -
Companies Act, 1956 - ss. 529(1)(c) proviso, and 529-A -
Interpretation of Statutes - Legislation by reference -
Legislation by incorporation. 
269 
H 
270 
SUPREME COURT REPORTS 
[2013] 3 S.C.R. 
A 
s. 19(19) of 1993 Act read with ss. 529-A and 529(1)(c), 
proviso of Companies Act - Company in liquidation - Debt 
of bank/financial institution and claim of workmen - Held: 
Once the company is in winding up, the only competent 
authority to determine workmen's dues and quantify 
B workmen's portion is the liquidator, who has to act under 
supervision of company court- s.19(19) of the 1993 Act does 
not clothe ORT with jurisdiction to determine workmen's 
claims against debtor company -
Certain incidental and 
ancillary powers given to ORT do not encompass power to 
c adjudicate upon or decide dues of workmen of debtor 
company. 
In the case filed by the appellant-Bank for recovery 
of its dues against a company, the Debts Recovery 
Tribunal gave its judgment on 19.7.2001 and issued the 
D recovery certificate on 21.8.2001. Consequently, the 
Recovery Officer, ORT, on 22.1.2004, auctioned the 
movable properties of the Company. By order dated 
8.10.2004, the Company was ordered to be wound up 
and Official Liquidator was appointed. The workmen of 
E the Company filed a writ petition before the High Court 
seeking a direction to the Recovery Officer to recover the 
amount of Rs.3 crores from the appellant Bank realized 
by it from sale of movables of the Company and for a 
direction to the Recovery Officer to adjudicate the claims/ 
F dues of the workmen/employees and release the amount 
due to them in priority over all the claims. The High Court 
held that the jurisdiction to determine the payment and 
its priorities was totally vested with the ORT under the Act 
and the workmen should approach the ORT for 
G determination of their claim and consequential payment. 
The High Court also issued guidelines to ORT for 
determination of priorities. 
The Bank filed C.A.No.7045 of 2005. C.A. No.7046 of 
2005 was filed by Indian Banks Association. The Division 
H Bench before which the appeals were listed, felt that the 
BANK OF MAHARASHTRA v. PANDURANG KESHAV 271 
GORWARDKAR & ORS. 
question: "whether the claims of the workmen who 
A 
claimed to be entitled to payment pari passu have to be 
considered by the official liquidator or whether their 
claims have to be adjudicated upon by the Debts 
Recovery Tribun~I" was likely to arise in a large number 
of cases and,1 therefore, referred the matter for 
B 
consideration by a larger Bench. 
Allowing the appeals, the Court 
HELD: 1.1. The Recovery of Debts Due to Banks and 
Financial Institutions Act, 1993 has not only conferred c 
exclusive jurisdiction upon ORT for determination of the 
matters specified in s.17 but has also ousted jurisdiction 
of all other courts and other authorities in entertaining 
and deciding such matters. The powers of the Supreme 
Court
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