REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  7128         OF 2008 (Arising out of SLP (C) No.13004 of 2007

Union of India & Ors. … Appellants

Versus

SICOM Ltd. & Anr. … Respondents

WITH

CIVIL APPEAL NO.  7132      OF 2008 (Arising out of SLP (C) No.21137 of 2007)

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Whether  realization  of  the  duty under  the  Central  Excise  Act  will

have  priority  over  the  secured  debts  in  terms  of  the  State  Financial

Corporation Act, 1951 (1951 Act) is the core question involved herein.

3. Respondent  No.2 borrowed  a sum of  Rs.51,00,000/-  from the first

respondent  by  an  Indenture  of  Mortgage  executed  on  22.12.1986.

Indisputably, the mortgage created under the said document is governed by

the provisions of the 1951 Act.  It also owed a sum of Rs.19,00,000/- by

way  of  Central  Excise  duty  for  the  period  April  1983  to  May  1988.

Assessment of central excise duty for the said sum was confirmed.

Indisputably the provisions of Sections 27, 29, 30, 31, 32A to 32F, 41

and 41A of the 1951 Act have been extended in favour of the respondent by

the Government of India in exercise of its power conferred upon it under

sub-section  (1)  of  Section  46  of  the  said  Act  by  issuing  an  appropriate

notification.   

Respondent  No.2  having  committed  defaults  in  repayment  of  the

principal  amount  of  loan  as  also  the  interest  accrued  thereon,  the  first

respondent invoked Section 29 of the 1951 Act by issuing notice to take

possession  of  the  said  securities.   Actual  physical  possession  of  the

mortgaged assets was taken over.  Respondent No.2, however, continued to

commit defaults as a result whereof the first respondent recalled the entire

amount of loan wherefor a notice dated 19th March, 1996 was served.

Respondent No.2 owed a sum of Rs.48,08,242/- to the appellant.  It

expressed its intention to attach and seize its properties.  First Respondent,

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however, by its letter dated 11.11.1996 informed them that they had the first

charge of the said properties which are mortgaged in their favour.  Despite

the same, the appellant expressed intention to proceed to recover the amount

from the said properties.  First Respondent, by its letters dated 21.7.2000

and 22.8.2000 followed by a lawyer’s notice, called upon the appellants to

desist  from taking any action against  their  securities  and to  remove their

seal, if any, from the properties of the borrower.  As the appellant did not

respond thereto, a writ petition was filed.  The principal question which, as

noticed hereinbefore, arose for consideration before the High Court was as

to whether dues of the first respondent-corporation will have priority over

the Central Excise dues.   

The High Court, upon consideration of a large number of decisions

opined that despite the fact that the dues of the appellant were recoverable

as land revenue in terms of Rule 213(2) of the Central Excise Rules read

with Section 32(g) and Section 151 of the Maharashtra Land Revenue Code,

1966, the same by itself would not mean that a first charge of the appellant-

corporation would give way thereto.  It was held :

“30. Turning to provisions of Section 169 of the Code, sub-section (1) provides that the arrears of land  revenue  due  on  account  of  land  shall  be paramount  charge  on  the  land  and  every  part thereof and shall have precedence over any other debt  demand  or  claim  whatsoever,  whether  in

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respect  of  mortgage,  judgment-decree,  execution or attachment, or otherwise however, against any land or the holder thereof, sub-section (2) provides that claim of the State Government to any monies other than arrears of land, revenue but recoverable as a revenue demand under Chapter II shall have priority over all unsecured claims against any land or holder thereof.

31. It  is  thus  clear  that  the  arrears  of  land revenue  dues  on  account  of  land  shall  be paramount  charge  on  the  land  or  every  part thereof.   Those  will  have  precedence  over  any other dues,  debts,  demands, or  claim.  But  other claims  of  the  State  Government  which  are recoverable as arrears of land revenue get priority over  all  unsecured  claims  against  any  land  of holder.   In  the  case  of  secured  loan  of  the Government  and  other  creditors,  priority  will depend upon precedence  of  such loan,  it  is  thus clear that security of the Corporation being prior in point of time, it being in the nature of mortgage of priority, the dues claimed by Corporation will have priority over the dues of Customs.”

Ms. Sunita Rao, learned counsel appearing on behalf of the appellant,

would submit that the crown debt and, in particular, arrears of tax will have

a priority over all other debts and in that view of the matter, the impugned

judgment is wholly unsustainable.  Strong reliance has been placed in this

behalf upon a decision of this Court in Macson Marbles Pvt. Ltd. v. Union

of India [2003 (158) ELT 424 (SC)].

Mr. Shekhar Naphade, Learned senior counsel appearing on behalf of

the respondent, on the other hand, submitted that principle that a crown debt

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prevails over other debts is confined only to the unsecured ones as secured

debts will always prevail over a crown debt.  Our attention in this behalf has

been drawn to the non obstante clause contained in Section 56 of the 1951

Act.   It  was furthermore contended that  for the  self-same reason Section

529A  in  the  Companies  Act  was  inserted  in  terms  by  way  of  special

provisions  creating  charge  over  the  property  and  some  of  the  State

Governments  also  amended  their  Sales  Tax  Laws  incorporating  such  a

provision.   The  Central  Government  also  with  that  view,  amended  the

Employees Provident Fund and (Miscellaneous) Provisions Act, 1952 and

Employees State Insurance Act, 1948.

The learned counsel appears to be right.

Generally, the rights of the crown to recover the debt would prevail

over the right of a subject.  Crown debt means the debts due to the State or

the king; debts which a prerogative entitles the Crown to claim priority for

before  all  other  creditors.  [See  Advanced Law Lexicon  by P.  Ramanatha

Aiyear (3rd Edn.) p. 1147].  Such creditors, however, must be held to mean

unsecured  creditors.   Principle  of  Crown  debt  as  such  pertains  to  the

common law principle.  A common law which is a law within the meaning

of Article 13 of the Constitution is saved in terms of Article 372 thereof.

Those principles of common law, thus, which were existing at the time of

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coming into force of the Constitution of India are saved by reason of the

aforementioned provision.  A debt which is secured or which by reason of

the provisions of a statute becomes the first charge over the property having

regard to the plain meaning of Article 372 of the Constitution of India must

be held to prevail over the Crown debt which is an unsecured one. It is trite

that when a Parliament or State Legislature makes an enactment, the same

would prevail over the common law.

Thus, the common law principle which was existing on the date of

coming into  force  of  the  Constitution  of  India  must  yield  to  a  statutory

provision.

To  achieve  the  same  purpose,  the  Parliament  as  also  the  State

Legislatures  inserted  provisions  in  various  statutes,  some of  which  have

been referred to hereinbefore providing that the statutory dues shall be the

first charge over the properties of the tax-payer.  This aspect of the matter

has been considered by this Court in a series of judgments.

In  M/s. Builders Supply Corporation v.  The Union of India & Ors.

[AIR 1965 SC 1061], this Court construing Section 46(2) of the Income Tax

Act, 1922 which enabled the Income Tax Officer to forward to the Collector

a  certificate  specifying  the  amount  of  arrears  due  from an  assessee  and

requiring the Collector, on receipt of such certificate, to proceed to recover

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from the assessee in question the amount specified as if it were an arrear of

land revenue, held :

“Section 46(2) does not deal with the doctrine of the  priority  of  Crown  debts  at  all;  it  merely provides for the recovery of the arrears of tax due from  an  assessee  as  it  were  an  arrear  of  land revenue. This provision cannot be said to convert arrears of tax into arrears of land revenue either; all  that  it  purports  to  do  is  to  indicate  that  after receiving  the  certificate  from  the  Income-tax Officer, the Collector has to proceed to recover the arrears  in  question  as  if  the  said  arrears  were arrears of land revenue. We have already seen that other  alternative  remedies  for  the  recovery  of arrears  of  land  revenue  are  prescribed  by  sub- section  (3)  and  (5)  of  section  46.  In  making  a provision for recovery of arrears of tax, it cannot be said that section 46 deals with or provides for the principal of priority of tax dues at all; and so, it is  impossible  to  accede  to  the  argument  that section 46 in terms displaces the application of the said doctrine in the present proceedings.”  

{See also  Superintendent and Remembrancer of Legal Affairs, West

Bengal v. Corporation of Calcutta [AIR 1967 SC 997]}

Yet again in  Bank of Bihar v.  State of Bihar & Ors. [AIR 1971 SC

1210], it was laid down :

“4. Now it  is  common  ground  that  the  plaintiff (which is the appellant before us) held the sugar which was seized from its custody as security for

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payment  of  the  debts  or  advances  made  to Defendant 2 in its cash credit account. There were arrears of certain cess due from Defendant 2. As stated  before,  the  Cane  Commissioner  took proceedings under the Public Demands Recovery Act and attached the price of the sugar which had been  deposited  by  the  appropriate  authorities  in the  Government  Treasury  instead  of  being paid  to  the  plaintiff.  The  Cane  Commissioner indisputably did not have any right of priority over the  other  creditors  of  Defendant  2  and,  in particular, the secured creditors. Section 172 of the Contract  Act  defines  a  pledge  to  mean  the bailment of goods as security for payment of debt or performance of a promise.”

{See also Revathinnal Balagopala Varma v. His  Highness  Sri  Padmanabhadasa  Varma (since deceased) & Ors. [1991 (2) SCALE 1142]}.  

These aspects of the matter, however, have been considered at some

length by a Three Judge Bench of this Court in  Dena Bank v.  Bhikhabhai

Prabhudas Parekh & Co. & Ors. [(2000) 5 SCC 694].  Dealing extensively

with the doctrine of priority to Crown Debts, it was held:

“7. What is the common law doctrine of priority or precedence  of  Crown  debts?  Halsbury,  dealing with  general  rights  of  the  Crown  in  relation  to property, states that where the Crown’s right and that of a subject meet at  one and the same time, that of the Crown is in general preferred, the rule being  “detur  digniori”  (Laws  of  England,  4th Edn., Vol. 8, para 1076, at p. 666).  Herbert Broom states:

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“Quando  jus  domini  regis  et  subditi  concurrunt jus regis praeferri debet.—Where the title of the king and the title of a subject concur, the king’s title must be preferred. In this case  detur digniori is the rule. ... where the titles of the king and of a subject concur, the king takes the whole. ... where the king’s title and that of a subject concur, or are in  conflict,  the  king’s  title  is  to  be  preferred.” (Legal Maxims, 10th Edn., pp. 35-36)

This  common law doctrine  of  priority of  State’s debts has been recognised by the High Courts of India  as  applicable  in  British  India  before  1950 and hence the doctrine has been treated as “law in force”  within  the  meaning  of  Article  372(1)  of Constitution.”

It was, furthermore, observed :

“10. However,  the  Crown’s  preferential  right  to recovery of debts over other creditors is confined to  ordinary or  unsecured  creditors.  The common law  of  England  or  the  principles  of  equity  and good  conscience  (as  applicable  to  India)  do  not accord the Crown a preferential right for recovery of its debts over a mortgagee or pledgee of goods or a secured creditor. It is only in cases where the Crown’s right and that of the subject meet at one and the  same time that  the  Crown  is  in  general preferred.  Where  the  right  of  the  subject  is complete  and  perfect  before  that  of  the  King commences, the rule does not apply, for there is no point  of  time  at  which  the  two  rights  are  at conflict, nor can there be a question which of the two ought to prevail in a case where one, that of the  subject,  has  prevailed  already.  In  Giles v. Grover it  has  been  held  that  the  Crown  has  no precedence over a pledgee of  goods.  In  Bank of Bihar v.  State  of  Bihar the  principle  has  been recognised by this Court holding that the rights of the pawnee who has parted with money in favour

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of the pawnor on the security of the goods cannot be extinguished even by lawful seizure of goods by making money available  to other  creditors of the pawnor without the claim of the pawnee being first  fully  satisfied.  Rashbehary  Ghose  states  in Law of Mortgage (TLL, 7th Edn., p. 386)  —  “It seems a government debt in India is not entitled to precedence over a prior secured debt.”

The principles enunciated therein have been reiterated by the Andhra

Pradesh  High  Court  in  Sitani  Taxtiles  &  Fabrics  (P)  Ltd. v.  Asstt.

Commissioner of Customs & Central Excise, Hyderabad-I [1999 (106) ELT

296 (AP)] where the applicability of the provisions of the 1951 Act vis-à-vis

the Central Excise dues were in question holding:

“22. From the above it follows: That in the case of a pledge, pawnee has special property and lien which is  not  of an ordinary nature on the goods and so long as his claim is not satisfied no other creditor of the pawnor has any right to take away goods or its price.  The right of a pawnee could not  be  extinguished  by  the  subsequent attachment/seizure  of  the  goods  under  any other law.  It gives the Pawnee a primary right to sell the goods in satisfaction of the liability of the pawner. An unsecured creditor could not have any higher rights than the pawner and was entitled only to the surplus  money  after  satisfaction  of  the  secured creditor’s dues.”

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The principles  laid down in  Dena Bank were reiterated recently in

Bank of India v.  Siriguppa Sugars & Cheimicals Ltd. [(2007) 8 SCC 353]

wherein it was held:

“There  is  no dispute  that  the  sugar  was  pledged with the appellant Bank for securing a loan of the first respondent and the loan had not been repaid. The goods were forcibly taken possession of at the instance  of  the  revenue  recovery  authority  from the custody of the pawnee, the appellant bank.  In view  of  the  fact  that  the  goods  were  validly pawned  to  the  appellant  bank,  the  rights  of  the appellant  bank  as  pawnee cannot  be affected  by the  orders  of  the  Cane  Commissioner  or  the demands made by him or  the  demands made on behalf  of  the  workmen.   Both  the  Cane Commissioner and the workmen in the absence of a liquidation, under Section 529 and 529-A of the Companies  Act,  1956,  stand  only  as  unsecured creditor  and  their  rights  cannot  prevail  over  the rights of the pawnee of the goods.  Thus, the rights of the appellant bank over the pawned sugar had precedence  over  the  claims  of  the  Cane Commissioner and that of the workmen.”

This Court also in State Bank of Bikaner & Jaipur v. National Iron &

Steel Rolling Corporation & Ors. [(1995) 2 SCC 19], stated the law thus:

“6.  The claim of the Commercial  Taxes  Officer, Bharatpur  rests  on the provisions  of  Section 11- AAAA  of  the  Rajasthan  Sales  Tax  Act,  1954. Section  11-AAAA  has  been  introduced  in  the Rajasthan  Sales  Tax  Act,  1954  by  way  of  an amendment  in  1989.  Section  11-AAAA  is  as follows:

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“11-AAAA.  Liability  under  this  Act  to  be the  first  charge.—  Notwithstanding anything  to  the  contrary  contained  in  any law for the time being in force, any amount of tax, penalty, interest and any other sum, if any, payable by a dealer or any other person under this Act, shall  be the first charge on the property of the dealer, or such person.”

Under this section the amount of sales tax or any other sum due and payable by a dealer or any other person under the Rajasthan Sales Tax Act, 1954, is a first  charge on the property of the dealer or of such person. It is on account of the provisions of this  section  that  the  Commercial  Taxes  Officer claimed priority for the recovery of the sales tax dues  from  the  sale  proceeds  of  the  mortgaged property. The appellant,  however,  contended that since the mortgage in their favour is prior in point of time, their claim will have precedence over the claim of the sales tax authorities.”

If a company had a subsisting interest despite a lawful seizure, there

cannot be any doubt whatsoever that a charge /mortgage over immoveable

property will have the same consequence.   

{See  also  KSIIDC Ltd. v.  Secretary,  Ministry of  Commerce [2005

(187) ELT 12 (Kar)]}.

In  ICICI Bank Ltd. (Since substituted by Standard Chartered Bank)

V.  SIDCO Leathers Ltd. & Ors. [(2006) 10 SCC 452], this Court held as

under:

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“48. Section 9 of the Companies Act only states that  provisions  thereof  would  override  the memorandum  or  articles  of  association  of  the company  or  any  other  agreement  executed  or resolution passed by the company. There does not exist  any provision  in the Companies Act which provides that the provisions of Section 48 of the Transfer of Property Act would not be applicable in  relation  to  the  affairs  of  a  company.  Unless, expressly  or  by  necessary  implication,  such  a provision  contrary  to  or  inconsistent  therewith carrying  a  different  intent  can  be  found  in  the Companies  Act,  Section  48  of  the  Transfer  of Property Act, cannot be held to be inapplicable.

49. Section  48  of  the  Transfer  of  Property  Act reads as under:

“48. Priority of rights created by transfer.— Where  a  person  purports  to  create  by transfer at different times rights in or over the  same  immovable  property,  and  such rights  cannot  all  exist  or  be  exercised  to their full extent together, each later created right  shall,  in  the  absence  of  a  special contract  or  reservation  binding  the  earlier transferees,  be  subject  to  the  rights previously created.”

50. The  said  provision,  as  noticed  hereinbefore, deals with a specific situation. The exceptions to the provisions of Section 48 are as under:

(i) where parties execute a registered deed at any point in time which is subsequent to a prior but an unregistered deed. This is also subject  to  the  doctrine  of  notice  i.e.  that parties to the registered deed executed after the unregistered deed did not have notice of the same;

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(ii) where there are exceptions carved out by a  statute—for  example,  Section  98  of  the Bengal Tenancy Act;

(iii) a mortgage executed on the directions of the court to preserve a property;

(iv)  where  a  “salvage  lien”  is  created  i.e. where lien is created for moneys advanced for the purposes of saving the property from destruction or forfeiture. The salvage lien is confined in English law to maritime lien.”

Strong  reliance,  however,  has  been  placed  by  Ms.  Sunita  Rao  on

Union of India v.  Somasundram Mills (P) Ltd. & Anr. [(1985) 2 SCC 40]

wherein this Court while construing the provisions of sub-section (2) and

(3) of Section 73 of the Code of Civil Procedure, held as under :

“It is a general principle of law that debts due to the  State  are  entitled  to  priority  over  all  other debts.   If  a  decree  holder  brings  a  judgment- debtor’s property to sale and the sale proceeds are lying  in  deposit  in  court,  the  State  may,  even without  prior  attachment  exercise  its  right  to priority by making an application to the executing court for payment out.  If however, the State does not choose to apply to the court for payment of its dues from the amount lying in deposit in the court but allows the amount to be taken away by some other  attaching  decree  holder,  the  State  cannot thereafter make an application for payment of its dues  from  the  sale  proceeds  since  there  is  no amount left with the court to be paid to the State. However,  if  the  State  had  already  effected  an attachment  of  the property which  was sold  even before  its  sale,  the  State  would  be  entitled  to

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recover  the  sale  proceeds  from  whoever  has received the amount  from the court  filing a suit. Section  73(3)  read  with  73(2)  CPC contemplate such a relief being granted in a suit.”

This Court in that case was dealing with conflict of interest between a

secured creditor and an unsecured creditor and not with a question we have

to deal with.   

Reliance has also been placed by Ms. Rao on  Macson Marbles Pvt.

Ltd. (supra)  wherein  the  dues  under  Central  Excise  Act  was  held  to  be

recoverable from an auction purchaser, stating :

“7. We  are  not  impressed  with  the  argument that the State Act is a special enactment and the same would prevail  over the Central  Excise Act. Each of them is a special enactment and unless in the operation of the same any conflict arises this aspect need not be examined.  In this case, no such conflict  arises  between  the  corporation  and  the Excise  Department.   Hence  it  is  unnecessary  to examine this aspect of the matter.

8. The  Department  having  initiated  the proceedings  under  Section  11A  of  this  Act adjudicated liability of respondent No.4 and held that respondent No.4 is also liable to pay penalty in a sum of Rs.3 lakhs while the Excise dues liable would be in the order of a lakh or so.  It is difficult to conceive that the appellant had any opportunity to participate in the adjudication proceedings and contend against the levy of the penalty.  Therefore, in  the  facts  and  circumstances  of  this  case,  we think it appropriate to direct that the said amount, if already paid, shall be refunded within a period

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of three months.  In other respects, the order made by the High Court shall remain undisputed.  The appeal is disposed of accordingly.”

The decision, therefore, was rendered in the facts of that case.  The

issue with which we are directly concerned did not arise for consideration

therein.  The Court also did not notice the binding precedent of Dena Bank

as also other decisions referred to hereinbefore.

Section 11 of the Central Excise Act, 1944 reads as under :

“Section  11.—Recovery  of  sums  due  to Government—In  respect  of  duty  and  any  other sums  of  any  kind  payable  to  the  Central Government  under  any of  the  provisions  of  this Act or of the rules made thereunder, including the amount  required  to  be  paid  to  the  credit  of  the Central Government under section 11D the officer empowered  by the  Central  Board  of  Excise  and Customs constituted under the Central  Boards of Revenue Act, 1963 (54 of 1963) to levy such duty or require the payment of such sums may deduct the amount so payable from any money owing to the  person  from  whom  such  sums  may  be recoverable or due which may be in his hands or under his disposal or control, or may recover the amount by attachment and sale of excisable goods belonging  to  such  person;  and  if  the  amount payable  is  not  so  recovered,  he  may  prepare  a certificate  signed  by  him specifying  the  amount due  from the  person  liable  to  pay the same and sent it to the Collector of the district in which such person  resides  or  conducts  his  business  and  the said Collector, on receipt of such certificate, shall proceed  to  recover  from  the  said  person  the

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amount specified therein, as if it were an arrear of land revenue.

Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other  sums of  any kind,  as  specified  in  this section,  is  recoverable  or  due,  transfers  or otherwise  disposes  of  his  business  or  trade  in whole  or  in  part,  or  effects  any  change  in  the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person,  all  excisable  goods,  materials, preparations, plants, machineries, vessels, utensils, implements  and  articles  in  the  custody  or possession of the person so succeeding may also be attached and sold by such officer  empowered by the Central Board of Excise and Customs, after obtaining written approval from the Commissioner of Central Excise, for the purposes of recovering such duty or other sums recoverable or due from such predecessor  at  the  time of  such  transfer  or otherwise disposal or change.”

A bare perusal of the aforementioned provision clearly goes to show

that the right to recover must start with the sale of excisable goods.  It is

only when the dues of the Central Excise Department are not satisfied by

sale of such excisable goods, proceedings may be initiated to recover the

dues as land revenue.

We  may  notice  that  a  Division  Bench  of  Orissa  High  Court  in

Suburban  Ply  & Panels  Pvt.  Ltd. v.  Assistant  Commissioner  of  Central

Excise  & Customs, BBSR [2002  (144)  ELT 257  (Ori)],  despite  noticing

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Dena Bank (supra)  as  also other  decisions,  relying  on  Section  11 of  the

Central  Excise  Act and Rule 230(2)  of the Central  Excise Rules held  as

under :

“The  rule  is  prima  facie  wide  in  its  operation. There is no challenge to the validity of the rule in this proceeding.  Going by Sub-Rule (2) of Rule 230, it appears to us that a change in ownership of the  undertaking  would  not  in  any manner  effect the obligation  of  the person liable  to  pay excise duty  and  authority  concerned  has  the  right  to proceed  against  the  successor  in  business  or transferee  even  though  the  duty  is  assessed subsequently  but  the  liability  had  arisen  before such transfer.  In other words, the right is given to the department to proceed against the Undertaking or its products or machinery even though it may be in the hands of the transferee.  On a plain reading of the rule, it appears to us that if the defaulter had sold  the  Undertaking,  the  transferee  would  be liable  for  the  excise  duty  that  remained outstanding  as  on  the  date  of  transfer  in  its favour.”

The High Court, with utmost respect, proceeded on a wrong premise

that only in terms of sub-section (4) of Section 29, proceeds of the sale will

be held in trust by the Financial Corporation and appropriated towards the

discharge of the debt due to it after first applying the proceeds in payment of

cost charges and expenses incurred and the balance to be paid to the person

entitled  and  having  regard  to  the  doctrine  of  Crown  debt,  the  auction

purchaser must satisfy it.

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The Orissa High Court failed to notice the binding precedent of this

Court in Dena Bank in its proper perspective.  We are concerned here with

the respective  rights  of  a secured  creditor  and unsecured  creditor  over  a

property.  If the finding of the Orissa High Court is correct, there was no

necessity  for  the  State  Legislatures  or  the  Parliament  to  amend  laws

incorporating  provisions  to  create  first  charge  over  the  properties  of  the

debtor.  The High Court failed to notice Article 372 of the Constitution as

also the well settled principles of law that a statutory provision shall prevail

over the Crown debt.

Furthermore, the right of a State Financial Corporation is a statutory

one.  The Act contains a non- obstante clause in Section 46B of the Act

which reads as under :

“Section 46B—Effect of Act on other laws—The provision  of  this  Act  and  of  any  rule  or  orders made thereunder shall have effect notwithstanding anything  inconsistent  therewith  contained  in  any other  law  for  the  time  being  in  force  or  in  the memorandum  or  articles  of  association  of  an industrial  concern  or  in  any  other  instrument having effect by virtue of any law other than this Act,  but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern.”

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The non-obstante clause shall not only prevail over the contract but

also other laws.  [See Periyar & Pareekanni Rubber Ltd. v. State of Kerala

(2008 (4) SCALE 125)]

For the reasons aforementioned, there is no merit in the appeals.  The

appeals are dismissed accordingly with costs.  Counsel’s fee quantified to

Rs.50,000/-

……………………………….J. [S.B. Sinha]

..…………………………..…J. [Cyriac Joseph]

New Delhi; December 05, 2008

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