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PETITIONER: WORKERS OF M/S ROHTAS INDUSTRIES LTD.

       Vs.

RESPONDENT: M/S ROHTAS INDUSTRIES LTD.

DATE OF JUDGMENT27/04/1987

BENCH: OZA, G.L. (J) BENCH: OZA, G.L. (J) MISRA RANGNATH

CITATION:  1987 SCR  (2)1216        1987 SCC  (2) 588  JT 1987 (2)   283        1987 SCALE  (1)894

ACT:     Bihar  Relief Undertakings (Special Provisions) Act  198 I--Section 3---’Relief undertaking’--Declaration of--Workers not  paid  salaries and wages as ordered  by  Court--Ordered that  goods lying in stock be sold and out of sale  proceeds the workers be paid their dues.

HEADNOTE:     By order dated 5.2.1986 this Court had directed that all salaries and wages due to the workers from May 1984  onwards shall  be paid to them In three instalments. They  have  not yet been paid.     It was brought to the notice of the Court that the State of  Bihar has issued a Notification dated December 12,  1986 declaring the respondent-industry a sick industry under s. 3 of  the Bihar Relief Undertakings (Special Provisions)  Act, 1981  and that the said Industrial Undertaking shall be  and remain a relief undertaking for one year.     On  behalf  of the industry it was  contended  that  the liability of the industry for payment to the workers  cannot be  enforced. However, counsel for the State  conceded  that the  State  Government wants that the wages to  the  workers should be paid.     According  to  the  Report of  the  Official  Liquidator finished products of the value of Rs.91,77,000 are lying  in stocks and that from May, 1984 till 8th July, 1984 an amount of  Rs.89,00,000 remains to be paid to the workers as  their salaries and emoluments.     On behalf of the financial institution it was  contended that the products lying in stocks are pledged with them  and they have prior claim over the sale proceeds of these stocks and,  therefore,  the  products could not be  sold  and  the workers  could  not  be paid off. It was  suggested  that  a scheme  has been drawn up to revive the industry and  finan- cial  problems may arise if the stock is sold out and  wages paid to the workera out of sale proceeds. Issuing directions the Court, 1217     HELD:  1. Though the stock of products is  pledged  with Banks and they have a priority in law, but it is the  result of  the hard-work of the workers that these stocks could  be produced. Therefore, it could not be said that the wages and

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emoluments  for  the period upto closure would not  rank  in priority. Their subsistance and living is also of  paramount importance  and has to rank with highest priority. For  this reason the Government of India is keen to have a scheme  for revival  of  this  industry and the  State  Government  also desires  that  the workers should be  paid  their  salaries. [1219A-D]     2.  Looking to all the circumstances and taking a  broad and humane view of the situation it would be just and proper that these goods which are lying in stock should be sold out and  out  of the sale proceeds the workers  should  be  paid their  dues upto the date of the closure (from May  1984  to 8th  July, 1984). The Official Liquidator will  ensure  that the disposal fetches the best rates. This shall be completed within two months. [1219F]     3.  The  financial institutions  have  other  sufficient securities  and properties of the Company and if the  stocks of finished products are sold to meet the basic requirements of  the workers, their interests would not be  in  jeopardy. [1219G-H]     4. The balance out of the sale proceeds, if any, will be utilised  for meeting other pressing demands in the  discre- tion  of  the Official Liquidator subject to orders  of  the Court. [1220B]     5. The Official Liquidator may keep the amount of insur- ance claim separately and allow the State Bank to adjust the same against its insurance. [1219G]     6.  Issuance  of  the Notification by  the  Bihar  State Government will not come in the way of sale of these  assets and payment of the workers. [1220C]

JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 5222 of 1985. Under Article 32 of the Constitution of India. R.K. Garg, R.S. Singh and S.K. Verma for the Petitioner.     K.  Parasaran,  Attorney General, B.  Datta,  Additional Solicito  General,  A.K. Ganguli, Dr. Y.S. Chitale  and  Dr. Shankar Ghosh 1218 P.P. Singh, Ranjit Kr. Pramod Dayal, D. Goburdhun, K. Swamy, Ms.  Sushma Suri, Probir Mitra. A.K. Ghose,  M.M.  Gangadeb, Dhanjay  Chandrachud,  P.R. Seetharaman,  D.K.  Sinha,  K.R. Narnbiar and A.K. Sil for the appearing parties. The Order of the Court was delivered by     OZA,  J.  Heard learned counsel for the  petitioners  as well  as the respondent, the various financial  institutions including the Banks and also counsel for the State of Bihar. By  orders of this Court dated 5.2.86 it was  directed  that all  salaries  and wages-due to the workers  from  May  1984 onwards  shall  be paid to them in  ’three  instalments:  It appears  that  they have not yet been paid  inspite  of  the directions  from  this  Court. It was also  brought  to  our notice  that notwithstanding that order of this  Court,  the State of Bihar has issued a Notification dated December  12, 1986,  wherein this industry has been declared to be a  sick industry  under Section 3 of the Bihar  Relief  Undertakings (Special  provisions) Act, 1981 (Bihar Act No. 12  of  1982) and  by this Notification the Bihar Government has  declared the  said  Industrial  :Undertaking shall be  and  remain  a relief  undertakings for one year from the date of issue  of the Notification. On ;the basis of this an attempt was  made to suggest that the liability of the industry for payment to the  workers can not be enforced. However,  learned  counsel

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appearing  for the State of Bihar frankly conceded  that  so far  as the liability of payment of wages to the workers  is concerned the State Government wants that it should be paid. As directed by this Court a report had been submitted by the Official  Liquidator  in  the case of  this  industry.  This report  shows  that the products produced by  this  industry which are lying in stocks are of the value of  Rs.91,77,000. This report also discloses that from the month of May,  1984 till 8th July, 1984 when this industry closed down an amount of  Rs.89,00,000 remains to be paid to the workers as  their salaries and emoluments.     The  learned  counsel appearing for the  State  Bank  of India’ and other financial institutions attempted to contend that  these goods which are the finished products  lying  in stock are pledged with these Banks and, therefore, they have a prior claim over the sale proceeds of these stocks and  it was,  therefore, contended that this could not be  sold  and the workers could not be paid off. On the other hand it  was suggested that in fact a scheme has been drawn up to  review the industry in the interests of the workers and the society in general and in that scheme of starting the industry again financial  problems may arise and if this stock is sold  out and the money collected therefrom-are            1219 paid out to the workers then it may create difficulties.     It  is no doubt true that these’ products the  stock  of which have been shown’ in the report and the value of  which has been shown by the Liquidator as Rs.91,77,000 is  pledged with Banks, is a priority in law in favour of the Banks but: lit  also; could not be disputed that these stocks were  the products of this industry before its closure and, therefore, the  workers  also contributed their labour and  it  is  the result  of their hard-work that these stocks could  be  pro- duced  and  in our opinion therefore, it could not  be  said that  the wages and emoluments for the period  upto  closure would  not  rank in priority. It is  also  significant  that after the closure in July, 1984,. till today in spite of the order passed by this’ Court the workers have not been  paid. Their  subsistance and living is also perhaps  of  paramount importance  and has to rank with highest priority. It is  in view of this as it appears, that the Government of India  is keen to have a scheme for revival of this industry.  Learned counsel for:the State of Bihar also frankly conceded that so far as payment to the workers is concerned the State Govern- ment  also desires that they should be paid their  salaries. It  is  no doubt true that at present there  are  no  assets available out of which the whole payment of all the dues  to the workers from May 1984 till today could be done but  from out  of these assets the products which are lying in  stocks valued  at  Rs.91.77,000 the salaries and the  dues  of  the workers  from  May 1984 tilt the date of  closure  could  be made. It was contended that in case these stocks are  liqui- dated and the amount collected are paid off to the  workers, difficulty may arise as this asset which has been taken into account will not be available for the scheme of  re-starting the industry. Looking to all the circumstances and taking  a broad  and humane view of the situation we are of the  opin- ion, that it would be just and proper that these goods which are  lying in stock should be sold and out of the sale  pro- ceeds the workers should be paid their dues upto the date of closure (from May 1984 to July 1984 i.e. 8th July, 1984)  so that  at  least  they will get  something  for  subsistance. Learned counsel for the State Bank of India pointed out that his client has paid for the insurance of certain assets  and for loss thereof in whole or in part, the insurance has paid

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for  the loss. The Official Liquidator may keep that  amount separately  and  allow  the State Bank to  adjust  the  same against its insurance. So far as the pledge and the priority of  the  financial institutions are concerned,  we  have  no doubt that they have other sufficient securities and proper- ties  of the Company and, therefore, if this stock  of  fin- ished  products are sold to meet the basic  requirements  of the workers, their interests would not be in jeopardy. Apart from  it,  we also hope and trust that if the loss  of  this amount of Rs.91,77,000 1220 somehow  comes  in way of the scheme of re-starting  of  the industry,  the Government of India would find funds to  save the  situation  and help early revival of  the  Company.  We therefore direct that these stocks which are lying with  the industry  valued at Rs.91,77,000 shall immediately  be  dis- posed  of  and out of this the wages and other dues  of  the workers  for the period from May 1984 till 8th  July,  1984, shall  be  met. The balance, if any, will  be  utilised  for meeting  other  pressing demands in the  discretion  of  the Official  Liquitator subject to orders of the Court. We  are sure  that  the  Official Liquitator will  ensure  that  the disposal  fetches  the best of rates. We may  also  make  it clear  that issuance of the notification by the Bihar  State Government will not come in the way of sale of these  assets and  payment  to the workers. We direct that this  shall  be completed  within two months from today. The case  may  come for further directions in third week of July.     We  expect that by then with the lead taken by the  Cen- tral  Government,  the  scheme of revival  would  have  made sufficient  headway and everyone would be in a  position  to have an optimistic view of the situation. A.P.J. 1221