Jharkhand High Court
Ghanshyam Prasad vs Union Of India Through The ... on 9 April, 2021
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No.3166 of 2018
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Ghanshyam Prasad, age-53 years, S/o Late Nagendra Prasad,
Block No.6/1/3, Road No.9, Adityapur, P.O. & P.S.-Adityapur, District-
Saraikela Kharsawan .... .... Petitioner
Versus
1. Union of India through the Secretary, Ministry of Law & Justice,
Jaisalmer House, 26, Mansingh Road, P.O. and P.S.-Shastri Bhawan,
New Delhi-110001
2. Union of India through the Secretary, Ministry of Corporate Affairs,
Shastri Bhawan, Rajendra Prasad Road, P.O. and P.S.-Shastri
Bhawan, New Delhi-110001
3. The State of Jharkhand
4. M/s Tayo Rolls Ltd., an existing Company incorporated under the
Indian Companies Act, having its registered office at Tata Steel Ltd.,
General Office, P.O. & P.S.-Bistupur, Town-Jamshedpur, District-East
Singhbhum ...... ..... Respondents
CORAM : HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
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For the Petitioner : Mr. Akhilesh Shrivastava, Advocate
Mr. Dharmendra Kr. Maltiyar, Advocate
For the Resp. Nos.1 & 2-UOI : A.C to A.S.G.I.
For the Resp. No.3-State : Ms. Shrestha Mehta, A.C to S.C-II
For the Resp. No.4 : Mr. Ashish Kumar, Advocate
ORAL ORDER
17/Dated: 09.04.2021
The matter has been heard with the consent of learned counsel for
the parties through video conferencing. There is no complaint about any
audio and visual quality.
2. The instant writ petition has been filed under Article 226 of the
Constitution of India for the following reliefs:-
(i) For the issuance of appropriate writ or writ in the
nature of mandamus or an order, or direction,
declaring that the provisions of Section 238 of the
Insolvency and Bankruptcy Code, 2016, are not
overriding the provisions of Industrial Disputes Act,
1947 inasmuch as provisions of Chapter V-B in which
Section 25-O of the Industrial Disputes Act, 1947, is
contained, are applicable only to certain industrial
establishments viz., as defined in Section 25-K and
25-L, of the Industrial Disputes Act, 1947, whereas,
Companies Act, 2013 applies only to the companies
incorporated under Companies Act regardless of the
nature of the Companies or the employees employed
in view of the non-obstante clause under Section 25-J
of the Industrial Disputes Act, 1947 AND also in view
of the fact that the Respondent No. 4 has already filed
a Writ before the Hon'ble High Court, which is
pending, pursuant to rejection of the application filed
u/s 25(O) of the Industrial Disputes Act, 1947;
(ii) For issuance of appropriate writ, order or direction
commanding upon Respondent No. 3 to take over the
Respondent No. 4 Company and to do all such thing
as may be required for its revival and continuous
employment of the employees of the Respondent No.
4 Company, including the Petitioner, in view of the
Order dated 27.10.2016, Annexure-2 passed by the
Appropriate Authority, Labour Employments and
Training Department, Government of Jharkhand;
(iii) For stay on all the undergoing proceedings before
Learned N.C.L.T and Hon'ble N. C. L. A. T, under
Section 10 Application filed by the Respondent No. 4,
under Insolvency and Bankruptcy Code, 2016,
inasmuch as the continuance of the same is
inconsistent with the Constitutional Mandate of India.
3. It appears from the order-sheet that as per the roster as has been
decided by Hon'ble the Chief Justice in the Administrative side, the matter
has been listed before the learned Single Judge.
Further, it appears that several orders have been passed by the
learned Single Judge of this Court, one of the order passed by the learned
Single Judge of this Court is dated 29.07.2019, wherein, after having
heard the learned counsel for the parties, the following order has been
passed which reads hereunder as:-
"Heard learned counsel for the parties.
The present writ petition has been filed for the following reliefs:-
(i) For the issuance of appropriate writ or writ in the nature of
mandamus or an order, or direction, declaring that the provisions of
Section 238 of the Insolvency and Bankruptcy Code, 2016, are not
overriding the provisions of Industrial Disputes Act, 1947 inasmuch
as provisions of Chapter V-B in which Section 25-O of the Industrial
Disputes Act, 1947, is contained, are applicable only to certain
industrial establishments viz., as defined in Section 25-K and 25-L,
of the Industrial Disputes Act, 1947, whereas, Companies Act, 2013
applies only to the companies incorporated under Companies Act
regardless of the nature of the Companies or the employees
employed in view of the non-obstante clause under Section 25-J of
the Industrial Disputes Act, 1947 AND also in view of the fact that
the Respondent No. 4 has already filed a Writ before the Hon'ble
High Court, which is pending, pursuant to rejection of the application
filed u/s 25(O) of the Industrial Disputes Act, 1947;
(ii) For issuance of appropriate writ, order or direction
commanding upon Respondent No. 3 to take over the Respondent
No. 4 Company and to do all such thing as may be required for its
revival and continuous employment of the employees of the
Respondent No. 4 Company, including the Petitioner, in view of the
Order dated 27.10.2016, Annexure-2 passed by the Appropriate
Authority, Labour Employments and Training Department,
Government of Jharkhand.
(iii) For stay on all the undergoing proceedings before Learned
N.C.L.T and Hon'ble N. C. L. A. T, under Section 10 Application filed
by the Respondent No. 4, under Insolvency and Bankruptcy Code,
2016, inasmuch as the continuance of the same is inconsistent with
the Constitutional Mandate of India.
Section of 2(cc) of the Industrial Disputes Act, 1947 is quoted
hereunder:
"2 [(cc) "Closure" means the permanent closing down of a place of
employment or part thereof;]"
Sections 25 (K), 25(L) and 25(O) of the Industrial Disputes
Act, 1947 are quoted hereunder:
"25-K. Application of Chapter V-B.--(1) The
provisions of this Chapter shall apply to an industrial
establishment (not being an establishment of a
seasonal character or in which work is performed only
intermittently) in which not less than 52[one hundred]
workmen were employed on an average per working
day for the preceding twelve months.
(2) If a question arises whether an industrial
establishment is of a seasonal character or whether
work is performed therein only intermittently, the
decision of the appropriate Government thereon shall
be final.
25-L. Definitions.--For the purposes of this
Chapter,--
(a) "industrial establishment" means--
(i) a factory as defined in clause (m) of section 2 of
the Factories Act, 1948 (63 of 1948);
(ii) a mine as defined in clause (j) of sub- section (1)
of section 2 of the Mines Act, 1952(35 of 1952); or
(iii) a plantation as defined in clause (f) of section 2 of
the Plantations Labour Act, 1951(69 of 1951);
(b) notwithstanding anything contained in sub-clause
(ii) of clause (a) of section 2,--
(i) in relation to any company in which not less than
fifty-one per cent. of the paid-up share capital is held
by the Central Government, or
(ii) in relation to any corporation [not being a
corporation referred to in sub-clause (i) of clause (a)
of section 2] established by or under any law made by
Parliament,
the Central Government shall be the appropriate
Government.
[25-O. Procedure for closing down an
undertaking.--(1) An employer who intends to close
down an undertaking of an industrial establishment to
which this Chapter applies shall, in the prescribed
manner, apply, for prior permission at least ninety
days before the date on which the intended closure is
to become effective, to the appropriate Government,
stating clearly the reasons for the intended closure of
the undertaking and a copy of such application shall
also be served simultaneously on the representatives
of the workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to
an undertaking set up for the construction of
buildings, bridges, roads, canals, dams or for other
construction work.
(2) Where an application for permission has been
made under sub-section (1), the appropriate
Government, after making such enquiry as it thinks fit
and after giving a reasonable opportunity of being
heard to the employer, the workmen and the persons
interested in such closure may, having regard to the
genuineness and adequacy of the reasons stated by
the employer, the interests of the general public and
all other relevant factors, by order and for reasons to
be recorded in writing, grant or refused to grant such
permission and a copy of such order shall be
communicated to the employer and the workmen.
(3) Where an application has been made under sub-
section (1) and the appropriate Government does not
communicate the order granting or refusing to grant
permission to the employer within a period of sixty
days from the date on which such application is
made, the permission applied for shall be deemed to
have been granted on the expiration of the said period
of sixty days.
(4) An order of the appropriate Government granting
or refusing to grant permission shall, subject to the
provisions of sub-section (5), be final and binding on
all the parties and shall remain in force for one year
from the date of such order.
(5) The appropriate Government may, either on its
own motion or on the application made by the
employer or any workman, review its order granting or
refusing to grant permission under sub-section (2) or
refer the matter to a Tribunal for adjudication:
Provided that where a reference has been made to a
Tribunal under this sub-section, it shall pass an award
within a period of thirty days from the date of such
reference.
(6) Where no application for permission under sub-
section (1) is made within the period specified therein,
or where the permission for closure has been refused,
the closure of the undertaking shall be deemed to be
illegal from the date of closure and the workmen shall
be entitled to all the benefits under any law for the
time being in force as if the undertaking had not been
closed down.
(7) Notwithstanding anything contained in the
foregoing provisions of this section, the appropriate
Government may, if it is satisfied that owing to such
exceptional circumstances as accident in the
undertaking or death of the employer or the like it is
necessary so to do, by order, direct that the
provisions of sub-section (1) shall not apply in relation
to such undertaking for such period as may be
specified in the order.
(8) Where an undertaking is permitted to be closed
down under sub-section (2) or where permission for
closure is deemed to be granted under sub-section
(3), every workman who is employed in that
undertaking immediately before the date of
application for permission under this section, shall be
entitled to receive compensation which shall be
equivalent to fifteen days' average pay for every
completed year of continuous service or any part
thereof in excess of six months.]"
Sections 3, 7, 8, 9, 10, 12, 53 and 238 of the Insolvency and
Bankruptcy Code, 2016 are quoted hereunder:
"3. Definitions.- In this Code, unless the context
otherwise requires,--
(1) "Board" means the Insolvency and Bankruptcy
Board of India established under sub-section (1) of
section 188;
(2) "bench" means a bench of the Adjudicating
Authority;
(3) "bye-laws" mean the bye-laws made by the
insolvency professional agency under section 205;
(4) "charge" means an interest or lien created on the
property or assets of any person or any of its
undertakings or both, as the case may be, as security
and includes a mortgage;
(5) "Chairperson" means the Chairperson of the
Board;
(6) "claim" means--
(a) a right to payment, whether or not such right is
reduced to judgment,
fixed, disputed, undisputed, legal, equitable, secured
or unsecured;
(b) right to remedy for breach of contract under any
law for the time being in force, if such breach gives
rise to a right to payment, whether or not such right is
reduced to judgment, fixed, matured, unmatured,
disputed, undisputed, secured or unsecured;
(7) "corporate person" means a company as defined
in clause (20) of section 2 of the Companies Act,
2013, a limited liability partnership, as defined in
clause (n) of sub-section (1) of section 2 of the
Limited Liability Partnership Act, 2008, or any other
person incorporated with limited liability under any law
for the time being in force but shall not include any
financial service provider;
(8) "corporate debtor" means a corporate person who
owes a debt to any person;
(9) "core services" means services rendered by an
information utility for--
(a) accepting electronic submission of financial
information in such form
and manner as may be specified;
(b) safe and accurate recording of financial
information;
(c) authenticating and verifying the financial
information submitted by a
person; and
(d) providing access to information stored with the
information utility to
persons as may be specified;
(10) "creditor" means any person to whom a debt is
owed and includes a financial creditor, an operational
creditor, a secured creditor, an unsecured creditor
and a decreeholder;
(11) "debt" means a liability or obligation in respect of
a claim which is due from any person and includes a
financial debt and operational debt;
(12) "default" means non-payment of debt when
whole or any part or instalment of the amount of debt
has become due and payable and is not [paid] by the
debtor or the corporate debtor, as the case may be;
(13) "financial information", in relation to a person,
means one or more of the following categories of
information, namely:--
(a) records of the debt of the person;
(b) records of liabilities when the person is solvent;
(c) records of assets of person over which security
interest has been created;
(d) records, if any, of instances of default by the
person against any debt;
(e) records of the balance sheet and cash-flow
statements of the person; and
(f) such other information as may be specified.
(14) "financial institution" means--
(a) a scheduled bank;
(b) financial institution as defined in section 45-I of the
Reserve Bank of India Act, 1934 (2 of 1934);
(c) public financial institution as defined in clause (72)
of section 2 of the Companies Act, 2013 (18 of 2013);
and
(d) such other institution as the Central Government
may by notification specify as a financial institution;
(15) "financial product" means securities, contracts of
insurance, deposits, credit arrangements including
loans and advances by banks and financial
institutions, retirement benefit plans, small savings
instruments, foreign currency contracts other than
contracts to exchange one currency (whether Indian
or not) for another which are to be settled
immediately, or any other instrument as may be
prescribed;
(16) "financial service" includes any of the following
services, namely:--
(a) accepting of deposits;
(b) safeguarding and administering assets consisting
of financial products, belonging to another person, or
agreeing to do so;
(c) effecting contracts of insurance;
(d) offering, managing or agreeing to manage assets
consisting of financial products belonging to another
person;
(e) rendering or agreeing, for consideration, to render
advice on or soliciting for the purposes of--
(i) buying, selling, or subscribing to, a financial
product;
(ii) availing a financial service; or
(iii) exercising any right associated with a financial
product or financial service;
(f) establishing or operating an investment scheme;
(g) maintaining or transferring records of ownership of
a financial product;
(h) underwriting the issuance or subscription of a
financial product; or
(i) selling, providing, or issuing stored value or
payment instruments or providing payment services;
(17) "financial service provider" means a person
engaged in the business of providing financial
services in terms of authorisation issued or
registration granted by a financial sector regulator;
(18) "financial sector regulator" means an authority or
body constituted under any law for the time being in
force to regulate services or transactions of financial
sector and includes the Reserve Bank of India, the
Securities and Exchange Board of India, the
Insurance Regulatory and Development Authority of
India, the Pension Fund Regulatory Authority and
such other regulatory authorities as may be notified
by the Central Government;
(19) "insolvency professional" means a person
enrolled under section 206 with an insolvency
professional agency as its member and registered
with the Board as an insolvency professional under
section 207;
(20) "insolvency professional agency" means any
person registered with the Board under section 201
as an insolvency professional agency;
(21) "information utility" means a person who is
registered with the Board as an information utility
under section 210;
(22) "notification" means a notification published in
the Official Gazette, and the terms "notified" and
"notify" shall be construed accordingly;
(23) "person" includes--
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a trust;
(e) a partnership;
(f) a limited liability partnership; and
(g) any other entity established under a statute,
and includes a person resident outside India;
(24) "person resident in India" shall have the meaning
asassigned to such term in clause (v) of section 2 of
the Foreign Exchange Management Act, 1999;
(25) "person resident outside India" means a person
other than a person resident in India;
(26) "prescribed" means prescribed by rules made by
the Central Government;
(27) "property" includes money, goods, actionable
claims, land and every description of property situated
in India or outside India and every description of
interest including present or future or vested or
contingent interest arising out of, or incidental to,
property;
(28) "regulations" means the regulations made by the
Board under this Code;
(29) "Schedule" means the Schedule annexed to this
Code;
(30) "secured creditor" means a creditor in favour of
whom security interest is created;
(31) "security interest" means right, title or interest or
a claim to property, created in favour of, or provided
for a secured creditor by a transaction which secures
payment or performance of an obligation and includes
mortgage, charge, hypothecation, assignment and
encumbrance or any other agreement or arrangement
securing payment or performance of any obligation of
any person:
Provided that security interest shall not include a
performance guarantee;
(32) "specified" means specified by regulations made
by the Board under this Code and the term "specify"
shall be construed accordingly;
(33) "transaction" includes a agreement or
arrangement in writing for the transfer of assets, or
funds, goods or services, from or to the corporate
debtor;
(34) "transfer" includes sale, purchase, exchange,
mortgage, pledge, gift, loan or any other form of
transfer of right, title, possession or lien;
(35) "transfer of property" means transfer of any
property and includes a transfer of any interest in the
property and creation of any charge upon such
property;
(36) "workman" shall have the same meaning as
assigned to it in clause (s) of section 2 of the
Industrial Disputes Act, 1947;
(37) words and expressions used but not defined in
this Code but defined in the Indian Contract Act,
1872, the Indian Partnership Act, 1932, the Securities
Contact (Regulation) Act, 1956, the Securities
Exchange Board of India Act, 1992, the Recovery of
Debts Due to Banks and Financial Institutions Act,
1993, the Limited Liability Partnership Act, 2008 and
the Companies Act, 2013, shall have the meanings
respectively assigned to them in those Acts.
7. Initiation of corporate insolvency resolution
process by financial creditor.- (1) A financial
creditor either by itself or jointly with other financial
creditors may file an application for initiating
corporate insolvency resolution process against a
corporate debtor before the Adjudicating Authority
when a default has occurred.
Explanation.--For the purposes of this sub-section, a
default includes a default in respect of a financial debt
owed not only to the applicant financial creditor but to
any other financial creditor of the corporate debtor.
(2) The financial creditor shall make an application
under sub-section (1) in such form and manner and
accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the
application furnish--
(a) record of the default recorded with the information
utility or such other record or evidence of default as
may be specified;
(b) the name of the resolution professional proposed
to act as an interim resolution professional; and
(c) any other information as may be specified by the
Board.
(4) The Adjudicating Authority shall, within fourteen
days of the receipt of the application under sub-
section (2), ascertain the existence of a default from
the records of an information utility or on the basis of
other evidence furnished by the financial creditor
under sub-section (3).
(5) Where the Adjudicating Authority is satisfied that--
(a) a default has occurred and the application under
sub-section (2) is complete, and there is no
disciplinary proceedings pending against the
proposed resolution professional, it may, by order,
admit such application; or
(b) default has not occurred or the application under
sub-section (2) is incomplete or any disciplinary
proceeding is pending against the proposed
resolution professional, it may, by order, reject such
application:
Provided that the Adjudicating Authority shall, before
rejecting the application under clause (b) of sub-
section (5), give a notice to the applicant to rectify the
defect in his application within seven days of receipt
of such notice from the Adjudicating Authority.
(6) The corporate insolvency resolution process shall
commence from the date of admission of the
application under sub-section (5).
(7) The Adjudicating Authority shall communicate--
(a) the order under clause (a) of sub-section (5) to the
financial creditor and the corporate debtor;
(b) the order under clause (b) of sub-section (5) to the
financial creditor, within seven days of admission or
rejection of such application, as the case may be.
8. Insolvency resolution by operational creditor.-
(1) An operational creditor may, on the occurrence of
a default, deliver a demand notice of unpaid
operational debtor copy of an invoice demanding
payment of the amount involved in the default to the
corporate debtor in such form and manner as may be
prescribed.
(2) The corporate debtor shall, within a period of ten
days of the receipt of the demand notice or copy of
the invoice mentioned in sub-section (1) bring to the
notice of the operational creditor--
(a) existence of a dispute, if any, and record of the
pendency of the suit or arbitration proceedings filed
before the receipt of such notice or invoice in relation
to such dispute;
(b) the repayment of unpaid operational debt--
(i) by sending an attested copy of the record of
electronic transfer of the unpaid amount from the
bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the
operational creditor has encashed a cheque issued by
the corporate debtor.
Explanation.--For the purposes of this section, a
"demand notice" means a notice served by an
operational creditor to the corporate debtor
demanding repayment of the operational debt in
respect of which the default has occurred.
9. Application for initiation of corporate
insolvency resolution process by operational
creditor.- (1) After the expiry of the period of ten days
from the date of delivery of the notice or invoice
demanding payment under sub-section (1) of section
8, if the operational creditor does not receive payment
from the corporate debtor or notice of the dispute
under sub-section (2) of section 8, the operational
creditor may file an application before the
Adjudicating Authority for initiating a corporate
insolvency resolution process.
(2) The application under sub-section (1) shall be filed
in such form and manner and accompanied with such
fee as may be prescribed.
(3) The operational creditor shall, along with the
application furnish--
(a) a copy of the invoice demanding payment or
demand notice delivered by the operational creditor to
the corporate debtor;
(b) an affidavit to the effect that there is no notice
given by the corporate debtor relating to a dispute of
the unpaid operational debt;
(c) a copy of the certificate from the financial
institutions maintaining accounts of the operational
creditor confirming that there is no payment of an
unpaid operational debt [by the corporate debtor, if
available;]
[(d) a copy of any record with information utility
confirming that there is no payment of an unpaid
operational debt by the corporate debtor, if available;
and
(e) any other proof confirming that there is no
payment of an unpaid operational debt by the
corporate debtor or such other information, as may be
prescribed.]
(4) An operational creditor initiating a corporate
insolvency resolution process under this section, may
propose a resolution professional to act as an interim
resolution professional.
(5) The Adjudicating Authority shall, within fourteen
days of the receipt of the application under sub-
section (2), by an order--
(i) admit the application and communicate such
decision to the operational creditor and the corporate
debtor if,--
(a) the application made under sub-section (2) is
complete;
(b) there is no repayment of the unpaid operational
debt;
(c) the invoice or notice for payment to the corporate
debtor has been delivered by the operational creditor;
(d) no notice of dispute has been received by the
operational creditor or there is no record of dispute in
the information utility; and
(e) there is no disciplinary proceeding pending against
any resolution professional proposed under sub-
section (4), if any.
(ii) reject the application and communicate such
decision to the operational creditor and the corporate
debtor, if--
(a) the application made under sub-section (2) is
incomplete;
(b) there has been repayment of the unpaid
operational debt;
(c) the creditor has not delivered the invoice or notice
for payment to the corporate debtor;
(d) notice of dispute has been received by the
operational creditor or there is a record of dispute in
the information utility; or
(e) any disciplinary proceeding is pending against any
proposed resolution professional:
Provided that Adjudicating Authority, shall before
rejecting an application under sub clause (a) of clause
(ii) give a notice to the applicant to rectify the defect in
his application within seven days of the date of receipt
of such notice from the adjudicating Authority.
(6) The corporate insolvency resolution process shall
commence from the date of admission of the
application under sub-section (5) of this section.
10. Initiation of corporate insolvency resolution
process by corporate applicant. -(1) Where a
corporate debtor has committed a default, a corporate
applicant thereof may file an application for initiating
corporate insolvency resolution process with the
Adjudicating Authority.
(2) The application under sub-section (1) shall be filed
in such form, containing such particulars and in such
manner and accompanied with such fee as may be
prescribed.
[(3) The corporate applicant shall, along with the
application, furnish -
(a) the information relating to its books of account and
such other documents relating to such period as may
be specified; and
(b) the resolution professional proposed to be
appointed as an interim resolution professional; and
(c) the special resolution passed by shareholders of
the corporate debtor or the resolution passed by at
least three-fourth of the total number of partners of
the corporate debtor, as the case may be, approving
filing of the application.]
(4) The Adjudicating Authority shall, within a period of
fourteen days of the receipt of the application, by an
order--
(a) admit the application, if it is complete [ and no
disciplinary proceeding is pending against the
proposed resolution professional]; or
(b) reject the application, if it is incomplete [or any
disciplinary proceeding is pending against the
proposed resolution professional];
Provided that Adjudicating Authority shall, before
rejecting an application, give a notice to the applicant
to rectify the defects in his application within seven
days from the date of receipt of such notice from the
Adjudicating Authority.
(5) The corporate insolvency resolution process shall
commence from the date of admission of the
application under sub-section (4) of this section.
53. Distribution of assets. - (1) Notwithstanding
anything to the contrary contained in any law enacted
by the Parliament or any State Legislature for the time
being in force, the proceeds from the sale of the
liquidation assets shall be distributed in the following
order of priority and within such period and in such
manner as may be specified, namely :--
(a) the insolvency resolution process costs and the
liquidation costs paid in full;
(b) the following debts which shall rank equally
between and among the following :--
(i) workmen's dues for the period of twenty-four
months preceding the liquidation commencement
date; and
(ii) debts owed to a secured creditor in the event such
secured creditor has relinquished security in the
manner set out in section 52;
(c) wages and any unpaid dues owed to employees
other than workmen for the period of twelve months
preceding the liquidation commencement date;
(d) financial debts owed to unsecured creditors;
(e) the following dues shall rank equally between and
among the following:--
(i) any amount due to the Central Government and
the State Government including the amount to be
received on account of the Consolidated Fund of India
and the Consolidated Fund of a State, if any, in
respect of the whole or any part of the period of two
years preceding the liquidation commencement date;
(ii) debts owed to a secured creditor for any amount
unpaid following the enforcement of security interest;
(f) any remaining debts and dues;
(g) preference shareholders, if any; and
(h) equity shareholders or partners, as the case may
be.
(2) Any contractual arrangements between recipients
under sub-section (1) with equal ranking, if disrupting
the order of priority under that sub-section shall be
disregarded by the liquidator.
(3) The fees payable to the liquidator shall be
deducted proportionately from the proceeds payable
to each class of recipients under sub-section (1), and
the proceeds to the relevant recipient shall be
distributed after such deduction.
Explanation.--For the purpose of this section--
(i) it is hereby clarified that at each stage of the
distribution of proceeds in respect of a class of
recipients that rank equally, each of the debts will
either be paid in full, or will be paid in equal proportion
within the same class of recipients, if the proceeds
are insufficient to meet the debts in full; and
(ii) the term "workmen's dues" shall have the same
meaning as assigned to it in section 326 of the
Companies Act, 2013 (18 of 2013).
238. Provisions of this Code to override other
laws. - The provisions of this Code shall have effect,
notwithstanding anything inconsistent therewith
contained in any other law for the time being in force
or any instrument having effect by virtue of any such
law."
The present writ petition has been filed wherein relief sought
for is declaratory in nature.
From perusal of the petition, it appears that the issues raised
in the present writ petition are as follows:
(i) Whether the order of closure of an undertaking of
an Industrial Establishment can be passed only in
accordance with Section 25(O) of the Industrial Disputes
Act, 1947 or not?
(ii) Whether the order of closure can be passed under
the Insolvency and Bankruptcy Code, 2016 while in the
process of liquidating the company or not?
(iii) Whether the company illegally closed in violation
of Section 25(O) of the Industrial Disputes Act, 1947 by
the employer and consequently company has been
declared insolvent and company stands closed due to
such declaration then, for intervening period, which law
will prevail i.e. Industrial Disputes Act, 1947 or Insolvency
and Bankruptcy Code, 2016 ?
(iv) Is there any conflict between above laws or they
have defined separate fields?
Since the matter is of great public importance and will affect
ongoing various Acts and Authorities as well as Adjudicatory
Authorities under the Insolvency and Bankruptcy Code, 2016 I am
of the view that let the matter be placed before Hon'ble the Acting
Chief Justice for His Lordship's consideration as per the mandate of
Rule 93 of the High Court of Jharkhand Rules, 2001."
It is evident from the order dated 29.07.2019 that the learned Single
Judge, considering the issue involved in this writ petition is having great
public importance and it will affect ongoing various Acts and Authorities as
well as Adjudicatory Authorities under the Insolvency and Bankruptcy
Code, 2016, directed the matter to be placed before the then Hon'ble the
Acting Chief Justice for consideration as per the Mandate of Rule 93 of
the High Court of Jharkhand Rules, 2001.
Accordingly, the matter has been placed before us.
4. Mr. Akhilesh Shrivastava, learned counsel appearing for the
petitioner has submitted that although the matter has been heard on
several occasions by the learned Single Judge of this Court but since it
has been posted before this Division Bench in pursuant to the order dated
29.07.2019 passed by the learned Single Judge, therefore, the prayer for
hearing of the matter has been made.
5. We have considered the provision of Rule 93 of the High Court of
Jharkhand Rules, 2001 which reads hereunder as:-
"93. Whenever a Single Bench desires and the Chief
Justice concurs, that any case shall be referred to a
Division Bench, or whenever in any case a Single
Bench or any other Bench is of the opinion that any
earlier decision of the Court on a point of law, or
usage having the force of law or otherwise is required
to be reconsidered, the Chief Justice may refer such a
case for decision by a larger Bench. The Bench
making any reference to a larger Bench may either
refer the whole case for hearing or may formulate
questions of law or fact or both, for determination by
such larger Bench and subject to any orders passed
by the Chief Justice, the larger Bench accordingly
shall hear the case and answer the reference."
It is evident from the aforesaid provision as contained under Rule 93
of the High Court of Jharkhand Rules, 2001 that the condition precedent
by the Bench by making any reference to a larger Bench may either refer
the whole case for hearing or may formulate questions of law or fact or
both, for determination by such larger Bench and subject to any orders
passed by the Chief Justice, the larger Bench accordingly shall hear the
case and answer the reference.
The Further condition stipulated under the aforesaid provision is
that whenever a Single Bench desires and the Chief Justice concurs, that
any case shall be referred to a Division Bench, or whenever in any case a
Single Bench or any other Bench is of the opinion that any earlier decision
of the Court on a point of law, or usage having the force of law or
otherwise is required to be reconsidered, the Chief Justice may refer such
a case for decision by a larger Bench.
Thus, it is evident that the learned Single Judge if makes out an
opinion for reference of the issue before the larger Bench, if he comes to
the opinion that any earlier decision of the Court on the point of law, or
usage having the force of law or otherwise is required to be reconsidered,
the same may be placed before Hon'ble the Chief Justice in the
Administrative side to put it before the larger Bench by making a reference
to that effect.
Thus, the reference by a Single Judge or the Benches having the
lesser forum can be made to the larger Bench only in a case when there is
a difference of opinion in the judgment rendered by the Benches having
the same forum or difference of opinion on the issues by two Division
Benches but certainly the reference to that effect is required to be made
for its consideration by the Chief Justice in the Administrative Side for its
referral before the larger Bench or the Single Judge of the High Court if
not agreeing with earlier decision of the Single Judge of the same Court,
should refer the matter to a larger Bench and judicial propriety or decorum
do not warrant holding contrary to the decision, as has been held in the
case of Ayyaswami Gounder & Ors Vrs. Munnuswamy Gounder &
Ors., (1984) 4 SCC 376.
It has further been held by the Hon'ble Apex Court in the case of
Sundarjas Kanyalal Bhatija & Ors. Vrs. Collector, Thane, Maharashtra
and Ors., (1989) 3 SCC 396 wherein, at paragraph-18 which reads
hereunder as:-
"18. It would be difficult for us to appreciate the
judgment of the High Court. One must remember that
pursuit of the law, however glamorous it is, has its
own limitation on the Bench. In a multi-Judge court,
the Judges are bound by precedents and procedure.
They could use their discretion only when there is no
declared principle to be found, no rule and no
authority. The judicial decorum and legal propriety
demand that where a learned Single Judge or a
Division Bench does not agree with the decision of a
Bench of coordinate jurisdiction, the matter shall be
referred to a larger Bench. It is a subversion of judicial
process not to follow this procedure."
Further, in the recent judgment delivered in the case of Dr. Shah
Faesal and Ors. Vrs. Union of India & Anr., (2020) 4 SCC 1 wherein, at
paragraph-19 it has been held which reads hereunder as:-
"19. When a decision is rendered by this Court, it
acquires a reliance interest and the society organises
itself based on the present legal order. When
substantial judicial time and resources are spent on
references, the same should not be made in a casual
or cavalier manner. It is only when a proposition is
contradicted by a subsequent judgment of the same
Bench, or it is shown that the proposition laid down has
become unworkable or contrary to a well-established
principle, that a reference will be made to a larger
Bench. In this context, a five-Judge Bench of this Court
in Chandra Prakash v. State of U.P. [Chandra
Prakash v. State of U.P., (2002) 4 SCC 234 : 2002
SCC (Cri) 496 : 2002 SCC (L&S) 496] , after
considering series of earlier rulings reiterated that :
(SCC p. 245, para 22)
"22. ... The doctrine of binding precedent is of utmost
importance in the administration of our judicial
system. It promotes certainty and consistency in
judicial decisions. Judicial consistency promotes
confidence in the system, therefore, there is this need
for consistency in the enunciation of legal principles in
the decisions of this Court."
6. We, on the basis of the aforesaid position of law coupled with the
provision of Rule, 93 of the High Court of Jharkhand, Rules, 2001 has
considered the fact about reference made by the learned Single Judge
vide order dated 29.07.2019 before the larger Bench.
It is evident from the aforesaid order that the learned Single Judge,
only because the matter is of great public importance and as such, it will
affect ongoing various Acts and Authorities as well as Adjudicatory
Authorities under the Insolvency and Bankruptcy Code, 2016 has directed
to place the matter before the then Hon'ble the Acting Chief Justice to
take decision in terms of the mandate of Rule 93 of the High Court of
Jharkhand Rules, 2001 but according to our considered view, the
mandate of Rule, 93 as per the referral order dated 29.07.2019 is not
applicable as because the aforesaid provision as contained under Rule,
93 speaks about the reference by the Single Judge by placing it before
the Chief Justice and if the Chief Justice concurs with the view of the
Single Judge taking into consideration that any earlier decision of the
Court on the point of Law, or usage having the force of law or otherwise is
required to be reconsidered, it may be referred by the Administrative
decision of Hon'ble the Chief Justice before the larger Bench but we have
not found any such stipulation made in the order dated 29.07.2019 either
containing the opinion that any earlier decision of the Court on the point of
law, or usage having the force of law or otherwise is required to be
reconsidered rather only consideration has been made by the learned
Single Judge that the matter is of great public importance and will affect
ongoing various Acts and Authorities as well as Adjudicatory Authorities
under the Insolvency and Bankruptcy Code, 2016, which cannot be
construed to be a reason to refer the matter by the Single Judge to a
larger Bench for its adjudication.
7. We, after taking into consideration the mandate of provision of
Rule, 93 of the High Court of Jharkhand Rules, 2001 coupled with the
ratio laid by the Hon'ble Apex Court hereinabove, are of the view that the
matter is required to be adjudicated by the learned Single Judge himself.
8. Therefore, the matter is being relegated back to the learned Single
Judge for consideration on merit.
9. Accordingly, let the matter be placed before the Chief Justice on
the Administrative Side.
(Dr. Ravi Ranjan, C.J.)
(Sujit Narayan Prasad, J.)
Rohit/-
