MAHARASHTRA STATE CO-OPERATIVE BANK LTD. v. THE ASSISTANT PROVIDENT FUND COMMISSIONER AND ORS.

A the pawnee of the goods."

(underlining is ours) '

39. The above referred judgments do not have any bearing on these appeals because in both the cases, the Court dealt 8 with the right of unsecured creditors vis-a-vis secured creditors i.e., the bank in whose favour the goods had been pledged/ mortgaged. Moreover, in neither of the cases, a provision analogous to Section 11 of the Act was considered by the . Court. ·- '

40. The next point which requires consideration is whether the sugar bags pledged with the appellant-bank constitute assets of the establishment within the meaning of Section 11 (2) of the Act.

D 41. As per Black's Law Dictionar:y (Eighth edition), the word 'asset' means, an item that is owned and has value; the >-- entries on a balance sheet showing the items of property owned, including cash, inventory, eqµipment, real estate, · accounts receivable and goodwill; all the property of a person available for paying debts or for distribution. In Law Lexicon by P. Ramanatha Aiyar (Second edition), the word 'assets' has been described as the property in the hands of an heir, an executor, administrator or trustee which is legally or equitably .;- . chargeable with the obligations with such heir, executor, F e1dministrator or trustee is, as such, required to discharge. Everything which can be made available for the payment of . debts, whether belonging to the estate of a deceased person or not; property in general all that one owns, considered as applicable to the payment of his debts; as, his assets are much G - greater than his_ liabilities. In Velchand Chhaganlal v. Mµssan 14 Born.LR. 633, it was held thattheword 'assets' means, a man's property of whatever kind which may be used to satisfy + debts or demands existing against him. -· -

42. As per Salmond's Jurisprudence, the word "property" H

MAHARASHTRA STATE CO-OP. BANK LTD. v. ASSTT. 53

PROVIDENT FUND COMMNR. AND ORS. [G.S. SINGHVI, J.]

means - in its widest sense, property includes a person's legal A 1 rights, of whatever description. A man's property is all that is his in law. This usage however, is obsolete at the present day, / .. though it is common enough in the older books. In a second and narrower sense, property includes not all a person's rights, but only his proprietary as opposed to his personal rights. The B former constitutes his estate or property, while the latter constitute his status or personal condition. In this sense a man's land, chattel. shares and the debts due to him are his property; but not his life or liberty or reputation .... In a third application, which is that adopted (here) the terms includes not even all c proprietary rights but only those which are both proprietary and in rem. The law of property is the right of proprietary rights in rem, the law-of proprietary rights in personam being ~ distinguished from it as the law of obligations. According to this usage a freehold or leasehold estate in land, or.a patent or D -'. copyright, is p_roperty; but a debt or the benefit or a contract is not. Finally, in the narrowest use of the term, it includes nothing more than corporeal property - that is to say, the right of ' ownership in a material object, or that object itself.

43. In the light of the above dictionary Find legal meanings E .of the word 'assets' and jurisprudential concept of the word 'property', it has to be seen whether the $Ugar.bags pledged with the appellant-bank constituted assets of the establishment for the purpose of Section 11 (2) of the Act. We have already held that even though symbolic custody of the sugar bags was given to the appellant-bank as security for repayment of loan · etc., the Sugar Mills continued to be owner thereof. In other words, the sugar bags pledged with ~he appellant-bank continued to be movable property Le. assets of the establishment, which could be attached 1and sold by the G Recovery Officer in terms of Section 88 or by adopting alternative modes of recovery enumerated in Section 8F. .

44. At the cost of repetition, it is apposite to mention that Section 11 is declaratory in nature. Sub-section· (2) thereof H

54 SUPREME COURT REPORTS [2009] 15 (ADDL.) S.C.R.

A declares that any amount due from an employer shall be deemed to be firs~ charge on the assets of the establishment l and shall be paid in priority to all other debts. For recovery of the amount due from an employer which is treated as arrear of ~-- land revenue, the Recovery Officer or any other authorized B officer has to take recourse to the provisions contained in Section 8 read with Sections 88 and SF. The recovery can be effected by attachment or sale of the movable or immovable property of the establishment or, as the case may be, the employer, or by arrest of the employer and his detention in c prison or by appointing a receiver for the management of the movable or immovable properties of the establishment or, as the case may be, the employer or by taking action in the manner laid down in the Third Schedule to the Income-tax Act, 1961. ...

D 45. The judgment in Transcore v. Union of India (supra) on which reliance has been placed by Shri Desai, does not >-· have any bearing on any of the facets of the question raised in these appeals. In pc_1ragraph 62 of that judgment, the Court merely referred to Snell's Principles of Equity. In paragraph 73, E the Court explained t~e distinction between symbolic and physical posses~ion and observed that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 basically deals with the securities by which ~ the creditor obt_ains ownership of or interest in the property concerned i.e., mortgages and the securities under which the secured creditor, namely, the Bank/Financial Institution obtains interest in the.property concerned.

46. We shall now deal with the last argument of the learned senior counsel for the appellant:-bank that the interest payable in terms of Section 7Q and damages imposed under Section 148 of the Act cannot be treated as first charge on the assets o..f the establishment payable in priority to all other debts within the meaning of Section 1_ 1(2).

MAHARASHTRA STATE CO-OP. BANK LTD. v. ASSTT. 55

PROVIDENT FUND COMMNR. AND ORS. [G.S. SINGHVI, J.]

47. Section 11 gives statutory priority to the amount due A

' from the employer vis-a-vis all other debts. Clause (a) of sub- section (1) of Section 11 is applicable to cases where an employer is adjudicated insolvent or, being a company, an order of its winding up is made. In that situation, the amount due from the employer in relation to an establishment to which any B ', Scheme or the Insurance Scheme applies in respect of any contribution payable to the Fund or, as the case may be, the Insurance Fund, damages recoverable under Section 148, --{ accumulations required to be transferred under Section 15(2) or any other charges payable by him under any other provision c of this Act or of any provision of the Scheme or the Insurance Scheme. Clause (b) is applicable to cases where the amount is due from the employer in relation to exempted establishment ....... in respect of any contribution to the provident fund or any insurance fund in so far it relates to exempted employees under D ---( the rules of provident fund or any insurance fund, any contribution payable by him towards the Pension Fund under Section 17(6), damages recoverable under Section 148 or any charges payable by him to the appropriate Government under the Act or under any of the conditions specified in Section 17. This sub-section then lays down that such amount shall be paid in priority to all other debts in the distribution of the property of the insolvent or the assets of the company being wound up. Sub- ~ section (2) lays down that any amount dye from the employer whether in respect of the employees' contribution deducted from the wages of the employee or the employer's contribution shall be deemed to be the first charge on the assets of the establishment, and shall be paid in priority to all other debts. The expression "any amount due from an employer" appearing ! in sub-section (2) of Section 11 has to be interpreted keeping in view the object of the Act and other provisions contained therein including sub-section (1) of Section 11 and Sections 7A, ~ 7Q, 148 and 15(2) which provide for determination of the dues payable by the employer, liability of the employer to pay interest in case the payment of the amount due is delayed and also pay damages, if there is default in making contribution to the Fund. H

56 SUPREME COt..;RT REPORTS [2009] 15 (ADDL.} S.C.R

A If any amount payable by the employer becomes due and the same is not paid within the stipulated time, then the employer is required to pay interest in terms of the mandate of Section

70. Likewise, default on the employer's part to pay any contribution to the Fund can visit him with the consequence of B levy of damages. As mentioned earlier, sub-section (2) was inserted in Section 11 by Amendment Act No.40 of 1973 with a view to ensure that payment of provident fund dues of the workers are not defeated by the prior claims of the secured and/or of the· unsecured creditOrs. While enacting sub-section c (2), the legislature was conscious of the fact that in terms of existing Section ·11 priority has been given to the amount due from an employer in relation to an establishment to which any scheme or fund is applicable including damages recoverable under Section 148 and accumulations required to be O transferred under Section 15(2). The legislature was also '>-- aware that in case of delay the employer is statutorily responsible to pay interest in terms of Section 17. Therefore, there is no plausible realion to give a. restricted meaning to the expression 'any amount due from the employer' and confine it to the amount determined under Section 7A or the contribution payable. under Section 8. If interest payable by the employer under Section 70 and damages leviable under Section 14 are excluded from the ambit of expression "any amount due from an employer'', every employer will conveniently refrain frqm paying c()ntribution to the Funcj and other dues and resist the efforts of the .concerned authormes_ to recover. the .dues as arrears of land. revenue by conte_nding that the movable. or immovable . property . . . of "the . establishment . . . . is. subject to other I - debts. Any such interpretatiory. would frustrate the object of introducing the deeming provision and non obstante clause in G Section 1.1(2). T~erefore, it i~ not possible to agree with .the. learned senior counsel f()r th'e appellant-bank that the amount of interest payable tmqer Sectio·n '.?a .and damages leviable under Section 148 do not form part of.the amount due from an employer for the purpose. of Section 11 (~) of the Act. H

MAHARASHTRA STATE CO-OP. BANK LTD. v. ASSTT. 57

PROVIDENT FUND COMMNR. AND ORS. [G.S. SINGHVI, J.]

48. In the result, the appea.ls are dismissed. A I

49. Although, while issuing notice in the special leave petitions and passing order of status quo, the Court had made it clear that in the event of dismissal of the special leave petitions, the amount shall be paid by the petitioner (appellant 8 herein) with interest at the rate which may be fixed by the Court, we do not consider it just and proper to saddle the appellant- bank with the liability of interest because price of the sugar sold pursuant to the High Court's order remained deposited with its Registrar General and the appellant-bank did not have the C benefit of utilizing the same.

D.G. Appeals dismissed.