Where the Borrower company is not under Liquidation workmen do not have right to claim their dues by distribution of sale proceeds in proceeding under SARFAESI Act

While deciding Pegasus Assets Reconstruction Private Limited v. HaryanaConcast Limited [(2016) 4 SCC 47], Supreme Court had clarified that the fact that a Borrower company is in liquidation shall not impede the rights of a secured creditor to enforce its secured interest in the property of the liquidated company under SARFAESI Act without the intervention of the Court or tribunal. The Apex Court had held that there is no lacuna or ambiguity in the SARFAESI Act to warrant reading something more into it. Thus, there is no plausible reason to take recourse to any provisions of the Companies Act and permit interference in proceedings under SARFAESI Act either by Company Judge or liquidator. Section 13 (9) of SARFAESI Act fully protects workmen's interests by incorporating scheme of Sections 529 and 529-A of Companies Act, 1956.

In a recent instance Janta Chini Mill Mazdoor Sangh (2016(8)ADJ347, 2016 (119) ALR 120, MANU/UP/1636/2016).After examining the legal position the Hon'ble Allahabad High Court held that at the post sale stage, the rights of the persons or parties having any stake in the sale proceeds are taken care of by sub-section (9) of Section 13 and its five provisos of the SARFAESI Act.  If borrower is a company in liquidation, the sale proceeds have to be distributed in accordance with the provisions of Section 529A of the Companies Act even where the company is being wound up after coming into force of the SARFAESI Act, if the secured creditor of such company opts to stand out of the winding up proceedings, it is entitled to retain the sale proceeds of its secured assets after depositing the workmen's dues with the liquidator in accordance with the provisions of Section 529A of the Company Act.

Based on the Apex Court decisions in Bank of Maharashtra v.Pandurang Keshav Gorwardkar and others [(2013)7 SCC 754] and Pegasus Assets Reconstruction Private Limited v. Haryana Concast Limited and another [(2016) 4 SCC 47] the High Court held that for the enforcement of its security interest, a secured creditor has been not only vested with powers to do so without the intervention of the Court or tribunal but detailed procedure has also been prescribed to take care of various eventualities such as when the borrower company is under liquidation.

The Hon’ble High Court concluded that under the provisions of SARFAESI Act, 2002, in terms of Section 13(9) interest of such workmen has been protected where the Company is under liquidation and in case company is not under liquidation then workmen have no right to claim their dues by distribution of sale proceeds in proceeding under SARFAESI Act and have no right to resist the proceedings so undertaken under the provision of SARFAESI Act for their dues.

Stranger to a loan account have no locus standi to seek information under RTI regarding loan accounts – CIC

While deciding the appeals filed by one Arun Pradhan against State Bank of India, the Central Information Commission has clarified that a person who is neither a borrower nor a guarantor in a loan account has no locus standi to seek information regarding the account.

Earlier, while deciding AR Shah v UBI, the CIC had held that Bank is clearly in a fiduciary relationship with its customers, both in relation to the information entrusted by them to the Bank as well as in regard to the business dealing between the two and hence the Bank may invoke Section 8(1)(e) of the RTI Act to deny information related to the customers, sought by a third party.

The CIC also reiterated that the rights available to public under the RTI Act is to be exercised with full responsibility so as not to overburden the public authority with frivolous and vexatious RTI applications which impinge on the scarce resources of the public authority and use the cherished right given in the RTI Act, 2005 in a diligent manner so as to enable the public authority to use its time and resources for providing information expeditiously and efficiently.