Partly allowed¶47

Ramachandran K v. The State of Tamilnadu

Madras HC25 Jun 2025WP(MD)/9924/2025

Case brief

AI extract

What is this about?

Madras High Court, Madurai Bench; W.P(MD)No.9924 of 2025; R. Vijayakumar J.; labour dues priority on winding up; SARFAESI auction sale challenge; Payment of Gratuity Act 1972 Controlling Authority order dated 15.12.2023; Revenue Recovery Act proceedings; Sri Krishnakanth Textiles Private Limited; Indian Overseas Bank; District Collector Dindigul suo motu impleaded; mandamus for disbursal of salary, provident fund, gratuity, bonus; writ petition partly allowed.

What did the court decide?

Respondents 3 (Joint Commissioner of Labour, Dindigul) and 10 (District Collector, Dindigul) directed to initiate appropriate proceedings under the Revenue Recovery Act to implement the third respondent's order dated 15.12.2023 against the fourth respondent Mill; the prayer against respondents 5 to 9 rejected; no order as to costs. ¶47

Ramachandran K Vs The State of Tamilnadu — Banking and Recovery | Madras HC (2025)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether a Writ of Mandamus should issue directing respondents 1 to 3 to take steps to collect the auction sale amount of the fourth respondent's assets from the fifth respondent Bank and disburse the pending salary, provident fund, gratuity, bonus, settlement and other dues to the labourers of the fourth respondent on the petitioner's representation dated 12.03.2024. +2 more

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Court's answer

The writ petition is partly allowed: respondents 3 and 10 are directed to initiate appropriate proceedings under the Revenue Recovery Act to implement the order passed by the third respondent dated 15.12.2023 against the fourth respondent Mill.

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Ratio / Principle

The dues of the labourers would get priority only when the fourth respondent Company is wound up; otherwise, the sale effected by the fifth respondent Bank of the assets of the fourth respondent Mill in favour of respondents 6 to 9 cannot be put to challenge in the present writ petition.

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Key takeaways

As far as the gratuity of the members of the petitioner Sangam is concerned, the rights of the workman have got crystallised by way of the order passed by the third respondent dated 15.12.2023.ratio¶41
As far as the other dues of the petitioner apart from gratuity are concerned, the rights are yet to be crystallised and the petitioner has to approach the appropriate authorities.ratio¶45
The prayer as against respondents 5 to 9 is rejected.

Detailed headnote1 paragraphs

Writ petition under Article 226 by the General Secretary of a Labour Association seeking a Mandamus to respondents 1 to 3 to collect the auction sale amount of Sri Krishnakanth Textiles Private Limited's assets from Indian Overseas Bank (which had sold the mill's assets under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 on 29.02.2024) and disburse pending salary, provident fund, gratuity, bonus and settlement dues to the mill's labourers, based on the petitioner's representation dated 12.03.2024. The mill had closed abruptly on 02.08.2015; the Joint Commissioner of Labour, as Controlling Authority under the Payment of Gratuity Act, 1972, had ordered payment of gratuity to 38 employees on 15.12.2023, which remained unimplemented. Held: labour dues get priority only when the company is wound up, and the sale in favour of the auction purchasers (respondents 6 to 9) cannot be challenged in this writ petition; the workmen's gratuity rights stand crystallised by the order dated 15.12.2023, while other dues are yet to crystallise and lie before the appropriate authorities. Writ petition partly allowed: respondents 3 and 10 (District Collector, Dindigul, suo motu impleaded) directed to initiate proceedings under the Revenue Recovery Act to implement the gratuity order; prayer against respondents 5 to 9 rejected; no costs.

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W.P(MD)No.9924 of 2025

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BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

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DATED : 25.06.2025

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CORAM

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THE HONOURABLE MR.JUSTICE R.VIJAYAKUMAR

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W.P(MD)No.9924 of 2025

K.Ramachandran

... Petitioner

Vs.

1.The State of Tamil Nadu,

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Represented by its Secretary to Government, Department of Labour and Employment, Fort St. George,

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Chennai.

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2.The Commissioner of Labour, Department of Labour and Employment, Teynampet, Annasalai, Chennai.

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3.The Joint Commissioner of Labour, Office of Joint Commissioner of Labour, Dindigul.

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4.Sri Krishnakanth Textiles Private Limited, Through its Managing Director, Adiyanooth Villages, Sirumalai Road, Dindigul Taluk, Dindigul.

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1/7

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https://www.mhc.tn.gov.in/judis

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W.P(MD)No.9924 of 2025

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5.The Principal Regional Manager, Indian Overseas Bank, Regional Office, Plot No.40, 80 ft Road, Annanagar, Madurai.

6.M.Gunaseelan

7.K.Raja

8.M.Sakthivel

9.K.Shanmugasundaram

10.The District Collector, Dindigul District. ... Respondents

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(R-10 is suo motu impleaded vide Court order, dated 25.06.2025 in W.P(MD)No.9924 of 2025)

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Prayer : Writ Petition filed under Article 226 of the Constitution of India, praying this Court to issue a Writ of Mandamus, directing the respondents 1 to 3 to take necessary steps to collect the action sale amount of the fourth respondent's assets from the fifth respondent for disbursing the pending salary, provident fund, gratuity, bonus, settlement and etc., to the laborers of the fourth respondent based on the petitioner's representation, dated 12.03.2024 within time limit as prescribed by this Court and pass such further or other orders as this Court.

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For Petitioner : Mr.S.Vellaichamy

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2/7

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https://www.mhc.tn.gov.in/judis

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W.P(MD)No.9924 of 2025

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For R-1 to R-3 & R-10 : M/s.D.Farjana Ghoushia Special Government Pleader For R-5 : Mr.N.Dilip Kumar For R-6 to R-9 : Mr.Ananda Gomathy Murugesan

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ORDER

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The District Collector, Dindigul District is suo motu impleaded as the tenth respondent in the writ petition.

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2. The present writ petition has been filed by the General Secretary of a Labour Association seeking a Mandamus as against the respondents 1 to 3 to initiate necessary action to collect the auction sale amount of the fourth respondent's assets from the fifth respondent Bank so as to disburse the dues of the laborers of the fourth respondent Mill based upon the representation of the petitioner, dated 12.03.2024.

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3. The assets of the fourth respondent Mill were sold under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, by the fifth respondent Bank on 29.02.2024. The

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https://www.mhc.tn.gov.in/judis

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W.P(MD)No.9924 of 2025

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sale certificate was issued on 07.03.2024 and the same was registered on 12.03.2025. It is the grievance of the writ petitioner Sangam that, the fourth respondent Mill was closed on 02.08.2015 abruptly without disbursing the monetary benefits to the members of the petitioner Sangam. It is further submitted that, the third respondent in the writ petition, who is the Controlling Authority under the Payment of Gratuity Act, 1972, has passed an order on 15.12.2023 directing the fourth respondent Mill to pay gratuity to 38 employees. However, the said order has not been complied with so far. In fact, the third respondent has addressed a communication to the tenth respondent for initiating action under the Revenue Recovery Act for collecting the dues from the fourth respondent Mill.

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4. Only when the fourth respondent Company is wound up, the dues of the laborers would get a priority. Otherwise, the sale effected by the fifth respondent Bank of the assets of the fourth respondent Mill in favour of the respondents 6 to 9 cannot be put to challenge in the present writ petition.

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5. The dues, as far as the gratuity of the members of the petitioner Sangam are concerned, the rights of the workman have got crystalised by way

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4/7

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https://www.mhc.tn.gov.in/judis

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W.P(MD)No.9924 of 2025

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of the order passed by the third respondent, dated 15.12.2023. As far as the other dues of the petitioner are concerned, the rights are yet to be crystalised and they have to approach the appropriate authorities.

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6. In view of the above said deliberations, this writ petition stands partly

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allowed directing the respondents 3 and 10 to initiate appropriate proceedings under the Revenue Recovery Act to implement the order passed by the third respondent, dated 15.12.2023, against the fourth respondent Mill. As far as the prayer as against the respondents 5 to 9 is concerned, it is hereby rejected.

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7. With the above said observation, this writ petition stands partly

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allowed. There shall be no order as to costs.

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25.06.2025

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NCC : Yes / No Index : Yes / No Internet : Yes BTR

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https://www.mhc.tn.gov.in/judis