- (1.) AMITAVA Lala, J. This writ petition is filed by U. P. Financial Corporation, Kanpur and another challenging the sale and recovery of an amount of Rs. 6. 24 lacs by the Recovery Officer of the Employees Provident Fund authorities out of the sale of movable assets on the plea that the State Financial Corporation has a first charge over and in respect of the properties even movable or immovable mortgaged or charged with the Corporation. The concerned provident fund authorities have come with a case that the statutory requirement of law i. e. the Employees Provident Funds and Miscellaneous Provisions Act, 1952 overrides the certain conditions of the contract in between the loanee and the U. P. State Financial Corporation. The learned Counsel appearing for the provident fund authorities has drawn our attention to Section 11 (2) of the Act 1952 which is as follows : "priority of payment of contributions over other debts.- [ (1)]. . . . . . (2) Without prejudice to the provisions of sub-section (1), if any amount is due from an employer, whether in respect of the employee's contribution (deducted from the wages of the employee) or the employer's contribution, the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts".
(2.) HE further says that in view of the ratio of the judgment particularly in paragraph 40 reported in (2000) 4 SCC 406, Allahabad Bank v. Canara Bank & Anr. , it has been held by the High Court that in a conflict between the Companies Act, 1956 and Recovery of Debts Due to Banks and Financial Institutions Act, 1993, both being special laws, the later will normally prevail over the former if there is a provision in the later special Act gives overriding effect. The Supreme Court came to a conclusion in this regard on the basis of Section 34 of the Later Act. Section 34 (2) of the Recovery of Debts Due to Banks and Financial Act, 1993 specifically overrides the State Financial Corporation Act. In any event, coming back to the particular case, we will find not only the Employees Provident Fund and Miscellaneous Provisions Act, 1952 later Act than the State Financial Corporation Act, 1951 but the provision which has been relied upon by the learned Counsel appearing for the respondents is part of amendment which has been incorporated only on 1st August, 1988. Therefore, the case of the respondents is squarely covered by the ratio of the judgment as well as prevailing effect of law. Having this background, we are of view that whatever sale proceeds have been recovered by the provident fund authority will be realized against their claim to meet the requirement of law and the balance will be refunded to the U. P. State Financial Corporation to adjust their claim amount as against the loanee.
(3.) HOWEVER, passing of this order for realization of the amount by the provident fund authority will no way affect the right of the petitioners to sale the assets of the company and recover the amount being first charge of the property. In fact, by this judgment we only clarify the position between the two first charge holders on the basis of the overriding effect of law. Therefore, the entire issue is resolved on the basis of the observations of this Court as aforesaid and hence, the writ petition is treated to be disposed of without imposing any costs. Petition disposed of. .;