In Brief
Jalgaon District Central Cooperative Bank, a secured creditor, sought to auction assets of a defunct cooperative sugar factory under the SARFAESI Act. The High Court directed that Employees' Provident Fund (EPF) dues be paid first from sale proceeds, then the bank's secured debt. The Bank appealed, arguing its Section 26E priority overrode all other claims. The Supreme Court held that Section 11(2) of the EPF & MP Act creates a statutory first charge (proprietary right in the asset) that prevails over Section 26E priority (a mere claim ranking). EPF dues, including contributions, interest, and penalties, must be paid first from sale proceeds. Workmen's dues, being unquantified and lacking a statutory first charge, do not override the bank's priority but workmen can seek quantification later.
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