In Brief
A cooperative society mortgaged its property to a bank to secure a loan. When it defaulted and the bank took possession and sold the property, unpaid employee salaries became an issue. The Supreme Court held that while employee dues cannot claim priority as a "paramount charge" under company liquidation laws (which do not apply to cooperatives), the bank's own sale contract with the purchaser obligated the bank to discharge employee dues from the sale proceeds. The bank must pay the employee claims within six months, while the purchaser must settle other statutory liabilities within the same timeframe.
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