Sarfaesi act 2002
Kishor Satpute
(Querist) 22 June 2013
This query is : Resolved
The Bank have sold factory under SARFAESI Act 2002 by public auction and received Rs.5 Cr. The directors of the company are demanding their Gratuity amount from the sales proceeds received through auction.
Can any one guide me whether the directors of the company are eligible for Gratuity from the said sales proceeds received?
If yes What documents are required to be taken in satisfaction of the said claim from the directors of the company?
How to confirm the amount of gratuity submitted by the directors of the company?
Devajyoti Barman
(Expert) 22 June 2013
Yes but only if any balance is left after paying off the debt of creditors.
Kishor Satpute
(Querist) 23 June 2013
If yes What documents are required to be taken in satisfaction of the said claim from the directors of the company?
How to confirm the amount of gratuity submitted by the directors of the company?
DEFENSE ADVOCATE.-firmaction@g
(Expert) 23 June 2013
It is very late now. You could have put spanner while auction process was on.
Now you must take all the accounts.If any surplus than only you can claim.
Other option is pick holes in auction process and claim damages from lender but it will be costly legal procedure.If you have staying power than only you can get even more than what you can bite.
Nadeem Qureshi
(Expert) 23 June 2013
Dear Querist
Its depend on the company.
the company is Pvt. Ltd or LTD?
Type of Loan?
Mortgage Property?
auction? Bid? Statement? all these thing
so as per my opinion you should contact a lawyer personally with all the documents
c.p.s. ramachary
(Expert) 24 June 2013
Directors of a company do not come under definition of employee as per "Payment of Gratuity Act 1952". Hence they are not entitled to gratuity. Therefore no such claim need be entertained
Raj Kumar Makkad
(Expert) 25 June 2013
Directors except executive director have no entitlement of gratuity hence their claim is no tenable under law.
prabhakar singh
(Expert) 25 June 2013
The question is interesting and of legal importance but unfortunately i have no idea about the correct answer.
Yet have a feel that answers given are conflicting and qualifying.
I would request experts who have addressed this query to provide reasoned answer with reference to provisions of law which convinces them to answer so.
Further I would seek answers from those experts who practice labor and service laws.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 25 June 2013
1) The person has referred only about gratuity but he had other rights also apart from any labor or service law.
2) Directors can seek compensation for loss of office and loss of opportunity since the lender had taken possession of property illegally and sold it without following due process of law.
This situation has not been mentioned in so many words but it is what happens in such cases.
3) Now the act absolves the lender from such liability u/s 16 but it also confirms that such liability exists.
4) Now all such liabilities are only against the company by the directors but since the company is now remained only on paper so how to make claim and recover.
5) But there is lengthy and expansive procedure that is to take legal action against the whole process of taking possession and auction of properties of the company by the lender.
Banks never follow the proper procedure as laid in the law.
There are two current glaring examples.
One is of Mallya . He is factually wrong still even inland and even foreign lenders are dancing to his tunes because just because the laws are so clumsy that it is not possible to follow the proper procedure.
The second current example is of SAHARA group. They are factually correct.They had all the permissions to accept deposits. But they made mistake of opposing Govt action from the top and so got trapped. Had to deposit about SIX THOUSAND crores with SEBI and all personal properties are attached.
6) So in these circumstances If the person can sustain and bear expanses than only the lender will have to come to terms.
K.K.Ganguly
(Expert) 25 June 2013
1. Things are not clear,
2. Has the Bank auction sold the immoveable property of the Factory of a Company which was mortgaged with it for creating security interest on a loan provided to the Company, to realise its debt?
3. If yes, then the Bank has to realise its outsnading debt only alongwith permitted cost & pay the balance amount to the Bank,
4. If the amount realised is less than the outstanding debt, then the Directors gratuity can not be paid from the realised amount since Directors are not employees.
DEFENSE ADVOCATE.-firmaction@g
(Expert) 25 June 2013
Gratuity is very minor issue and as Ld expert Ramachary said it is not even applicable to the Directors.
Even the person if he was a Director is not aware of his rights from the defunct co regarding loss of office and loss of opportunity. SARFAESI act accepts it but absolved the lender from its liability.
