Secured Creditor Is Obligated To Contribute Towards Workmen's Dues When Security Interest Is Realised Under SARFAESI Act: NCLAT

The NCLAT (National Company Law Appellate Tribunal) has ruled that a secured creditor is obligated to contribute towards workmen's dues when security interest is realized under the SARFAESI Act. This crucial decision prioritizes the welfare of workers during debt recovery processes. When a secured creditor enforces its security interest (e.g., by selling secured assets) under SARFAESI, the proceeds must first cater to the dues of workmen before being fully appropriated by the secured creditor. This ensures that employees' legitimate claims are protected even during financial distress.