TMI Blog2001 (8) TMI 1302X X X X Extracts X X X X X X X X Extracts X X X X ..... e union in the particulars of claim (exhibit G) to the tune of Rs. 4,58,47,593.74 comprising wages for December 1999, 30 days gratuity, 30 days compensation, leave wages, wages and dearness allowance. 2. The respondent-company has filed affidavit-in-reply of its managing director disputing the whole claim and contentions of the union. It has contended that the activities of the company were stopped in or about April 1994, and that the company was closed. It has challenged the claim of the union for wages till December 1999, as the employees have not done any work and that they were gainfully employed elsewhere. It has also questioned the legality of the other items and their factual correctness. It has mainly contended that the employees and the union have alternative remedies under various labour laws, i.e., the Industrial Disputes Act, 1947, the Payment of Gratuity Act, 1972, etc., and that the union has already filed one complaint of unfair labour practice under the provisions of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971, on behalf of some of the employees and the same is pending for final disposal before the Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlements governing the service conditions of the employees. Shri Kapadia has further submitted that the alleged claim will have to be properly determined and computed in accordance with law by the appropriate forum specifically created for such purpose. According to the learned counsel, there are major miscalculations in the chart of the claims prepared by the union and that the Company Court cannot undertake such onerous exercise to compute the correct legal dues of the concerned employees. He has further pointed out that the company has a lready challenged the decisions of the BIFR/AIFR recommending winding up of the company under article 226 of the Constitution and is awaiting the hearing of its writ petition before this Court. Shri Kapadia further submits that it has paid and satisfied all its creditors and by November 2001, the bank debt to the tune of Rs. 1 crore and 40 lakhs would be paid. He has also pointed out that no creditor has filed a winding up petition. According to him, it is not that the company is unable to pay its debt. He reiterates that his clients have already deposited the admitted dues of the VRS employees and the company was further ready and willing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving been conferred on the workers, they cannot prefer a winding up petition against a company. But from this exclusion of the workers from the right to present a winding up petition, it does not follow as a necessary consequence that the workers have no right to appear and be heard in a winding up petition filed by one or more of the persons specified in section 439. It may be that the workers have no right to present a winding up petition against the company, but if a winding up petition is properly filed by any of the persons entitled to do so under section 439, they may still be entitled to appear and be heard in support of or in opposition to the winding up petition. That would depend upon whether their interest is likely to be affected by any order which may be made on the winding up petition. The next section relied upon by respondent Nos. 6 to 9 was section 440 which says that where a company is being wound up voluntarily or subject to the supervision of the court, a petition for its winding up by court may be presented by any person authorised to do so under section 439 or the official liquidator, but the court shall not make a winding up order, unless it is satisfied tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sist, the workers would be employed in the enterprise which is being run by the company and they would be earning their livelihood from such employment, but if an order for winding up is made, their services would, except in cases where the business of the company is continued, stand terminated by reason of sub-section (3) of section 445, which provides that a winding up order shall be deemed to be notice of discharge to the officers and employees of the company except when the business of the company is continued . Ordinarily when a winding up order is made, the business of the company would cease to continue and even if the liquidator is authorised to carry on the business, such continuance would be only for the beneficial winding up of the company and the logical and inevitable end would be the ultimate discontinuance of the business. The making of a winding up order on a petition for winding up would, therefore, almost certainly have an adverse consequence on the workers inasmuch as the continuance of their service would be seriously jeopardised and their right to work and earn their livelihood would be disastrously imperilled. Now, it is an elementary principle of law, well-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company is not given to the workers it does not mean that they cannot appear to support or oppose a winding up petition which is properly filed by one or the other persons specified in section 439. There would, in fact, be no point in conferring the right to apply for winding up of a company on the workers since they cannot have any interest in demolishing the enterprise which is the source of their livelihood and particularly when the only effect of the winding up order would be to render them unemployed and to bring about the winding up of the company for the benefit of the creditors and the contributories. So also the circumstance that the right to be consulted or to make applications in the course of the winding up of a company is conferred only to the creditors and the contributories does not in any way militate against the right of the workers to appear and be heard in the winding up petition because once the winding up order is made the assets of the company have to be realised, the creditors have to be paid and if there is any surplus, it has to be distributed among the contributories and, therefore, at that stage it is only the creditors and the contributories who have an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors of a company to enable them to maintain a winding up petition and that is the efficacious and legitimate remedy provided by the Central and the State Legislatures for recovery of their dues. There are 4 main enactments arming the unions and the employees to recover their dues from their employers, viz., the Industrial Disputes Act, the Payment of Wages Act, 1936, the Payment of Gratuity Act, and the State Acts, viz., the Bombay Industrial Relations Act, 1946, and the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act. There are other special enactments which are self-contained codes providing for reme-dies for recovery of dues, such as the Employees State Insurance Act, 1948, the Employees Provident Funds and Miscellaneous Provisions Act, 1952 and the Workmen s Compensation Act, 1923. These enactments have created special machinery to deal with the disputes and the claims of the employees as expeditiously as possible free from the unnecessary and avoidable procedural shackles of the civil litigation. In the presence of expeditious and special remedy it would be absolutely unreasonable to allow a union and/or unpaid employees to abus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver the debt. The Supreme Court has held as under in the judgment of Hind Overseas (P.) Ltd. v. Raghunath Prasad Jhunjhunwalla [1976] 46 Comp. Cas. 91 : "Section 433( f ) under which this application has been made has to be read with section 443(2) of the Act. Under the latter provision where the petition is presented on the ground that it is just and equitable that the company should be wound up, the court may refuse to make an order of winding up if it is of opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy. Again, under sections 397 and 398 of the Act there are preventive provisions in the Act as a safeguard against oppression in management. These provisions also indicate that relief under section 433( f ) based on the just and equitable clause is in the nature of a last resort when other remedies are not efficacious enough to protect the general interests of the company." (p. 106) And further the Supreme Court in the case of Pradeshiya Industrial Investment Corpn. of U.P. v. North India Petro-chemical Ltd. [1994] 79 Comp. Cas. 835 has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holds that there are arguable issues and, therefore, the winding up petition has to be admitted. On this aspect the Courts below failed to note that the admission of the winding up petition is fraught with serious consequences as far as the appellant is concerned." (p. 44) 10. Section 443(2) of the Act which reads as under, has clinched the point: "(2) Where the petition is presented on the ground that it is just and equitable that the company should be wound up, the court may refuse to make an order of winding up, if it is of opinion that some other remedy is available to the petitioners and that they are acting unreasonably in seeking to have the company wound up instead of pursuing that other remedy." 11. Malice, ulterior motives, trade union rivalry and unscrupulous trade union leaders getting set up by the rivals in the trade and industry cannot be ruled out in the present days when the tribe of honest dedicated trade union leaders is getting vanished. By construing section 439 neither the trade unions nor the employees, even if unpaid, can be added as a class of creditors to exercise the right to file petition for winding up a company. It would prove to be an addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
