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2013 (1) TMI 226 - HC - Companies LawWinding up proceedings - rights of Secured Creditors and workmen - almost 11 years have passed since the date on which the order for winding up of the company (i.e. 27.12.2001) came to be passed - Held that:- A plain reading of the Sec. 2(s) of the Act of 1947 clarifies that except the persons who stand covered under the exclusion clause all persons employed to do manual unskilled, skilled, technical, operational, clerical or even supervisory work for hire or reward are covered within the meaning of the term workmen.According to the said section, those persons who are "mainly" employed in managerial or administrative category (i.e. such duty should not be "incidental" to main duty) and/or those who are employed in supervisory category with wages exceeding prescribed limit stand excluded from the term "workmen" and consequently they would stand excluded for the purpose of section 529, section 529 A and section 530 of the Act. Therefore the submission that all those persons who were drawing Basic wages exceeding Rs. 2000/- should have been excluded, without having regard to the issue as to whether they were employed "mainly" in managerial or administrative capacity or were employed in supervisory capacity with wages exceeding prescribed limit, or not is not in consonance with the relevant provision. As the matter is required to be examined from the perspective that the company in liquidation was an engineering undertaking and that therefore while excluding the persons from the purview of the term "workmen", regard is required to be had to the definition under section 2(s) of the Act of 1947. Differently put all persons who were employed in supervisory category would not stand excluded only because they were employed in supervisory category unless each was drawing wages exceeding prescribed limit. Similarly merely because a person was drawing wages exceeding prescribed limit, he would not stand excluded (according to section 2(s) of Act of 1947), unless he was employed in supervisory category. Of course all persons employed mainly and purely in administrative or managerial capacity/category, would stand excluded. Out of the total claim amount which is determined by the chartered accountant i.e. quantification of workmen's claim, the amount allowed towards claim for wages towards privilege leave/earned leave shall be taken out. The said claim is not permissible for purpose of disbursement under Section 529A, and could not have been included in the quantification of workmen's claim. Therefore, to that extent correction shall be carried out by the chartered accountant. It is also held that in certain circumstances the secured creditors can come before the Company Court and claim priority over other creditors even though the said creditor is standing outside the winding up. On the premise that the secured creditor is standing outside the winding or that it has not relinquished its security, the disbursement under section 529-A of the Act cannot be denied to the secured creditors on the said ground, when the property over which the said secured creditors has a charge and such charge is registered under Section 125 of the Act is sold by the official liquidator and sale proceeds are received by official liquidator and are put up for disbursement under section 529-A of the Act. Creditors other than the workmen are concerned their inter-se rights (including right of priority in receiving disbursement) based on the nature and extent of charge held by them are not obliterated vis-a-vis the workmen. The provisions under section 529 and section 529-A of the Act do not, in any manner, admit or support the contention that while determining the distribution ratio for the purpose of distribution amongst the secured creditors and the workers, the debt of the secured creditors holding second charge should be excluded. The claim/debt of the secured creditors holding second charge is not to be excluded at the time of determining the distribution ratio for the purpose of distribution/payment between the secured creditors and the workmen. Workmen's claim that the dues of the mutual fund do not enjoy first charge over the properties and therefore the said claim should not have been included - As the objection against inclusion of the debt of secured creditors holding second charge is rejected, the aforesaid objection also stands rejected. The "distribution ratio" will have to be respondent-calculated and shall have to be determined afresh. Thus, the chartered accountant shall complete the entire process within two weeks and for that purpose official liquidator shall forward appropriate intimation with copy of this order to the chartered accountant. Two weeks time is granted to the secured creditors and the workmen to submit the details with supporting documents, to point out case of particular workmen, if any, in whose cases any error with regard to date of birth (and consequently in determining date of superannuation) or date of joining or date of death (in cases where any workman has died) or with regard to the wage as on relevant date (basic wage or VDA/FDA) have actually occurred. The chartered accountant shall verify as to whether cases of any person employed as senior engineer, senior engineer (project), senior programmer and senior officer treating basic wage of more than Rs. 2000/- or not and if any case of such category is found then claim of such person shall be taken out of the total claim of workmen and necessary correction shall be accordingly made. Claim of State Bank of Patiala - the claim in the sum of Rs. 27,19,360/- which is allowed by the chartered accountant vide report dated 17.2.2009 is not permissible at this stage of disbursement under Section 529A of the Act and that therefore the said amount will have to be taken out from the total claim amount quantified by the chartered accountant for State Bank of Patiala and necessary correction shall be made by the chartered accountant.
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