2013 (10) TMI 1474 - HC - Companies Law

Summary

Issues Involved:
1. Relevant date for calculating workmen's dues.
2. Components of workmen's dues to be paid on priority.
3. Entitlement of Badli workers to compensation and benefits.

Summary:

Relevant Date for Calculating Workmen's Dues:
The primary issue was whether the dues of workmen should be calculated up to the date of the winding-up order or the appointment of the Provisional Liquidator. The court concluded that the Companies Act, 1956, specifically u/s 445(3), deems the winding-up order as the notice of discharge for employees unless the business is continued. The court held that the appointment of a Provisional Liquidator does not terminate the services of workmen. Therefore, the relevant date for calculating workmen's dues is the date of the winding-up order, which is 5 September 2005, not the date of the appointment of the Provisional Liquidator.

Components of Workmen's Dues to be Paid on Priority:
The court examined the components of workmen's dues entitled to priority u/s 529A. It upheld the Official Liquidator's decision based on the judgments in *Engineering Workers Association* and *Jubilee Mills*, which construed "wages" with reference to the definition in the Industrial Disputes Act. The court confirmed that bonus is not included in the priority dues. The Official Liquidator was directed to recalculate the dues, including gratuity and retrenchment compensation, up to the date of winding up, 5 September 2005. The court also emphasized that Provident Fund claims should be pursued by the Provident Fund Commissioner, and the Official Liquidator should assist in this process.

Entitlement of Badli Workers to Compensation and Benefits:
The court addressed the entitlement of Badli workers to compensation, referencing the Supreme Court's decision in *Prakash Cotton Mills*, which held that Badli workers, who do not have a guaranteed right to employment, are not entitled to closure compensation. However, the court allowed Badli workers to demonstrate that they had completed the stipulated number of days to be considered as regular employees and directed the Official Liquidator to consider such claims accordingly.

Conclusion:
The court directed the Official Liquidator to recalculate the dues of workmen by considering 5 September 2005 as the date of severance and to include the components as per the judgments in *Engineering Workers Association* and *Jubilee Mills*. The Official Liquidator was also instructed to engage with the Provident Fund Commissioner for the recovery of provident fund dues and to allow Badli workers to present evidence of their service duration. The application was disposed of with no costs.