TMI Blog1999 (5) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... ined as parties respondent. The Industrial Development Bank of India (IDBI), the Industrial Investment Bank of India (IIBI) and the Industrial Credit and Investment Corporation of India (ICICI) are also joined as respondents though there is some dispute about their status as seemed creditors. That dispute is the subject-matter of another application. That dispute is not being adjudicated by this court at this stage since with the consent of learned counsel for the parties, the only controversy which is being resolved is about the scope of the expressions "workmen" and "workmen's dues" as defined by sub-section (3) of section 529 of the Companies Act, 1956 (hereinafter referred to as "the Act"). FACTS Before delineating the contours of the controversy, a few facts leading to the filing of this application may be stated. Jubilee Mills Ltd., a company registered under the Act was engaged in the business of manufacturing textiles. At the instance of some of its creditors, the company was ordered to be wound up as per the order passed by this court on September 5, 1989, in Company Petition No. 139 of 1986. The official liquidator (respondent No. 1 herein) was appointed as the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id claim. The claims are made on behalf of all the categories of employees, workers, clerks, supervisors, semi clerks and officers. Substantial claims are made on behalf of the category called "workers". Since these claims made in the present application are not peculiar to workmen of the company in question alone, but the controversy about admissibility of the claims of workmen under the aforesaid different heads for the purposes of priority under sections 529 and 529A has been ranging in a large number of other companies in liquidation, the court has permitted the other learned advocates to intervene. Statutory provisions and the underlying object : Before the official liquidator or for that matter, workers can enforce their charge against realization of security, the extent of their proportion in the security has to be determined with reference to the total amount due to the secured creditors and the total amount due to the workers on the relevant date, that is to say as on the date of winding up. Security by way of pari passu charge in favour of the workers is created ex hypothesi simultaneously with the making of the winding up order by operation of statute and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relevant provision falling for consideration in the present order reads as under : "(3) For the purposes of this section, section 529A and section 530, ( a )'workmen', in relation to a company, means the employees of the company, being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947) ; ( b )'workmen's dues', in relation to a company, means the aggregate of the following sums due from the company to its workmen, namely: ( i )all wages or salary including wages payable for time or piecework and salary earned wholly or in part by way of commission of any workman, in respect of services rendered to the company and any compensation payable to any workman under any of the provisions of the Industrial Disputes Act, 1947 (14 of 1947) ; ( ii )all accrued holiday remuneration becoming payable to any workman, or in the case of his death to any other person in his right, on the termination of his employment before, or by the effect of, the winding up order or resolution ; ( iii )(subject to certain exceptions), all amounts due in respect of any compensation or liability for compensation under the Workmen's Compensation Act, 1923, in respect of the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s within the twelve months, next before the relevant date, subject to the limit specified in sub-section (2) ; (Rs. 20,000 in case of one claimant, vide G.S.R. No. 80(E) ([1997] 89 Comp Cas (St.) 12.) dated February 17, 1997). ( c )all accrued holiday remuneration becoming payable to any employee, or in the case of his death to any other person in his right, on the termination of his employment before or by the effect of, the winding up order of resolution ; ( d )... all amounts due, in respect of contributions payable during" the twelve months next before the relevant date, by the company as the employer of any persons, under the Employees' State Insurance Act, 1948 (54 of 1948), or any other law for the time being in force ; ( e )... all amounts due in respect of any compensation or liability for compensation under the Workmen's Compensation Act, 1923, in respect of the death or disablement of any employee of the company ; ( f )all sums due to any employee from a provident fund, a pension fund, a gratuity fund, or any other fund for the welfare of the employees, maintained by the company ; and... (2) the sum to which priority is to be given under clause ( b ) of subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company." Contours of controversy: In view of the aforesaid statutory provisions, the applicant union has, for the purposes of sections 529 and 529A of the Act, claimed priority for sums under the heads enumerated hereinafter in respect of a number of workmen and have also claimed interest on such amounts. (1) Unpaid wages /salary for the period of illegal closure : All wages or salary referred to in sub-clause ( i ) of clause ( b ) of section 529(3) include all wages or salary till the date of making of the winding up order which is deemed to be notice of discharge to the officers and employees of the company (except when the business of the company is continued) as provided in section 445(3) of the Act. While according to the workmen, this claim would include all wages and salary of the workmen for the entire period up to the date of the winding up order including the period of illegal closure, according to the secured creditors what is covered by sub-clause ( i ) is only wages or salary in respect of services actually rendered till the date of closure and, therefore, wages or salary during the period of closure (whether legal or illegal) is not admissible for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs the provisions of the Payment of Bonus Act, 1965. On the other hand, according to the secured creditors, the claim for bonus whether under the Payment of Bonus Act, 1965, or otherwise, would not fall within the definition of all wages or salary as referred to in sub-clause ( i ) of section 529(3)( b ) of the Act. (8) Notice pay : According to the workmen, the wages/salary payable to the workmen in lieu of notice pay for retrenchment of the workmen payable to them under the provisions of sections 25F, 25FF and 25FFF and similar other provisions of the Industrial Disputes Act, 1947, or under any other provision of law would be admissible for the purposes of priority. According to the secured creditors, this claim would not be admissible as what is admissible would be only retrenchment compensation payable to workmen under the provisions of the Industrial Disputes Act, 1947. (9)Who are the employees excluded from the definition of workmen under section 529(3)( a )? (10)Whether interest on dues of workmen/employees or on dues of secured creditors is admissible for the purposes of priority under sections 529, 529A and 530 of the Act. Discussion : Preliminary objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proceedings in winding up the company and perform such duties in reference thereto as the court may impose". Section 457(1) provides "the liquidator in a winding up by the court shall have power, with the sanction of the court, ... ( e ) to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets... (3) The exercise by the liquidator in a winding up by the court of the powers conferred by this section shall be subject to the control of the court ; and any creditor or contributory may apply to the court with respect to the exercise or proposed exercise of any of the powers conferred by this section." It is thus clear that the official liquidator acts as the officer or agent of the court under the supervision and control of the court. Rules 147 to 179 of the Companies (Court) Rules are, therefore, required to be read in the light of the a foresaid provisions of the Act which confer jurisdiction on the court to give necessary directions to the liquidator in all matters and things as may be necessary for winding up the affairs of the company and distributing its assets and any creditor or contributory also has been gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burden of winding up and give immediate relief to creditors amongst whom the workmen stand first in the queue. Workmen and for that matter agencies representing them will serve this object well by lodging the claim in a proper manner before the liquidator for their admittance and not adopt the practice of making applications for ad hoc payments de hors proof of such claims, which invariably results in delay in disbursement of realisation, which has to wait until verification of the claim. No disbursement may be possible in the absence of lodging of claim. That will also result in speedy completion of winding up process." The Division Bench has thus emphasized on the need for quick lodging of the claims by the workmen and expeditious determination of such claims by the official liquidator. But in practice what has been happening all these years is that the workmen lodge their claims under all possible heads, the chartered accountants verify them, but the secured creditors dispute the admissibility of the claims under various heads and for one reason or another no progress is made in the matter of determination of the ratio of the workers' dues and the dues of the secured creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f illegal closure. All the parties and interveners have argued at length on this particular question. According to Mr. D. S. Vasavada for the applicant-Textile Labour Association, in the instant case closure of the textile mill from March 9, 1987, onwards was clearly illegal. The closure was in flagrant violation of the provisions of sections 25-O, 25FFA and 25FFF of the Industrial Disputes Act, 1947 (hereinafter referred to as "the I. D. Act"). The emphasis was laid on the provisions of sub-section (6) of section 25-O of the Industrial Disputes Act providing that where the closure is illegal on account of no application for permission having been made as required by sub-section (1) or where permission sought has been refused, the workmen are entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down. Mr. Vasavada, therefore, submitted that in view of the undisputed fact in the instant case that closure of the mill of the Jubilee Mills Ltd., from March 9, 1987, was without obtaining any permission under section 25-O of the Industrial Disputes Act, the necessary consequences must follow and, therefore, the workmen are ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had actually rendered services to the company and not to accord any priority to workmen's dues for the period when actual services were not rendered to the company. In support of the said contention, learned counsel referred to the following extract from the Statement of Objects and Reasons for the Amendment Act 25 of 1985, by which the proviso to sub-section (1) and sub-section (3) were added to section 529 of the Act. "The resources of the companies constitute a major segment of the material resources of the community and common good demands that the ownership and control of the resources of every company are so distributed that in the unfortunate event of its liquidation, workers, whose labour and effort constitute an invisible but easily perceivable part of the capital of the company are not deprived of their legitimate right to participate in the product of their labour and effort. It is, accordingly, proposed to amend sections 529 and 530 of the Companies Act and also to incorporate a new section in the Act, namely, section 529A (vide clauses 4, 5 and 6 of the Bill)." (as quoted in 58 Company Cases 186 Statutes) (emphasis supplied on behalf of the secured creditors). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, While referring to the provisions for payment of compensation under the Industrial Disputes Act, the Legislature has not made any reference to the provisions of section 25-O of the Industrial Disputes Act and, therefore, the legislative intent was not to give priority to the workmen for the benefit which the workmen are entitled to under section 25-O of the Industrial Disputes Act, but to limit the priority to wages and salary for the services actually rendered and to compensation payable under the Industrial Disputes Act. In the alternative, if under section 5129(3)( b )( i ) of the Act wages and salary were to include the wages for the period of illegal closure, the question whether the closure is legal or illegal is to be decided first by the Industrial Tribunal and it is only thereafter that the distribution could be effected under sections 529 and 529A. This would delay the distribution process and, therefore, the Legislature would not have intended to give any cause for such delay. The court has to interpret section 529(3)( b )( i ) as it stands. The court cannot fill in the gaps and introduce words which the Legislature has not written. Reliance is placed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a period of 60 days from the date on which such application is made to the employer. Sub-sections (4) and (5) are not relevant for the purposes of the present discussion as admittedly the company had not made any application for permission for closure under section 25-O of the Industrial Disputes Act. Sub-section (6) is now required to be quoted : "(6) Where no application for permission under sub-section (1) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down." Sub-section (7) is not relevant for the present purpose Sub-section (8) reads as under : "(8) Where an undertaking is permitted to be closed down under subsection (2) or where permission for closure is deemed to granted under sub-section (5), every workman who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... created only for some definite purpose and they are limited to the purpose for which they are created and should not be extended beyond their legitimate field. Hence, the question is what was the purpose for which the Legislature enacted section 25-O of the Industrial Disputes Act and particularly subsection (6) thereof and whether sections 529 and 529A of the Companies Act fall within the field covered by section 25-O(6) of the Industrial Disputes Act. Under sub-section (2) of section 25-O of the Industrial Disputes Act, the Government may grant or refuse to grant the employer permission to close down an undertaking of an industrial establishment, after giving an opportunity of hearing to the employer, workmen and persons interested in such closure, having" regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors. The absence of any such application of the employer under sub-section (1) or refusal of such permission by the Government under sub-section (2) would clearly indicate an absence of genuine and adequate reasons for closure and will also .indicate the interests of the general public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 25-O of the Industrial Disputes Act or section 529(3)( b ) of the Companies Act which can indicate even the slightest intention that the Legislature did not intend the legal fiction to be carried to its logical conclusion. Reference is also required to be made to sub-section (8)( a ) of section 530 of the Companies Act which provides that even where the workmen had not offered their services during the period of holiday or of absence from work through sickness or other good cause, any remuneration in respect of such period shall be deemed to be wages in respect of services rendered to the company during that period. This provision which is a part of the scheme providing for preferential treatment to the dues of the employees more than supports the view being taken by this court that when the statutory fiction contained in section 25-O(6) of the Industrial Disputes Act is read into section 529(3)( b )( i ) of the Companies Act, unpaid wages for the period of illegal closure do get priority under sections 529, 529A and 530 of the Companies Act. It would be inconceivable to hold that the Legislature which gives preferential treatment to the wages during the period of holid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n "services rendered to the bankrupt, but all that is required is that they should be rendered before the date of the receiving order and during the four months which may not be immediately prior to the four months before the date of the receiving order". The court was thus only concerned with the words "during the four months before the date of receiving order" and not really the words "services rendered to the bankrupt". In any case the court was not concerned with the situation where a statutory fiction was created by labour legislation, unlike in the instant case. The inescapable conclusion is that the expression "all wages or salary . .. in respect of services rendered to the company" in section 529(3)( b )( i ) of the Companies Act includes all wages or salary payable by the company to the workmen for the period of illegal closure. Ad hoc claim: On behalf of the workmen, it is submitted that ad hoc interim relief was granted by the award of the industrial court. Reliance is placed on the affidavit filed on behalf of the workmen with a copy of the award. It is, therefore, submitted that since the interim relief payable was not paid by the company it was required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n any of the provisions of the Industrial Disputes Act does fall within the definition of "workmen's dues" under section 520(3)( b )( i ) of the Companies Act and, therefore, there cannot be any controversy. Hence, it is not necessary to make reference to the decisions cited by learned counsel for the applicant-union in that behalf. The workmen who are discharged by reason of winding up are entitled to retrenchment compensation under the Industrial Disputes Act even if the winding up order is due to inability to pay the debts (vide Shri Madha v Mills Ltd., In re [1967-68] 32 FJR 315 ; AIR 1967 Bom 219). This is so because financial inability does not amount to unavoidable circumstances within the meaning of section 25FFF of the Industrial Disputes Act and also because section 25-O(8) of the Act also makes it clear that even when an undertaking is permitted to be closed down or is deemed to have been permitted to be closed down under section 25-O of the Act, every workman-employee therein shall be entitled to receive compensation which will be equivalent to fifteen days of average pay for every completed period of service or any part in excess of six months. It is inconceivable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work done in such employment and includes" ... Payment of Wages Act : "2( vi ) 'wages' means all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes ... ( b ) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period." This court then observed that while trying to determine what are the workmen's dues for the purpose of sections 529 and 529A of the Companies Act, the word "wages" will have to be understood in the same manner in which it is understood under the labour laws. The court, therefore, held that the workmen's dues for the purpose of sections 529 and 529A of the Companies Act will include wages payable to workmen for the unavailed privilege leave with a clarification that the extent of wages payable would depend upon the leave standing to the credit of the workmen and which has not lapsed. However, in the aforesaid decision, this court does not appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding priority given to the workmen's dues is only for their legitimate dues which cannot include any fiction of unavailed/refused privilege leave. This reasoning will apply with greater force to such claim for the period of legal closure. In view of the above discussion, the wages in lieu of unclaimed privilege leave/holiday remuneration during the period of closure (whether legal or illegal) would not qualify for priority under sections 529, 529A and 530 of the Act. The court would, of course, hasten to add that if under a contract of employment or any statutory provision the workman is entitled to get wages in lieu of unavailed/refused privilege leave during the period when the company was carrying on its manufacturing or business activities ( i.e. , for the period prior to the date of closure), the claim for such pre-closure unclaimed/refused privilege leave would fall within the definition of workmen's dues under section 529(3)( b )( ii ) for the purposes of priority under sections 529, 529A and 530 of the Companies Act. Compensation under the Workmen's Compensation Act : There is no controversy about the interpretation of this clause. Gratuity : As regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assets of the company must be subjected to all the charges in favour of the workmen which are statutorily imposed on the assets of the company either in the form of a direct charge or in the form of a liability to be charged to the provisions of the Land Revenue Code. Hence, the claim for gratuity is also covered by the statutory priority under sections 529, 529A and 530 of the Companies Act. Bonus : As far as the claim under this head is concerned, on behalf of the workmen, reliance is placed on the definition under the Payment of Wages Act and reference is also made to the decision of this court in Textile Labour Association v. Official Liquidator [1993] 1 LLJ 383 (Guj) ; Bala Subrahmanya Rajaram v. B.C. Patil [1957-58] 14 FJR 167 ; [1958] 1 LLJ 773 (SC); [1976] 1 LL] 511 and D.P. Kelkar v. Ambadas Keshav Bajaj, AIR 1971 Bom 124. It is vehemently contended that the concept of bonus as incorporated in the Payment of Bonus Act is to give the workmen right to get bonus as a statutory right irrespective of the fact whether the company makes any profit or not and without being linked with productivity of the workmen and, therefore, it falls within the definition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e definition of the term "wages" in the Payment of Wages Act, 1936, was with a definite purpose. The said Act was enacted for the purpose of enabling the workman to recover all his dues from the employer by approaching one and the same authority (except when any specific rights are conferred on a workman under a separate enactment with a separate authority constituted under the said Act such as the Provident Fund Act or the Payment of Gratuity Act) and, therefore, "bonus" payable under the terms of employment or under a settlement/award or a court order was also included in the definition of wages. Hence, the wide definition of "wages" under the Payment of Wages Act cannot be applied for all purposes irrespective of the underlying object or scheme of the provisions of the other statutes. The relevant provisions of sections 529 and 529A have been enacted to give priority to the workmen's dues and the said provisions expressly refer to the provisions of the Industrial Disputes Act which contain a narrow definition of "wages". The court must, therefore, proceed on the footing that the Legislature preferred the narrow definition of wages under the Industrial Disputes Act and not the wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the employment de hors the provisions of the Payment of Bonus Act. The following pertinent observations made by the Division Bench (Coram : Hon'ble the Chief Justice Mr. Kotwal and Hon'ble Mr. Justice Palekar) in the case reported in D.P. Kelkar v. Ambadas Keshav Bajaj, AIR 1971 Bom 124, would go to show that bonus is not a part of the wages, as ordinarily understood (headnote) . "When a payment, whether called bonus or not, is such that it can hardly be called remuneration, it would not be included under the definition of 'wages'. By the Payment of Bonus Act a term of the employment has been introduced binding on the employer and in favour of the employee to pay bonus. The expression 'term of employment' or 'under the terms of employment' used in section 2( vi ) cannot be read to imply merely contractual terms of employment. The bonus payable under the Payment of Bonus Act, 1965, amounts to 'wages' within the definition in section 2( iv )." In none of the cases cited at the Bar, the court was concerned with the question whether "bonus" would fall within the definition of "workmen's dues" for the purpose of priority under section 529(3)( b ) of the Companies Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kmen's dues" qualifying for priority under sections 529 and 529A of the Companies Act. Learned counsel for the applicant-union has, of course, relied on the decision of the Kerala High Court in State of Kerala v. Official Liquidator, Sitharam Spg. and Wvg. Mills Ltd. [1979] 49 Comp Cas 335 . The Kerala case was concerned with the provisions of section 530(1) prior to amendment of sections 529 and 530 and insertion of section 529A in 1985. This court is not in a position to agree with the view taken therein for the reasons already given in paras. 18.1, 18.2 and paras. 17.4 to 17.8 hereinabove (pages 220-21 and 218-220). Moreover, the Kerala High Court, while adopting the wider definition of wages, appears to have been influenced by the provision that under section 230(1)( b ) of the 1913 Act, preference was limited to wages for only two months immediately prior to the date of the winding up order, which period is now increased to four months subject to the limit of Rs. 20,000 as per notification dated February 17, 1997, under section 530(2). However, now the material difference is that priority for workmen's dues under sections 529 and 529A is for an unlimited amount, whereas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( i )Manager ; ( ii )Factory manager ; ( iii )Secretary ; ( iv )Spinning master/Manager ; ( v )Weaving master/Manager ; ( vi )Processing master/Manager ; ( vii )Printing master/Manager ; ( viii )Sales manager ; ( ix )Sales executive ; ( x )Doctor ; ( xi )Administrative officers and other officers drawing the basic wages exceeding Rs. 2,000. There can be no controversy for exclusion of the first nine categories as they would fall under exclusionary clause ( iii ) in section 2( s ) of the Industrial Disputes Act. As far as category ( x ) i.e. , doctor is concerned, there is no claim on behalf of the Textile Labour Association that the said category be included in the definition of workmen. However, there is some scope for controversy regarding category ( xi ) whether it would fall within the exclusion clause ( iv ) of the definition of workmen under the Industrial Disputes Act. It is also pertinent to note that the definition of "employee" under the Bombay Industrial Relations Act, 1946 ("the BIR Act"), is different from the definition of "workmen" under the Industrial Disputes Act. Section 2(13) of the Bombay Industrial Relations Act, 1946, in so far as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company as an internal auditor on a monthly salary and his duties were mainly reporting and checking up on behalf of the management but he had no independent right or authority to take decision and his decision did not bind the company. It was held that a checker on behalf of the management or employer is not a supervisor and that the internal auditor was a workman. The courts have laid down that in order to decide whether an employee is a workman, the court has to decide as to whether the work performed by him is of a supervisory or managerial nature. The label by which the post was advertised is of no consequence. The criteria is primary and basic duties and not incidental duties (Arkal Govind Raj Rao v. Ciba Geigy of India Ltd, [1985] 67 FJR 102 ; AIR 1985 SC 985). The apex court has also observed that sometimes high-sounding nomenclature is adopted not only to inflate the ego of the employee but primarily for avoiding the application of the Industrial Disputes Act. In view of the above discussion, the court would proceed on the basis that a person employed in a textile mill in the State of Gujarat and drawing monthly basic pay of Rs. 2,000 or less (excluding allowances) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of ratio as well as for the purpose of priority payment under sections 529 and 529A and also for the purpose of preferential payment under section 530 of the Act, the relevant date would mean the date of the first appointment of a provisional liquidator and if no such appointment is made, the date of the winding up order. A similar view is taken in the decision of the Division Bench of this court in Industrial Credit and Investment Corporation of India Ltd. v. Textile Labour Association (O. J. Appeals Nos. 80 and 81 of 1998, dated November 3/4, 1998), as also in the case of Kerala Financial Corporation v. Official Liquidator, High Court of Kerala [1996] 87 Comp Cas 183 (Ker) and in the case of S. Anthony Raj v. A Shanmugam [1994] 80 Comp Cas 531 (Mad). The dues of the workmen as well as the dues of the secured creditors are first required to be determined as on the aforesaid relevant date which is generally the date of the winding up order and, therefore, no interest is to be calculated for the period after the date of the winding up order either on the dues of the secured creditors or on the dues of the workmen. The question of payment of interest thereon after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remuneration becoming payable to any workman on the termination of his employment before, or by the effect, of the winding up order as mentioned in clause ( ii ) of section 529(3)( b ) includes such claim for the period immediately prior to the date of closure but it does not include such claim for the period of closure, whether closure is legal or illegal. (5)Compensation under the Workmen's Compensation Act, 1923, is admissible for the purpose of priority under the Act as per the provisions of section 529(3)( b )( iii ). (6)The claim for gratuity under the Payment of Gratuity Act, 1972, is covered by the provisions of section 529(3)( b )( iv ) of the Companies Act, irrespective of the fact whether the company had established or maintained a gratuity fund and the qualifying period for the purpose of computing gratuity, pension and provident fund shall include the period of illegal closure. (7)The claim for notice pay under the provisions of the Industrial Disputes Act, 1947, or under any other law is not admissible for the purposes of priority under the Act. (8)The claim for bonus, whether under the Payment of Bonus Act, 1965, or otherwise, is not admissible for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e week from the date of receiving the copy of the summary, any details of the claims submitted for the workmen's dues, the same shall be supplied by the official liquidator to the secured creditors/financial institutions at their costs. Within one month from the date of receipt of the summary of claims for workmen's dues, the objections, if any, on behalf of the secured creditors or financial institutions shall be submitted to the official liquidator with a copy to the Textile Labour Association. The official liquidator shall thereafter submit the claims as well as objections for verification to the concerned chartered accountants who had earlier verified the claims of workmen's dues. The chartered accountants shall submit their verification report within two months from the date of receipt of the instructions from the official liquidator along with the aforesaid material and the report shall be placed before the court. In order to see that the ratio between the workmen's dues and the dues of the secured creditors over the security realized can be determined expeditiously, the secured creditors or the parties claiming to be secured creditors shall submit before the official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial liquidator as on February 15, 1999), there will be no possibility of recovery of any amount from the gross block of workmen's dues. Similarly the secured creditors can be paid 10 per cent. of their dues, but there is inter se dispute amongst the secured creditors and financial institutions as to which creditor can be paid out of sale proceeds of which assets of the company in liquidation. Hence, there will be no interim payment to secured creditors or to financial institutions but 10 per cent. of their respective claims can be safely deposited with them out of the aforesaid amount of Rs. 4.23 crores lying with the official liquidator. Accordingly, within one month from the date the Textile Labour Association submits the revised claims for dues of workmen of Jubilee Mills Ltd., the official liquidator shall disburse 10 per cent. of the dues of the workmen as computed in the revised claims. The official liquidator shall make the above payments by account payee cheques in favour of the individual workmen or in case of death in favour of the legal representatives of the deceased workmen after proper identification and in the presence of the authorised representative of the Tex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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