Workmen's right to be heard in winding-up proceedings upheld where livelihood and employment are directly at stake.

Workmen facing the civil consequences of a winding-up petition were held entitled to be heard through their unions at the admission stage and before appointment of a provisional liquidator. The majority held that the Companies Act, 1956 does not expressly bar such participation, Rule 34 of the Companies (Court) Rules, 1959 is procedural, and the principles of audi alteram partem and social justice support a hearing where employment and livelihood may be affected. It further held that union applications on behalf of workmen were maintainable. The dissent held that no such right exists for employees under the Act and that any wider protection must come from legislation.

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Issues: Whether the workmen of a company, through their unions, have a right to appear and be heard in a petition for winding up of the company, including at the stage of admission and before appointment of a provisional liquidator; and whether the absence of an express provision in the Companies Act, 1956 excludes such participation.

Analysis: The majority held that a winding-up order has direct civil consequences for workmen because it may terminate employment and affect livelihood. The Companies Act, 1956 does not expressly prohibit workmen from being heard, and the statutory scheme confers rights on creditors and contributories at the winding-up stage because their interests are directly affected after liquidation has commenced; that scheme does not negate a hearing for workmen at the stage when the court is deciding whether the company should be wound up at all. Rule 34 of the Companies (Court) Rules, 1959 was treated as procedural and not as confining appearance only to creditors and contributories. The majority further relied on the constitutional policy of social justice, including Article 43A, and on the principle of audi alteram partem to hold that workers whose livelihood is at stake must be allowed to intervene and make submissions. The fact that the applications were made by trade unions did not defeat the claim, because they were in substance applications on behalf of the workmen represented by them.

Conclusion: The workmen were held entitled to appear and be heard in opposition to or in support of the winding-up petition, and also to seek a hearing in relation to the provisional liquidator application.

Dissenting Opinion: Venkataramiah, J., with Amarendra Nath Sen, J., held that the Companies Act, 1956 and the Rules confer no such right on employees in their capacity as employees, that Rule 34 is only procedural, and that any broader protection for workmen must come from legislation, not judicial expansion. On that view, the trade unions were not necessary or proper parties to the winding-up petition.

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