Industrial closure compensation and winding-up interest are governed by statutory limits, not automatic reduced liability or higher interest rates.

Closure of an industrial undertaking is compensable under the main rule in section 25FFF(1) of the Industrial Disputes Act, 1947 unless the employer proves closure was due to unavoidable circumstances beyond its control. Financial difficulties and accumulation of stocks do not, by themselves, bring the case within the proviso, and a winding-up order does not automatically convert the closure into one falling under the restricted liability provision. In winding-up proceedings, workmen's admitted dues are subject to the Companies (Court) Rules, 1959, and interest on such claims is confined by Rule 156 to the statutory limit, not an enhanced contractual or equitable rate.

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Issues: (i) whether the closure of the undertaking following stoppage of work and winding up attracted the main rule in section 25FFF(1) of the Industrial Disputes Act, 1947 or only the limited compensation under its proviso; and (ii) whether interest on the workmen's admitted dues could be awarded at 12 per cent per annum or was confined by the Companies (Court) Rules, 1959.

Issue (i): Whether the closure of the undertaking following stoppage of work and winding up attracted the main rule in section 25FFF(1) of the Industrial Disputes Act, 1947 or only the limited compensation under its proviso.

Analysis: Section 25FFF(1) treats closure as a compensable event and the proviso restricts compensation only where closure is due to unavoidable circumstances beyond the control of the employer. The Explanation excludes closure merely because of financial difficulties or accumulation of stocks from that limited category. The closure here had in fact occurred before the winding-up notice, and the stoppage of work was caused by financial difficulties and accumulation of undisposed stocks. The statutory consequence of a winding-up order under section 445(3) of the Companies Act, 1956 does not by itself convert every closure into one caused by unavoidable circumstances. The facts must show that the employer was compelled to close without fault or facilitation on its part. On the recorded facts, the employer was not entitled to the restricted liability under the proviso.

Conclusion: The workmen were entitled to compensation under the main part of section 25FFF(1) of the Industrial Disputes Act, 1947 and not merely to the limited three months' compensation under the proviso.

Issue (ii): Whether interest on the workmen's admitted dues could be awarded at 12 per cent per annum or was confined by the Companies (Court) Rules, 1959.

Analysis: The claim arose in winding up, where workmen's dues rank with secured creditors to the extent provided by section 529 of the Companies Act, 1956, and interest on overdue debts in such proceedings is governed by Rule 156 of the Companies (Court) Rules, 1959. That rule limits proof for interest to a rate not exceeding 4 per cent per annum up to the winding-up date in the circumstances specified by it. The award of 12 per cent interest was therefore inconsistent with the statutory rule governing liquidation claims.

Conclusion: Interest was confined to 4 per cent per annum in accordance with Rule 156 of the Companies (Court) Rules, 1959.

Final Conclusion: The appeals failed on the substantive compensation issue, while the interest component required reduction to the statutory limit applicable in winding up.

Ratio Decidendi: Closure of an industrial undertaking is not automatically treated as arising from unavoidable circumstances merely because it follows a winding-up order; the employer must establish the factual basis for the proviso to section 25FFF(1), and interest on liquidation claims is controlled by the specific winding-up rules.

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