2002 (7) TMI 578 - HC - Companies Law

Courts allow impleadment in Electronics India liquidation, order eviction of ex-employees from company quarters

Electronics Ltd., In re

The court allowed the impleadment of ex-workmen/ex-officers in the liquidation proceedings of Electronics India. It ordered the eviction of ex-employees ... Winding up - Consequences of Issues Involved:1. Impleadment of ex-workmen/ex-officers in liquidation proceedings.2. Maintenance of status quo and eviction of ex-employees from company quarters.3. Applicability of Industrial Disputes Act (I.D. Act) provisions in the context of company liquidation.4. Legal obligations and rights of the official liquidator and ex-employees.5. Judicial directions for eviction and sale of company properties.Detailed Analysis:1. Impleadment of Ex-Workmen/Ex-Officers in Liquidation Proceedings:The application filed by fifty-two ex-workmen/ex-officers of the company to be impleaded as a party to the liquidation proceedings was allowed. The court noted that all these individuals had already been heard, and thus, they were deemed parties to the present proceedings. The filing of fresh Memo of Parties was dismissed.2. Maintenance of Status Quo and Eviction of Ex-Employees from Company Quarters:Electronics India (in Liquidation) was ordered to be wound up on 20-5-1998. The application (CA 450 of 2001) filed under rule 9 of the Company Court Rules sought maintenance of status quo regarding several quarters occupied by ex-employees. The court noted that possession of some premises had already been taken over by the official liquidator. Orders were passed directing the official liquidator to take urgent steps to evict the employees and take possession of the properties, authorizing police assistance if necessary.3. Applicability of Industrial Disputes Act (I.D. Act) Provisions in the Context of Company Liquidation:The court examined whether the provisions of the I.D. Act override section 445(3) of the Companies Act, 1956. The court concluded that the I.D. Act is concerned with industrial disputes and does not directly apply to the vacation of quarters allotted to workmen. It was noted that upon the passing of winding-up orders, all employees stand discharged forthwith under section 445(3). The court referenced several judgments, including National Textile Workers' Union v. P.R. Ramakrishnan, to support this conclusion.4. Legal Obligations and Rights of the Official Liquidator and Ex-Employees:The court emphasized that the official liquidator is responsible for taking possession of the company's properties and assets. Section 630 of the Companies Act provides for prosecution if any officer or employee wrongfully withholds company property. The court also referenced rule 9 of the Companies (Court) Rules, 1959, and sections 446 and 456(2) of the Act, which state that all properties and assets of the company are deemed to be in the custody of the court from the date of the winding-up order.5. Judicial Directions for Eviction and Sale of Company Properties:The court directed the official liquidator to take effective steps to evict the employees from the staff quarters, authorizing police assistance if necessary. The court noted that the applicants' conduct indicated mala fides and dilatory tactics. The court dismissed CA No. 450 of 2001, CA No. 1882 of 2001, and CA No. 661 of 2002, stating that the position adopted by the applicants was detrimental to the common weal of the entire workforce. The official liquidator was directed to carry out the eviction within seven days and file a report within two weeks.Conclusion:The court addressed multiple issues related to the liquidation proceedings of Electronics India, including the impleadment of ex-workmen, the eviction of ex-employees from company quarters, and the applicability of the I.D. Act. The court upheld the official liquidator's authority to take possession of the company's properties and directed immediate eviction of the ex-employees to facilitate the liquidation process.