Winding up and takeover provisions limit gratuity liability to post-takeover service; earlier service breaks are excluded.

A winding up order is treated as notice of discharge under Section 445(3) of the Companies Act, 1956, so the intervening period before re-employment is not continuous service for gratuity purposes. A later stay under Section 18FA(10) of the Industries (Development and Regulation) Act, 1951 operates prospectively from the takeover of management and does not relate back to the winding up date. In a nationalisation context, the successor corporation's liability for gratuity is confined to the period of service expressly covered after takeover, and does not extend to earlier liabilities unless the statute so provides.

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Issues: (i) Whether the winding up order resulted in a break in service of the employee so as to exclude the intervening period from computation of gratuity; (ii) Whether the nationalisation provision fastened liability for gratuity on the Corporation for the period prior to the taking over of management under Section 18FA of the Industries (Development and Regulation) Act, 1951.

Issue (i): Whether the winding up order resulted in a break in service of the employee so as to exclude the intervening period from computation of gratuity.

Analysis: Section 445(3) of the Companies Act, 1956 treats a winding up order as notice of discharge to the officers and employees of the company, except where the business is continued. The stay under Section 18FA(10) of the Industries (Development and Regulation) Act, 1951 operates only during the period of management or control and does not relate back to the date of the winding up order. The stay therefore commenced only when the authorised person took over management, not from the date of winding up. The intervening period could not be treated as continuous employment.

Conclusion: There was a break in service from the date of the winding up order until re-employment, and the employee was not in continuous service for that period.

Issue (ii): Whether the nationalisation provision fastened liability for gratuity on the Corporation for the period prior to the taking over of management under Section 18FA of the Industries (Development and Regulation) Act, 1951.

Analysis: Section 10(1) of the Maharashtra Act No. XXXIII of 1982 continued employees in service with their existing rights and privileges, but Section 10(2), with a non-obstante clause, confined the Corporation's liability to liabilities arising from continuance of service only for the period on and after the date of taking over of management under Section 18FA. The liability for gratuity before that date was not intended to be borne by the Corporation.

Conclusion: The Corporation was liable only for gratuity attributable to the period after taking over of management, and not for the earlier period.

Final Conclusion: The impugned gratuity order could not be sustained to the extent it fastened liability on the petitioner for the period prior to the takeover of management, and the petition was therefore allowed.

Ratio Decidendi: A winding up order terminates service by operation of law under Section 445(3) of the Companies Act, 1956, and a later stay of winding up under Section 18FA(10) of the Industries (Development and Regulation) Act, 1951 operates only prospectively for the period of management or control; consequently, liability for gratuity under the nationalisation statute is confined to the period expressly covered by that statute.

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