Retrenchment compensation on winding-up depends on proved unavoidable circumstances, and higher wages exclude only supervisory employees.

Closure of an undertaking following a winding-up order does not automatically confine workmen to three months' compensation under the proviso to section 25FFF of the Industrial Disputes Act, 1947; the employer must prove that the closure resulted from unavoidable circumstances beyond its control, and that question depends on the facts. A winding-up order alone is not sufficient. Employees drawing wages above Rs. 500 per month are not excluded from the definition of workman unless they are employed in a supervisory capacity; the wage ceiling by itself does not defeat entitlement to retrenchment compensation. The liquidator's contrary assumptions were rejected and the claims were remitted for fresh factual examination under the correct legal principles.

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Issues: (i) whether, on the closure of an undertaking pursuant to a winding-up order, workmen were automatically restricted to three months' compensation under the proviso to section 25FFF of the Industrial Disputes Act, 1947; (ii) whether employees drawing wages exceeding Rs. 500 per month were excluded from the definition of workman and therefore from retrenchment compensation.

Issue (i): Whether, on the closure of an undertaking pursuant to a winding-up order, workmen were automatically restricted to three months' compensation under the proviso to section 25FFF of the Industrial Disputes Act, 1947.

Analysis: Section 25FFF confers notice and compensation on workmen when an undertaking is closed down, as if retrenched under section 25F. The proviso limits compensation only where the closure is on account of unavoidable circumstances beyond the control of the employer. The Court held that the burden lies on the employer to establish those circumstances. A winding-up order by itself does not prove that the closure was due to unavoidable circumstances beyond the employer's control, and the question depends on the facts of each case. The Liquidator's assumption that statutory termination under section 445(3) of the Companies Act, 1956 necessarily attracted the proviso was rejected.

Conclusion: The claim for retrenchment compensation could not be restricted merely because the undertaking was wound up; the matter required factual investigation, and the Liquidator's contrary conclusion was incorrect.

Issue (ii): Whether employees drawing wages exceeding Rs. 500 per month were excluded from the definition of workman and therefore from retrenchment compensation.

Analysis: Under section 2(s) of the Industrial Disputes Act, 1947, the exclusion applies only to persons employed in a supervisory capacity who draw wages exceeding Rs. 500 per mensem. The wage ceiling alone is not enough to exclude an employee from the definition. Employees drawing more than Rs. 500 per month but not employed in a supervisory capacity remain workmen for the purposes of section 25FFF.

Conclusion: Only supervisory employees drawing wages above Rs. 500 per month were excluded; other employees crossing that wage level were still entitled to retrenchment compensation.

Final Conclusion: The order rejecting substantial parts of the employees' claims was set aside, and the claims were remanded for fresh investigation in the light of the correct legal principles.

Ratio Decidendi: Closure of an undertaking after a winding-up order does not, by itself, establish closure on account of unavoidable circumstances beyond the control of the employer; the employer must prove the proviso to section 25FFF, and the wage ceiling in section 2(s) excludes only supervisory employees.

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