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Issues: (i) Whether an employee can maintain a petition for winding up of a company as a creditor based on unpaid salary and wages under section 439 read with sections 433(e) and 434(1)(a) of the Companies Act, 1956; (ii) Whether a trade union can maintain a winding up petition on behalf of its members for unpaid wages and salary.
Issue (i): Whether an employee can maintain a petition for winding up of a company as a creditor based on unpaid salary and wages under section 439 read with sections 433(e) and 434(1)(a) of the Companies Act, 1956
Analysis: The provisions governing winding up permit a petition by a creditor, and an employee claiming unpaid wages or salary falls within the class of persons to whom the company is indebted. The deemed inability to pay debts under section 434 is attracted when the statutory demand remains unsatisfied, and nothing in section 439 excludes an employee from the category of creditor where the debt is alleged to be due and payable.
Conclusion: The employee can maintain the winding up petition as a creditor.
Issue (ii): Whether a trade union can maintain a winding up petition on behalf of its members for unpaid wages and salary
Analysis: A registered trade union is a body corporate and section 15 of the Trade Unions Act, 1926 permits expenditure of funds on legal proceedings for protecting the rights of members and on the conduct of trade disputes. A claim for unpaid wages or salary constitutes a trade dispute, and the union may prosecute proceedings arising from the employment relationship on behalf of its members. Reading the two enactments together, the union is not barred from invoking the winding up jurisdiction for such claims.
Conclusion: The trade union can maintain the winding up petition on behalf of its members.
Final Conclusion: The questions referred were answered in favour of maintainability, and the petition was left to be considered on its own merits before the Company Judge.
Ratio Decidendi: An employee owed unpaid wages is a creditor for the purposes of winding up, and a registered trade union may maintain such proceedings on behalf of its members where the claim arises from the employment relationship and is supported by the Trade Unions Act, 1926.
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