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Issues: (i) Whether the workers ceased to be employees of the company when the debenture trustees entered into possession and worked the mills; (ii) whether the winding-up prohibition against legal proceedings barred the Government's declaration making the industrial award binding; (iii) whether the Official Liquidator could challenge the merits of the industrial tribunal's award; and (iv) whether the workers were entitled to priority for two months' wages under the winding-up provisions.
Issue (i): Whether the workers ceased to be employees of the company when the debenture trustees entered into possession and worked the mills.
Analysis: The arrangement with the debenture trustees was carried out at the company's request and on its risk and account. Even where a mortgagee or debenture trustee enters into possession and manages the business, the company does not cease to exist as a legal entity and the business remains that of the company. A change in management does not amount to a change in personality or terminate the employer-employee relationship.
Conclusion: The workers remained employees of the company.
Issue (ii): Whether the winding-up prohibition against legal proceedings barred the Government's declaration making the industrial award binding.
Analysis: The reference to the industrial tribunal and the award were made before the appointment of the provisional liquidator and before the winding-up order. The later declaration by the Government was only the statutory act required to make the award binding and was not itself a legal proceeding against the company. The prohibition on proceedings in winding up does not extend to statutory enquiries, adjudications, or administrative declarations made under the Industrial Disputes Act.
Conclusion: Section 171 of the Indian Companies Act did not bar the Government's declaration.
Issue (iii): Whether the Official Liquidator could challenge the merits of the industrial tribunal's award.
Analysis: The award, once declared binding under the Industrial Disputes Act, could not be questioned in any manner. In the absence of fraud, collusion, or a miscarriage of justice, the Official Liquidator could not go behind a competent statutory adjudication merely because a legal error was alleged.
Conclusion: The Official Liquidator could not attack the correctness of the award.
Issue (iv): Whether the workers were entitled to priority for two months' wages under the winding-up provisions.
Analysis: The priority provision protects wages for services rendered within the relevant two-month period. Where the mills had been illegally locked out, the workmen's right to priority was not defeated merely because actual work was not performed during that period. The illegal closure did not deprive them of the statutory protection for wages.
Conclusion: The workers were entitled to priority for two months' wages.
Final Conclusion: The appeal fails because the workers' status continued, the industrial award remained binding, and the wage claim enjoyed statutory priority.
Ratio Decidendi: A statutory industrial adjudication made binding under the Industrial Disputes Act cannot be reopened by the liquidator in winding up except on grounds of fraud, collusion, or miscarriage of justice, and a change in management does not by itself sever the employment relationship.
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