Industrial adjudication in liquidation remains valid while closure compensation is capped by the statutory limit.

Closure-related termination compensation was held to fall under the proviso to section 25FFF(1) of the Industrial Disputes Act, 1947 where the undertaking was closed because of unavoidable circumstances beyond the employer's control, so compensation was restricted to three months' average pay. Industrial adjudication under section 10 of the Industrial Disputes Act was treated as a statutory proceeding in public interest and not as a claim against company assets, so section 446 of the Companies Act, 1956 did not render the reference or award void for want of leave from the winding-up court. The award was also construed to allow increments from 1952 to 1957, while arrears of revised pay were confined to the earlier three years.

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Issues: (i) whether the workmen's compensation on termination of service was governed by the limitation in the proviso to section 25FFF(1) of the Industrial Disputes Act, 1947, or was payable without that limitation under section 25F(b); (ii) whether proceedings before the Industrial Tribunal under section 10 of the Industrial Disputes Act, 1947, and the resulting award were hit by section 446 of the Companies Act, 1956 for want of leave of the winding up court; (iii) whether the award granted increments only up to 1954 or for the period 1952 to 1957, with arrears confined to the earlier three years.

Issue (i): whether the workmen's compensation on termination of service was governed by the limitation in the proviso to section 25FFF(1) of the Industrial Disputes Act, 1947, or was payable without that limitation under section 25F(b).

Analysis: The termination of services occurred in stages as the undertaking was being closed down. The closure was found to be on account of unavoidable circumstances beyond the control of the employer, namely severe losses and adverse trade conditions leading to winding up. In such a case, the proviso to section 25FFF(1) applied and restricted compensation to three months' average pay.

Conclusion: The limitation under the proviso to section 25FFF(1) applied, and the compensation was restricted to three months' average pay, against the workmen.

Issue (ii): whether proceedings before the Industrial Tribunal under section 10 of the Industrial Disputes Act, 1947, and the resulting award were hit by section 446 of the Companies Act, 1956 for want of leave of the winding up court.

Analysis: Proceedings under the Industrial Disputes Act were treated as statutory proceedings in public interest, not as actions against the company's assets in the nature of private creditor claims. Section 446 was held to control suits or proceedings against the property of the company and not to override a pending statutory adjudication under the Industrial Disputes Act. The award was therefore not void for want of leave.

Conclusion: Section 446 of the Companies Act, 1956 did not apply to the industrial reference or the Tribunal's award, in favour of the petitioners.

Issue (iii): whether the award granted increments only up to 1954 or for the period 1952 to 1957, with arrears confined to the earlier three years.

Analysis: The award was construed as granting increments from 1952 onwards for the purpose of fixing salary and computing compensation, while limiting arrears of pay on the revised scale to the years 1952, 1953 and 1954. The wording was not read as cutting off increments after 1954.

Conclusion: The workmen were entitled to increments from 1952 to 1957, but arrears of pay on the revised scale were confined to the first three years, in favour of the petitioners.

Final Conclusion: The petitions succeeded in part: the compensation claim was limited by the statutory cap applicable to closure, the industrial award was sustained as operative, and the award was construed to allow increments for the relevant period with arrears restricted to the earlier years.

Ratio Decidendi: A statutory industrial adjudication under the Industrial Disputes Act, 1947 is not a proceeding against the company's assets within the meaning of section 446 of the Companies Act, 1956, and therefore is not stayed or rendered void merely because the company is in liquidation.

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