TaxTMI 
TaxTMI 
2015 (10) TMI 1771
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....e letter dated 05.03.2008 and subsequent employment letter dated 18.04.2008. The petitioner was accordingly appointed as the Chief Executive Officer of the respondent-Company and was assured payment of a gross annual salary of S$ 650,000 being S$ 54,166 per month. The petitioner was also offered two years employment, a fixed and guaranteed annual bonus of S$ 450,000. Further, the respondent-Company was fully satisfied by the services rendered by the petitioner after his appointment and was receiving regular monthly salary till 31.03.2009. However, after 31.03.2009 as the respondent-Company failed and neglected to pay monthly salary to the petitioner in spite of several requests made by the petitioner to the respondent-Company in that behalf until 14.09.2009, which resulted in penury condition for the petitioner. The petitioner, therefore, resigned from service on 14.09.2009 by sending a resignation letter to the respondent- Company and also demanded his rightful dues including the outstanding salary of S$ 297,961.67 for the period between 1.4.2009 to 14.9.2009, the fixed and guaranteed bonus of S$ 131,250 for the period starting from 18.04.2009 till 14.09.2009, aggregating to S$ 87....
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....the petitioner did not receive any favourable response from the respondent-Company nor his outstanding dues were settled, was forced to file Company Petition under Sections 433 and 434 of the Companies Act, 1956 (for brevity "Act"), on 27.01.2010. 5. Besides the Company Petition filed by the petitioner, two more Company Petitions have been filed against the respondent-Company being Company Petition No.3/2010 (filed by The Hongkong and Shanghai Banking Corporation) and Company Petition No.9/2011 (filed by UCO Bank). 6. In the Company Petition filed by the petitioner herein, the respondent-Company inter alia raised objection regarding the locus of the petitioner to pursue his claim of outstanding salary, wages and emoluments, which became payable to him whilst in service and employment of the respondent-Company. According to the respondent-Company, dues towards salary, wages and emoluments being remuneration, does not become "debt" within the meaning of Section 433(e) of the Act. The workman or employee of the Company cannot pursue claim in that behalf as Creditor that too by filing a Company Petition under Sections 433 and 434 of the Act. To buttress this submission, reliance was ....
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.... the meaning of terms "Creditor" and "Debt" respectively. 9. Per contra, counsel for the respondent submits that the fact that the petitioner ceased to be in employment of the respondent-Company will make no difference to the nature of claim of the petitioner. It would still retain the colour of wages, salary and emoluments payable to an employee whilst he was in service of the respondent-Company. Being remuneration payable to an employee, it cannot be considered as a debt within the meaning of Section 433(e) of the Act, nor the status of the petitioner can be treated as Creditor ascribable to Section 439 read with Section 434(1)(a) of the Act. To buttress this submission, reliance has been placed on the dictum of the Supreme Court in National Textile Workers' Union and Others v. P.R. Ramakrishnan and Others (1983) 1 SCC 228 (para 7 in particular). According to the respondent, the Supreme Court, in no uncertain terms, has noted that workers are not included in the list of specifically enumerated persons in Section 439 of the Act and therefore have no right to prefer a petition for winding up of a Company. Further, the right to apply for winding up of a company being a creature of ....
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....ealth (India) Private Limited v. Info-Drive Systems SDN. BHD (2010) 10 SCC 553, in particular paragraph 34, which has cautioned the Company Courts to keep in mind Public Policy Considerations while considering the relief of winding up of the Company. It is not only a matter of the interests of Creditors, but also interests of public at large. 10. At the outset, we may clarify that the issue under consideration is limited to the locus of the petitioner to institute Company Petition for winding up against the respondent-Company in respect of his claim for unpaid salary, wages and emoluments whilst he was in the employment of respondent-Company. We may not be understood to have expressed any opinion about the merits of that claim, which will have to be considered by the Company Judge after the reference is answered. 11. Indisputably, the petitioner was appointed by the respondent-Company vide employment letter dated 18.04.2008 to manage its Asset Management Business in Singapore. The petitioner submitted resignation vide letter dated 14.09.2009 for the stated reasons. According to the petitioner, he has not been paid his monthly salary and other emoluments as per the contract after ....
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....on of creditor in the context of his claim regarding unpaid wages, salary and emoluments receivable from the respondent-Company where he was employed during the relevant period. 15. The expression "Creditor" is intrinsically linked to the expression "debt"/ "debts". Wherever it is a case of "debts", the person, who is entitled to receive the amount, as belonging to him, is necessarily a creditor. No provision of any statute much less of the Companies Act has been brought to our notice, which expressly or impliedly excludes the dues to be received by the employee - be it, in service or former employee - from the character of a debt to be paid by the Company; and for which reason the person so employed is not a creditor of the Company, within the meaning of Section 439 or any other provision of the Companies Act. 16. We may now deal with the decision of the learned Company Judge of Our High Court in the case of Pawan Kumar Khullar (supra). In that case also, the petitioner had filed Company Petition for winding up of the Company on the assertion of non-payment of his salary. The Company Judge observed that there is difference between debt and salary. Further, the salary is the remu....
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....hat resignation was still treated as pending. Be that as it may, the Company Judge of the Andhra Pradesh High Court disagreed with the view taken by the Company Judge of Our High Court in Pawan Kumar Khullar (supra). It will be useful to reproduce the relevant part of the said decision, which reads thus: "In the case of Kesoram Industries and Cotton Mills Ltd. v. CWT [1966] 59 ITR 767, the apex court, after discussing various decisions, has observed that (pages 780 and 787) : "a debt means a sum of money which is now payable or will become payable in future by reason of present obligation debitum in praesenti, solvendum in futuro. A debt involves an obligation incurred by the debtor and the liability to pay a sum of money in present or future. The liability must, however, be to pay a sum of money, i.e., to pay an amount which is determined or determinable in the light of factors existing on the date when the nature of the liability is to be ascertained." The claim of short delivery of materials has been held to be debt in the case of Kudremukh Iron Ore Co. Ltd. v. Kooky Roadways P. Ltd. [1990] 69 Comp Cas 178 (Kar). The unpaid salary of an employee is liable to be recovered f....
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....f service, undoubtedly the employee can bring a legal action to enforce his/her right to recover the salary due to him or her against the company. The definition of the word "debt", as understood in the well-known treatises as well as English and Indian courts, to put it pithily, means a sum of money which is presently payable. In other words, there must be debitum in presenti. There are no good reasons to take out 'salary due to an employee' from the company from the meaning of the word "debt" in the context of section 433(e) of the Act....." 20. After adverting to the decision of Our High Court in the case of Pawan Kumar Khullar (supra), the Division Bench of Andhra Pradesh High Court went on to observe as follows:- "........With great respect, we are not in a position to accept the opinion of the learned single Judge of the M.P. High Court recorded in paragraph 4 of the above judgment as correct position in law. A learned single Judge of this Court, Krishna Saran Shrivastva, J., in Capt. B.S. Demogray v. VIF Airways Ltd, [1998] 94 Comp Cas 291 : [1998] 1 An.WR 743, had occasion to consider the question whether the unpaid salary of an employee from the company could be ....
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....Workers' Union (supra), in particular observations found in para 7 of the said judgment, the right to apply for winding up of Company being a creature of statute, and no such right having been conferred on the workers, they cannot prefer a winding up petition against a Company, has been examined. The background in which these observations have been made by the Supreme Court has been pithily analyzed by the Company Judge of the Delhi High Court, from pages 59 to 62; and concluded that the said observations are in the context of the argument raised on behalf of the Company in the said proceeding about the locus of the workers to intervene. In other words, the Court was dealing with the said argument of the Company that the workers have no right to be heard in the said proceedings and that extreme argument has been negatived. 22. Suffice it to observe that the Delhi High Court has justly analyzed the observations of the Supreme Court in National Textile Workers' Union (supra); and relying on Section 439 of the Act, has noted that when the worker becomes a Creditor, he will have a right to institute petition as a creditor of the Company. In substance, the Court has noted that it is on....
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....worker or employee regarding his unpaid salary, wages or emoluments cannot be treated as debt or dues payable by the Company. Once that contention fails, it would necessarily follow that the workman is a Creditor of the Company to the extent of his unpaid wages and salary. This view is reinforced from Chapter-V of the Companies Act. For, Section 529, defines the purport of expression "workmen's dues". Further, Section 529A provides for Overriding Preferential Payments in respect of workmen's dues. There is preferential right to receive those dues guaranteed under Section 530 of the Act over other dues. The fact that special preference in payment of workmen's dues has been specified in the Act, does not mean that the workmen are excluded from the term "creditors" or that the amount of unpaid salary, wages or emoluments of the workmen is not a debt payable by the Company, as such. 27. Counsel for the respondent-Company invited our attention to Sub-section (5) of Section 530 of the Act including the distinction made between workman and the employee of the Company. The fact that no specific reference is made to the dues of employees in Section 529A unlike workmen's dues, to be paid as....