TaxTMI 
TaxTMI 
2016 (2) TMI 645
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.... wound up by the final order of winding up which was passed by this Court on 05/09/2005. Provisional Liquidator, however, was appointed with full powers including the power to sell the Company's assets on 13/02/2002. The workers filed claim before the Official Liquidator claiming their dues from the date of winding up. 4. The Company - Svadeshi Mills Ltd contended that the workmen were entitled to get their dues but not from the date of cessation i.e. from 01/08/2000 when they accepted their provident fund dues but from the date of appointment of Provisional Liquidator i.e. 13/02/2002. The Official Liquidator held that the workers were entitled to get their dues from 13/02/2002 when the Provisional Liquidator was appointed. Being aggrieved by the said order, the workers preferred a Petition before the Company Court. 5. The learned Single Judge relying on the provisions of section 445 sub-clause (iii) held that the workers were entitled to get their dues from the date of official winding up of the Company. The Appellant - Grandview Estate Private Ltd is a secured creditor of the Company and it has challenged this order on the ground that if the order of the learned Single ....
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....f the Company. HPC, on 08/10/2001, fixed 30/09/2001 as a cut off date for all dues. On 13/02/2002, in winding up proceedings, Official Liquidator was appointed as Provisional Liquidator of the Company with all powers including the power to sell assets of the Company. On 21/06/2002, the Company Court passed an order permitting the HPC to dispose of the movable assets of the Company, and deposit proceeds with the Official Liquidator. 11. The Official Liquidator took possession of the factory and office premises in July 2002 and on 17/09/2003, sale of movable assets was confirmed by the Company Court. Thereafter, on 18/10/2003, the Official Liquidator issued an advertisement inviting claims from creditors including the claims of workers. The workers filed their claim through their Union on 30/12/2003. In 2004, HPC sold the movable assets and realized an amount of Rs. 15.53 crores. 12. This amount was disbursed by the Official Liquidator for reimbursement of the cost of security agencies, other related expenses, part payment of the dues of the workers and employees and statutory dues and dues of secured creditors. Employees of the Mill were paid from the proceeds from the sale of....
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....can interfere with the order passed by the learned Single Judge only if it is found that the impugned order is patently illegal or perverse. The Apex Court in Wander Ltd and Another vs. Antox India P. Ltd.(1990(Supp) SCC 727) has observed in para 14 1 1990(Supp) SCC 727 as under:- "14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had c....
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.... of 1985 by which some provisions of the Companies Act relating to winding up were amended and priority was given to the workers dues alongwith dues of the secured creditors, the position was that in the scheme of distribution of assets, workers did not get any priority in distribution. Only secured creditors were first entitled to receive their claim and after this amount was paid, all others were then paid ratably according to the amount which was available for distribution. 23. Prior to this amendment, workers, employees and officers had a priority only to the extent of section 530(1)(b) and they were entitled to get only four months' salary out of a year. The said provision prescribed that the period of four months was to be calculated 12 months before the "relevant date". The "relevant date" has been defined under section 530(8)(c) to mean the date on which the Provisional Liquidator was appointed by the Company Court Judge. After insertion of Section 529-A, Section 530 was amended and after clause 8(b), clause (bb) was added and it was clarified that the Section was not applicable to workmen. Consequently, the workmen were brought out of the purview of Section 530. In ....
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....enses] incurred by the liquidator 9including a provisional liquidator, if any) for the preservation of the security before its realization by the secured creditor.] [Explanation -For the purposes of this proviso, the portion of expenses incurred by the liquidator for the preservation of a security which the secured creditor shall be liable to pay shall be the whole of the expenses less an amount which bears to such expenses the same proportion as the workmen's portion in relation to the security bears to the value of the security.] [(3) For the purposes of this section, section 529A and section 530,- (a) "workmen", in relation to a company, means the employees of the company, being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947); (b) "workmen's dues", in relation to a company, means the aggregate of the following sums due from the company to its workmen, namely :- (i) all wages or salary including wages payable for time or piece work and salary earned wholly or in part by way of commission of any workman, in respect of services rendered to the company and any compensation payable to any workman under any of the provisions of....
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....ices rendered to the company and due for a period not exceeding four months within the twelve months next before the relevant date subject to the limit specified in sub-section 2;" "530(8) For the purposes of this section- (a)........ (b)........ (bb) the expression "employees' does not include a workman;" and] (c ) the expression "relevant date' means- (i) in the case of a company ordered to be wound up compulsorily, the date of the appointment (or first appointment) of a provisional liquidator, or if no such appointment was made, the date of the winding up order, unless in either case the company had commenced to be wound up voluntarily before that date; and (ii) in any case where subclause (i) does not apply, the date of the passing of the resolution for the voluntary winding up of the company." 25. It will also be relevant to have a look at section 445 which reads as under:- "445. Copy of winding up order to be filed with Registrar (1) On the making of a winding up order, it shall be the duty of the petitioner in the winding up proceedings and of the company to file with the Registrar a certified copy of the....
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....ssation of work due to that, such a dates also would have to be taken into consideration by the Official Liquidator. Secondly, it is submitted that the Official Liquidator has rightly held that the date of appointment of the Provisional Liquidator with all powers viz 13/02/2002 is the cut off date. He submitted that there could be several situations in which lawfully the services of the workmen would come to an end before the date of winding up as stated in written submissions of the Appellants in para 5.4 viz (a) to (k). He submitted that therefore the learned Single Judge has erred in holding that the date of winding up was the only date on which there was legal cessation of relationship of employer-employee. He relied on the judgment of Carne & Anr. vs. Debono(1988) 1 WLR 1107 at page 1112) in support of this submission and also relied on para 25 at page 30 of the judgment of the learned Single Judge dated 23/03/2009 in MSM Satellite (Singapore) Pte. Ltd. vs. Board of Control for Cricket in India (Arbitration Petition (L) No.284 of 2009). 30. On the other hand, Ms. Jane Coax appearing for the workmen submitted that the view taken by the learned Single Judge is correct and ela....
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.... Petition (Ld) No.284 of 2009) after relying on the aforesaid judgment held in para 25 as under:- "25. The provision relating to deemed delivery on the next working day is also not applicable because here also deeming provision does not come into play in view of the actual receipt of notice by the petitioner. The respondent has also relied upon the decision in Carne & Anr. vs. Debono, reported in (1988) 1 WLR 1107 wherein the Court of Appeal while considering a similar clause to the effect "12(h): Any notice given by either party to the other under the provisions of this agreement shall be in writing and shall be deemed to have been served at the expiration of 48 hours after it has been posted...." has held that the deeming provision does not exclude the possibility of proving the earlier receipt. It is not a statement that for all purposes, the document shall only be treated as having received at a particular time." 32. There cannot be any dispute regarding the said proposition. The deeming fiction clause which is introduced in any provision may not necessarily mean that, that date alone would be date on which the provision would come in operation and factually if it can be ....
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....here was no question of workers rendering their services particularly when the plant and machinery in the Mill was being sold. He also submitted that the HPC has held that date 30/09/2001 was to be treated as cut off date for calculating dues of workmen. He relied on para 20 of the Judgment of Gujarat High Court in Textile Labour Association vs. Official Liquidator(1999-II-LLJ-859 (Gujarat) ("Jubilee Mills case") Secondly, he submitted that the workers had collected their provident fund dues in 2001 He submitted that having collected their provident fund dues, workers could not claim to be in service. Thirdly, he submitted that, in any case, the Company court Judge appointed a Provisional Liquidator with all powers to sell movable and immovable assets. He submitted that from that date, in any case, there was a complete cessation of work and, therefore, the Official Liquidator had rightly held the said date to be the cut off date. 36. The learned Senior Counsel for the Appellants in response to the submissions made by the learned Counsel for workmen submitted that section 25-O(6) would have no application to the present case. He relied on the judgment of the Division Bench of thi....
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....nsider the last order of actual winding up of the Company as the order from the date of which the workers dues would have to be calculated. In our view, such purposive interpretation or "purposes & objectives" approach could harmonize the intention of the legislature in giving paripasu benefit to workers alongwith the secured creditors. 39. In the present case the facts which are undisputed are as under:- The Appellants before this Court are not only the secured creditors but also the majority shareholders. The Appellant No.1 held from earlier 22.70% of the shares and is part of the Shahpoorji Pallonji Group, which is in turn part of the Tata Group which owned the Mill in liquidation. The Appellant No.2 is also a part of the Shahpoorji Palonji Group and engaged in real estate development construction and infrastructure business. It acquired 29.29% of the shares in 2010 after the Order of winding up, thus giving the Appellants together 52% of the equity shares of the Company. Similarly, after the order of winding up, in 2006 and 2007 the debts of the only two secured creditors, IDBI and Bank of Baroda, were assigned to the Appellant No.2, as also the debts of 70 out of the 146....