TaxTMI 
TaxTMI 
2013 (1) TMI 1064
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the impugned order dated 04.08.2009 passed by the learned Company Court in Company Application No.358 of 2008 by which the learned Company Court has negatived the contention on behalf of the workers that while making payment to them under Section 529A of the Companies Act, 1956 (hereinafter referred to as "Act"), along with other secured creditors at pari passu, they shall be entitled to any interest from the date of winding up till the date of sale of the assets of the company in liquidation. [2.1] OJ Appeal No.108 of 2009 has been preferred by the appellant herein - Surat Labour Union challenging the impugned order dated 02.09.2009 passed by the learned single Judge / Company Court in OLR No.70 of 2008 by which a similar prayer made by the appellant herein for and on behalf of the workers of the Company in liquidation (M/s. Sugam Paper & Boards Pvt. Ltd.) has been negatived. [3.0] Facts leading to the present OJ Appeals in nutshell are as under: [3.1] That TLA for and on behalf of the workers of the company in liquidation i.e. New Rajpur Mills Ltd. submitted Company Application No.358 of 2008 for disbursement of the amount out of the amount realized by selling the properties ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate of winding up, until the property is sold from the available surplus/balance fund realised from such security, prior to the payment attributable to the preferential creditors under Section 530 of the Act. If the secured creditors are not holding the decree, for any interest later to the date of winding up, their claim is not required to be considered for interest in such category. C. The remaining unpaid amount of interest as per the decree of the secured creditor is to be considered for payment, if surplus amount remains after satisfying the debt of all other creditors. D. The workers would not be entitled to interest at par with the interest with the secured creditor holding the decree for contractual interest for the period after the date of winding up. The claim of the workers, if any outstanding, after payment under Section 529A of the Act would fall in the category of unsecured creditor. E. The claim of the application of Company Application No. 185/09 be treated as falling under Section 530 of the Act and the OL shall be at the liberty to get the said claim verified, if not verified, with the help of the Chartered Accountant and such claim shall be considered as pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es evident that the intent of the legislature is to adequately and satisfactorily compensate the workers for attributing their labour and therefore, the dues of the workmen are treated pari passu with dues of the secured creditors. It is submitted that necessary inference is that the term pari passu has a very wide sweep and it does connote that the secured creditors and the workers are to be treated at par in all aspects. It is submitted that the Andhra Pradesh High Court in the case of Crips Laboratories (Supra), has interpreted the term "pari passu" incorporated in the very said sections and has held that for all practical purposes, a workman is treated as a cocharge holder along with the secured creditors and would, therefore, be entitled to claim the same rate of interest on their dues from the assets of the company in liquidation as has been contracted to by the secured creditors which in the present case is 15% per annum. It is submitted that however it may be clarified that as the learned Company Judge has reduced the rate of interest to be paid to the secured creditors at 4% per annum in consonance with the Company Court Rule 179 and therefore, the workmen have no objectio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....taneous and equal. It is submitted that term "pari passu" is to be further construed as equal in all aspects. Thus, equal in the payment of principal dues as well as equal in payment of interest. It is submitted that this is the real meaning of the term "pari passu" and the underlying object of Section 529 and 529A of the Act. It is submitted that therefore, whatever interest the secured creditor is entitled to receive under the decree passed by the competent Court and as per the contract or as per Company Court Rules, the workmen are equally entitled to receive the same line of treatment in the payment of interest also. It is submitted that no other meaning can be given to the term "pari passu" as has been tried to be given by the learned Company Judge. Therefore, it is submitted that the learned Company Judge has patently and materially erred in interpreting and appreciating the underlying object of Section 529 and 529A of the Act. [4.5] Now, so far as the payment of bonus to the workers while considering the claim of the workmen, Shri Vasavada, learned advocate appearing on behalf of TLA has stated that under Section 10 of the Payment of Bonus Act, 1965, every employer is under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....laced upon the decision of the Hon'ble Supreme Court in the case of Textile Labour Association & Anr. (Supra) and the decision of the Andhra Pradesh High Court in the case of Crips Laboratories Ltd. (Supra) by the learned advocates appearing on behalf of the respective appellants, it is submitted that in none of the decisions it is held that the workers would be entitled to the same interest/s on their dues which is being paid to the secured creditors. It is submitted that in none of the cases there was a direct issue with respect to payment of interest to the workers at par with the secured creditors. It is submitted that even under Section 529A of the Act which provides for dues of the workmen, does not provide the interest. It is submitted that therefore, the learned Judge has not committed any error and/or illegality and has rightly held that the workmen are not entitled to the interest on their dues at par with the secured creditors. [5.2] Now, so far as the payment of bonus and the notice pay as required to be paid under Section 25 of the Industrial Disputes Act, 1947 while considering the dues of the workmen is concerned, it is submitted that none of the aforesaid claims fa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....providing the payment at pari passu with the secured creditors as provided under Section 529A of the Act, what is provided is payment and not with respect to the same or similar dues. Under the circumstances, the contention on behalf of the workers that they are also entitled to the interest at par with the secured creditors and/or which is being paid to the secured creditors while making them payment under Section 529A of the Act, cannot be accepted. The learned single Judge has rightly agreed with the decision of the Kerala High Court in the case of Federal Bank Limited (Supra). [6.2] Now, so far as the reliance placed upon the decision of the Andhra Pradesh High Court in the case of Crips Laboratories Ltd. (Supra) is concerned, like the learned Company Court, this Court is also not in agreement with the view taken by the Andhra Pradesh High Court. At the outset it is required to be noted that as such there was no similar issue before the Andhra Pradesh High Court. This Court is not in agreement with the view taken by the Andhra Pradesh High Court that for all practical purposes a workman is treated as a cocharge holder along with the secured creditors and would, therefore, be e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or by the effect of, the winding up order or resolution; (iii) unless the company is being wound up voluntarily merely for the purposes of reconstruction or of amalgamation with another company, or unless the company has, at the commencement of the winding up, under such contract with insurers as is mentioned in section 14 the Workmen's Compensation Act, 1923 (8 of 1923), rights capable of being transferred to and vested in the workman, all amounts due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any workman of the company; (iv) all sums due to any workman from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the workmen, maintained by the company; As held by the Hon'ble Supreme Court in the case of Hamdard (Wakf) Laboratories vs. Dy. Labour Commissioner and Ors. reported in (2007)5 SCC 281, wages does not include the bonus. The Hon'ble Supreme Court in the said decision has observed and held in paras 21, 26, 28 and 29 as under: "21. Definition of 'wages' within the meaning of the Act does not include "bonus". It, however, includes allow....