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Judgment
Abhilasha Kumari, J.—Admit. The learned advocates waive service of notice of admission on behalf of the respective respondents.
This appeal has been preferred against the order dated August 8, 2008, rendered by the learned company judge in Company Application No. 538 of 2007 in Civil Application No. 5 of 2004 in Company Application No. 183 of 2000.
The grievance of the appellant is that though other similarly situated workers of the company-in-liquidation have been paid their salaries, the appellant has not been paid his salary for the very same period and has only received a sum of Rs. 50,000 which has been disbursed subsequent to the order of winding up qua the other workers.
The appellant resides at Chennai. He has been appearing as party-in-person on each date. Therefore, by order dated October 10, 2008, this Court dispensed with the presence of the appellant by observing that if it is found necessary, notice shall be issued to him.
The brief facts, as culled out from the material on record, are that the appellant joined Calico Printing Mills Co. Ltd. ("the company" for short) as a stenographer on May 30, 1955. At the time when he was working in the sewing thread depot at Tiruppur as an administrative officer, the services of the appellant were terminated by the company, on July 9, 1990. The appellant filed an appeal before the appellate authority under the Tamil Nadu Shops and Establishments Act, 1947.
The order of termination was challenged by the appellant in the court of the Deputy Commissioner of Labour, Coimbatore, being the appellate authority under the Tamil Nadu Shops and Establishments Act, 1947, as the appellant was posted in Coimbatore at the time of termination of his service. The order of termination was set aside by the said authority, vide order dated October 31, 1991. On the basis of the order dated October 31, 1991, of the appellate authority, the appellant moved the Labour Court, Coimbatore, by way of Computation Petition No. 106 of 1991 u/s 33C(2) of the Industrial Disputes Act, 1947, claiming a sum of Rs. 23,892 towards the salary for the periods from June, 1990 to March, 1991. The said computation petition was allowed and it was ordered that the appellant is entitled to recover the said amount from the company as arrears of land revenue.
Meanwhile, the company went into liquidation and was closed down on October 16,1994. By order dated July 15,1998, made in Company Petition No. 157 of 1995 by the High Court, the company has been ordered to be wound up and the official liquidator has been appointed as the liquidator of the said company.
Earlier, the appellant had claimed an amount of Rs. 4,18,322 with interest. However, now the appellant has restricted his claim for salary for the periods July 1,1990 to October 31,1994, to an amount of Rs. 2,24,092 in view of the fact that the other workmen had been paid up to October 31, 1994.
The official liquidator has filed reports dated November 17, 2008, December 4, 2008 and December 24, 2008, contesting the claim of the appellant. Mr. J. S. Yadav, learned Counsel for the official liquidator has submitted that the official liquidator is bound to observe priority as stipulated in Section 530 of the Companies Act, 1956 ("the Companies Act") and, as per the provisions of Sections 529 and 529A of the Companies Act, 1956, the workers are entitled for pari passu payment with the secured creditors and the employees have a second preference, after making full payment of Government dues. It is further submitted that a worker, who has obtained an order from the labour court cannot form a separate class of creditors or workers for preferential treatment. That the appellant will be paid at par with the other workers of the company and he cannot claim priority to the exclusion of the secured creditors and other workers and, therefore, the appeal deserves to be dismissed.
Mr. Kunan B. Naik, learned advocate for M/s. Trivedi and Gupta for respondent No. 3, has submitted that the appellant is not prejudiced by any order of the court and therefore this appeal is not maintainable. That payments are to be made to the secured creditors and workers upon winding up of a company and no payment can be made, or claimed, de hors the provisions of the Companies Act, as is being done by the appellant. That the claim made by the appellant from July 1, 1990 to October 31, 1994, is not acceptable as the case of the appellant cannot be compared with that of the other workers, as the claim has been lodged after the company-in liquidation was ordered to be wound up. That the appellant cannot claim dues de hors the provisions of the Companies Act, and he is entitled to only those payments which will be disbursed by the official liquidator of the company in winding up, as per his share. On the above grounds, it is prayed that the appeal be dismissed.
Mr. D.S. Vasavada, learned Counsel for respondent No. 4 has reiterated the submissions made by learned Counsel for the other respondents, to the effect that since the appellant has failed to execute the award and has lodged his claim after the winding up order is passed, the disbursement will be governed by Sections 529 and 529A of the Companies Act, 1956. In support of the above proposition, the learned advocate has relied upon the following judgments:
(1) J.K. (Bombay) P. Ltd. Vs. New Kaiser-I-Hind Spg. and Wvg. Co. Ltd. and Others,
(2) ICICI Ltd. v. Textile Labour Association, O.J. Appeal No. 80 of 1998 with O.J. Appeal No. 81 of 1998 oral order dated November 3, 1998.
(3) Union of India v. Kishor Lakha [2004] II LLJ 285.
This Court has heard the party-in-person, who has appeared and made his submissions before his presence was dispensed with, and also considered the written submissions tendered by the appellant and learned counsel for the respondents, and has considered the documents forming part of the record.
The admitted position is that the services of the appellant was terminated on July 9, 1990, before the company was wound up. The order of termination was challenged by the appellant before the Appellate Authority under the Tamil Nadu Shops and Establishments Act, 1947 and the said termination was set aside by order dated October 31, 1991, i.e., prior to the date of closure. The appellant was thus an employee at a point of time when the company was functional. The appellant thereafter moved the labour court u/s 33C(2) of the Industrial Disputes Act, 1947, and his computation petitions for the claim of salary filed from time to time were allowed. The arrears of salary were directed to be recovered as arrears of land revenue. The date of closure of the company is October 16, 1994, i.e., after the termination of the appellant had been set aside. It is also an admitted fact that the other workers of the respondent-company had received their salaries up to October 31,1994. This fact is confirmed by the report of the official liquidator, dated December 24, 2008. As per the said report, the date of winding up of the company is July 15,1998, i.e., after the termination of the appellant had been set aside and after his computation petitions for the claim of salary had been allowed by the labour court and recovery proceedings in respect of the same, initiated. From the above factual scenario, it is evident that the claim of the appellant for salary is for the period before the winding up and, therefore, it stands on a totally different footing. The appellant would have been in service had his services not been illegally terminated. As the termination has been set aside, he ought to have been reinstated. The termination of the services of the appellant has been held to be illegal by a competent forum and there is nothing on record to show that this order has not attained finality. Had it not been for the order of termination, the appellant would have received his salary, along with similarly situated workmen up to October 31, 1994. However, he was not reinstated and has been deprived of his salary, in spite of there being an order from the competent court and despite his computation petitions for grant of salary, being allowed by the labour court. In this factual scenario, the provisions of the Companies Act will not be applicable to the case of the appellant, as contended by learned Counsel for the respondents. The judgments cited at the Bar are also not relevant, in the peculiar facts and circumstances of the case. The case of the appellant cannot, therefore be equated with a debtor after winding up. His claim for salary is based on the illegal termination of his services, which order was set aside, meaning thereby, that status quo ante, qua the services of the appellant was restored regarding the service conditions of the appellant. As such, the appellant is entitled to his salary up to October 31, 1994, at par with other similarly situated workers, at the relevant point of time.
For the aforesaid reasons, the appeal is partly allowed. The official liquidator is directed to pay a sum of Rs. 2,24,092 as full and final payment of arrears of salary up to October 31, 1994, as given to other similarly situated workmen, within a period of four (4) weeks from today. The appeal is accordingly disposed of. The appellant is entitled to costs quantified at Rs. 500 (rupees five hundred only) which shall be paid by the official liquidator.
The registry to send a copy of this judgment to the appellant by post.