1996 (12) TMI 315 - HC - Companies Law

Summary

Issues:
Challenge to order under Payment of Wages Act, 1936 by petitioner-company post winding-up proceedings.

Analysis:
The judgment addresses the challenge to an order dated June 3, 1985, made by the civil court under the Payment of Wages Act, 1936, against the petitioner-company. The court notes that since the petition filing, winding-up proceedings of the petitioner-company have occurred, leading to the appointment of an official liquidator. The court allows the substitution of the petitioner-company as requested by counsel. The legal implications of winding up under section 446 of the Companies Act, 1956 are discussed, emphasizing the stay on legal proceedings against the company without court leave and the court's jurisdiction over such matters. The judgment clarifies that the petition under articles 226 and 227 of the Constitution of India is not affected by section 446, highlighting the constitutional remedy's significance.

The court delves into the provisions of section 17A of the Payment of Wages Act, 1936, which governs the conditional attachment of an employer's property. The judgment outlines the conditions necessary for invoking this power, such as the filing of an application or appeal by the workman and the satisfaction of the court regarding potential evasion of payment by the employer. It criticizes the challenged order for lacking essential details required by section 17A, including the absence of information on filed applications or appeals, the amount of wages in question, and the employer's potential non-compliance. The court highlights the erroneous aspects of the order, particularly the premature direction for property attachment and sale without proper legal basis.

Ultimately, the court finds the challenged order unsustainable due to its failure to adhere to the statutory requirements of section 17A. Consequently, the petition succeeds, and the impugned order is quashed. The judgment emphasizes that the ruling does not affect the workman's rights to claim before the official liquidator despite the order's annulment. The decision grants no order as to costs, ensuring clarity on the legal implications of the ruling and upholding the petitioner's rights within the winding-up context.