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Issues Involved:
1. Lifting the corporate veil. 2. Rights of the workmen of the subsidiary company under section 529A of the Companies Act, 1956. Detailed Analysis: 1. Lifting the Corporate Veil: The court examined whether the principle of lifting the corporate veil could be applied to treat the subsidiary company and the holding company as a single entity. The union argued that the subsidiary company was essentially a part of the holding company, citing the transfer of employees between the two entities and the shared business operations. They contended that the assets of the holding company should be used to satisfy the liabilities of the subsidiary company. The court reviewed several precedents on the doctrine of lifting the veil, including *Spencer & Co. Ltd. v. CWT*, *Workmen Employed in Associated Rubber Industry Ltd. v. Associated Rubber Industry Ltd.*, and *State of U.P. v. Renusagar Power Co.*. It noted that while the corporate veil could be lifted in cases of fraud or improper conduct, or where public interest demanded, this was not a universal principle and had to be applied cautiously. The court concluded that the holding company and the subsidiary company were distinct legal entities with separate boards of directors, financial investments, and employment policies. There was no evidence of the holding company guaranteeing the subsidiary's debts or abusing the corporate form. Therefore, the court held that it was not permissible to pierce the corporate veil in this case. 2. Rights of the Workmen of the Subsidiary Company Under Section 529A: The court considered whether the workmen of the subsidiary company could claim priority payment under section 529A of the Companies Act, 1956, which gives priority to the dues of workmen in the event of a company's winding up. The court referred to sections 528, 529, and 529A of the Act, which specify that claims against a company in liquidation can only be admitted by the Official Liquidator for that specific company. The definition of "workmen" under section 529(3) refers to employees of the company being wound up, within the meaning of the Industrial Disputes Act, 1947. The court emphasized that the relationship of master and servant must exist between the workmen and the company in liquidation. The workmen of the subsidiary company could not be considered workmen of the holding company, as there was no evidence of a common cadre of service or employment policy between the two entities. The court also noted that the union had not claimed rights against the holding company until the subsidiary company was wound up and its assets were insufficient to satisfy their claims. The court concluded that the workmen of the subsidiary company had no legal claim under section 529A against the assets of the holding company in liquidation. The applications filed by the union were therefore dismissed.
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