2010 (4) TMI 900 - HC - Companies Law

Whether the applicant falls within the scope of the expression employees mentioned in section 445(3) of the Companies Act ? Held that - A reading of section 445 (3) of the Act makes it clear that the order of winding up also amounts an order of discharge to the applicant in view of the fact that on that date, the business of the company was at an end and was not continued. Sadly, in this case, the applicant himself had brought the petition for winding up of the respondent company on his own behalf and on behalf of unpaid workers of the company and it was on his petition that this order came to be passed. To my mind, the scope of the expression discharge used in section 445(3) of the Companies Act, 1956 cannot be taken to mean that all employees, thus, discharged are deemed to have left the insurable employment on attaining the age of superannuation, as required under rule 61 of the ESI (Central) Rules, 1950. Appeal dismissed.

Summary

Issues:
1. Eligibility for medical benefits under the ESI scheme after company liquidation.

Analysis:
The applicant, as the President of a union, sought medical benefits under the Employees State Insurance Act and Rules following the liquidation of the company. The applicant claimed entitlement based on reaching superannuation age after being insured for over five years. However, the company was wound up before the applicant's superannuation age, raising questions about eligibility criteria.

The key requirement for relief under the ESI scheme is that the insured person must have left insurable employment upon attaining superannuation age after being insured for at least five years. The applicant claimed to have been insured since 1964, meeting the five-year criteria. However, the winding up of the company occurred before the applicant's superannuation age, impacting the eligibility for benefits.

The interpretation of the term "employee" in the Companies Act was crucial in determining the applicant's status post-liquidation. While the Act does not define "employee," the absence of a specific mention of workers as a separate category implies that workers are included in the term "employees." The court emphasized that a workman is a type of employee under the Industrial Disputes Act, broadening the scope of the term "employee."

Despite the applicant's lengthy employment, the court found that the winding up order did not equate to deemed superannuation. The order of winding up was considered a discharge, terminating the applicant's employment. The court highlighted that the order's timing determined the applicant's eligibility for benefits, which, in this case, did not align with the requirements under the ESI scheme.

The court dismissed the application, emphasizing that the order of winding up did not automatically confer superannuation status on the applicant. The applicant's petition for winding up the company further complicated the situation, as the court concluded that the discharge resulting from liquidation did not meet the criteria for ESI benefits based on superannuation age.