1959 (11) TMI 24 - HC - Companies Law

Winding up Suits stayed on winding-up order, Debts of all descriptions to be admitted to proof and Avoidance of certain attachments, executions, etc.

Issues Involved:
1. Determination of compensation payable to workmen on termination of services under section 25F(b) of the Industrial Disputes Act, 1947, versus the limitation imposed by the proviso to section 25FFF(1).
2. Validity of the award made by the Industrial Tribunal, Alleppey, without leave of the court under section 446 of the Companies Act, 1956.

Detailed Analysis:

Issue 1: Determination of Compensation Payable to Workmen

The first issue revolves around whether the compensation payable to the workmen on the termination of their services should be determined under section 25F(b) of the Industrial Disputes Act, 1947, without the limitation imposed by the proviso to section 25FFF(1), or if it should be subject to that limitation. The workmen argued that their termination was a retrenchment under section 25F, entitling them to compensation of 15 days' average pay for every completed year of service without any upper limit. However, the court held that the termination of services was on account of the closing down of the undertaking, which commenced gradually from 1955 and culminated on July 24, 1957, with the winding-up order. The court concluded that the closure was due to "unavoidable circumstances beyond the control of the employer," as per the explanation to the proviso to section 25FFF(1). Consequently, the compensation was rightly limited to three months' average pay as held by the liquidator.

Issue 2: Validity of the Industrial Tribunal's Award

The second issue concerned the validity of the Industrial Tribunal's award made on August 5, 1957, regarding annual increments and strike wages for the "staff members" of the company. The liquidator argued that the award was void as no leave of the court was taken under section 446 of the Companies Act for the continuance of the proceedings after the winding-up order. The court examined the applicability of section 446, which requires leave of the court for the continuance of any pending proceeding after a winding-up order. The court noted that section 446 does not apply to proceedings before an Industrial Tribunal, as such proceedings are not in the nature of an action against the property of the company but are meant to settle industrial disputes in the public interest. The court held that section 446 of the Companies Act does not apply to proceedings under the Industrial Disputes Act, as these proceedings are not for the enforcement of personal rights against the company's assets but for resolving industrial disputes. Therefore, the Tribunal's award was not void for want of leave under section 446.

Additional Observations:

- The court clarified that the termination of services of the petitioners was due to the closing down of the undertaking, which was gradual and due to unavoidable circumstances beyond the control of the employer.
- The court emphasized that the Industrial Disputes Act is conceived in the public interest, aiming to ensure fair terms for workmen and secure industrial peace, thus transcending the private interests of the company's creditors and members.
- The court also addressed the controversy regarding the terms of the award, concluding that the workmen were entitled to increments from 1952 to 1957, with arrears of pay granted retrospectively for the years 1952 to 1954.

Conclusion:

The petitions were allowed to the extent indicated in the judgment. The petitioners were directed to file statements showing the amounts due to them in accordance with the court's order, which the liquidator was to verify and file into court. The liquidator was also ordered to pay the petitioners' costs from the assets of the company.

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