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Issues Involved:
1. Authorization to deduct amounts from retrenchment compensation. 2. Mode or procedure for making payments. Detailed Analysis: 1. Authorization to Deduct Amounts from Retrenchment Compensation: The official liquidator sought permission to deduct certain amounts from the retrenchment compensation payable to the workers. These amounts included advances made by the company, rent and water tax for house accommodation, and amounts due to the Mysore Spun Silk Mills Co-operative Society Ltd. The liquidator argued that these deductions were authorized by Section 7 of the Payment of Wages Act, as amended by the Payment of Wages (Mysore Amendment) Act of 1952. Specifically, Section 7(2)(f) allowed deductions for recovery of advances, and Section 7(2)(m), added by the Mysore Amendment, allowed deductions for house accommodation provided by the employer, as authorized by the State Government. The Government of Mysore had issued an order under Section 7(2)(m) authorizing deductions for house accommodation provided by employers, the State Government, or the Mysore Housing Board. It was undisputed that the workers were housed in tenements provided by the Mysore Housing Board and that rent and water tax were regularly deducted from their wages before the company went into liquidation. The liquidator further argued that retrenchment compensation, directed to be paid as a preferential payment under Section 530(1)(b) of the Companies Act, constituted "wages" under both the Payment of Wages Act and the Industrial Disputes Act, thereby allowing the aforementioned deductions. Mr. Balaji, representing the workers, objected on two grounds: (1) deductions under the Payment of Wages Act could only be made by an employer, and the liquidator was not in an employer-employee relationship with the workers; (2) retrenchment compensation under Section 530(1)(b) of the Companies Act could not be classified as "wages." The court rejected the first argument, stating that the liability for wages or compensation continues even after the termination of the employer-employee relationship. The court emphasized that if the liquidator could not be considered an employer for deductions, the workers would also be disentitled from claiming payments, which would be detrimental to their interests. Regarding the second argument, the court referred to the definition of "wages" in Section 2(g)(vi) of the Payment of Wages Act, which includes any sum payable due to the termination of employment under any law. The court concluded that retrenchment compensation falls within this definition as it is compensation for loss of employment. The court dismissed the distinction made by Mr. Balaji between Section 25F and Section 25FFF of the Industrial Disputes Act, noting that the law treats payments under Section 25FFF as if the workman had been retrenched. Therefore, the court held that retrenchment compensation is "wages" and authorized the liquidator to deduct amounts for advances, rent, and water tax. However, regarding the amounts due to the co-operative society, the court noted the absence of agreements required under Section 34 of the Mysore Co-operative Societies Act. Without such agreements, the court refused permission to make deductions for amounts due to the society. 2. Mode or Procedure for Making Payments: The court addressed the procedure for making payments, noting that the Companies (Court) Rules prescribe the procedure and forms for such payments (Rules 276 and 277, Forms Nos. 138 and 139). Initially, there were suggestions to make payments at the mills' premises for convenience, but this led to complications and rival claims to leadership. The court directed the liquidator to follow the prescribed rules and forms, with additional instructions: - The notice in Form No. 138 should detail the gross amount of retrenchment compensation, deductions, and the net amount payable. - The notice should inform workers that they could request payment via postal money-order, with postal commission deducted. - Thumb impressions of illiterate workers and authorizations in Form No. 139 should be attested by a Magistrate, Tahsildar, or Gazetted Officer, who should verify the worker's identity. - The liquidator should verify the identity of the worker or authorized person before making payments and certify the verification in writing. The application was closed as no further directions were required.
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