9911796707
TMI Blog1957 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of Hyderabad referred to the Industrial Tribunal a dispute between the workmen and the company. The issue referred to the Tribunal for decision was whether the contemplated lock-out of the company with effect from 1st July, 1952, was justifiable and if so to what relief would the workmen be entitled. By its award dated the 16th of August, 1952, the Industrial Tribunal held that in the event of the company closing down its factory at any time within one year from the date when the award became enforceable, it should pay to each workman half month's wage for every completed year of service as compensation. This award was published in the Hyderabad Gazette on the 29th of August, 1952. At a meeting of the creditors of the company held on the 23rd of August, 1953, a resolution for voluntary winding up of the company was passed and a liquidator was appointed for winding up its affairs. The liquidator so appointed having resigned, at a meeting of the creditors of the company held on 30th October, 1954, the present petitioner was appointed liquidator. Now, the compensation payable to the workmen by the company as per the award of the Industrial Tribunal abovementioned amounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies Act of 1956 became law on the 18th of January, 1956, and came into force on the 1st of April, 1956. Section 530 of the new Act corresponds to section 230 of the old Act. It is provided by sub-section (9) of section 530 that it shall not apply in the case of a winding up where the date referred to in sub-section (5) of section 230 of the Companies Act, 1913, occurred before the commencement of this Act, and, in such a case, the provisions relating to preferential payments, which would have applied if this Act .had not been passed, shall be deemed to remain in full force. The date referred to in sub-section (5) of section 230 is, in the case of a company ordered to be wound up compulsorily, which had not been previously commenced to be wound up, the date of the winding up order, and in any other case, the date of the commencement of the winding up. In this case the date of the commencement of the winding up occurred on the 23rd of August, 1953, before the commencement of the Companies Act of 1956. Hence the provisions relating to preferential treatment which would apply are those contained in section 230 of the Companies Act of 1913. The material provisions of that section r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untary winding up was admittedly passed on the 23rd of August, 1953. Therefore, the period of two months for which the labourer or workman could claim preferential treatment are the two months next before the 23rd of August, 1953. The contention of the petitioner is that the amount of compensation payable to the workmen under the award of the Industrial Tribunal is not wages in respect of services rendered to the company and that the said amount does not appertain to the period mentioned in sub-section (1)( c ) read with sub-section (5) of section 230 of the Act. The first of the questions which arise for consideration is whether the amount awarded by the Tribunal as compensation is "wages". The term "wages" has not been denned under the Companies Act. Section (2)( rr ) of the Industrial Disputes Act defines "wages" as meaning all remuneration capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to a workman in respect of his employment, and as including ( i ) such allowances (including dearness allowance) as the workman is for the time being entitled to etc. It may be noted here that section 2( rr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t but the situation that arises on a lay-off is the very antithesis of the fulfilment of the contract. Not only is the contract not fulfilled, but the contract need not be fulfilled because the employee is under no obligation to carry out any orders of his employer and he is at perfect liberty to employ himself elsewhere. The very term 'lay-off' assumes and implies that the employer is not in a condition to offer employment to his employee and therefore he terminates his employment temporarily during the continuance of the emergency and while that emergency continues the employee is unemployed." The learned Judges also observed : "But what must be considered is whether there was an effective and subsisting contract of employment of master and servant at the material date and the material date is during the period of the lay-off. If during that period the master cannot command his servant to do his work and if the servant is under no obligation to do the work of the master, then it is difficult to understand how a subsisting contract of employment continued during the period of the lay-off." Drawing a distinction between wages and compensation, the learned Judges pointed out: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin its ambit all sums payable to an employee by reason of the termination of his employment. But section 2( rr ) of the Industrial Disputes Act, which defines "wages", includes only gratuity payable on the termination of an employees' services within the definition of "wages". There is, therefore, some difference between the definition of "wages" contained in section 2( rr ) of the Industrial Disputes Act and in section 2( vi ) of the Payment of Wages Act. As I have already stated, it may also be noted that section 2( rr ) defining "wages" has been inserted in the Industrial Disputes Act for the first time in 1953 and was not part of the statute when the award was made. It has to be further noted that section 230(1)( c ) of the Companies Act, 1913, does not contain the wide definition given to the term "wages" either in section 2( rr )of the Industrial Disputes Act or in section 2( vi ) of the Payment of Wages Act but confines it only to wages in respect of services rendered to the company and not to sums payable upon the termination of services of an employee. On behalf of the respondents, the learned Government Advocate contended that what is payable as compensation also c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the workmen of the conditions of service applicable to them within the meaning of clause ( a ) nor a discharge or punishment, whether by dismissal or otherwise, of the workmen within the meaning of clause ( b ) of section 33 of the Industrial Disputes Act, As has been pointed out by Balakrishna Ayyar J. in Sri Ramachandra Spinning Mills v. Province of Madras AIR 1956 Mad. 241, if an employer shuts down his place of business as a means of reprisal or as an instrument of coercion or as a mode of exerting pressure on the employees, or generally speaking, when his act is what may be called an act of belligerency there would be a lock-out. If the Industrial Tribunal finds that there was an illegal lock-out, the employees would be entitled to be paid their wages because a lock-out does not automatically terminate the services of the workmen and therefore in the case of an illegal lock-out the sums payable to the employees may be entitled to preferential treatment under section 230(1)( c ) of the Companies Act. But as has been pointed out by the Supreme Court in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union [1957] 11 FJR 262 the industrial dispute to which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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