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TMI Blog1959 (11) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to that limitation as held by the liquidator. The second is, whether the award made by the Industrial Tribunal, Alleppey, on August 5, 1957, on a reference under section 10 of the Industrial Disputes Act (and published under section 17 in the Gazette dated August 27, 1957), of a dispute between the company and those of its workmen as come under the category, "staff members", is void for the reason that no leave of this court was taken under section 446 of the Companies Act for the continuance of the proceedings after the winding up order and the liquidator is therefore entitled to ignore that award. The business of the company was the manufacture and sale of coir and coir products. In 1953, 1954 and 1955 it suffered heavy loss owing, it is said, to adverse trade conditions, the loss in 1952 being phenomenal and amounting to half its paid up capital. In June 1955, the board of directors of the company decided that the company should go into voluntary liquidation and resolved that necessary steps be taken for the purpose. A general meeting was called for the purpose, but owing to certain supervening complications including a court injunction, the meeting could not be held and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quidator was confined to the two petitions filed against him, and it observed that it was not concerned with the continuation of the adjudication of the reference. It declined to express any opinion on the argument advanced on behalf of the Staff Association that section 446 of the Companies Act had no application to such proceedings. The proceedings before the Tribunal went on without the official liquidator participating in them either in his capacity as provisional liquidator or as liquidator, although, of course, he had notice of the proceedings. By the award, the workmen were given increments as also wages during the strike period. But, as we have seen, in adjudging their proofs, the liquidator has ignored the award. The first question does not present much difficulty. The case of the workmen is that the termination of their services was a retrenchment falling within section 25F of the Industrial Disputes Act and that they are entitled to compensation of 15 days' average pay for every completed year of service under clause ( b ) of that section without any other upper limit. In any view of the matter, the undertaking was closed down only on July 24, 1957, when the last of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for the adverse trade conditions which made it impossible for it to continue in fact it would appear that the company was depending solely on foreign buyers and that its business fell, owing to import restrictions imposed by the countries concerned. In the end, the company had to be compulsorily wound up, and there is no allegation that the winding up petition was fraudulent or collusive. In the circumstances, it can scarcely be said that the undertaking was closed down by reason merely of financial difficulties or financial losses. The liquidator was right in limiting the compensation payable to the petitioners to three months' average pay. The Tribunal's award is concerned only with those of the petitioners who are styled "staff members"; the factory hands, the workmen proper, were not parties to the dispute. The reference to the Tribunal was in June, 1956 ; the appointment of the provisional liquidator was in December, 1956 ; the winding up order was in July, 1957 ; and the award was in August, 1957. On the wording of section 446(1) of the Companies Act, 1956, which, in this respect, makes a significant departure from the language of section 171 of the Act of 1913, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly initiated under the Act. The very decision relied upon states that notwithstanding a closure, the machinery provided by the Act would continue to be available for working out any rights accrued prior to the closure. As pointed out therein, if that were not so, an employer could escape the consequences of what I might call industrial misconduct by the simple expedient of a closure, and his workmen would be left without remedy in respect of the rights given to them by the Act. I see no basis for the argument that, once a company running an industry is ordered to be wound up and has, therefore, to close down, section 446 of the Companies Act must gain ascendancy over the provisions of the Industrial Disputes Act in the determination of disputes between the company and its workmen. In my opinion, section 446 of the Companies Act can have no application to proceedings pursuant to a reference under section 10 of the Industrial Disputes Act. Giving the term, "other legal proceedings" appearing in sub-section (1) of the section, the wide meaning given to the same term in the corresponding section, section 171 of the 1913 Act, in Governor-General in Council v. Shiromani Sugar Mills ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 171 of the 1913 Act was a provision intended to safeguard the company's assets against wasteful or expensive litigation in regard to matters which are capable of determination more expeditiously and cheaply in the winding up. With due respect I agree. The Industrial Disputes Act, needless to say, is conceived in the public interest. Its object is to ensure fair terms to workmen and to secure industrial peace, so that the economy might not suffer. Although an adjudication under the Act might have the result of giving individual workmen personal rights against the property of the owner of the undertaking, be it an individual or a company, its purpose is not really that, but to settle the industrial dispute. Obviously, the purpose is something before which the personal interests of the creditors or members of the company concerned must yield, just as, for example, they must before a criminal prosecution or a proceeding under section 145 of the Criminal Procedure Code. If we turn next to section 10 of the Industrial Disputes Act, we find that, as pointed out in S.K.G. Sugar Ltd. v. Ali Hassan [1957] 27 Comp. Cas. 168 , the section makes it obligatory on the appropriate Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence under section 10 of the Industrial Disputes Act was a legal proceeding against the company falling within the scope of section 171 of the Indian Companies Act, 1913 (in other words, of section 446 of the Companies Act, 1956) their Lordships expressly stated that they would prefer not to express any opinion. At page 501 of Buckley on the Companies Acts (13th Edition), it is stated with reference to the section of English Act of 1948 corresponding to section 446 of our Companies Act, that a statutory enquiry cannot be stayed under this section. To the same effect are the observations of Rajamannar C.J. in Price v. Chandrasekharan [1951] 21 Comp. Cas. 251 , that, "section 171 of the Companies Act would have no application to enquiries, investigations and orders made either by Government or statutory bodies in exercise of statutory powers." In Mukerjee v. Krishna Dassi [1933] 3 Comp. Cas. 269 , a Division Bench of the Calcutta High Court took a similar view with reference to an enquiry under section 145 of the Criminal Procedure Code. All these support the proposition that a proceeding in performance of a statutory duty is not controlled by section 446 of the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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