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TMI Blog1999 (9) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... er in Company Petition No. 2 of 1995R is the Union of the workers of another unit of the same corporation, namely, Swarnrekha Watch Factory at Namkom and is known as Swarnrekha Watch Factory Employees Union or Swarnrekha Ghari Kharkhana Shramik Sangh and they shall hereinafter be referred to as 'the petitioner-union (s)'. Both the applications purporting to be under sections 433(e), 434( a) and 439(b) of the Companies Act, 1956 ('the Act') have been presented by respective Unions of the workers of the High Tension Insulator Factory and Swarnrekha Watch Factory seeking winding up of the Bihar State Industrial Development Corpn. Ltd. and the units concerned on the ground that they have been unable to pay their rightful dues, such as, Salary, allowance and bonus, etc. Since grounds canvassed for winding up in both the cases are identical in nature, these two petitions have been heard together and are being disposed of by this common judgment. 2. The Bihar State Industrial Development Corpn. Ltd., a public sector undertaking of the Government of Bihar registered under the Companies Act, having its registered office at Indira Bhawan, Bailey Road, Patna, is common in both the petitions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of bonus and salary, etc., as approved by the State Government for its employees in terms of the recommendation of the said Committee. As the employees and workers of opposite party No. 1 and opposite party No. 3 were not being paid their salary, etc. in terms of recommendation of the Fifth Pay Revision Committee, representations were made by the Work- ers' Unions and the Confederation of Unions of opposite party No. 1 to opposite party No. 2. On such representations having been made by the Workers Unions including the petitioner-Union, at a meeting of those Unions with opposite party No. 2 it was resolved that in terms of recommendations of the Fifth Pay Revision Committee, payment of bonus, etc., to the workers shall be made only on getting financial assistance from the State Government. When payment was not made to them in terms of the assurance given by opposite party No. 2, the petitioner-Union submitted a memo of representation dated 31-3-1992 to the General Manager of opposite party No. 3 demanding payment of salary of the workers for the months of January, 1992 and February, 1992 together with arrears fallen due to them in terms of the recommendations of the Fifth Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the factory and working capital, so that the unit (opposite party No. 3) was made viable. When the workers of opposite party No. 3 were still not paid their salaries, etc. even thereafter, the petitioner-Union again approached this Court by filing yet another writ application, being CWJC No. 3202 of 1994R, which stood dismissed on 30-1-1995 with observation that the factory being one of the units of BSIDC, the latter should take all steps to make the unit viable so that the employees may be paid their salaries. In the meantime, representations were made by the petitioner-Union to the Chairman of Public Sector Undertakings, the Chief Justice of this Court, and others with no fruitful result. According to the petitioner-Union employees/workers of opposite party No. 3 were not paid their salary from October, 1992; deferred C.L.A. between March, 1986 and March, 1990; bonus for the year 1991-1992; overtime wages from May, 1991 till the presentation of the application, except for the month of April, 1992; and 90 per cent of the arrears of their salaries in terms of the recommendations of the Fifth Pay Revision Committee accepted and implemented by the State Government. Since conflicti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to seek winding up of opposite party Nos. 1 and 3. In any event, the Unions representing those workers have no locus standi to present these applications for winding up. They have also stated that the petitioner-Unions have not made out any case for winding up of opposite party Nos. 1 and 3 on the ground that it is just and equitable in the opinion of the Court that the companies be wound up. It is further contended on their behalf that no notice of the demand of the so-called debt was served on them as required under section 434(1)(a). In this view of the matter, it has been submitted that both the petitions are fit to be dismissed. 7. In their counter-affidavits, the opposite parties referred to above have not denied their liabilities to Pay to the workers of opposite party No. 3 in both the cases. However, it has been stated that the units are facing financial constraints and are unable to make full payment of the salaries to the employees. To some measure, they have tried to blame the employees/workers for the poor financial conditions of both the Units. 8. Therefore, the point for consideration in both the company petitions is whether the petitioner-Unions have locus s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances in which a company may be wound up by the court. According to this section, a company may be wound up by the Court : (a) if the company has, by special resolution, resolved that the company may be wound up by the Court ; (b) if default is made in delivering the statutory report to the Registrar or in holding the statutory meeting; (c) if the company does not commence its business within a year from its incorporation, or suspends its business for a whole year ; (d) if the number of members is reduced, in the case of a public company, below seven, and in the case of a private company, below two; (e) if the company is unable to pay its debts; and (f) if the Court is of opinion that it is just and equitable that the company should be wound up. 12. Both the company petitions purport to have been presented under sections 433(e), 434( a) and 439(1)(b). In other words, these two petitions have been preferred as if workers of the two units of the BSIDC (oppsite party No. 1) are creditors and the latter is unable to pay its debts in view of the fact that the said company or for that matter its respective units have failed, or are unable, to pay the salary, etc., of those workers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iabilities of the company. 14. The term 'debt' has not been defined anywhere in the Act. Ordinary dictionary meaning of the word 'debt' is what one owes to another; or what one becomes liable to do or suffer; a state of obligation or indebtedness, according to Chambers English Dictionary. The Oxford Advanced Learners' Dictionary defines the word 'debt' as a sum of money owed to somebody that has not yet been paid. According to the definition of the word given in the Law Lexicon compiled by P. Ramanath Aiyar, 'debt' is a sum of money due under an express or implied agreement; or amount due or payable from one person to another in return for money, services, goods, or other obligations. Thus, in common parlance, 'debt' is a sum of money due from one person to another. However, this word has been used in different statutes to connote different meaning according as the context in which it has been used or referred to in those statues. In CWT v. Pierce Leslie & Co. Ltd. AIR 1963 Madras 356 in the context the word has been used in the Wealth-tax Act, and the Income-tax Act, a Division Bench of the Madras High Court has held that "debt is a liquidated money/obligation for recovery of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n stated by the petitioner-Union therein is that the workers of the Malleable Cast Iron Foundry of High Tension Insulator Factory (opposite party No. 5), a unit of BSIDC had not been paid their salary from October, 1992, deferred C.L.A. from March, 1986 to March, 1990, bonus for the year 1991-92, overtime wages from May, 1991 till the filing of the application except for the month of April, 1992, and 90 per cent of the arrears of salary payable in accordance with the recommendation of the Fifth Pay Revision Committee. This description of the dues of the workers of the unit in question hardly satisfies the ingredients of debt within the meaning of clause (a) of sub-section (1) of section 434. Likewise, in paragraph 43 of Company Petition No. 2 of 1995R, the dues of the workers of Swarnrekha Watch Factory (opposite party No. 3 therein) have been described as a sum of Rs. 12,64,705 on account of wages, etc., from April, 1993 to April, 1994; Rs. 81,120 on account of the wages of 8 casual employees for the same period; Rs. 5,46,000 towards arrears of salary withheld contrary to the recommendation of the Fifth Pay Revision Committee; Rs. 4 lakhs on account of bonus for the years 1990, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... delivered on the office of the General Manager (opposite Party No. 4) or Manager (opposite Party No. 4) respectively of those units. 18. Mr. Tapen Sen has, however, contended that law does not require any special form of notice of demand to be delivered in compliance with the provisions of clause (a) of sub-section (1) of section 434. According to him, the demand need not be in any special form nor is it necessary to use the word 'demand' in the notice. A preemptory request or call for payment would be sufficient. He has submitted that various annexures to the applications indicate that the Unions representing the workers had been making representations and filing writ applications demanding payment of their salaries, etc. Therefore, according to him, the requirement of clause (a) of sub-section (1) of section 434 shall be taken to be substantially complied with. I find myself quite unable to agree with him. According to the provisions of clause (a) of sub-section (1) of section 434, the demand in whatsoever form, has to be made in the hands of the creditor or creditors. According to sub-section (2) of section 434, the demand referred to in clause (a) of sub-section (1) shall be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 998, they stated that 79 employees of Ceramic Malleable Cast Iron Foundry and 60 of Swarnrekha Watch Factory have been paid their salaries up to 1993. In the subsequent paragraphs, they stated that those employees were paid up to May, 1993 only, although in the reply, the petitioners-Unions submitted that they have not been paid beyond January, 1993. By filing yet another supplementary counter-affidavit on 8-9-1998, opposite Party No. 1 informed this Court that Swarnrekha Watch Factory (opposite party No. 3 in company Petition No. 2 of 1995R) and Ceramics Malleable Cast Iron Foundry (opposite party No. 5 in Company Petition No. 1 of 1995(R)] were lying closed since 1992. At the time of hearing, Mr. Kameswar Prasad submitted that since there is no chance of Swarnrekha Watch Factory being revived, attempt is being made to absorb its employees in some other viable units of BSIDC. On 23-2-1999 another affidavit was filed on behalf of the General Manager of High Tension Insulator Factory and Swarnrekha Watch Factory, who is probably looking after both the factories in absence of any Manager of Swarnrekha Watch Factory because it is lying closed since 1992, informing this Court that purs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their salaries up to 1998 without stating the month of payment, the petitioner-Union in Company Petition No. 1 of the 1995R has filed affidavit denying this assertion and stated that the workers represented by them have not been paid from February, 1992. Drawing my attention to a decision of a Full Bench of this Court reported in 1997(1) BLJ 1010, Mr. Tapen Sen has submitted that since in their counter-affidavit, the opposite parties have admitted that they were not able to pay the dues of the workers due to paucity of fund, they are liable to be wound up. 21. In the case of Manikant Pathak v. State of Bihar, writ applications had been filed by the employees of Bihar Finished Leathers Ltd., a subsidiary company of the Bihar Leather Industries Development Corpn. Ltd. and Bihar State Agro Industries Development Corpn. Ltd. for a direction to the State Government to provide sufficient fund to the said corporations to facilitate payment of salaries of the employees of those corporations. The respondents, namely, the corporations aforesaid admitted their liabilities but took a plea of non-availability of sufficient fund generated either from their own resources or made available to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3 in Company Petition No. 1 of 1995R)] and Swarnrekha Watch Factory (opposite party No. 3 in Company Petition No. 2 of 1995R) are lying closed since 1992 and there is no chance of reviving them. Attempt is being made to absorb their employees in some other units of the corporation or some other Government companies or departments of the Government. As regards the employees of High Tension Insulator Factory (opposite party No. 3 of Company Petition No. 1 of 1995R) payments are being made to them and attempt is also being made to revive that unit. Affidavit has also been filed stating that even the employees of the Ceramic Malleable Cast Iron Foundry have been paid their salaries, etc., up to 1998, although this fact has been denied by the petitioner-Union in Company Petition No. 1 of 1995R. Under the Act only it is the company which can be wound up and not any unit or the factory thereof whose workers have not been paid their salary, etc. The objects for which Bihar State Industrial Development Corpn. was established include promotion, establishment and execution of industries etc. in the State; promotion and operation of Schemes for industrial development of the State of Bihar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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