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TMI Blog2008 (9) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... ohan Shukla, learned counsel for opposite party No. 1. 2. The opposite party No. 1-Avadh Rubber Limited is a public limited company incorporated under the Companies Act, 1956. The petitioner has filed the present company petition for winding of the company under section 433( e ) of the Companies Act as the company has failed to pay the salary to the petitioner for some periods and the same has become due. 3. Learned counsel for the opposite party No. 1 has raised objection against the maintainability of the writ petition that for the payment of arrears of salary, the company may not be wound up under section 433( e ) of the Companies Act as the arrears of salary is not debt. 4. To determine the question as to whether the arrears of salary is debt or not and on default of payment of arrears, the company is liable to be wound up or not, the relevant provisions of the Act are to be considered, which are quoted hereinunder : "Section 433. Circumstances in which company may be wound up by Tribunal. A company may be wound up by the Tribunal, ( a )to ( d )****** ( e )if the company is unable to pay its debts; Section 439. Provision as to applications for winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by him/her whereas debt is not remuneration. Debt is something which is borrowed by a person on settled terms and conditions and settled rate of interest and can be re-settled between the parties. 6. He further placed reliance upon the judgment rendered in the case of National Textile Workers Union v. P.R. Ramakrishnan [1983] 1 SCC 228. In this case, there was a dispute between two groups of shareholders and since it could not be settled amicably, a petition for winding up of the company was filed. The employees of the company through its Union also filed an application for impleadment as respondents. Their locus to appear and oppose the winding up petition was challenged on the ground that the workmen who were members of these three Unions were neither creditors nor contributories of the Company. The Company Judge held that workmen had no right either to get impleaded in the winding up petition or even to intervene in the winding up petition. It was observed that the duty of the court to consider the interest of the workers of the company would not create a right in such workers to intervene in the absence of express provision in the Companies Act and in the teeth of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a winding up petition is filed against a company. On behalf of Unions, a narrow contention advanced that the workmen were entitled to intervene in the winding up petition and to be heard before any order was made by the Company Judge in the winding up petition, because any such order might affect the interest of the workmen. The respondents 1 to 5 however seriously challenged the locus of the workmen to appear and be heard in the winding up petition and contended that so far as the winding up petition is concerned, it is only the creditors and contributories and in certain specified contingencies the Registrar and the Central Government who are entitled to appear at the hearing of the winding up petition whether to support or to oppose it. The right to be heard in winding up petition is governed solely by the provisions of the Companies Act, 1956 and since no such right is conferred on the workmen by any provision of the Companies Act, 1956, the workmen are not entitled to intervene in the winding up petition, even though the making of a winding up order may result in termination of their services. The workmen, according to respondents 1 to 5, could appear at the hearing of the wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of section 529A, learned counsel for the opposite parties submitted that in the case of winding up of a company, there has been given a priority for payment to the workmen s dues and debts due to secured creditors and thus these two dues are different dues and cannot be mixed in one. Therefore, the workmen s dues cannot be said as a debt for recovery of which, petition for winding up of the company can be filed and he further submits that in any manner the word debt does not include the workmen s dues. Therefore, from the provisions of the Act, it is clear that the legislation in legislating the Companies Act was in clear intention to permit the filing of the company petition including on some other grounds if the company is unable to pay its debts. He further relied upon a decision of the Hon ble Supreme Court in the case of Mor Modern Co-operative Transport Society Ltd. v. Financial Commissioner Secretary to Government of Haryana [2002] 6 SCC 269 in which it has been held that it is trite to say that the intention of the Legislature must be found by reading the statute as a whole. The court must ascertain the intention of the Legislature by directing its attention no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turo . A debt involves an obligation incurred by the debtor and the liability to pay a sum of money in present or future. The liability must, however, be to pay a sum of money, i.e. , to pay an amount which is determined or determinable in the light of factors, existing on the date when the nature of the liability is to be ascertained." 13. In the light of the aforesaid decision of the Hon ble Supreme Court, the High Court concluded that the dues, which are recoverable by the petitioner from the respondent-company, are the debts. As a corollary, the employee whose debts are not paid shall have to be treated as a creditor. In the aforesaid judgment, the Delhi High Court had discussed the judgment given by the Madhya Pradesh High Court in the case of Pawan Kumar Khullar ( supra ) and contrary to that, the judgment given by the Andhra Pradesh High Court in the case of Capt. B.S. Demogray v. VIF Airways Ltd. [1998] 94 Comp. Cas. 291 1 ; the judgment of the Hon ble Supreme Court given in the case of Kesoram Industries Cotton Mills Ltd. ( supra ) and expressed its full agreement with the view taken by the Andhra Pradesh High Court. The Hon ble Judge has also taken care of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed the company petition for winding up of the company. An objection was raised on behalf of the opposite parties on the point of maintainability of the petition on the ground that the petitioner is one of the ex-directors of the respondent-company and he cannot resort to the provisions of the Companies Act, 1956, for winding up of the respondent-company for recovery of his dues. He has remedy of the suit for recovery of the amount allegedly due against the respondent-company. Being in agreement with the objections raised by the opposite parties, the Hon ble Court held that the petitioner being one of the ex-directors of the company cannot resort to the provisions of the Companies Act, 1956 but after perusal of the aforesaid decision, I do not find that the Hon ble Judge has discussed the term "debt" as has been discussed by the Hon ble Courts in other matters, which are referred hereinabove whereby the salary has been included in the term "debt" for the purpose of filing petition for winding up on the eventuality of non-payment of debt by the Company. After going through the decision discussed hereinabove, I am of the view that the employee of the company can file the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over a period of time, it was felt that it was not possible for the petitioner to fulfil his duties as a Director of the Company. Under the circumstances, on 18-10-1996 the company had appointed alternative authorised signatory because the petitioner was not available for signing cheques and other bank documents. Further, on 23-12-1999, the company changed name of occupier and Mr. Subhash Sarraf was replaced. The petitioner was not even available for Board of Directors meetings and it was felt that he would not be able to fulfil his duties as Director. As a consequence, in August, 2001 the petitioner was informed the same and he offered to resign. The request was accepted on 27-8-2001 and he was relieved of charge of director of company. The petitioner has controverted these facts and submitted that the story of resignation is fabricated and has further submitted that for the removal of Director, procedure prescribed under the Act has not been followed and the Registrar of Companies was also not intimated. It has further been submitted by him that there was unwarranted pressure upon the petitioner to sign blank cheque books and to hand over the same to the Managing Director of Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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