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TMI Blog2016 (2) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... eks quashing of an adjudication made by Official Liquidator in respect of 11 workmen set out in a resubmitted report, being OLR No.158 of 2010, of the Official Liquidator and re-adjudication of the claims on the basis of an order and judgment passed by the Industrial Court in Complaint (ULP) No.144 of 2005 dated 2 July 2005. 2. The facts of the case may be briefly set out as follows: (i) In or about 1991, KMA Ltd. (in liquidation) (hereinafter referred as "the company") was referred to BIFR in a suo motu reference. On 16 April 1993, BIFR passed an order approving a scheme of rehabilitation for the company. The scheme envisaged taking over of the management of the company by a workers' cooperative. Under the scheme, each worker was entitled to become a member of the cooperative and also continue as an employee of the company upon payment of Rs. 20,000/- (for workers working in the Mumbai unit of the company) and Rs. 15,000/- (for workers working in the Bangalore unit). 50% of the wages of workmen due from the year 1991 and upto the date of restarting of the production through the workers' cooperative was to be converted under the scheme to equity and the balance 50% was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the workmen of the company as well as the company and the consortium of banks and financial institutions of the company, challenged the orders of the Industrial Court and DRT. Three writ petitions, one by the Company, one by the Union and one by the lead bank on behalf of the Consortium of banks, were filed in this behalf. In 2007-08, negotiations were held between the banks and the registered trade union regarding the claims of workmen as well as secured creditors. Consent terms specifying the amounts payable to both workmen and secured creditors including the consortium of banks were arrived at. At general body meetings of the union, resolutions accepting the culmination of negotiations and approving draft consent terms to be filed in terms thereof, were approved. Workmen signed affidavits accepting the amounts set out in the consent terms towards full and final settlement of their dues and authorised the union to sign the consent terms. Accordingly, consent terms were signed between the union and the banks. Thereafter, on 8 July 2008, a Division Bench of this Court disposed of all three writ petitions in accordance with the consent terms, in the presence of dissenting workmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kmen from Mumbai and Bangalore units. Several meetings were held before the Official Liquidator for adjudication of these claims. On 5 May 2010, the Official Liquidator presented a report, seeking extension of time for adjudication as also directions to the parties to provide copies of claims and make submissions on the claims. On 6 May 2010, the Company Court allowed the report. Several further meetings were thereafter held before the Official Liquidator for adjudication of the claims of dissenting workmen. A resubmitted report was filed by the Official Liquidator, being resubmitted OLR No.158 of 2010, submitting inter alia that the amounts payable under the consent terms being higher than the adjudicated amounts, the dissenting workmen be paid their dues in accordance with the consent terms. (xi) In or about October / November 2011, the present company applications were respectively filed by the individual dissenting workman - Ms. Triveni Kulkarni and the rival union of workmen for adjudication of their claims, as noted above. By an order dated 2 February 2012, these applications were partly allowed by the Company Court inter alia directing the Official Liquidator to adjudicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9A can wait (and which they would like to be kept open) till there is availability of surplus of funds, their dues under Section 529A be determined and paid from the amount set apart for the purpose. Ms.Doshi, on behalf of the registered Union, opposes the applications. She submits that the dissenting workmen cannot oppose the consent terms. Many of them have given affidavits accepting the consent terms. She submits that even otherwise in the facts of the case, the consent terms need to be adhered to. She opposes the basis on which Mr.Ganguly and Mr.Naidu calculate their entitlements under Section 529A. Based on these rival submissions, the following questions broadly arise for the consideration of this Court : (a) Whether the dissenting workmen are bound by the consent terms or whether they are entitled to be paid in accordance with Sections 529 and 529A of the Companies Act, 1956? (b) If they are to be paid according to their entitlement under Sections 529 and 529A, upto what date are they entitled to be paid wages? (c) Whether they are entitled to any (i) notice pay, (ii) leave wages, (iii) bonus or (iv) gratuity and (v) any interest on these dues? 5. The dissenting workmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orkmen, who were in employment, were entitled to monthly wages till subsistence of the contract of employment. This order inter alia was the subject matter of challenge in the writ petitions, namely, Writ Petition Nos.285 of 2006, 195 of 2006 and 459 of 2007. In accordance with the consent terms arrived at by the registered union and the secured creditors, the Division Bench hearing the writ petitions disposed of the petitions. The consent terms provide for distribution of assets of the Company in a particular manner amongst workmen and secured creditors. The distribution inter se amongst workmen is provided for in an annexure prepared by the registered union and forming part of the consent terms. With these terms being put in place, the dues provided for by the order of Industrial Court necessarily get varied. The Division Bench whilst disposing of the petitions in terms of the consent terms was conscious of the fact that the Company Court was seized of liquidation proceedings in respect of the company and accordingly, directed the parties to seek concurrence of the Company Court to the consent terms. The Company Court did give such concurrence in its order dated 13 March 2009, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company at Mumbai and Bangalore was passed by this Court in Writ Petition No.1512 of 2002 on 20 December 2012.) On the other hand, the dissenting workmen root for '24 October 2008' as the relevant date, contending that the contract of employment between a company and its workmen subsists till the date of the winding up order and that is the date upto which the wages ought to be computed. (The Company Court ordered the company to be wound up on 24 October 2008.) 9. On the relevant date upto which workmen's dues in winding up need to be calculated, it is to be noted that under Section 445(3) of the Companies Act, 1956, the contract of the Company (in liquidation) with its employees comes to an end on the passing of the winding up order. No discharge of workmen at any time earlier can be shown in the facts of the present case. It is not possible to accept the contention of Ms.Doshi that since the winding up order relates to the date of presentation of the petition, a similar relation-back obtains in the case of notice of discharge under Section 445(3). A learned Single Judge of this Court in Vishwanath Namdeo Patil vs. Official Liquidator of Swadeshi Mills [2013] 181 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho are entitled to wages under the scheme. The others, who did not become such members and who did not work, cannot claim to have continued as workmen of the Company. A scheme sanctioned by BIFR under SICA has the effect of altering contracts of the Sick Industrial Company with its shareholders, creditors, guarantors and employees. Under Section 18(8) of SICA, such scheme is binding on the shareholders, creditors, guarantors and employees. The Company in the present case offered to provide employment to those workmen who agreed to join the Workers' cooperative on the terms of the sanctioned scheme. Those who did not so join must be treated as having refused to offer themselves for service and accordingly, ceased to be workmen. They cannot now demand wages after 20 September 1991, i.e. the date of closure of the factory. Even the Principal Labour Court, Bangalore has, on an application of the rival union whom Mr.Naidu represents, held in its award of 22 March 2004 that there was no refusal of employment on the part of the company to those workmen who did not join the Worker's cooperative and work for the Company under the Workers' co-operative. 11. In view of the forego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a repugnant State law, either directly, or by itself enacting a law repugnant to the State law with respect to the 'same matter'. In that case, the State law would become void as soon as the subsequent law of Parliament creating repugnancy is made even though such subsequent law does not expressly repeal a State law. The question which would always arise in such case is whether the subsequent law is with respect to the 'same matter'. Mr Naidu submits that Section 25-O of the Act applicable in Maharashtra, which confers an additional benefit on the workmen of a closed undertaking, is not in any event repugnant to the subsequently enacted Section 25-O of the Union law. I am afraid that is not quite correct. As held by a Full Bench of our Court in the case of Britannia Industries Ltd. Vs Maharashtra General Kamgar Union2009 II CLR 536, the amended provisions of Section 25-O (introduced by the Central Act, i.e. Act No.46 of 1982) are a complete and self-contained code. If it is so, that means it covers the whole field on the subject, namely, closure of an industrial undertaking, and any provision in the State law on the subject, which is at variance with it, is necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of leave generally, but only in the contingencies referred to therein. So far as accumulation of unavailed leave is concerned, Subsection (5) enables a maximum accumulation of leave of thirty days by carrying forward earned leave. The leave that can, thus, be encashed under Section 79 of the Factories Act is only the earned or accumulated leave during the calender year upto a maximum of thirty days under conditions of Sub-section (3). The rate of such wages has to be as per Section 80 of the Factories Act. 15. As held by this Court in the case of Swadeshi Mills (supra), bonus is not included in the category of wages under Sections 529 and 529A of the Companies Act and cannot be accorded any priority. The dissenting workmen in the present case accept this position, though they would like to keep their option to claim bonus in the event of availability of surplus funds so as to satisfy nonpriority debts of the Company (in liquidation). 16. On gratuity, all parties including the Official Liquidator agree that gratuity would be payable. The consent terms provide for such gratuity. So does the adjudication made by the Official Liquidator. The dissenting workmen would accordingly have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken on record in the writ petitions referred to above and accepted by the Company Court, an option needs to be given to the dissenting workmen to accept their respective dues in accordance with the consent terms. 19. In the light of the foregoing discussion, the following order is passed : (i) The Official Liquidator is directed to adjudicate the claims of the Applicants in the Company Applications herein on the basis of this order and after taking into account the documentary evidence available on record and verifying the respective claims; (ii) The Official Liquidator shall enlist the assistance of any advocate and / or chartered accountant on his panel for the purpose of such adjudication. The costs of such advocate and / or chartered accountant shall be defrayed from the funds of the Company (in liquidation) available with the Official Liquidator; (iii) At any time during the course of such adjudication or after adjudication but before disbursal of payment on the basis thereof, the Official Liquidator shall give an option to each of the Applicants to accept their dues in accordance with and on the principles of the consent terms taken on record in Writ Petition Nos.285 ..... 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