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TMI Blog2003 (1) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... The creditors of the mill moved a winding up petition before this Court. On 13th January, 1977 this Court ordered the winding up of the company and appointed the Official Liquidator as "Liquidator" of the Company. By an order dated 10th March, 1977 this Court ordered the Central Government to authorise a person or body of persons to take over the management of the said company for a period not exceeding five years and directed the Official Liquidator to handover management of the textile mill to the authorised person to be appointed by the Central Government under the Industries (Development and Regulation) Act, 1951. 4. On 11th March, 1977 the Central Government appointed the Petitioner, the Maharashtra State Textile Corporation as the authorised person under Section 18FA of the Industries (Development and Regulation) Act, 1951 to take over management of the textile mill. The Petitioner as an authorised person, took charge of the management of the textile mill and restarted the mill on 1st August, 1977. Upon restarting of the mill, the Petitioner employed afresh the erstwhile employees of the mill on different dates. The 1st Respondent was re-employed on or about 14th N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous service for a period of 17th years, 7 months and 14 days and has held him entitled to ₹ 6,932.60. 12. Ms. Doshi, learned Counsel for the Petitioner submits that there was a break in service. A winding up order was passed on 13th January, 1977 which had the effect of terminating the services of the Respondent under Section 445 of the Companies Act. The Respondent was re-employed on 14th November, 1977 after the Petitioner was appointed as an authorised agent for the purpose of management of the mill under Section 18FA of the Industries (Development and Regulation) Act, 1951 on 11th March, 1977. Therefore, according to the learned Counsel for the Petitioner, the period from 13th January, 1977 to 14th November, 1977 was in fact a break in service and must be recognised as such for the purpose of computing gratuity. 13. Mr. Ganguli, the leaned Counsel for the Respondent disputes the above contention since according to him though normally the consequences of a winding up order is the termination of employment, in the present case the application of Sub-section (10) of Section 18FA of the Industries (Development & Regulation) Act, 1951 had the effect of staying the proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yed shall be excluded." 16. On a plain reading of Sub-section (10) it is clear that the sub-section provides that the winding up of the company shall remain stayed "during the period of such management or control", and not from the inception of winding up. It is, therefore, not possible to accept the contention of the learned Counsel for the Respondent that the stay can be taken to be effective from the date the winding up order was passed on 13th January, 1977. It cannot be artificially taken to be a period prior or subsequent to the period of management or control. In the present case, the period of such management or control commenced on the date of the order under Section 18FA of the Industries (Development and Regulation) Act by which the Petitioner was appointed as an authorised person i.e. on 11th March, 1977 and not prior thereto. Therefore, it cannot be said that the winding up order dated 13th January, 1977 stood stayed from inception and the services of the Respondent was not terminated as a consequence thereof. It must therefore be held that the Respondent's service were terminated as a consequence of Section 445 of the Companies Act on 13th January, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sult of continuance of any employee of a company in the service of the Corporation shall be borne by the Corporation in respect of the period on and after the date of taking over of the management of the undertaking under Section 18FA of the Industries (Development and Regulation) Act. This sub-section, therefore, clearly shows the intention of the legislature to fasten the liability for the continuance of any employee in respect of the period after the taking over of management of the undertaking. The phrase "liability accruing or arising as a result of continuance of any employee in the service of the Corporation" certainly includes the liability as to pension, gratuity and other matters. It cannot be said that merely because the words pension, gratuity and other matters are absent in Sub-section (2), these are not liabilities as a result of continuance of an employee in the service of the Corporation, and therefore these liabilities became the liabilities of the Corporation from the appointed day. Such a construction would defeat the intention of the Legislature in enacting Sub-section (2) with a non-obstante clause, the intention being to fasten liability on the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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