9911796707
TMI Blog1963 (10) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the balance of the price due, the company had handed over to the sellers a cheque for ₹ 32,414.45 np. but the same was dishonoured by non-payment. In spite of repeated reminders and Attorneys' correspondence, the company failed to pay the sellers the above amount of ₹ 32,414.45np. Various particulars were mentioned in the petition to show that the company was in huge financial difficulties and unable to pay its debts. By the Order dated 5-8-1959 the company was ordered to be wound up. 2. Prior to the above order for winding up by a notice dated February 25, 1959, Haridas Mundhra, the Chairman of the Board of Directors of the Company, notified all the employees of the company that the company had "been incurring heavy losses over a period of about three years owing to the sustained losses and financial difficulties, the Management is unable to continue to run the Mills. further, owing to the winding up proceedings launched in the Bombay High Court by the Elgin Mills Ltd., kanpur, it has become impossible for the Management to make any effort whatsoever of keeping the Mills running". (The reference to the Elgin Mills Ltd., ought to have been to G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched: Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer the compensation to be paid to the workman under clause (b) of section 25F shall not exceed his average pay for three months. Explanation:- An undertaking which is closed down by reason merely of financial difficulties (including financial losses) or accumulation of undisposed of stocks shall not be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section. (2) xx xx xx xx 7. Under section 25F a workman who has been in continuous service for not less than one year under an employer is not liable to be retrenched by that employer except upon service on him of notice of one month in writing indicating the reasons for retrenchment and the workman has been paid, at the time of retrenchment, compensation equivalent to 15 days' average pay for every completed year of ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the mill's undertaking was closed down on account of unavoidable circumstances beyond the control of the employer. Now in this connection it must at once be stated that no one made such a contention in the proceedings for adjudication of the claimants' claim before the Liquidator. The contention has been raised for the first time on behalf of the intervening creditors, though there are no facts on record which go to prove the correctness of the contention. I will deal with this question after disposing of the question of true construction of the provisions in Section 25FFF. 13. On a reading of the provisions in sub-section (1) of Section 25FFF, it is clear beyond doubt that in all cases where an industrial undertaking is closed down, every workman who has been in continuous service for not less than one year immediately before such closure is entitled to notice and compensation in accordance with the provisions in Section 25F as if the workman had been retrenched. This right, however, is subject to the provisions in sub-section (2) and the proviso to sub-section (1) of Section 25FFF. Having regard to the clear provisions in sub-section (1), it would be incumbent upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies to discharge all their debts in due course of business. In most cases, it would be impossible to make a finding that because the Court has intervened and passed winding up orders, the closure of the undertakings is due to or on account of unavoidable circumstances beyond the control of the employers. On the contrary in those circumstances, the appropriate finding would be that the financial difficulties were in fact result of the companies usual trading activities and were not on account of unavoidable circumstances beyond the control of the companies. It is clear that diverse different facts would have to be examined if the companies raise the question that their undertakings were closed down on account of "unavoidable circumstances beyond the control of the employer". 15. As such a question is now raised not only on behalf of the intervening creditors but also the Liquidator in this case, investigations will have to be made to find out if the winding up order was result of ordinary trading activities of the Company or it was result of what is mentioned in the proviso to sub-section (1) of Section 25FFF as "unavoidable circumstances beyond the control of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be remanded to the Liquidator for further investigations. All objections that the intervening creditors and/or the company desire to raise against the claims filed by the claimant before the Liquidator for showing that the undertaking of the mill's company was closed down on account of unavoidable circumstances beyond the control of the employer will have to be brought in due course before the Liquidator. The liquidator should in this connection give appropriate directions so that the objections are filed within a very short period. The objections must contain all necessary particulars so that the claimants can put forward their case in connection with such objections and can meet with the same.
20. The order in appeal is set aside. The matter is remanded to the Liquidator for further investigations in the light of the above directions. The Liquidator should expeditiously dispose of claims of all the claimants. The Liquidator will pay costs of the Applicant Appellant from out of the company's assets. The Liquidator's costs will come out of the assets. The Appellant's costs are fixed at ₹ 150/-.
AK/JHS/D.V.C.
(21) Order set aside. X X X X Extracts X X X X X X X X Extracts X X X X
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