The Apex Court while summing up its conclusions, inter alia, held as under: Section 19(19) of the 1993 Act does not clothe DRT with jurisdiction to determine the workmens claim against the debtor company. The adjudication of workmens dues against the debtor company in liquidation has to be made by the liquidator. In other words, once the company is in winding up, the only competent authority to determine the workmens dues is the liquidator who obviously has to act under the supervision of the Company Court and by no other authority. In the light of the analysis made hereinbefore, the adjudication made by the Assistant Commissioner of Labour is without jurisdiction and the same is in the teeth of determination of the claim of the workman already made by the Official Liquidator. Hence, the impugned order is set aside. The Company Application is, accordingly, allowed.
HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY
COMPANY APPLICATION No.972 of 2012
28-01-2015
M/s Sri Ambuja Petrochemicals Ltd.,reptd by the Official Liquidator.....
Petitioner
N.Prabhakar and another......Respondents
Counsel for the appellant: Sri M.Anil Kumar
Counsel for Respondent No.1: Sri S.Prasada Rao
(None appeared)
<Gist:
>Head Note:
?Cases Referred:
(2013) 7 SCC 754
HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY
COMPANY APPLICATION No.972 of 2012
In
RCC.No.4 of 1997
Date:28.01.2015
The Court made the following:
ORDER:
This Company Application is filed under Sections-441,
446, 536 and 537 of the Companies Act, 1956 (for short the
Act) read with Rule-9 of the Companies (Court) Rules, 1959,
inter alia, for setting aside order, dated 04.07.2012, passed in
P.G.Case No.1 of 2011 by the Controlling Authority under the
Payment of Gratuity Act, 1972 and the Assistant Commissioner
of Labour, Patancheru, Medak (for short the Assistant
Commissioner of Labour).
Though Sri S.Prasada Rao, learned counsel, entered
appearance for respondent No.1, (hereinafter referred to as the
workman), he is consistently absent during the hearing of the
case.
I have heard Sri M.Anil Kumar, the learned counsel for the
Official Liquidator and perused the record.
By order, dated 10.04.1998, this Court has ordered
winding up of M/s Sri Ambuja Petrochemicals Limited in
RCC.No.4 of 1997 and the Official Liquidator of this Court was
appointed as the Liquidator of the said company. The workman
has approached the Assistant Commissioner of Labour under
Rule-10 of the Payment of Gratuity (Central) Rules, 1972 read
with Section-3 of the Payment of Gratuity Act, 1972 for a
direction for payment of gratuity. The Assistant Commissioner of
Labour has, thereafter, issued notice to the Official Liquidator. In
response to the same, the Official Liquidator has submitted his
objections, wherein he has informed the Assistant Commissioner
of Labour that by order, dated 10.04.1998, this Court has
ordered winding up of the company in liquidation and
appointed him as the Liquidator of the said company; that under
Section-446 of the Act, when a winding up order has been
made or the Official Liquidator has been appointed as the
Provisional Liquidator, no suit or other legal proceeding shall be
commenced or if the same are pending on the date of the
winding up order, they shall not be proceeded with against the
company except by the leave of the Court; that in pursuance of
order, dated 09.04.2002 in Company Application No.261 of
2002, the Official Liquidator has caused publication by inviting
claims from the creditors of the company in liquidation; that the
workman has also submitted his claim which was included in
the list of 89 workmen and the same was admitted to a tune of
Rs.95,900/- towards unpaid wages, gratuity compensation and
notice pay against the secured debt and Rs.12,976/- was
admitted towards unpaid allowances as an unsecured debt, vide
File No.69, dated 22.06.2004; and that the workman was
informed that if he is dissatisfied with the decision of the
Official Liquidator, he can prefer an appeal before the High
Court. It is further pleaded by the Official Liquidator that the
claim of the workman has got crystallized by his order, dated
23.06.2010 and a sum of Rs.32,868/- was paid to the workman
through cheque, dated 21.12.2004, towards first dividend and
that having accepted the said adjudication, it is not open to the
workman to make a claim before the Assistant Commissioner of
Labour and that the payment of further dividends to the
workman has to be adjudicated vis--vis the claims of other
secured creditors and that the present Company Application
filed without seeking the leave of this Court is liable to be
dismissed. After receiving the objections from the Official
Liquidator, the Assistant Commissioner of Labour has
adjudicated the claim of the workman and quantified the claim
for gratuity at Rs.33,749/- and accordingly, directed the Official
Liquidator to deposit the said amount in any nationalized bank.
A perusal of the order, dated 04.07.2012, of the Assistant
Commissioner of Labour shows that he has made reference to
Section-14 of the Payment of Gratuity Act, 1972 and observed
that under the said provision, the provisions of the said Act or
any rule thereunder shall have effect notwithstanding anything
inconsistent therewith contained in any enactment other than
that Act or in any instrument or contract.
Sri M.Anil Kumar, the learned counsel for the Official
Liquidator, referred to Section-529(3)(b) of the Act and
submitted that the workmen dues, which include the gratuity
fund or any other fund for the welfare of the workmen, fall
within the scope of adjudication by the Official Liquidator. He
has also referred to Section-529A of the Act which was
introduced by Companies (Amendment) Act, 1985 and
submitted that the said provision has given over riding affect on
other provisions of the Act or any other law for the time being in
force and that the workmens dues are included under the said
provision.
Learned counsel has also placed reliance on the judgment
of the Supreme Court in Bank of Maharashtra Vs. Pandurang
Keshav Gorwardkar and others and has, accordingly, submitted
that in view of the provisions of Sections-529 and 529A of the
Act, it is only the Official Liquidator who is competent to
determine the workmen dues and that the Assistant
Commissioner of Labour had no jurisdiction to pass the
impugned order.
I have carefully considered the submissions with reference
to the provisions of the Act.
Section-529 of the Act deals with application of
insolvency rules in winding up of insolvent companies.
Sub-section-(3) (b) of Section-529 and Section-529A of
the Act, which are relevant for the purpose of adjudication of
the present Company Application, read as under:
Sub-section-3(b) of Section-529 of the Act:
workmens dues in relation to a company, means the
aggregate of the following sums due from the company
to its workmen, namely-
(i) all wages or salary including wages payable for
time or piece work and salary earned wholly or in part
by way of commission of any workman, in respect of
services rendered to the company and any
compensation payable to any workman under any of
the provisions of the Industrial Disputes Act, 1947 (14
of 1947);
(ii) all accrued holiday remuneration becoming
payable to any workman, or in the case of his death to
any other person in his right, on the termination of his
employment before, or by the effect of, the winding up
order or resolution;
(iii) unless the company is being wound up voluntarily
merely for the purposes of reconstruction or of
amalgamation with another company, or unless the
company has, at the commencement of the winding
up, under such a contract with insurers as is
mentioned in Section 14 of the Workmens
Compensation Act, 1923 (8 of 1923) rights capable of
being transferred to and vested in the workman all
amounts due in respect of any compensation or
liability for compensation under the said Act in respect
of the death or disablement of any workman of the
company;
(iv)all sums due to any workman from a provident
fund, a pension fund, a gratuity fund or any other
fund for the welfare of the workmen, maintained by
the company.
Section-529A of the Act:
(1) Notwithstanding anything contained in any other provision
of this Act or any other law for the time being in force, in
the winding up of a company-
(a) workmens dues, and
(b) debts due to secured creditors to the extent such debts rank
under clause (c) of the proviso to sub-section (1) of section
529 pari passu with such dues,
shall be paid in priority to all other debts.
(2) The debts payable under clause (a) and clause (b) of sub-
section (1) shall be paid in full, unless the assets are
insufficient to meet them, in which case they shall abate in
equal proportions.
Section-14 of the Payment of Gratuity Act, 1972 reads as
under:
Act to override other enactments, etc:- The provisions
of this Act or any rule made thereunder shall have
affect notwithstanding anything inconsistent therewith
contained in any enactment other than the Act or in
any instrument or contract having effect by virtue of
any enactment other than this Act.
While the Payment of Gratuity Act was enacted in the year
1972, Section-529A of the Companies Act, 1956 was
incorporated in the year 1985 under the Companies
(Amendment) Act, 1985. As Section-529A of the Act being the
later enactment, the same prevails over the provisions of the
Payment of Gratuity Act, 1972 in general and Section 14 of the
said Act in particular. Though a specific plea was raised by the
Official Liquidator based on the provisions of Section-529A of
the Act, the Assistant Commissioner of Labour failed to advert to
the same. Therefore, in view of the provisions of Section-529A
of the Act, no authority other than the Official Liquidator has
competence to adjudicate upon the dues of the workmen. This
aspect is crystallized by the judgment of the Apex Court in Bank
of Maharashtra (supra). The Apex Court while summing up its
conclusions, inter alia, held as under:
Section 19(19) of the 1993 Act does not clothe DRT
with jurisdiction to determine the workmens claim
against the debtor company. The adjudication of
workmens dues against the debtor company in
liquidation has to be made by the liquidator. In other
words, once the company is in winding up, the only
competent authority to determine the workmens dues
is the liquidator who obviously has to act under the
supervision of the Company Court and by no other
authority.
In the light of the analysis made hereinbefore, the
adjudication made by the Assistant Commissioner of Labour is
without jurisdiction and the same is in the teeth of
determination of the claim of the workman already made by the
Official Liquidator. Hence, the impugned order is set aside. The
Company Application is, accordingly, allowed.
___________________________
JUSTICE C.V.NAGARJUNA REDDY
28th January, 2015
COMPANY APPLICATION No.972 of 2012
28-01-2015
M/s Sri Ambuja Petrochemicals Ltd.,reptd by the Official Liquidator.....
Petitioner
N.Prabhakar and another......Respondents
Counsel for the appellant: Sri M.Anil Kumar
Counsel for Respondent No.1: Sri S.Prasada Rao
(None appeared)
<Gist:
>Head Note:
?Cases Referred:
(2013) 7 SCC 754
HON'BLE SRI JUSTICE C.V.NAGARJUNA REDDY
COMPANY APPLICATION No.972 of 2012
In
RCC.No.4 of 1997
Date:28.01.2015
The Court made the following:
ORDER:
This Company Application is filed under Sections-441,
446, 536 and 537 of the Companies Act, 1956 (for short the
Act) read with Rule-9 of the Companies (Court) Rules, 1959,
inter alia, for setting aside order, dated 04.07.2012, passed in
P.G.Case No.1 of 2011 by the Controlling Authority under the
Payment of Gratuity Act, 1972 and the Assistant Commissioner
of Labour, Patancheru, Medak (for short the Assistant
Commissioner of Labour).
Though Sri S.Prasada Rao, learned counsel, entered
appearance for respondent No.1, (hereinafter referred to as the
workman), he is consistently absent during the hearing of the
case.
I have heard Sri M.Anil Kumar, the learned counsel for the
Official Liquidator and perused the record.
By order, dated 10.04.1998, this Court has ordered
winding up of M/s Sri Ambuja Petrochemicals Limited in
RCC.No.4 of 1997 and the Official Liquidator of this Court was
appointed as the Liquidator of the said company. The workman
has approached the Assistant Commissioner of Labour under
Rule-10 of the Payment of Gratuity (Central) Rules, 1972 read
with Section-3 of the Payment of Gratuity Act, 1972 for a
direction for payment of gratuity. The Assistant Commissioner of
Labour has, thereafter, issued notice to the Official Liquidator. In
response to the same, the Official Liquidator has submitted his
objections, wherein he has informed the Assistant Commissioner
of Labour that by order, dated 10.04.1998, this Court has
ordered winding up of the company in liquidation and
appointed him as the Liquidator of the said company; that under
Section-446 of the Act, when a winding up order has been
made or the Official Liquidator has been appointed as the
Provisional Liquidator, no suit or other legal proceeding shall be
commenced or if the same are pending on the date of the
winding up order, they shall not be proceeded with against the
company except by the leave of the Court; that in pursuance of
order, dated 09.04.2002 in Company Application No.261 of
2002, the Official Liquidator has caused publication by inviting
claims from the creditors of the company in liquidation; that the
workman has also submitted his claim which was included in
the list of 89 workmen and the same was admitted to a tune of
Rs.95,900/- towards unpaid wages, gratuity compensation and
notice pay against the secured debt and Rs.12,976/- was
admitted towards unpaid allowances as an unsecured debt, vide
File No.69, dated 22.06.2004; and that the workman was
informed that if he is dissatisfied with the decision of the
Official Liquidator, he can prefer an appeal before the High
Court. It is further pleaded by the Official Liquidator that the
claim of the workman has got crystallized by his order, dated
23.06.2010 and a sum of Rs.32,868/- was paid to the workman
through cheque, dated 21.12.2004, towards first dividend and
that having accepted the said adjudication, it is not open to the
workman to make a claim before the Assistant Commissioner of
Labour and that the payment of further dividends to the
workman has to be adjudicated vis--vis the claims of other
secured creditors and that the present Company Application
filed without seeking the leave of this Court is liable to be
dismissed. After receiving the objections from the Official
Liquidator, the Assistant Commissioner of Labour has
adjudicated the claim of the workman and quantified the claim
for gratuity at Rs.33,749/- and accordingly, directed the Official
Liquidator to deposit the said amount in any nationalized bank.
A perusal of the order, dated 04.07.2012, of the Assistant
Commissioner of Labour shows that he has made reference to
Section-14 of the Payment of Gratuity Act, 1972 and observed
that under the said provision, the provisions of the said Act or
any rule thereunder shall have effect notwithstanding anything
inconsistent therewith contained in any enactment other than
that Act or in any instrument or contract.
Sri M.Anil Kumar, the learned counsel for the Official
Liquidator, referred to Section-529(3)(b) of the Act and
submitted that the workmen dues, which include the gratuity
fund or any other fund for the welfare of the workmen, fall
within the scope of adjudication by the Official Liquidator. He
has also referred to Section-529A of the Act which was
introduced by Companies (Amendment) Act, 1985 and
submitted that the said provision has given over riding affect on
other provisions of the Act or any other law for the time being in
force and that the workmens dues are included under the said
provision.
Learned counsel has also placed reliance on the judgment
of the Supreme Court in Bank of Maharashtra Vs. Pandurang
Keshav Gorwardkar and others and has, accordingly, submitted
that in view of the provisions of Sections-529 and 529A of the
Act, it is only the Official Liquidator who is competent to
determine the workmen dues and that the Assistant
Commissioner of Labour had no jurisdiction to pass the
impugned order.
I have carefully considered the submissions with reference
to the provisions of the Act.
Section-529 of the Act deals with application of
insolvency rules in winding up of insolvent companies.
Sub-section-(3) (b) of Section-529 and Section-529A of
the Act, which are relevant for the purpose of adjudication of
the present Company Application, read as under:
Sub-section-3(b) of Section-529 of the Act:
workmens dues in relation to a company, means the
aggregate of the following sums due from the company
to its workmen, namely-
(i) all wages or salary including wages payable for
time or piece work and salary earned wholly or in part
by way of commission of any workman, in respect of
services rendered to the company and any
compensation payable to any workman under any of
the provisions of the Industrial Disputes Act, 1947 (14
of 1947);
(ii) all accrued holiday remuneration becoming
payable to any workman, or in the case of his death to
any other person in his right, on the termination of his
employment before, or by the effect of, the winding up
order or resolution;
(iii) unless the company is being wound up voluntarily
merely for the purposes of reconstruction or of
amalgamation with another company, or unless the
company has, at the commencement of the winding
up, under such a contract with insurers as is
mentioned in Section 14 of the Workmens
Compensation Act, 1923 (8 of 1923) rights capable of
being transferred to and vested in the workman all
amounts due in respect of any compensation or
liability for compensation under the said Act in respect
of the death or disablement of any workman of the
company;
(iv)all sums due to any workman from a provident
fund, a pension fund, a gratuity fund or any other
fund for the welfare of the workmen, maintained by
the company.
Section-529A of the Act:
(1) Notwithstanding anything contained in any other provision
of this Act or any other law for the time being in force, in
the winding up of a company-
(a) workmens dues, and
(b) debts due to secured creditors to the extent such debts rank
under clause (c) of the proviso to sub-section (1) of section
529 pari passu with such dues,
shall be paid in priority to all other debts.
(2) The debts payable under clause (a) and clause (b) of sub-
section (1) shall be paid in full, unless the assets are
insufficient to meet them, in which case they shall abate in
equal proportions.
Section-14 of the Payment of Gratuity Act, 1972 reads as
under:
Act to override other enactments, etc:- The provisions
of this Act or any rule made thereunder shall have
affect notwithstanding anything inconsistent therewith
contained in any enactment other than the Act or in
any instrument or contract having effect by virtue of
any enactment other than this Act.
While the Payment of Gratuity Act was enacted in the year
1972, Section-529A of the Companies Act, 1956 was
incorporated in the year 1985 under the Companies
(Amendment) Act, 1985. As Section-529A of the Act being the
later enactment, the same prevails over the provisions of the
Payment of Gratuity Act, 1972 in general and Section 14 of the
said Act in particular. Though a specific plea was raised by the
Official Liquidator based on the provisions of Section-529A of
the Act, the Assistant Commissioner of Labour failed to advert to
the same. Therefore, in view of the provisions of Section-529A
of the Act, no authority other than the Official Liquidator has
competence to adjudicate upon the dues of the workmen. This
aspect is crystallized by the judgment of the Apex Court in Bank
of Maharashtra (supra). The Apex Court while summing up its
conclusions, inter alia, held as under:
Section 19(19) of the 1993 Act does not clothe DRT
with jurisdiction to determine the workmens claim
against the debtor company. The adjudication of
workmens dues against the debtor company in
liquidation has to be made by the liquidator. In other
words, once the company is in winding up, the only
competent authority to determine the workmens dues
is the liquidator who obviously has to act under the
supervision of the Company Court and by no other
authority.
In the light of the analysis made hereinbefore, the
adjudication made by the Assistant Commissioner of Labour is
without jurisdiction and the same is in the teeth of
determination of the claim of the workman already made by the
Official Liquidator. Hence, the impugned order is set aside. The
Company Application is, accordingly, allowed.
___________________________
JUSTICE C.V.NAGARJUNA REDDY
28th January, 2015
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