1 ca332-11.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY APPLICATION NO.332 OF 2011 IN COMPANY PETITION NO.518 OF 2005 Smt.Kusum Jinappa Pujari & Ors .. Org.Petitioners And Krantikari Kamgar Union .. Applicant versus The O.L, High Court, Bombay .. Respondent Mr.Sanjay Singhavi a/w Ms.Jane Cox for the applicant. Mr.A.T.Satelkar a/w Mr.J.P.Sen for O.L. Dr.T.Pandian, O.L present. Mr.Cyrus Ardeshir a/w Mr.N.Rajani i/by V.Deshpande & Co for Kotak Mahindra Bank. Ms.Sneha Prabhu i/by Juris Consultus for UTI. Mr.Mohan Kumar K for Adarsh Kamgar Sabha. CORAM : S.C.DHARMADHIKARI, J. 15th September 2011. P.C.: . This is a company application by a Union-Krantikari Kamgar Union seeking to set aside the adjudication by the Official Liquidator of M/s.Zadona Electronics Ltd (in liquidation) of the workmen’s claims and dues. 2 ca332-11.doc 2 Mr.Singhvi, learned counsel appearing in support of this application has raised various contentions. He submits that the adjudication of the claims by the Official Liquidator is erroneous because it is not in terms of the concept of “workmen’s dues” as defined in the Companies Act, 1956. Inviting my attention to the definition of the term “workmen’s dues” as appearing in section 529(1)(b)(i) of the Companies Act, 1956, it is submitted that the components specified therein include the aggregate of the sums due by the company to its workmen, namely, all wages or salary (including wages payable for time or piecework and salary earned wholly or in part by way of commission) in respect of the services rendered to the company and all amounts due in respect of any compensation or liability payable to the workmen. 3 Mr.Singhvi submits that this concept in no way militates against the definition of the word “wages” appearing in section 2(rr) of the Industrial Disputes Act, 1947. Thus, these are not conflicting concepts and definitions. It is submitted that what the Official Liquidator has done in this case is that he has only taken into 3 ca332-11.doc account the last drawn wages of the workmen but he has ignored all the components that have been referred to by the applicant. Once the claim is inclusive of all remuneration capable of being computed in terms of money, then, even bonus cannot be excluded. My attention is invited by him to several provisions of Industrial Disputes Act, 1947 and particularly sections 25-N and 25-O thereof. He submits that even if these provisions are not applicable, still section 25-FFF of the Industrial Disputes Act, 1947, cannot be ignored. 4 My attention is also invited to an order passed by the Industrial Court on a complaint of unfair labour practice which was filed by the workman against the company in liquidation being Complaint (ULP) NO.661 of 1993. It is stated that an order was passed on this complaint on 31st July 1995 and the following directions have been issued: “ : O R D E R : It is hereby declared that the respondents are guilty of unfair labour practices under Item 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and provision of unfair labour practices Act, 1971. 4 ca332-11.doc The respondents are hereby directed to cease and desist from commission of the above unfair labour practices by providing work to all the concerned employee, including the employees concerned in the complaint and who were on their muster roll as on 01.04.1993. The respondents are hereby directed to pay to the concerned employees arrears of wages from June 1993 onwards and continue to pay the monthly wages regularly thereafter. July 31, 1995.” 5 My attention is also invited to the order passed by this Court on a Writ Petition being Writ Petition No.652 of 1997 which was filed by the ICICI Bank Ltd which is the predecessor in title of the Kotak Mahindra Bank. Mr.Singhvi submits that the Official Liquidator therefore could not have ignored the claim for wages from 1st April 1993 till the date of the winding up order, namely, 20th June 2007. For all these reasons, the report made by the Official Liquidator be made absolute, and in addition, the adjudication as made by him should be interfered with and set aside. 6 On the other hand, Mr.Satalekar, learned counsel appearing on behalf of the Official Liquidator submits that the Official Liquidator has gone by the practice prevailing and in this case what 5 ca332-11.doc has been done is the actual wages last drawn by the employees/workmen have been taken into account. The adjudication has not been done bearing in mind the claims before the Industrial Court and as enumerated in the order dated 31st July 1995. Moreover, the claims from the date mentioned in the said order till the date of winding up have not been taken into account, particularly, under the components to which my attention is invited. Even as far as bonus is concerned, the Official Liquidator has not taken into account the same. In the alternative, the Official Liquidator may consider the claim of bonus but he would not grant anything over and above the statutory rate, namely, 8.33%. For all these reasons, he submits that appropriate orders and directions be passed on the report. 7 Mr.Ardeshir, appearing on behalf of the secured creditor, viz., ICICI and Kotak Mahindra Bank submitted that when this Court directs the Official Liquidator to make payment of workmen dues, it cannot be forgotten that their dues ranks pari pasu with that of the secured creditor who is entitled to substantial sum from the sale proceeds. Thus, the workmen dues should not be adjudicated in 6 ca332-11.doc such a manner so as to override completely the claim under the recovery certificate in favour of the secured creditor. Therefore, this Court should bear in mind that while releasing the sums or seeking further amounts from the sale proceeds, it is not as if the claim of the workmen is not protected. The same can be protected and safe- guarded by issuing appropriate directions including obtaining undertakings from Kotak Mahindra Bank to bring in monies as and when directed by the Official Liquidator and upon adjudication of all claims which are pending before him. For all these reasons, he submits that while taking into account the pleas of the workmen, this Court should not pass an order to the prejudice of the secured creditors. 8 After having heard all the parties, to my mind, any wider question or controversy should not be decided at this stage. From a reading of the application and the annexures thereto, it is apparent to me that the Union/workmen have in their favour an order of the Industrial Court which directs payment of wages from month to month. This direction takes effect from 1st April 1993, although the order in that behalf is made on 31st July 1995. Therefore, from 1st 7 ca332-11.doc July 1993 till the date of the winding up order if the workmen are entitled to their dues and particularly the wages as directed in terms of this order, then, whether that amount will include the sums as contemplated by section 2(rr) of the Industrial Disputes Act, 1947 and section 529(1)(b)(i) of the Companies Act, 1956, is a matter which admittedly has not been adjudicated and gone into. That aspect will have to be considered. It is submitted by Mr.Singhvi that the Official Liquidator has committed error in ignoring the claims in that behalf. However, as to which component, including bonus and any sum capable of being computed in terms of the money, is claimed under several heads, is a matter which must be decided by the Official Liquidator once again. Therefore, the Official Liquidator will have to re-adjudicate the claims of the workmen in terms of the orders of the Industrial Court and up till the date of winding up order passed in the company petition. Under what heads and components the amounts that are claimed can be claimed and disbursed, is a matter which must be decided by giving an opportunity of raising all such pleas as are permissible in law including the materials that have been placed in support of this company application. 8 ca332-11.doc 9 Equally, it must be clarified that the order and direction that has been issued to the Official Liquidator, is in addition to adjudicating all claims made on the basis of a scheme of voluntary retirement which has been floated by the company. The dues of such workmen who are claiming to have voluntarily retired under the scheme can also be considered and adjudicated and all contentions in that behalf are also kept open. 10 Thus, while directing that the adjudication shall be in terms of the order of the Industrial Court and till the date of winding up order passed in the company petition, it is clarified that this period shall be reckoned for the purposes of adjudicating the claims under the various components and under the definition of the term “wages” as understood by the term “workmen dues” defined in the Companies Act, 1956. However, without prejudice to the rights and contentions of the applicants and all workmen who may have lodged their claims, it is directed that the Official Liquidator shall release the sum which is determined and adjudicated on the basis that he has taken into account the last drawn wages of the said workmen. The 9 ca332-11.doc amount that is already determined and adjudicated by him is stated to be Rs.31 crores and odd. That sum be released within a period of one month from the date of receipt of copy of this order. The workmen and all members of the applicant shall accept the same without prejudice to the rights and contentions with regard to the pending claims and adjudication in terms of the aforesaid directions. Thus, without prejudice and without in any manner adversely affecting their contentions, they may receive these amounts from the Official Liquidator and he shall release them in accordance with practice and rules followed by him. 11 So far as the claim of the secured creditor is concerned, presently, sum of Rs.68.10 crores plus interest accrued thereon, is lying with the Debt Recovery Tribunal. The Official Liquidator will be entitled to withdraw or seek withdrawal of the said sum to the extent required to enable him to comply with the order and direction of disbursing Rs.31 crores to the workmen in terms of this order. In other words, for the purpose of such disbursal, the Official Liquidator is at liberty to approach Debt Recovery Tribunal for withdrawal in that behalf. As far as the balance amount is 10 ca332-11.doc concerned, on an undertaking of the secured creditor Kotak Mahindra Bank and particularly that any arrangement or any alterations in its status not affecting the claims and orders and directions of this Court, the sum which is lying with the Debt Recovery Tribunal is withdrawn or taken away, but, subject to further orders and directions of this Court so also that of the Official Liquidator. In other words, upon an undertaking being furnished by the said Kotak Mahindra Bank that it will bring in such other and further sums as are directed by the Official Liquidator and this Court and which undertaking shall be furnished within a period of one week from the date of receipt of copy of this order, the amount lying with the Debt Recovery Tribunal shall be paid over to the said Kotak Mahindra Bank with accrued interest. Company Application is disposed off in above terms, but, without prejudice to the rights and contentions of the parties. Report of the Official Liquidator is disposed off. (S.C.DHARMADHIKARI, J)