IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD MONDAY, THE TWENTY THIRD DAY OF AUGUST TWO THOUSAND AND TEN PRESENT: HON’BLE SRI JUSTICE G.V.SEETHAPATHY COMPANY APPEAL No.9 OF 2010 IN R.C.C.No.20 OF 2000 IN THE MATTER OF THE COMPANIES ACT, 1956 AND IN THE MATTER OF M/s CIRCAR PAPER MILLS LIMITED (IN LIQUIDATION) Between: V.Naga Mohan and 52 others …Applicants A n d M/s Circar Paper Mills Limited (in liquidation) Rep. by the Official Liquidator, High Court of A.P., Hyderabad. …Respondent HON’BLE SRI JUSTICE G.V.SEETHAPATHY COMPANY APPEAL No.9 OF 2010 IN R.C.C.No.20 OF 2000 JUDGMENT: This appeal is filed under Rule 164 read with Rule 9 of the Companies (Court) Rules, 1959 seeking a direction to the Official Liquidator to re-adjudicate the claims of all the 53 applicants on par with that of the secured workmen and to pay the gratuity and other eligible statutory benefits to the applicants, who are actually in managerial cadre on par with the workmen. 2. The Official Liquidator filed report in O.L.R.No.404 of 2009 and thereafter the appellants filed a reply affidavit. 3. Heard the learned counsel for the appellants and the learned counsel representing the Official Liquidator for the respondent company in liquidation. Perused the record. 4. By order dated 14-02-2001 in R.C.C.No.20 of 2000, this Court directed winding up of M/s Circar Paper Mills Limited, respondent company in liquidation, and appointed Official Liquidator as its liquidator. By order dated 01-07-2005 in C.A.No.394 of 2005, this Court directed the Official Liquidator to invite the claims from the creditors. A notice in Form 63 was published in the newspapers inviting claims and fixing the last date for receipt of the claims as 19-09-2005. The Official Liquidator received various claims from various creditors and workmen. The claims received from the workmen were under two categories i.e., claims of 178 workmen in List-I and claims of 110 employees, who are administrative staff, under List-II. The said claims were made by the workers’ union in respect of 288 employees towards unpaid wages and other terminal benefits. After adjudication, the claims of 180 workmen were admitted as secured debt and the claims of 108 employees were admitted under preferential category. The Official Liquidator filed Form 69 dated 05-04-2007. The Official Liquidator filed certificate in Form 71. This Court, by order dated 21-07-2007 in C.A.No.1144 of 2007, permitted the Official Liquidator to declare dividend at 63.77 ps in a rupee to all the 180 workmen, whose claims were admitted under secured category. Accordingly, the first dividend was disbursed to 180 workmen. Aggrieved by the said orders, 108 employees, whose claims were admitted under preferential category, preferred Appeal No.11 of 2008 before this Court seeking admission of their claims as secured debt. This Court, by order dated 20-06- 2008, directed the Official Liquidator to re-adjudicate the claims of the said 108 employees. After re-adjudication, the Official Liquidator by order dated 13-01-2009, admitted the claims of 55 workmen under secured category and in respect of the remaining 53 employees, the earlier order admitting their claims under preferential category was confirmed. This Court, by order dated 18-03-2009 in C.A.Nos.197 and 198 of 2009 permitted the Official Liquidator to disburse dividend at 63.77 ps to the 55 workmen, whose claims were admitted under secured category and the said amount was disbursed. The remaining 53 workmen, whose claims were admitted only under preferential category even after re-adjudication, filed the present appeal. 5. According to the Official Liquidator, the appellants submitted only copies of the ESI/identity cards issued by the company and no proof was submitted in respect of their wages or salary except provident fund slips in some cases and no evidence was also led by them as to the nature of their employment or the job description or the roll. Based on the acquittance register, the Official Liquidator determined the claims of the appellants treating them as administrative staff in terms of Section 2(s) of the Industrial Disputes Act (for short ‘the Act’). It is further stated by the Official Liquidator that even in the course of re-adjudication also, the appellants in spite of notice have not produced any proof in support of their claim. 6. It is to be seen that the appellants while furnishing affidavit of proof of debt in Form 67 placed themselves under the administrative category. The appellants claim that they do not come under the category of administrative staff and they submitted their wages/salary slips regarding their job description and in spite of it, their claims were rejected. In the reply affidavit, it is stated that except appellants 2, 3, 4 and 9, all the other appellants are technical staff/workmen, whose wages and salaries are below the wages of those employees whose claims are admitted. 7. The learned counsel for the appellants would submit that in Company Appeal No.2 of 2009, this Court by order dated 01-07-2009 remitted the matter to the Official Liquidator to determine the status of the appellant therein as to whether he is workman or manager (employee, not being workman) for the purpose of treating the debt as secured debt or preferential debt and a similar order may be passed in the present case also. C.A.No.2 of 2007 was filed by an employee of M/s Southern Transformers and Electricals Limited, company in liquidation in the above matter. The company in liquidation in the present matter is a different one and C.A.No.2 of 2007 has nothing to do with the present proceedings. Even otherwise, in the above order, this Court observed that a plain reading of definition of ‘workman’ under Section 2(s) of the Act which definition holds good for the purpose of Sections 529 and 530 of the Companies Act, shows that a person employed in an industry to do any manual, unskilled, skilled, technical, clerical or supervisory work for hire or reward is workman, if he is not employed mainly in managerial or administrative capacity and even if he is employed in supervisory capacity, his wages do not exceed specified amount. Section 2(s) of the Act while defining the expression ‘workman’ states that it does not include any person who is employed mainly in a managerial or administrative capacity or who, being employed in a supervisory capacity, draws wages exceeding Rs.1,600/- per mensem or exercises functions mainly of a managerial nature. When once it is shown that the appellants were drawing wages exceeding Rs.1,600/- per mensem, they get excluded from the purview of the expression ‘workman’ under Section 2(s) of the Act. In fact, in the present case, admittedly the matter was remitted to the Official Liquidator for re-adjudication by order dated 20-06-2008 in C.A.No.11 of 2008 by this Court in respect of the appellants. The impugned order of the Official Liquidator shows that even during the course of re-adjudication, taken up pursuant to the above orders on finding that the documents already filed by the appellants in support of their claim did not disclose sufficient evidence/proof regarding the pay drawn by them, the Official Liquidator issued a letter dated 17-07-2008 to furnish necessary evidence and the appellants have replied that no such proof was available with them. The Official Liquidator, therefore, addressed letters to the Provident Fund Commissioner and ESIC, Nellore on 18- 08-2008 seeking information and there was no reply from either of them. Whereupon, the Official Liquidator addressed a letter dated 30-10-2008 to the Provident Fund Organization, Kadapa and a reply dated 06-11-2008 was received along with the list of employees and workmen with details of wages for five months. Basing on the statement submitted by the P.F authorities, the wages of the appellants were calculated and taken into consideration in the course of re-adjudication. Accordingly, the claims of 55 workmen were admitted for an amount of Rs.43,63,902-13 Ps as secured debt and the claims of remaining 53 employees were admitted for Rs.39,53,540- 90 ps as preferential debt. The statement annexed to Form 67, copy of which is enclosed to the report of the Official Liquidator, would show that the salary of appellants exceeded Rs.1,600/- per month and, therefore, by virtue of clause of exclusion contained in Section 2(s) of the Act, they do not answer the description of ‘workman’ irrespective of nomenclature used to describe their description or job roll. Thus, even after re-adjudication in pursuance of the orders of this Court, it was found that the appellants did not produce any evidence/proof to show that they fall under the category as defined under Section 2(s) of the Act and, on the other hand, the material available on record, particularly the wage details furnished by the P.F authorities discloses that they were drawing wages above the prescribed limit of Rs.1,600/- per month and, therefore, they do not answer the description of the workman under Section 2(s) of the Act and consequently they do not fall under the purview of Section 529(A) of the Companies Act so as to have priority. The impugned order of the Official Liquidator adjudicating the claims of the appellant and admitting them under the category of preferential debt and not a secured debt, does not call for any interference. There are no merits in the appeal. 8. In the result, the Company Appeal is dismissed There shall be no order as to costs. ____________________ G.V.SEETHAPATHY, J 23rd August, 2010 Lrkm.