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R. Srinivasan Vs. the Official Liquidator Vegetols Ltd., in Liquidation, High Court of Andhra Pradesh, Hyderabad - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtAndhra Pradesh High Court
Decided On
Case NumberCompany Appln. No. 66 of 1965
Judge
Reported inAIR1966AP224; [1967(14)FLR70]; (1967)IILLJ706AP
ActsCompanies Act, 1956 - Sections 530(1); Industrial Disputes Act, 1947 - Sections 25F, 25FFF and 25FFF(1)
AppellantR. Srinivasan
RespondentThe Official Liquidator Vegetols Ltd., in Liquidation, High Court of Andhra Pradesh, Hyderabad
Appellant AdvocateB. Manavala Chowdari and ;B. Srinivasa Rao, Advs.
Respondent AdvocateOfficial Liquidator
DispositionAppeal allowed
Excerpt:
.....down by reason of financial difficulties - whether compensation payable to workers governed by section 25f or 25fff - held, compensation should be governed by section 25f. -..........of the companies act 1956. the appellant relies on section 25f of the industrial disputes act and claims 6 months' wages, while only 3 months' wages have been paid under section 25-fff, as also one month's pay in lieu of notice. a reading of section 25-fff would itself show that by virtue of the explanation to that section, 'an undertaking which is closed down by reason merely of financial difficulties (including financial losses) or accumulation of undisposed 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 sub-section (1) of section 25-fff which contingency alone will attract the proviso to sub-section (1) of section 25-fff. which limits the payments of compensation.....
Judgment:
ORDER

Jaganmohan Reddy, J.

1. This is an appeal against an order of the Official Liquidator in Claim No. 7 in O. P. 4/1957, applying 8. 25FFF of the Industrial Disputes Act, 1947 and also disallowing the claim for priority under Section 530(1)(b) of the Companies Act 1956. The appellant relies on Section 25F of the Industrial Disputes Act and claims 6 months' wages, while only 3 months' wages have been paid under Section 25-FFF, as also one month's pay in lieu of notice. A reading of Section 25-FFF would itself show that by virtue of the explanation to that section, 'an undertaking which is closed down by reason merely of financial difficulties (including financial losses) or accumulation of undisposed 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 Sub-section (1) of Section 25-FFF which contingency alone will attract the proviso to Sub-section (1) of Section 25-FFF. which limits the payments of compensation provided in Section 25-F(b) to 8 months. Once the proviso is not attracted, --and if cannot be denied that it is not attracted because the company has been liquidated due to financial difficulties, then Section 25F will apply. Section 25F runs thus:

'No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until-

(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired or the workman has been paid in lieu of such notice, wages for the period of the notice;

Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for the termination of a service;

(b) the workman has been paid, at the time of retrenchment compensation which shall be equivalent to fifteen day's average pay for every completed year of service or any part thereof in excess of six months, and

(c) notice in the prescribed manner is served on the appropriate Government.' As I have stated, the conditions necessary for attracting the proviso to Section 25FFF are non-existent and consequently, compensation is payable under Section 25F and the claim of the appellant must be allowed.

2. In respect of the priority claimed by the appellant, his contention is that the amount is payable to him under the provisions of Chapter V-A of the Industrial Disputes Act, 1947, and consequently, under Section 530(1)(b) of the Companies Act, the amount payable must be given priority. The Official Liquidator, on the other hand, contends that this amendment came in December, 1960 while the amount became pay able to the appellant prior to this amendment. In my view, it is immaterial whether the appellant had a claim to the amount on the date of the winding up order. What has to be determined is whether the amount is payable when the question arises. Section 530(1)(b) of the Companics Act does not limit the operation of this provision and states generally that any compensation payable to any workman under any of the provisions of Chapter V-A subject to the limits prescribed in Sub-section (2) will have priority The limit provided in Sub-section (2) is that the amount shall not exceed one thousand rupees In my view, the appellant is entitled to priority, and since the amount does not exceed Rs. 1,000 he shall be given priority in accordance with the provisions of Section 530 of the Companies Act

3. In the result, the appeal is allowed.


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