Skip to content


General Secretary, Palai Central Bank Employees' Union Vs. Official Liquidator, Palai Central Bank Ltd. (24.09.1964 - KERHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Case NumberA.S. No. 546 of 1961
Judge
Reported in[1965(10)FLR98]; (1966)ILLJ533Ker
ActsCompanies Act, 1956 - Sections 445(3); Industrial Disputes Act, 1947 - Sections 25FFF(1)
AppellantGeneral Secretary, Palai Central Bank Employees' Union
RespondentOfficial Liquidator, Palai Central Bank Ltd.
Appellant Advocate Mani J. Meenattoor, Adv.
Respondent Advocate C.M. Devan, Adv.
DispositionAppeal dismissed
Excerpt:
- - allowed some claims of the appellant, the general secretary, palai central bank employees' union, like dearness allowance, increments of salary, etc......rate when the winding-up order was passed, the bank stopped the carrying on of its business, the banking business, in any proper sense of that term. therefore, it is clear that in the case before us the winding-up work by the liquidator is not a continuation of the business of the bank.5. the alternate contention, as already stated, is that in case the business of the bank was not continued after the winding-up order, then the subsequent employment under the liquidator was a fresh employment. on this question also the observation of chitty j. in macdowall's case is apt. there is no evidence to show that there was any subsequent agreement whatever between the official liquidator and the employees that they should go under a new contract similar in terms to the old one. in the absence of.....
Judgment:

Raghavan, J.

1. Three points are raised in this appeal against an order of our learned brother, Raman Nayar J. The first is that though Raman Nayar J. allowed some claims of the appellant, the General Secretary, Palai Central Bank Employees' Union, like dearness allowance, increments of salary, etc., those are not implemented by the respondent, the official liquidator. We do not think that this is a matter for appeal. The counsel of the respondent also assures us that the order of Raman Nayar J. on these questions will be fully implemented if there is any mistake in the implementation, or in case it is not already implemented fully.

2. The second objection is that the learned judge should not have confined the compensation for termination of employment to a maximum of average pay for three months under the proviso to Sub-section (1) to Section 25FFF of the Industrial Disputes Act. The contention is that the winding-up of the bank was not due to unavoidable circumstances beyond the control of the directors, because the winding-up order itself shows that there was mismanagement which necessitated the winding-up. As pointed out by our learned brother, the argument has no force whatsoever. The closing down of the bank was something imposed on it by the order of the High Court and was, therefore, on account of unavoidable circumstances beyond its control. It was, in fact, in spite of and overruling objections against windlng-up. The question that it was misconduct or mismanagement that brought about the winding-up is not relevant to the consideration whether the closing down was imposed on it by the court. We agree with Raman Nayar J. that unless the order of the court was obtained by collusion or fraud, every case of closure following an adjudication in insolvency or a compulsory winding-up must necessarily come within the proviso to Sub-section (1) of Section 25FFF. There is thus no substance in this objection either.

3. The third ground of attack is that the workers were entitled to notice-pay for one month under Section 25F(a) of the Industrial Disputes Act. The winding-up order was passed on 5th December, 1960; but the employees were discharged only more than one month thereafter at different dates. Under Section 445(3) of the Companies Aet a winding-up order shall be deemed to be notice of discharge to the employees of the company except when the business of the company is continued. The argument is that the business of the bank was continued under the official liquidator and, therefore, the notice under Section 445(3) did not come into play. An alternate contention is that if the business was not continued after the winding-up order, then the subsequent employment under the liquidator was a new employment and not a continuation of the earlier employment.In that case, the counsel claims, the employees were entitled to one month's notice-salary on their discharge as a result of the winding-up order. This claim was disallowed on the ground that the employees worked for more than the notice-period of one month and also drew salary for the said period, and, therefore, they were not entitled to any further notice-salary.

4. The learned counsel of the liquidator has drawn our attention to Section 457(1) of the Companies Act and especially to Clause (b) thereof. This indicates that the carrying on of the business of the company, in so far as it is necessary for the beneficial winding-up of the company, is not continuing the business of the company. He has also cited the English decision in In re Oriental Bank Corporation (MacDowall's case). Chitty J. says in that case that when the bank closed its doors and ceased to carry on the business of banking even before the date of the winding-up order or at any rate when the winding-up order was passed, the bank stopped the carrying on of its business, the banking business, in any proper sense of that term. Therefore, it is clear that in the case before us the winding-up work by the liquidator is not a continuation of the business of the bank.

5. The alternate contention, as already stated, is that in case the business of the bank was not continued after the winding-up order, then the subsequent employment under the liquidator was a fresh employment. On this question also the observation of Chitty J. in MacDowall's case is apt. There is no evidence to show that there was any subsequent agreement whatever between the official liquidator and the employees that they should go under a new contract similar in terms to the old one. In the absence of such evidence, the winding-up order operated as discharge of the employees as contemplated by Section 445(3) of the Companies Act, Therefore, this plea also fails.

6. Lastly, it is contended that some of the workers were given notice on loth October, 1960, and in their case the winding-up order, which came in only on 5th December subsequent, could not have the effect of an order of discharge. But even in these cases the period of notice was extended by two months by the court and they were actually discharged only on I2th December, 1960. This shows that they were given salary for more than the notice-period after the notice on 10th October. Hence, this contention has also to be rejected.

7. The order of Raman Nayar J. is ultimately confirmed and the appeal is dismissed with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //