Gujarat High Court
Khimjibhai Sanabhai Parmar vs Sevalia Cement Works (Unit Of Manor on 16 January, 2013
Author: Jayant Patel
Bench: Jayant Patel
KHIMJIBHAI SANABHAI PARMAR....Appellant(s)V/SSEVALIA CEMENT WORKS (UNIT OF MANOR INVESTMENT PVT LTD ) O/OJA/31/2011 CAV JUDGEMNT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD O.J.APPEAL NO. 31 of 2011 In COMPANY PETITION NO. 40 of 1997 With O.J.APPEAL NO. 52 of 2011 With O.J.APPEAL NO. 18 of 2012 FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE JAYANT PATEL and HONOURABLE MR.JUSTICE MOHINDER PAL ============================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ?2
To be referred to the Reporter or not ?3
Whether their Lordships wish to see the fair copy of the judgment ?4
Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?5
Whether it is to be circulated to the civil judge ?
============================================================== KHIMJIBHAI SANABHAI PARMAR....Appellant(s) Versus SEVALIA CEMENT WORKS (UNIT OF MANOR INVESTMENT PVT LTD ) & 2....Opponent(s) ============================================================== Appearance:
MR KISHOR M PAUL, ADVOCATE for the Appellant(s) No. 1 in OJ A NOS.31/11 AND 18/12 MR BS SUPEHIA, ADVOCATE for the Appellant(s) No. 1 in OJA No.52/11 MR YATIN SONI, ADVOCATE for the Opponent(s) No. 1 MS AMEE YAJNIK, ADVOCATE for Official Liquidator ============================================================== CORAM:
HONOURABLE MR.JUSTICE JAYANT PATEL and HONOURABLE MR.JUSTICE MOHINDER PAL Date : 16/01/2013 CAV JUDGEMNT (PER :
HONOURABLE MR.JUSTICE JAYANT PATEL) As all the appeals are interconnected and arising from the common judgment of the learned Company judge, they are being considered simultaneously.
The short facts are that one Khimjibhai Sanabhai Parmar in capacity as the worker who had to recover the outstanding wages and other dues filed petition under section 433(e) read with 434 of the Companies Act (hereinafter referred to as the Act ) for winding up of the respondent Company M/s. Sevalia Cement Work, a unit of M/s. Manor Investment Co. Pvt. Ltd. As per the petitioner, about 260 workers were working with the respondent Company and 123 employees were working in Balasinor quarry which was run and managed by respondent Company. In all there were 400 workmen working with the respondent company but the respondent company was not paying regular wages to its employees in spite of several demands, notices and directions of the Court. The petitioner and all other workers were engaged and appointed by M/s. Associate Cement Company Limited and they were working with the said Company for many years. The respondent Company was run and managed by ACC Company Ltd. and the said ACC Co. Ltd. was earning profit. The said ACC Co. Ltd. decided to sell the said unit to respondent by agreement dated 05.03.1988 along with all its liabilities of about 11102 workers at the relevant point of time. After purchasing the unit of M/s. Sevalia Cement Works, the respondent Company was not running the unit and the factory was totally closed from May 1989 and there was no production from that date. The respondent Company had sold away the assets and regular wages of the workers were not paid. As per the petitioner, more than Rs.10 crore were due and payable by respondent Company to its workers towards wages, allowances, etc. As per the petitioner, the respondent Company had made payment to its other creditors without paying wages to its workers and and employees and as per the provisions of section 529A and 530 of the Companies Act, the dues of the workers were having priority over the dues of the other creditors of the Company and therefore, as they were not paid, the present petition.
In the said petition, on 24.04.1997, the learned Company Judge while issuing notice, had granted interim stay whereby the respondent Company was restrained from disposing of any of its assets, movable or immovable, and further restrained from transferring, alienating or in any way creating charge over the movable and immovable of the Company. It appears that thereafter, the consent terms were arrived at between the workmen and the respondent Company on 26.10.1997 agreeing inter alia that during the pendency of the above petition, the workmen and the management in respect of about 400 workers, agreed to settle the outstanding amount. The workmen agreed that all legal dues upto 31.01.1997 shall be the legal claims and the respondent Company agreed to pay all the legal dues including wages and other allowances for 49 months being full and final settlement of all the claims in respect of wages, benefits, and other allowances for the said period. It was also agreed by the respondent Company that the amount of wages and allowances for 4 ½ months out of the disputed period of 9 months being subject matter of the dispute pending before the Industrial Tribunal in Reference (IT) No.478/92 shall be paid and the said payment was also agreed to be accepted as full and final settlement of the disputes and the reference was to be withdrawn. It was also agreed that the aforesaid legal dues of the workmen would be paid by the management by disposing of the movable/immovable assets of the Company and other miscellaneous assets to that extent only. The Company had agreed to dispose of movable assets at the first instance and thereafter if dues are not satisfied then the Company would dispose of immovable assets. The parties agreed that the interim relief granted by the learned Company Judge be modified to that extent so as to enable the respondent Company to meet with the above agreed liability. The assets were to be disposed of within a period of 6 months and the sale was to be conducted by the committee consisting of 5 representatives of the Union and 3 representatives of the respondent Company. The amount of sale proceedings was to be deposited in the Court and all workmen were to be paid dues as per the amount shown in the annexure to the settlement. The respondent Company had also agreed to pay the provident fund contribution upto the cut-off date, i.e., 31.01.1997 before the authorities so as to enable the employees to get their PF and pension benefits under the scheme. The respondent Company had also agreed that all workmen would continue to occupy their respective quarters till the entire amount was paid to the concerned employees. The respondent company also agreed that the Company would continue to supply all necessary amenities, i.e., light, water, etc, till the entire dues were paid to the concerned employees.
Based on the aforesaid settlement, this Court vide order dated 16.12.1997, in Company Petition No.42 to 44, 54 to 70, 76 to 92, 102 to 137, 158 to 213, 263 to 271 of 1997 passed the order and the interim relief granted was modified in terms of para 4 of the consent terms filed on 16.12.1997. The Managing Director of the respondent Company was directed to file an affidavit giving undertaking that he would comply with the consent terms before this Court on 16.12.1997. As per Annexure A of the consent terms, the total amount agreed to be paid by the respondent Company to the workmen was Rs.6,50,06726.54. As per the order dated 16.12.1997, Shri Mayur M. Amin, Director of the respondent Company filed an undertaking before this Court on 28.12.1997. He undertook that he would comply with the terms and conditions of the consent terms dated 16.12.1997 entered into between the workmen and the respondent Company. He has further undertaken to pay all legal dues of the workmen as per the consent terms.
It appears that thereafter, the respondent Company entered into an agreement with one M/s.Punit Corporation and such agreement was a tripartite agreement between M/s. Punit Corporation, respondent Company and the sale committee appointed by this Court. As per the said agreement M/s. Punit Corporation was to deposit a sum of Rs. 6, 61,00,000/- before this Court on the date as mentioned in the said agreement and in exchange thereof, the said M/s. Punit Corporation was allowed to lift the materials to the extent of the monies so deposited by it. It was also clarified that if M/s.Punit Corporation failed to deposit the amount as per the schedule fixed, it would be liable to pay the interest at the rate of 18 % p.a. for the delay in payment. As per the said agreement, once the workmen received the payment as per the settlement, they would not have any dispute or objection against other assets of the respondent Company. Along with the said agreement, an undertaking was also given by Shri Mayur Amin, Director of respondent Company, wherein it was stated that under the settlement of 22.04.1998, the management, workmen and M/s. Punit Corporation have entered into a sale agreement and thereby parties have agreed to dispose of movable and immovable properties of the Company and have agreed to purchase the said assets under the said sale agreement dated 22.04.1998. It was further undertaken by him that he would pay all legal dues of the workmen as per the agreement entered into on 22.04.1998.
Again, based on the aforesaid sale agreement, this Court passed an order on 28.04.1998 in Company Application No.162/98 whereby the applicant therein was directed to go on depositing the agreed amount stat ed in the schedule to the sale agreement dated 22.04.1998 and as and when the amounts were so deposited, the applicant was permitted to sell the movable and immovable properties of the equivalent amount. The Court had further observed that along with the payments being deposited in the Court, the members of the sale committee were directed to file a statement of distribution amongst the workmen signed by all of them and on the strength thereof, as and when the amounts were so received, the Registrar of this Court was directed to issue the cheques to the concerned employees.
As per the sale agreement, the respondent Company was to deposit the entire amount of Rs. 6.61 crore on or before 25.09.1998. The respondent Company did not deposit the amount as per the agreement and undertaking given to this Court. The request was made for extension of time which was granted upto December 1998 and in any case till 10.03.1999, the respondent Company deposited only an amount of Rs.3.25 crore as against which it was alleged that the goods worth Rs. 8 crore were lifted by M/s.Punit Corporation. The workmen-Union had to file Misc. Civil Application for contempt of Court alleging that the respondents had committed breach of the order as well as the undertaking filed before this Court. It was also alleged that though the goods were removed, equivalent amount was not deposited with this Court. It was also alleged that the respondents were not ready and willing to follow and implement the order of this Court and the undertaking filed by them. The respondents had contended that there was dispute between the Company and M/s.Punit Corporation and therefore, Civil Suit No.164/98 was preferred and ex parte injunction was also granted restraining Punit Corporation from lifting the material/scrap and it was also alleged that M/s. Punit Corporation did not make any effort to get the stay vacated only with a view to shirk the responsibility of paying the outstanding amount of Rs.3.33 crores to the workers. It is on account of the aforesaid dispute, all other petitions were disposed of in view of the consent terms but the present petition being Company Petition No.40/97 was kept pending till entire dispute was over.
There were interim applications to which we are now not concerned in the present appeal. However, the relevant aspect is that the said Company Petition came to be heard by the learned Company Judge and initially, vide order dated 31.03.2005, it was found that there was no intentional delay in making payment to the workers nor there was any willful default or intentional breach of the agreement on the part of the respondent Company. The learned Judge found that the circumstances were such that it was impossible for the Company to honour their commitment. The learned Company Judge also found that since the workman are still occupying the quarter inspite of the end of their employment, the interest does not deserve to be awarded. Ultimately, the learned Company Judge directed the respondent Company to deposit the sum of Rs.3.36 crore before this Court within 21 days from the date of the order with the further direction that until the amount was so deposited, the respondent Company was not permitted to lift any part of the goods or material, either movable or immovable from the premises of the Company. The workmen were directed to vacate the quarter as soon they received the remaining amount as per the consent terms excluding the interest and upon deposit of Rs.3.36 crore, it was observed that the stay would stand vacated. Accordingly, the petition was disposed of.
It appears that thereafter, the amount of Rs.3.36 crore was not so deposited and therefore, again the matter came to be considered by the learned Company Judge and vide order dated 11.05.2005, the learned Company Judge found that despite the time extended and despite the declaration made by this Court, the amount of Rs.3.36 crore, total was not deposited and the learned Company Judge found that the respondent Company has failed and neglected to discharge its liabilities towards the dues of its workers and therefore, the Company Petition was ordered to be restored and the petition was admitted and the advertisement was ordered to be published in Indian Express English daily and Jansatta Loksatta Gujarati daily, both Baroda edition mentioning the date of final hearing as 23.06.2005 with the clarification that the publication of the advertisement in the official gazette would stand dispensed with. The learned Company Judge further found that the intention of the management of the respondent Company did not seem to be genuine and bonafide and the assets of the Company were likely to be frittered away and therefore, the official liquidator attached to this Court was appointed as provisional liquidator of the respondent Company, i.e., Manor Investment Private Ltd. of which Sevalia Cement Works was one of the unit and the OL was directed to take charge of the assets of all the units of the respondent Company before the next date of hearing, as provisional liquidator.
It appears that thereafter, the official liquidator who was appointed as the provisional liquidator took over the charge of the assets of the Company. The respondent Company had preferred OJ Appeal No.17/05 with the interim application therein against the aforesaid order dated 11.05.2005 passed by the learned Company Judge in Company Petition No.40/97. In the said OJ Appeal, this Court had granted stay on the condition to deposit the amount of Rs.2 lakh and thereafter, pending the OJ Appeal, the amount of Rs.3 crore was deposited in addition to other amount deposited of Rs. 50 lakhs in Company Application No.63/11 and the other amount of Rs.65 lakhs as stated by the learned counsel for the respondent company was also deposited. The said OJ Appeal was heard by the Division Bench of this Court and vide order dated 10.02.2011, it was found that the real cause which led the learned Company Judge to recall the earlier order as well as for issuance of the order of advertisement may not survive since the amount has been deposited but this Court found that the main company petition is still pending before the learned Company Judge after admission and the learned Company Judge has yet to decide the question as to whether Company should be ordered to be wound up or not, may be either at the instance of the workmen who preferred Company Petition No. 40/97 or may be at instance of Kheda District Panchayat who preferred Company Petition No.116/05. Therefore, the order passed by the learned Company Judge was modified to the extent that the main Company Petition No.40/97 may be considered by the learned Company Judge for passing appropriate orders with a view to resolve various aspects which have arisen from the date from which the impugned order came to be passed on 11.05.2005 till the matter is finally considered by the Court. It was also observed by the Division Bench that the learned Company Judge may be required to examine the aspects that (1) whether the petition should be admitted or (2) the order of winding up should be passed or (03) Company Petition No.40/97 or Company Petition No.116/05 be dismissed on the ground of amount already deposited with this Court or not.
It appears that thereafter, the learned Company Judge heard the Company Petition No.40/97 and vide order dated 30.03.2011, found that the workmen have no right to file winding up petition but have the only right for audience and as the consent terms were submitted and the amount has been deposited, the said aspect is not disturbed and therefore, ultimately, the learned Company Judge disposed of the Company Petition. Under the circumstances, the present appeals before the Division Bench of this Court.
It may be recorded that OJ Appeal No.31/11 has been preferred by the original petitioner challenging the order of the learned Company Judge whereas OJ Appeal No.18/12 has been preferred by another workmen Sonaji Adaji Parmar against the very order of the learned Company Judge whereas OJ Appeal No.52/11 has been preferred by the security agency which has been deployed by the provisional liquidator challenging the order of the learned Company Judge to the extent of not making any provision for disbursement of the amount of the outstanding bill of the security agency by the learned Company Judge. Since in all the appeals, the order under challenge is the same, they were heard simultaneously.
We have heard Mr. Kishor Paul for the Khimji Sanabhai Parmar, appellant of OJ Appeal No.31/11 as well as for Mr.Sonaji Adaji Parmar, appellant of OJ Appeal No.18/12, Mr. Supehia for the appellant of OJ Appeal No.52/11, Mr. Yatin Soni for the respondent Company and Ms.Amee Yagnik for OL in all the appeals and Mr.Girish Das for respondent no.4 in Edvinbhai Clement Menon in OJ Appeal No.18/12.
It appears that as per the order dated 10.02.2011 passed by the Division Bench in OJ Appeal No.17/05, it was observed inter alia as under:
....Hence the question may be required to be examined by the Ld. Company Judge as to whether the petition should be admitted or the order of winding up should be passed or Company Petition No. 40/1997 or Company Petition No. 116/2005 be dismissed on account of the amount already deposited with this Court or not.
It is undisputed position that the aforesaid order of the Division Bench in OJ Appeal is not modified by any higher forum. If the impugned order is considered, it appears that the learned Company Judge has disposed of the petition on the ground that workers are entitled to appear at the hearing of the winding up petition whether to support or oppose it so long as no winding up order is made by the Court. The learned Company Judge found that the workers have no locus to appear and be heard in the winding up petition both before the winding petition is admitted and after admission and advertisement of winding up petition, until the order is made for winding up of the Company. The learned Company Judge by relying upon the view of the Apex Court in the case of National Textile Workers Union vs. P.R. Ramakrishnan reported at AIR 1983 SC 75, has found that the workmen have no right to file winding up petition but only right of audience and therefore, dismissed the petition.
Had it been a case where the workers filed the petition simplicitor for recovery of wages which remained undecided, the matter might stand on different footing. But the facts and circumstances as narrated hereinabove, shows that on behalf of the Company, the dues of the workers to the extent of 6,50,06726.54 were admitted by the respondent Company in the consent terms and not only that but the respondent Company also agreed to pay the said amount. The matter did not end there, but a step further was that a tripartite agreement was entered into for modification of the interim order granted by this Court between the Company, the workers union and M/s. Punit corporation (the purchaser), whereby it was agreed to deposit the amount of Rs.6.61 crore wherein it was agreed that upon failure to pay the amount, the interest shall be payable at the rate of 18% p.a. The additional aspect is that the undertaking was given by the Managing Director of the Company to this Court to abide by the consent terms and the agreement. The facts further show that out of the total amount of Rs.6.61 crore till 10.03.1999, Rs.3.25 crore was deposited and the amount of Rs.3.26 crore was yet to be deposited. It is true that the learned Company Judge when considered the matter on 31.03.2005 in Company Petition No.40/97, he had initially found that there was no intentional delay in making payment to the workers nor there was any willful default or intentional breach of the agreement and therefore, directed the respondent Company to deposit the amount of Rs.3.36 crores and did not award interest. However, thereafter vide order dated 11.05.2005, the very learned Company Judge at paragraph 5 while dealing with the contention of maintainability of the petition as under:
So far as present petition is concerned, the Court has observed in its order dated 31.03.2005 that the winding up petition filed by the workmen is not maintainable. However, in the present case, the respondent Company has agreed and undertaken to this Court that the respondent Company would deposit an amount of Rs. 3.36 Crores before this Court within 21 days from the date of the order towards the dues of the workers. As the said amount has not been deposited and the respondent Company has expressed its inability to deposit the said amount, it becomes clear that the respondent Company has failed and neglected to discharge its liabilities towards the dues of workers. Hence, the order dated 31.03.2005 passed by this Court is hereby recalled.
The petition is hereby restored and for the aforesaid reasons, the petition is accordingly admitted. The petition is ordered to be advertised in "Indian Express" - English Daily and "Jansatta-Loksatta" - Gujarati Daily - Both Baroda Editions mentioning the date of final hearing as 23.06.2005. Publication of advertisement in the Official Gazette is dispensed with. (Emphasis supplied) In our view, the aforesaid observations were required to be considered before a finding was recorded that the workmen had no right to file the winding up petition. Each case would depend on the fact situation of the matter. Once a debt is admitted by the Company of any worker and based on the same, the order is passed by the Court directing the company to pay a particular amount, the worker could be termed as creditor of the Company so as to fall under section 434(1)(b) of the Act for finding out as to whether the Company is unable to pay its debts or not. We may again make it clear that we are not dealing with the situation were the workers dues are yet to be finalised. But we are dealing with a case where the workers dues are admitted and based on the dues of the workers, the learned Company Judge had passed the order and the order of the Court remained unsatisfied if the stage of admission of the petition was to be considered because at the relevant point of time when the petition came to be admitted, the order of the Court for payment of the dues of the workers remained unsatisfied. Therefore, keeping in view the facts of the present case, it is not possible for us to agree with the view taken by the learned Company Judge that workers had no right of filing winding up petition. It is also not possible for us to agree with the view taken by the learned Company Judge that the petition now could not be maintained.
It appears to us that the other aspects have not been considered by the learned Company Judge, viz., as to the order of the Court wherein, based on the admission of the debt of the workmen in the consent terms, was satisfied or not. If the said aspect was further to be examined, the Court may be required to consider for the interest for the delayed period. If the debt is crystallised, and thereafter, if there is a delay for deposit of the amount, one cannot say that no interest would be payable even on compensatory basis more particularly when as per the tripartite agreement, which led the Court to modify the order for disposal of the property, interest was payable at the rate of 18% p.a.. At this stage, we may also record that Mr.Paul, learned counsel appearing for the workmen did declare before the Court that after 2005 till today, there is substantial rise in the price of immovable property of the Company which is more than about 200 acres of land and therefore, there is no reason to deprive the poor workmen of their legitimate interest on the agreed amount payable when it is clear that the amount of more than Rs.3 crore was not deposited. He submitted that if the interest is to be awarded on compensatory basis, the workmen are agreeable to accept the interest at the rate of 10 % p.a. from the date on which the amount was payable until the amount is actually paid in the Court on proportionate basis.
Whereas, Mr.Soni, learned counsel appearing for the respondent Company submitted that the respondent Company cannot be made liable to pay the interest because the interest was to be paid by M/s. Punit Corporation upon default in making payment and he submitted that the suit is filed and the matter is still pending. He also contended that if M/s. Punit Corporation had agreed to pay the interest, respondent Company cannot be made liable to pay the interest on the agreed amount more particularly when more than principal amount deposited with this Court is already paid.
We find that we need no embark upon such exercise for liability to pay the interest including that of interest on compensatory basis since we find that the said aspect is not examined by the learned Company Judge while disposing of the main petition. It also appears to us that there is considerable force in the contention raised by Mr.Supehia, learned counsel appearing for the security agency that if the security agency was deployed and the bills have remained unpaid at the time when the Court was to pass final order for disposal of the Company petition, appropriate orders were required to be passed for the expenses already incurred by the OL or the liabilities so incurred by the provisional liquidator for the purpose of implementation of the order of this Court to take charge of the affairs of the properties of the company.
It appears that as the learned Company Judge has not dealt with the aforesaid various aspects, it would be appropriate to relegate the matter to the learned Company Judge for deciding the said aspects at the time when the further order is to be passed in the main Company petition.
In view of the aforesaid observations and discussions, we find it proper to remand the matter to the learned Company Judge for deciding the various aspects which may arise in the Company Petition in light of the observations made by this Court in the present order.
Hence, the impugned order passed by the learned Company Judge is set aside with the direction that the main Company Petition No.40/97 shall stand restored before the learned Company Judge for decision in accordance with law.
The interim order passed in the present OJ Appeals shall continue to remain in operation until the Company Petition is finally decided by the learned Company Judge.
All the appeals are allowed to the aforesaid extent. Considering the facts and circumstances, there shall be no order as to costs.
(JAYANT PATEL, J.) (MOHINDER PAL, J.) BIJOY Page 27 of 27