Karnataka High Court
Shri Ambannasa Katwe vs The Official Liquidator Of on 29 May, 2012
Author: A.S.Bopanna
Bench: A.S. Bopanna
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 29TH DAY OF MAY 2012
BEFORE
THE HON'BLE MR. JUSTICE A.S. BOPANNA
CA. Nos.160/2012 and 164, 166, 168, 170, 172. 174,
176, 178, 180, 182, 184, 186 & 188/20 12
IN
COP NO.166/2001
Between:
C.A. 160/2012
Shri, Ainbarinasa Katwe
Sb Shri. 1kambarasa Katwe,
Aged aheut 67 years,
R/at 3rd Main, l6th (ross.
Rajaramnagar.
Harihar- 577 601. .Applicant
ci64JQi2
Shri NHin S. Dhopeshwai
S/o Shri, Shripad.
g d abou 53 y ai s
R/atM1G14 103
Aksha Park Gokul Roa I
1Iib1i 550 00. ... Applicant
C.Ad66L1 2
SI M.F33s4at u iaIIa 13
j 113
1
h t 1ao
\gu ab U )3 e
P L
3 no, 1 os
UtI'1T:H :'
IL
,
4 , pp1icant
co12
Shri run P Dlxii
S/o. Late Pandurang Dixit,
Aged about 64 years
R/at 25/23 #306
Sagar Park View,
Opp. JP Park lank Bund Ro id,
SBM Colony, Mathikeie,
Bangalore 560 054 Applicant
C.A. 17Q/Qi2
Sri, Suresh D. More
Sb. Late Devaji More,
Aged about 61 years,
R/at 1 10. 6th Cross,
Maratha Colony.
Dharwad 588 008. Applicant
c7]2012
Shri BR. Sreedhar
S/o late B Rajashekar
Aged about 49 years
R/at 3 47 M,K Colony
Yant rapur
Harihar 577 601 Applicant
CA. 174/2012
SI iH \ Ashk
S/ Latt H N enk te )ixi
Ved h it 8
7 44 Ki loska (
H i Applicant
C A 176/2012
/
3
34, Somwarpeth,
Tilakwadi,
l3elgaum 590 006. Appflcant
C178JO1
Shri M S Chandra Mohan
Sb late Shn M Subbanna
ged about 65 years
R/at 752, Sri Jaladurga Nivas
I' Main, 7th (q
Ngallngappa Layout
Davangere 577 004 .AppUcant
2012
Shri Vinod B. Umeiji
8/0, Shri Bhimrao Umeiji
Aged about 50 years,
R/at 47, Yalakkishettar Colony,
Near Shamkar Math,
Dharwad 580 004. .. Applicant
22012
Shri M,N,Mohan
S/o Late M N,Amhaji Rat
Aged about 63 years,
R/at J 51, MJ(.Colony,
Yantrapur
ilarihar a77 601 . Applicant
C4 1$4j292
Shr I K I irishot1'in
h B I allapp
ge1ahcii 1 ea
0
R/ii Sneha I has '\ilava
1Irkogiur -7 i
) er i Applicant
I
CS. 1QS/2012
Shri Mounesh Badiger
Sb. Shri Ganappa.
Aged about 61 years,
R/at 174/C, Jeejarnatha Colon).
Guttut Ilarlhar 577 601 Applicant
4 188J201;
1
c
Slid M. Manjunatha
S/n Isle ShrI Mukkannappa
Aged about 45 years
R/at J 56/4, M.K.Colony.
Yantrappur.
Harthar 577601 ...Applicant
(By SrI Deepak. Adv.)
at
the Official Liquidator of
the Mvsore Kirloskar Ltd. (in liquidation)
Attached to High Court of Karnataka
1 2" Flout Rahrja Towers,
Bangalore 560001 .. . Respondent
(Cammo
HySnKMatnckirandS a) n At's
[a c mpi çphcabon r ik [3 1 on c
icaplcar nie Rule 64f Ic C )LW.
1 ii iaa ia,. cdiii r
) C I SIC lIC- S IC
1
C
5
ORDER
These applications are filed by the former employees of the Company in liquidation. The applications are in the form of appeals as contemplated under Rule 164 of the Companies (Court) Rules. 1959 assailIng the adjudication rendered by the Official Liquidator in respect of the claim made by them.
2. Since the issue for consideration in all these applications are similar, they are heard together and are disposed of by this common order. For the purpose of narration of facts, the averments as contained In CA No.160/2012 is referred.
3. Heard Sri Deepak. learned counsel appearing for the applicants and Sri K.S.Mahadevan, learned counsel for the Official Liquidator and also the Official Liquidator who is present In person in the Court.
4. The brief facts are that the respondent company was ordered to be wound up by this Court vide the order dated 01.04.2004 passed in Co.P.No. 166/200 1. 6 Subsequent thereto, in the process of liquidation, the Official Liquidator had invited claims from all concerned. Phe applicants who are the ftrrner employees of the Company in liquidation had filed their affidavit of proof of debt in form No67 claiming the amounts due a indicated thei em, Though the quantum of amount claimed aries in each of these cases, the claims in all the cases were made under the category of (i) Salary (ii) Leave encashment and
(iii) Gratuity Even in respect of th gratuity the period for which it is claimed varies from case to case In the case, which is taken up for reference of facts, the salary claimed is for the months from March 2000 to December 2000. lii Leav nc ashment is for 180 days whih th Gratuity lairned is for 20 months The Offft mal Liquidator having adjudicated the (laini and having noti 'ed the total Him of Rs 95 H a rcjt I d su I Rs 624 rofa Is 0 lii ( fir 1 i' F I F mentioned in the other applications vary from case to case but, the method adopted by the Official Liquidator is similar in all these cases.
5. The applicant claims that the method of adjudication adopted by the Official Liquidator is not in consonance with law. It is contended that limiting to the extent to Rs.20,000/- as 'Preferential' would arise only in respect of the amount adjudicated under the head of 'wages or 'salary' as contained under Section 530(1)(b) of the Companies Act, 1956 (for short. the 'Act'). The contention of the learned counsel for the applicant is that the amount payable towards 'Gratu itv' and/or the Lcave Encashrnent' cannot be encompassed under the notification provided under subsection (2) to Sec.tion 530 since subsection (2) does not•• apply to Section 530 (I)(c) to 5l. The aetna amount in respect of claim under Section 530 (e) and (P admitted durine the course of adjudication would have to be considered as PrererenuaL it is •therefore conten.ded that the amount of 'Grati..iity' and 'Leave enca.shm.enb also being the amount payable by t.he 8 company to the employee should he considered as the amount to he paid as Preferential amount during the course of liquidation process. The learned counsel also referred to the decision of the Gujarat I 11gb Court in the case of Textile Labour Association vs. Official Liquidator of Jubilee Mills Ltd (2000 Vol.99 Comp,cases page 189). In fact the said decision has also been taken note of by the Official Liquidator while processing the claims
6. The objection filed on behalf of the Official Liquidator would indicate that the limit of Rs20,000/ adopted by the Official Liquidator to treat that extent only is Preferential is based on the notification dated 1, 02 1997 issw d in exercise of the po er irider sub sect i n (2) Ic Se lion 30 of th( Act Ttn e ekin n the mc eh if i1 iqi do tek p lily P nsof r he i n i o tend d n m t I I I 9 of gratuity. In this regard, ft is stated that insofar as the Officers are concerned, the payment of Gratuity is administered by the Mysore Kirloskar Officers Gratuity Fund trust and insofar as the workmen it is the Mysore Kirloskar Employees Gratuity Fund Trusf Therefore to the extent of the said amount, it cannot be considered as the amount due from the company as workmen's dues as the company has already parted with the amount and therefore, it cannot be considered 'Preferential' payment It is in that context contended that the adjudication as made by the Official Liquidator is in accordance with law. The Official Liquidator has also placed reliance on the order dated 0809201 I passed by this Court in C A No 113/201 1 to justify their action In line with the contention which have been urged in the obje hon sratemc nt the I irned counsc I for the Official I iguidator md als t )ffi i. i q iid tor i putfor hei o iion htf p ii I0 Act provides for overriding preferential payments Subject to the same, Section 530 provides for preferential payments in priority to all other debts. The payments which receive priority have been enumerated in (lause (a) to (g) of sub section (1) of Section 530 Sub section (2) provides that th um to which priority is to bc given under Clause (b) of sub section (1) shall not, in the case of any one claimant exceed such sum as may be notified by the Central Government in the Official Gazette. In exercise of that power under Section 530 (2), a notification is issued as hereunder Notification No C SR 80(F) dated 1 7"
r nkri i nny I t L t LI I V 1i 007 .J .J K Tn Iii n,Jnrnl flt c ,.r ni FLIk t1 t Lii it n ,nr nnn fnrrnrl jJtJ VV ti tiJi ItI I Li 1 k LJ, sub section (2) of Section 530 of the (omparnes Act 1956 (1 of 1956), the Central Goernment hereba notifies that the sum to which priority shall be gien under c Iaus (bj at sub section 1j 01 ect1on 30 01 hc said Act with cited from 1 day of March 199/ h ll not in as I an ,n( la mars x td ic suir R 20000 (1w r t h )usand rily H
9. The issue at the outset would therefore be with regard to the manner of consideration of the unpaid salary/wages to its employees as preferential and the limit applicable. In that regard, the adjudication of the said amount would be as contemplated under Section 530( 1)(b) of the Companies Act. To the said extent, the notification dated 1702. 1997 relied on by the Official Liquidator would certainly be applicable. In that view, a perusal of the provision contained in SubSection (2) to Section 530, as rightly pointed out by the learned counsel for the applicant would indicate that the said subsection has been made , 14 r -i ki 1 r +k r ' n+ i ri - i i rI 4 r ' r rI 1 1 i rr crr+4 -t, 530(i)(b) towards wages or salary and not to the categories claimed under Clauses (c) to (g contained i.r. Section 530 (1) of the Act. If that be the.• po.sition, insofar as the detern.ination of the accrued Le-ave Rern.uneratlon and with regard to the amount payable towards Grat.uity and other similar amounts, the said notification cannot be .made applicable. In other words, i.t would be clear that with regard to the amount of Leave Remuneratio.n and the p Gratuity to be adjudicated by the Official Liquidator as admitted and payable to an employee, the same cannot be limited to any extent Phe entire adjudicated amount under the said itegorv would have to bc admitted br preferential payment along with the salar 01 wages admitted and limited to tIle extent of Rs,20,000/ clS provided under the notification, I'herefore, the manner in which the Official Liquidator has treated the preferential payment in the instant case vide the impugned order dated 03.10.2011 in CA No, 160/2012 and similar orders in the connected cases are not sustainable, Hence, the respective claims of the applicants herein calls for readjudication at the hands of the Official Liquidator 10 1h nt ith m nit to the I ave em men ation and thu iratuity 1 umn d ir th i st m s ill also have ( ) tur I )fi Y y J 0 r r I ii Ii i b i rsf t ( i e ur (i I i r b i k tt I 13 been paid to an employee as has been held in the Textile Labour Association's case (supra). Pherefore, such amount in any event would have to be treated as the rmount payable if there i' nz'rterial produced by the employee justifying such claim and verified by the Official Liquidator from the records of the C ompany. Uhe entire amount determined thereto as due arid payable will have to be treated for preferential payment in the manner as stated above 11 With regard to the claim for gratuity amount, as noticed in the scheme of the prois1orr made by the JI JCL 1 J iy iii 1Ii4 ir 4,-I firr 1Tl L1ikLCt L1'J1 I IV 1I1 I C VI (t u11 CIII r19 JI iCit, ( 5 JLI I ' kJI 'V I II tin gratuity fund had been ciealxd in the manner as mcriti mci ibox 1 b' orrrnnt II depe idert Irust Thc rr c un pay ihh I ft e emploc tow d 3r i t a I C p 1 c jci p v 11 H I I 14 amount that the company had already deposited with the Trust without reference to the liquidation. Hence, the t'Ifl{)lOVees ('OIiCeITle{1 iliort' particularly I lie al)plicallts herein would have to lirsi approach tho respective (ratunv fund Trust from whom the were enLit led to receive the Grattut amount and seek br disbursement of the Gratuity clue to them ftr the services reiidered to the respondent company and as cleposite(l by the company.
From the amount available with the Trust the disbursement would be made to the employee. If the Gratuity Trust informs the employee that the Gratuity payable to such employee has i lot been deposited by the company for the entire length of service, th amount not deposited in r spe t of such period of s rv c r ndered h tht employee wiuid still remain to be the liability ol the r€spondcn cnnlpanv alul the aine would fuim a paiL il w ik wn s 1 woul sLiI1 r n i efl paat i2 I a \ iexv i tilt (tOO ia iip iar1 01 1 lIt ai1 1\ It 'a a I n 1 a li c a] 3( ( I iz a I \ I 15 wherein the amount claimed towards Gratuity is also indicated, the employee concerned would have to furnish such material from the Gratuity Trust to Indicate that only a portion of the amount was made available to the Trust and the balance is payable by the company. Such material obtained shall be furnished to the Official Liquidator in support of the affidavit of proof which requires readjudicatlon at this point Based on the additional material that would be filed, the claim for Gratuity also would be readjudicated by the Official Liquidator for the purpose of treating It as preferential payment.
13. Thus, on having obtained the details, thc Official Liquidator while adjudicating the claim would separately adjudicate the amount that is admissible towards salaiy/wages, the amount payable towards leave remuneration and the amount, if any payable towards gratuity which is still due from the company. After having determined the amount admitted under the different heads, if the amount determined towards the salary/wages exceeds the sum of Rs.20,000/-, the ceiling contained In 16 the notification dated 17.02.1997 would be made applicable only to that category. Insofar as the amount determined towards leave remuneration and gratuity, the entire admissible amount shall be treated as Preferential' In addition to the extent of Rs.20,000/- towards the salary/wages which Is treated as 'Preferential'. Thus, having readjudicated the applicants shall be notified with regard to the amount that has been admitted In the manner as stated above.
14. In order to enable the Official Liquidator to readjudicate the claim after obtaining necessary documents from the applicants the respective orders dated 03.10.2011, 19.09.2011 17.08.2010, 02.06.2011, 21.09.2011, 29.08.2011. 17.08.2010, 21.09.2011, 25.08.2011, 02.06.2011. 11.10.2010, 21.09.2011, 29.08.2011 and 13.09.2010 are set aside.
15. The respective claims which are the subject matter herein stand remitted to the Official Liquidator for 4. 17 readjudicatlon of the matter In accordance with law, keeping In view the above obseniatlons.
The applications are disposed of In the above terms.
Sd! JUDGE Akc/bms