Gujarat High Court
Regional Office Of Textile ... vs Dhaniram Ramchandra & on 27 August, 2013
Author: K.M.Thaker
Bench: K.M.Thaker
REGIONAL OFFICE OF TEXTILE COMMISSIONER....Applicant(s)V/SDHANIRAM RAMCHANDRA O/OJMCA/140/2013 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD MISC. CIVIL APPLICATION NO. 140 of 2013 In COMPANY APPLICATION NO. 257 of 2012 In COMPANY PETITION NO. 21 of 1984 ================================================================ REGIONAL OFFICE OF TEXTILE COMMISSIONER....Applicant(s) Versus DHANIRAM RAMCHANDRA & 2....Respondent(s) ================================================================ Appearance: MS SEJAL K MANDAVIA, ADVOCATE for the Applicant(s) No. 1 GOVERNMENT PLEADER for the Respondent(s) No. 2 OFFICIAL LIQUIDATOR for the Respondent(s) No. 3 PARTY-IN-PERSON, ADVOCATE for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE K.M.THAKER Date : 27/08/2013 ORAL ORDER
1. Company Application No.257 of 2012 was taken by the original opponent. After hearing the original applicant (Party-in-Person) and learned advocate for the original opponent i.e. present applicant, the Court passed order dated 16.07.2013 in said application.
2. Now, the applicant has taken out present application and has prayed that:-
13(A) This Hon ble Court would be pleased to review and recall the order dated 16.07.2013 with respect to the facts mentioned in the application, in the interest of justice.
3. At the time of hearing of this application, learned advocate for the applicant laid stress continuously on one aspect viz. observation in Paragraph No.14 of the order dated 16.07.2013, passed in Company Application No.257 of 2012 in Company Petition No.21 of 1984, which read thus:-
In the alternative, the date on which winding up order came to be passed in Company Application will have to be taken as the last date of employment According to the learned Counsel for the applicant, the establishment of the Company was closed down in November,1986 whereas the winding up order was passed in the Year-1989 and that therefore, the relevant date for considering the length of petitioner s service should be November-1986 and not the date of winding up order i.e. 1989.
5. On the said ground, learned Counsel for the petitioner submitted that the order is required to be reviewed.
Any other ground to justify the request for review of the order is not urged at the time of hearing.
6. Now, so far as aforesaid circumstance is concerned, it is relevant to mention that in Paragraph No.12 of the order dated 16.07.2013 the Court has observed that:-
It is necessary to mention that the closure of certain department was declared illegal by the Court. Under the circumstances, if the competent authority and/or Official Liquidator has been taking into consideration the date of closure of the department as the last date of applicant s employment, then probably such approach may not be justified. If the closure of certain department of the company in liquidation was declared illegal and if the applicant was engaged in one the said departments, then the applicant would be deemed to be in service until closure of the undertaking in accordance with Section25-0 of the Industrial Disputes Act,1947. )
7. Before proceeding further, it is necessary to mention that this Court (Co:M.S.Shah,J, as his Lordship then was) has in the decision in the case between Textile Labour Association Vs. Official Liquidator of Jubilee Mills Ltd., {(2009) 99 CC 189} held that, if the closure of the Company or its Department/Establishment is not effected after following procedure prescribed under Section 25(fff) or Section 25(o) of the Act i.e. closure of the establishment of the Company is not in accordance with the applicable provisions of Industrial Dispute Act, 1947, then such closure would be illegal and in case of such illegal closure, the workman would be entitled for the wages for the period of such illegal closure meaning thereby, date of closure cannot be taken as base for determining terminal benefits of the workmen and in such cases, i.e. the cases where the closure was not effected in consonance with the provision of Industrial Disputes Act, 1947) and the relevant date for the purpose of calculating the dues of the workmen would be the date on which the winding up order is passed or the date of appointment of provisional liquidator. In the said decision in case of Jubilee Mills (Supra) the court observed that :-
This Court then observed that while trying to determine what are the workmen s dues for the purpose of Section 529 and 529-A of the Companies Act, the word wages will have to be understood in the same manner in which it is understood under the labour laws. The Court, therefore, held that the workmen s dues for the purpose of Section 529 and 529A of the Companies Act will include wages payable to workmen for the unavailed privilege leave with a clarification that the extent of wages payable would depend upon the leave standing to the credit of the workmen and which was not lapsed.
14.4 However, in the aforesaid decision, this Court does not appear to have been concerned with the question whether unclaimed privilege leave would be admissible for the period of closure also. In this case, we are not directly concerned with legal closure i.e. closure for which permission or deemed permission is obtained under sub-section (2) or (3) of Section 25-O of the I.D.Act. However, as far as the period of illegal closure is concerned, while the unpaid wages of the workmen would certainly be entitled to priority under Sections 529 and 529A of the Act, it cannot be said that the same priority will be available to the wages in lieu of unclaimed privilege leave during the period of illegal closure. The fiction that during the period of illegal closure the workmen had rendered services to the Company cannot be extended to mean that during the period of illegal closure the Company is not only deemed to have been carrying on its business operations but also that the workmen must be deemed to have not availed of the privilege leave or that the employer must be deemed to have refused to grant the privilege leave. Suppose privilege leave available to a workman is months s leave in a year and the undertaking remained illegally closed for one full year. Did the legislature intend that the workmen s dues should be given priority not only for the unapaid wages for the period of 12 months of illegal closure, but also that even though actually the workmen could not render services on account of illegal closure, the workmen should be paid the 13th Months s wages by way of wages in lieu of unclaimed privilege leave? The answer must be in negative. While priority for 12 months s wages is in view of legislative fiction contained in Section 25-O(6) of the I.D.Act read with Section 529(3)(b)(i) of the Companies Act, there cannot be any fiction that the workmen would not have availed of one month s privilege even if applied for. Any such fiction would not only be unwarranted by provisions of Sub-Sec.(6) of Section 25-0 of the I.D.Act, but would also run counter to the letter and spirit of the provisions of Secs.529, 529A and 530 of the Companies Act which intended to ensure that the workers/employees get priority/preference for their legitimate dues. The overriding priority given to the workmen s dues is only for their legitimate dues which cannot include any fiction of unavailed/refused privilege leave. The reasoning will apply with greater force to such claim for the period of legal closure.
Relevant date for computing workmen s Dues and Calculation of interest.
The relevant date for computation of the workmen s dues as well as the dues of the secured creditors for the purpose of determining the ratio of the respective dues under Sections 529 and 529A of the Companies Act is the date of first appointment of provisional liquidator and if no such appointment is made the date of winding up order as contemplated in Section 530(8)(c)(i) of the Act. Hence, in the first instance, the Official Liquidator shall compute the dues of the workmen as covered by the claim for priority under Section 529 and 529A of the Companies Act and the dues of the secured creditors as on the aforesaid relevant date.
As far as the claim for interest is concerned:-
(i) No interest shall be awarded for the subsequent period after the relevant date (as defined above).
(ii) As far as the claim for interest for the prior to the relevant date (as defined above) is concerned, the claim for interest shall not be allowed unless the debts carry interest as per the terms of the respective contracts.
(iii) It is only if the Company is left with surplus assets/funds realized after distribution of the dues of secured creditors and the workers dues both on pari passu as on the relevant date as aforesaid as per the provisions of Section 529 and 529A of the Act and after distribution of preferential dues under Section 530 of the Act that the question of awarding any interest on the dues of the secured creditors or on the workmen s dues for the further period after the relevant date will arise.
Since, the eventuality has not arisen in the instant case so far, the question about rate of interest is not considered at present.
8. It was In light of the observation by the Court in the said decision, that in the order dated 16.07.2013, this Court made the observation in Paragraph No.12 of the order dated 16.07.2013. It is pertinent that this Court also observed in order dated 16.07.2013 that:-
In the alternative, the date on which winding up order came to be passed in Company Application will have to be taken as the last date of employment
9. The words in the alternative make it clear that in the event the closure of the establishment of the Company was legal and was effected by the Company after following the procedure under Section 25(fff) or Section 25(o) (as may be applicable in the case of Company) then the date of closure would be the relevant date and in the event the closure was not legal i.e. closure was not effected in accordance with provisions of Industrial Dispute Act, 1947 & after following the prescribed procedure then the date of winding up order (or the date of appointment of provisional liquidator) will be applicable.
so far as this case is concerned it appears that any other/separate order appointing provisional liquidator was not passed at relevant time and in any case no one has relied on such date.
Hence, Choice is only between date of illegal closure and date of order of winding up. Thus, in light of the decision in case of Jubilee Mills, it has to be the date of order of winding up because undisputedly closure was not affected in accordance with provision of I.D.Act. That is not even the case of the applicant herein.
10. Besides this, when the Official Liquidator has made the payment of terminal dues to all other workmen after taking into consideration the date of winding up order then merely in case of one person any departure can not be made.
11. When for all other terminal benefits & for all other workmen, the date of winding up order is taken into consideration in case of all other workmen, the same relevant date would be applicable as relevant date for payment of all benefits to this worker as well.
12. Having regard to the said aspects, the observations in Paragraph No.14 of the order dated 16.07.2013 have been made.
Hence, there is no error apparent on the face of the order which can be corrected in exercise of review jurisdiction.
If at all the applicant has any grievance about the merits of the order then the applicant should have taken out appropriate Appeal proceedings against the order since only appellate Court can correct error in the order, but error, if any, in the order cannot be corrected in application for review i.e. in exercise of review jurisdiction.
13. The application does not fall within the purview of review jurisdiction or within purview of order 47 Rule 1, there is no error apparent on the face of the order and that therefore, the application is otherwise also not maintainable.
14. The other submissions made by learned advocate is with regard to reference leave note in Paragraph No.3 of the order dated 16.07.2013. According to the learned Counsel for the applicant she had filed sick-note on 16.07.2013 and not leave note.
15. In view of the said submission, the office is directed to verify as to whether learned Counsel had filed leave note or sick-note, and if the record reflects that learned Counsel of the applicant had filed sick-note then appropriate correction in Pagragraph No.3 of the order shall be made.
16. Certified copy of the order may be issued to the original opponent i.e. present applicant.
17. With the aforesaid observation and clarification, the present application is disposed of.
(K.M.THAKER, J.) Girish Page 8 of 8