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1. The present application is moved for the relief, inter alia, that the workers of Mumbai Unit of Ahmedabad Manufacturing and Calico printing Mills and Company Limited (hereinafter referred to as SC alico for the sake of convenience) be paid dues on adhoc basis from the sale proceeds realised by the Official Liquidator.

2. The short facts appear to be that the applicant is the Union representing the workmen, who were employees of ILAC Limited (hereinafter referred to as SILAC for the sake of convenience) on the date when winding up order came to be passed. The date of winding up order is not in dispute. It is also not in dispute that Calico was a holding company and ILAC was its subsidiary. It appears that as per the applicant, the workers were the employees of Calico, however, in the year 1982 the management of Calico transferred its Mumbai Unit to ILAC, which was subsidiary of Calico. Calico has resolved for transferring of the complete unit, including the land, building, plant and machinery, employees, etc., and the resultant effect was also given, but since at the relevant point of time Urban Land (Ceiling and Regulation) Act, 1976 was in force and as for such transfer, the requisite permission was to be obtained from the competent authority and as no permission was available at the relevant point of time, the transfer of land and building from Calico to ILAC was not effected. Consequently, it appears that in the balance-sheet of ILAC the price of the land was not shown as paid, nor in the balance-sheet of Calico such price was shown as having received for the land. It also appears that as such when the transfer took place for Mumbai Unit from Calico to ILAC no consideration was passed by Page 1307 ILAC to Calico, but consideration was shown as paid notionally and was shown as owing to the holding company in the balance-sheet of the ILAC and shown as recoverable in the balance-sheet of Calico. The fact remains that after the aforesaid transfer of 1982, ILAC continued to look-after the management and affairs of Mumbai Plant Plastic and Commercial Division and not only that but as it appear from the balance sheet the investments were also made in the Plant and Machinery by ILAC after taking over of the same from Calico. As per the statement made at the bar, the unit was closed in the year 1985 and since then the said Unit under the control of ILAC remained closed.

10. On behalf of the secured creditors, it was inter alia submitted that it is not a case where the transfer was effected by Calico to ILAC with a view to deprive the workers from their legitimate rights or to deprive any creditors of Calico. It was submitted that in the balance-sheet which are produced from the period of 1982 onwards, after the transfer of the unit by Calico to ILAC, ILAC has made development over the plant and machinery, the investments are also made and therefore, such be treated as property of ILAC for all purposes. If it is on account of the ULC Act or otherwise, that the immovable properties are not transferred by Calico to ILAC, such cannot be made as a ground for declaring that the whole transfer of the unit by Page 1310 Calico to ILAC was a fraud, more particularly when ILAC was already a company formed long back, though may be subsidiary of Calico.

23. ILAC has continued with the operations after receiving the Bombay Unit and it has also added investments to the plant and machinery, which is apparent from the balance-sheet of the Company, viz. of ILAC.

24. No consideration as shown has credited in favour of Calico so far as the land and buildings are concerned and the consideration reflected in the Books of Account was only to the extent of plant and machinery and other movable of the Bombay Unit belonging to Calico to ILAC.

25. Calico as well as ILAC both are ordered to be wound-up on 15.07.1998 and till then in any case, at any point of time, no dispute was raised by the applicant contending inter alia that they are the employees of Calico or that the transfer by the management of Calico to ILAC of the whole undertaking including the workmen is sham or bogus or with a view to frustrate the welfare legislation of the labour laws or to deprive them from their legitimate rights.