Allowed

Damodaran.C.M v. Official Liquidator

Kerala HC3 Mar 2011Co.Appeal/68/2010

Case brief

AI extract

What is this about?

The High Court allowed company appeals filed by four workers of a liquidated company against the rejection of their wage claims under an Industrial Tribunal award. The Court held that the Official Liquidator's equitable reasoning regarding excessive payments to other workmen did not apply to the appellants, entitling them to the undisputed amounts from the award.

What did the court decide?

The respondent shall pay to the appellants the specific wage amounts indicated in the notice of rejection.

Damodaran.C.M Vs Official Liquidator — Labour and Industrial Disputes | Kerala HC (2011)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE R.BASANT & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN

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THURSDAY, THE 3RD MARCH 2011 / 12TH PHALGUNA 1932

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Co.Appeal.No. 68 of 2010()

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AGAINST THE JUDGEMENT/ORDER IN CA.173/2010 IN CP.33/2001

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APPELLANT/APPLICANT:

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DAMODARAN.C.M., S/O.GOVINDAN, AGED 72 YEARS, KAKKADAN HOUSE, NEAR SREENARAYANA VAYANA SALA, CHAL.P.O., AZHEEKODE, KANNUR-670 009.

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BY ADV. SRI.N.NAGARESH

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RESPONDENT(S): RESPONDENT

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OFFICIAL LIQUIDATOR, HIGH COURT OF KERALA, ERNAKULAM.

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BY OFFICIAL LIQUIDATOR SRI.K.MONI

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THIS COMPANY APPEAL HAVING BEEN FINALLY HEARD ON 03/03/2011, ALONG WITH COA NO.69 OF 2010 COA NO. 70 OF 2010 COA NO.71 OF 2010 THE COURT ON THE SAME DAY PASSED THE FOLLOWING:

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svs

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R.BASANT & K. SURENDRA MOHAN, JJ.

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Company Appeal Nos:68, 69, 70 and 71 OF 2010

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Dated this the 3^rd March, 2011.

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JUDGMENT

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Basant, J.

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All the appellants were workers of Messrs. Tiruvepathi Mills Pvt. Ltd which company has gone into liquidation. Before the Official Liquidator the appellants herein/workers staked claim for various amounts. Inter alia they claimed salary/wages for the period 19-10-1991 to 16-8-1992. According to the claimants/appelants/workmen they are entitled to such wages as per the award passed by the Industrial Tribunal in Annexure 2 award i.e award dated 29-4-2002 in I.D 10/98 passed by the Industrial Tribunal, Kozhikode. All the four appellants/claimants staked their claims before the Official Liquidator. The Official Liquidator considered their claims and vide identical adjudication orders turned down their claims for arrears of wages as per the award in I.D.10/98. Identical notices of rejection of proof of debt in form 69 (Rule 163) were issued to the appellants. As per Clause 7 of the said form 69 notices of rejection of proof of debt the appellants in the four appeals were

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COA 68,69,70 & 71/2010

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not granted the following amounts claimed by them as salary/wages for the said period of 19-10-1991 to 16-8-1992 as per award dated 29-4-2001 in I.D 10/98 of the Industrial

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Tribunal, Kozhikode.

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*Sl.No*	*Company Appeal No.*	*Name of the claimant*	*Amount*
1	68/2010	Damodaran C.M	24484
2	69/2010	Krishnan.K	25017.77
3	70/2010	Balan P.K.	23166.42
4	71/2010	Mohanan T.C.	24337.5

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The appellants/claimants are aggrieved by rejection of

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their claim for arrears of wages under the award. Significantly no contention was raised that the appellants/claimants are not entitled to the above amounts as per the award in I.D 10/98. The Official Liquidator rejected the claim of the appellants giving the following reasons in the adjudication order:-

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“7. Arrears of wages for back period:

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Arrears of wages for the period from 19.10.1991 to 16.08.1992 claimed as per the Award dated 29.04.2002 passed in ID No: 10/98 by the Hon'ble Industrial Tribunal, Kozhikode is rejected on the reason that the orders were passed subsequent to the date of commencement of winding up

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COA 68,69,70 & 71/2010 3

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(22.06.2001) without obtaining leave of the Hon'ble High Court as required under Section 446 of the Companies Act, 1956. Further the company was declared as a sick unit and was under the BIFR. No notice of the case is seen as served on the BIFR.”

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Identical rejection was challenged before the Company Court by all the four claimants. The learned Single Judge considered the challenge against the rejection by the Official Liquidator and upheld the rejection by the impugned order. The relevant discussion appears in paragraph 4 of the impugned common order which we extract below:-

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“As rightly pointed out by the learned counsel for the petitioners, Section 446 cannot be pressed into service for denying the claims as per the awards in the industrial disputes, which were passed prior to the winding up order. But I find considerable force in the contention of the Official Liquidator that since the claimants have been paid huge amounts by way of arrears of wages for 10 years without any work, it is unjust and inequitable to direct to pay further amounts to the claimants. It is a fact that for more than 10 years, the company was closed. It is also not disputed before me that the claimants had not

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COA 68,69,70 & 71/2010

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worked during that period. I cannot assume that they were starving without any work during that time since the company was closed. They must certainly have gone for other work and earned wages for the same. Therefore, on equitable ground I am not inclined to entertain these company applications. Accordingly, these company applications are dismissed.”

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Before us the learned counsel for the appellants/claimants and the learned counsel for the Official Liquidator have advanced their arguments. The learned counsel points out that both reasons given by the Official Liquidator have not been accepted by the learned Single Judge in paragraph 4 of the impugned order extracted above. Those reasons are not legally sustainable it is further submitted. The learned Single Judge rejected the claim on the short ground that it will be inequitable to direct payment of further amounts as huge amounts by way of arrears of wages for 10 years without any work had been awarded to some of the workmen. The learned counsel for the appellants/claimants contends that this reason is not applicable to the appellants/claimants herein as they have

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COA 68,69,70 & 71/2010

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not been awarded arrears of wages for 10 years without any work. This is clear from entry(1) in form 69 referred above. While the other workmen who were entitled to continue to work till the date of order of winding up were awarded arrears of wages till the date of winding up order the claimants/appellants who were to retire on superannuation much earlier were not granted such arrears of wages. This is evident from entry No:1 in the identical notice of rejection of proof of debt in form 69. Merely because some other workmen were granted arrears of wages for a period of about 10 years even though they had not actually worked it is not just, equitable or legal to deny the claimants/appellants herein the amounts which they are undisputedly entitled as per award in I.D.10/98. The learned counsel for the appellants in these circumstances argues that the only reason relied on by the learned Single Judge to uphold the rejection of the claim viz., 10 years arrears of wages without any work has already been paid to the claimants cannot operate as a reason to justify the rejection of the claim so far as the appellants are concerned.

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COA 68,69,70 & 71/2010

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We find force in this contention of the learned counsel for the appellants/claimants. The reason stated by the Official Liquidator, as rightly found by the learned Single Judge cannot deny to the appellants the amounts due to them as per the award in I.D10/98. The only reason relied on by the learned Single Judge does not on facts apply to the appellants. In these circumstances we are of the opinion that the appellants are entitled to the amounts noted above which indisputably is due to them as per the award in I.D 10/98. Their claims we are satisfied have been rejected unjustifiably.

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The learned counsel for the Official Liquidator advances an interesting argument. He submits that if the claims of the appellants were accepted, identical claims will be raised by all other employees who are entitled for amounts as per the award in I.D 10/98. Admittedly such claims of all other employees have been rejected and they have not chosen to challenge such rejection. Identical notice of rejection of proof of debt in form 69 under Rule 163 served on such employees have not been challenged on the ground that the claim for amounts due under

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COA 68,69,70 & 71/2010 7

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I.D 10/98 have not been paid. Merely because the claim of the appellants/claimants are being accepted by us now, we make it clear that the other claimants who have not chosen to challenge the rejection of their claim will not be entitled to seek such amounts even without any formal challenge of such orders.

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These appeals are in these circumstances allowed. The respondent shall pay to the appellants the amounts indicated above.

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K. SURENDRA MOHAN Judge

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COA 68,69,70 & 71/2010 8

Damodaran.C.M v. Official Liquidator

Case brief

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Damodaran.C.M v. Official Liquidator

Case brief

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