Radheshyam Ajitsarla and Anr. v. Bengal Chatkal Mazdoor Union and Ors.

, and it was Mr. Raj Kumar Nemani who had been held to be liable by the High Court to pay provident fund dues. The liability to pay Provident Fund dues remains with the company which is still run a going concern. Insofar as the outstanding amounts are concerned, these very unions had sworn affidavits filed in July, 1993 before the High Court stating that the Nemani group after taking over management has paid substantial part of their dues. Insofar as the scheme is concerned, the said scheme was initially for F a period of 8 years and the amounts mentioned therein were to be liquidated over the years and not immediately upon the scheme coming into force. The payments which were to be made immediately upon implementation of the scheme, were accordingly made. The petitioner group was replaced midway into the scheme and did not complete the entire tenure of the scheme. The G new Committee of Management (Jain-Jalan) which replaced the petitioner group, took over the management on the same terms and conditions as contained in the scheme, thereby assuming and/or taking over the entire responsibility of payment of all outstanding amounts including workers dues and other employee benefits including Provident Fund. H It is pertinent to note that the fund which is the subject-matter of the present proceedings was created only for the purpose of payment of unsecured creditors under the scheme framed by the High Court and accepted and affinned by this Court by two orders dated 17.12.1993 and 11.03.1994. This Court affinned that the amount of Rs. 8 lacs per month out of the revenues of the Company would be kept aside in the hands of the Registrar, Original side and pay to the unsecured creditors alone @ 2% per month. Admittedly, the said corpus has been treated by successive orders of this Court and the High Court as being the dues of the unsecured creditors alone. None of these orders were ever appealed against or set aside. It is too late in the day to contend that the said fund would also be utilized for payment of workers dues and or other statutory dues for which the scheme made separate arrangements. Both Jardine Henderson and Jain-Jalan Committee who were in management of this Company at various points of time have been allowed to recover their entire dues as unsecured creditors out of this fund without reference to the workers dues and or other statutory dues. At D no stage, whatsoever, have any part of the said fund been utilized by the High Court for payment of any of the workers dues or other dues. The said fund, in our opinion, therefore, cannot have a different character merely when it comes to the dues of the present petitioners. E It is important to note that by orders of Court, the company (in liquidation) was not in fact wound up but was allowed to continue as a going concern. This was undoubtedly in the interest of the workers. So long as the company continued as a going concern, the workers not only continued to get their wages and other benefits and also retained their rights to be reimbursed out of the assets of the Company in the event that the assets have to be sold in winding up. In fact, the fixed assets of the Company are enormously valuable. It has land in excess of 50 acres in prime locations out of which 17 acres was acquired by the National High-way Authority upon payment of compensation of Rs. 41 crores recently to the present Company. The dues of workers are, therefore, in no jeopardy whatsoever. When the G Company continues as a going concern, it is the dues of the unsecured creditors which are most vulnerable and it is for that purpose this Court by its various orders ensured that a separate fund should be c:·eated for the unsecured creditors. In our opinion, it is fair and proper that the funds so created should only be utilized for the purpose of the unsecured creditors H and not workers dues and other dues. RADHESHYAM AJITSARIA v. BENGAL CHATKAL MAZDOOR UNION [LAKSHMANAN, J.) 951 It was contended by the respondent that for the purposes of Sections A 441and529A of the Companies Act, the phrase "in winding up" should refer to "in the course of winding up". In our view, this cannot be the position because, if so, no part of the fixed or movable or any other assets of the Company including raw material and working capital can be alienated by the Company in the usual course of its business activities only such time as the winding up proceedings are permanently stayed. This would mean that no order could ever be made exploring the possibility of running the Company as a going concern during the pendency. of the winding up proceedings. Such. an interpretation would not only be contrary to the interest of the workers and the industry as a whole but would not be pragmatic and would be contrary to long settled practice in the Company jurisdiction. Many judgments were cited by counsel for the workers' union. None of the judgments cited on behalf of the workers' union under Section 11(2) are applicable to the facts of the present case. These are cases where a dispute arose as to who had first charge on the assets of the employer which is not at all the issue arising in the present context. It was argued that the present petitioners (Niraj Trading Company Group) are responsible for heavy outstanding which was specifically denied by learned counsel for the petitioners as most mis-leading and contrary to the provisions of the scheme itself. Our attention was also drawn to the findings recorded by learned single Judge that despite such tall claims, the workers had not been able to provide proof of the specific details claimed by them. It was stated by learned single Judge that except for certain bald statements the objectors did not provide details in support of their allegation. In our view, dues under the many heads were not to be paid personally by the Members of the Committee of the Management. They would be paid out of the funds generated in the course of carrying on business of the said Company. If anything remained unpaid, the liability would pass on under the provisions of the scheme itself to the Committee of Management which replace them. In the first instance, the Committee of Mapagement was taken over by the Jain-Jalan Group and it is now alleged that now it is taken over by Chetan Choudhary. Outstanding liabilities under the scheme, therefore; remain the liability of the Company and the subsequent Committees were also required to discharge their liabilities under the Scheme. In our view, it is a deliberate attempt here to cast the entire liability under the Scheme on to the Members of the Committee constituted under the present petitioners in special leave petition Nos. 6257-58 so that the subsequent Committees can avoid their responsibilities and obligations under the scheme. To take one example, if there is any outstanding amount by way of Provident Fund, the same is just as such charged on the compensation money realized by the present Management. The present Management in collusion with the Union leaders are, therefore, necessitated in projecting that the outstanding Provident Fund dues, if any, should come out of the fund lying in the hands of the Registrar, Original side, rather than out of the compensation money which has been realized by the present Management at the time of acquisition of the fixed assets of the Company. It is to be noted that only 25% of the dues of the petitioner, as unsecured creditors, have been directed to be released under the orders of the High Court. These dues relate back to 1987. The present petitioners who were suppliers of jute to this mill have been unable to realize their dues of 1987 till today whereas all other unsecured creditors have been able to do so. It is, therefore, just and proper that at least at the present stage, the dues should not be held back any further. In any event, it is crystal clear that finding of the Division Bench of the High Court, that the claim of the appellants have not been duly adjudicated is erroneous as claim of the appellants have duly been adjudicated by the Registrar, High Court, Original Side, with the help of the Chartered Accountant as would be evident from Certificate dated 15th March, 2004 issued by the Registrar. Thus, the said order dated 3.3.2004 passed by the Division Bench as against these appellants is liable to be set aside. For the foregoing reasons, we hold F I. That the appellants in C.A.Nos. 4IO1-4103 of 2004 and the petitioners in S.L.P.(C) Nos. 6257 and 6258 of 2004 are entitled for payment as pre-scheme unsecured creditors in view of the specific directions given by this Court on 31.3.1994. 2. That the Division Bench was not entitled to direct readjudication of the claims which were already adjudicated, contrary to its own orders dated 30.11.1998/1.12.1998. 3. The fund lying with the Registrar, original side, High Court of Calcutta was specially earmarked for the pre-scheme unsecured creditors as defined in the Scheme. RADHESHYAM AJITSAR!A 1•. BENGAL CHATKAL MAZDOOR UNION [LAKSllMANAN, J.] 953 4. Registrar of the High Court is directed to effect payment A immediately to both the creditors. In the result, C.A.Nos. 4101-4103 of 2004 and S.L.P.(C) Nos. 6257- 6258 of 2004 are allowed and the orders passed by the Division Bench of the High Court which are impugned in these appeals and petitions are set aside and the C.A.Nos. 5906 and 5907 of 2004 filed by Barangore Jute Factory and Bengal Chatkal Mazdoor Union (CITO) shall stand dismissed. However, there shall be no order as to costs. It is stated that both the appellants in C.A.Nos. 4101-4103/2004 and petitioners in S.L.P.(C) Nos. 6257-6258 of2004 have already furnished the C bank guarantee and have received the payment upon furnishing the requisite bank guarantee. The Registrar of the High Court is directed to release the bank guarantee to the respective parties forthwith. The Company is directed to pay the other dues such as PF, ESI, Welfare Fund, arrears of wages, gratuity, bonus etc. to the workers depending upon the availability of the funds with it. The appeals and special leave petitions are disposed of accordingly. No costs. K.K.T. Appeals and special leave petitions disposed of.