R SRINIVASAN Vs. OFFICIAL LIQUIDATOR VEGETOLS LIMITED IN LIQUIDATION HIGH COURT OF ANDHRA PRADESH HYDERABAD

JUDGEMENT

(1.) This is an appeal against an order of the Official Liquidator in Claim No. 7 in O. P. 4/1957, applying 8. 25FFF of the Industrial Disputes Act, 1947 and also disallowing the claim for priority under Section 530(1)(b) of the Companies Act 1956. The appellant relies on Section 25-F of the Industrial Disputes Act and claims 6 months" wages, while only 3 months wages have been paid under Section 25-FFF, as also one months pay in lieu of notice. A reading of Section 25 5-FFF would itself show that by virtue of the explanation to that section, "an undertaking which is closed down by reason merely of financial difficulties (including financial losses) or accumulation of undisposed stocks, shall not be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to Sub-section (1) of Section 25-FFF which contingency alone will attract the proviso to Sub-section (1) of Section 25-FFF. which limits the payments of compensation provided in Section 25-F(b) to 8 months. Once the proviso is not attracted, --and if cannot be denied that it is not attracted because the company has been liquidated due to financial difficulties, then Section 25-F will apply. Section 25-F runs thus:

(2.) In respect of the priority claimed by the appellant, his contention is that the amount is payable to him under the provisions of Chapter V-A of the Industrial Disputes Act, 1947, and consequently, under Section 530(1)(b) of the Companies Act, the amount payable must be given priority. The Official Liquidator, on the other hand, contends that this amendment came in December, 1960 while the amount became pay able to the appellant prior to this amendment. In my view, it is immaterial whether the appellant had a claim to the amount on the date of the winding up order. What has to be determined is whether the amount is payable when the question arises. Section 530 (1) (b) of the Companies Act does not limit the operation of this provision and states generally that any compensation payable to any workman under any of the provisions of Chapter V-A subject to the limits prescribed in Sub-section (2) will have priority The limit provided in Sub-section (2) is that the amount shall not exceed one thousand rupees In my view, the appellant is entitled to priority, and since the amount does not exceed Rs. 1,000 he shall be given priority in accordance with the provisions of Section 530 of the Companies Act

(3.) In the result, the appeal is allowed.