Judgment :- Ramachandra Ayyar, C.J These appeals arise out of the judgment of Kunhamed Kutti, J., declining to set aside the order of the Official Liquidator admitting certain claims made for closure compensation and leave allowances to the workers of Shanmugar Mills, Ltd., Rajapalayam (to be referred to hereafter as the company), now under liquidation. The object of the company was to carry on business as cotton-growers in ginning cotton and as spinners and weavers of cotton and silk yarn, etc. The company owns a textile mill Rajapalayam and at the time when liquidation proceedings commenced it employed about 357 workers. The year 1957 was an unfortunate one for the company in that its financial position deteriorated and its own workers added to its difficulties by staging what was called "illegal strikes." There were seven such strikes in the year. That was not the only difficulty created by them. The company's mode of business was to purchase cotton from merchants on credit, convert them into yarn and sell the same in most cases to those who sold cotton in full or partial liquidation of the liability incurred in the purchase of raw material. The workers obstructed delivery of the manufactured yarn by putting forward certain grievances real or imaginary with the result that were few who were willing to supply cotton to be mills. On 23 September, 1957 the company gave notice of a temporary closure of the mills on account of non-availability of raw material. Five days later that notice was converted into one of an indefinite closure of the mills. The mill was actually closed down on 29 October, 1957. But it was stated even then that the management was hoping for better times. There was nothing to indicate that the management was closing down the business permanently and discharging its workers.While matters stood thus, on 15 November, 1957 a creditor of the company presented a petition to this Court, Original Petition No. 297 of 1957, for the winding-up of the company on the ground that it was unable to pay its debts. While this petition was pending, the workers raised a dispute as to the justification of the closure of the business, and the Government by their order dated 3 December, 1957 referred the dispute under S.10 of the Industrial Disputes Act for adjudication by the industrial tribunal at Madras. While this petition was pending, the workers raised a dispute as to the justification of the closure of the business, and the Government by their order dated 3 December, 1957 referred the dispute under S.10 of the Industrial Disputes Act for adjudication by the industrial tribunal at Madras. The reference itself proceeded on the assumption as if there had been a closure and the only matter left for adjudication was as to the justification for it and for the assessment of monetary benefit on the basis of any finding that the tribunal may come to. Efforts were however being made to rehabilitate the company. The management filed a counter-statement before the tribunal stating the circumstances under which they were obliged to close down the mills and also complaining about the obstructive attitude of the workers which in the main according to them was responsible for the deadlock. Initiation of liquidation proceedings appears to have cooled down the enthusiasm of the management and no one on their behalf took interest in the proceedings before the industrial tribunal. No provisional liquidator had been appointed at the time when the dispute was pending adjudication. The industrial tribunal was not prepared to wait till something was known about the fate of the winding-up petition. But it is evident that it was appraised of the attempts made in the matters of finding a satisfactory solution to resolve the deadlock in the working of the company to enable it to resume its business. On 11 August, 1958 the tribunal passed the following order : "None has entered appearance in this reference for the management during the last few hearings. The union is represented by counsel Mr. Sankaran and suggests that the closure may for the present be accepted as a fact and the workers awarded compensation under S. 25FFF. In the circumstances of this case, I agree that it is the only possible and also proper course to be adopted and so subject to any settlement that might take place in the winding-up proceedings the closure will be accepted as a facts and the workers paid compensation under S. 25FFF, the proviso to the section not applying to this case. If as a result of any such settlement, the mills should reopen and carry on its business as before, the present workers will be entertained in preference to new-comers. If as a result of any such settlement, the mills should reopen and carry on its business as before, the present workers will be entertained in preference to new-comers. There will be an award accordingly." * Before continuing the narrative, we wish to confess our inability to understand as to what exactly the tribunal meant by saying that the closure "may for the present be accepted as a fact." It must be remembered that the industrial tribunal was called upon to decide whether the closure of the mills was justified or not. There had been no attempt on its part to advert to and consider the reasons which led to the closure. No evidence on the side of the workers was even recorded : yet the tribunal found that the proviso to S. 25FFF would not apply. Even more difficult to understand is the conclusion that the closure should be accepted "as a fact." As an essential preliminary to the adjudication of the reference, it was the duty of the tribunal to find out whether there was a closure in law. Again, if really the closure was held to be true, there would be no question of its being accepted only for the present. "Closure" implies complete stoppage of business and discharge of the workers there-by. It is different from a lay-off occasioned by the employer's inability to give work to his employees on account of non-availability of raw materials, or other cause. The fact that the tribunal contemplated the possibility of the mills being reopened and the business being carriage on as before, would show that there was no closure. There was the contingency of a scheme being evolved and sanctioned by Court for the working of the mills. It is, however, unnecessary to pursue the matter further as we are not concerned with the validity of the award of the industrial tribunal in these proceedings. The award purports only to be a contingent or conditional one and it is made expressly subject to any settlement that may be arrived at in the course of the the winding-up proceedings pending before the High Court. Such a settlement, as shall show presently, had taken place. The award itself directs that if as a result of the settlement, the mills reopen, the workers will have to be reentertained in preference to new-comers. Such a settlement, as shall show presently, had taken place. The award itself directs that if as a result of the settlement, the mills reopen, the workers will have to be reentertained in preference to new-comers. The learned Judge has regarded this direction as a mere recommendation by the industrial tribunal. We are with respect unable to agree. In the opinion, a fair reading of the award shows that the tribunal was not inclined to regard the stoppage of work in the mills after the presentation of the winding-up petition as a closure involving discharge of the workers in the event of an ultimate settlement. If there was to be a settlement which enabled the mills to resume its work, the direction was to re-employ the old workers. The direction to re-employ the old workers will therefore be an inevitable consequence of the resumption of business by the company and should be regarded, under the circumstances, as part of the award or at any rate as indicating that the award as to closure compensation would cease to have effect if there were to be a resumption of the business.To resume the narrative, the workers did nothing to enforce the award. On the other hand, having learnt a bitter lesson from the consequences of their own obstruction tactics, they appear to have been anxious to co-operate in the matter of the rehabilitation of the mills and securing for themselves employment. Effects in that direction of staying the winding-up proceedings however proved futile. When the petition came up for final hearing on 30 April, 1959, one of the members of the present Bench passed an order directing the winding-up of the company. At the same time, having regard to an earnest request made on behalf of the workers, a further direction was given in the following terms : "As a number of persons are employed in the company I consider that a attempts should be made in the first instance to dispose of the mills belonging to the company as going concern if it can be done to the advantage of the company." * There is thus a clear indication that the attitude of the workers even that the everything essential for the re-starting of the mills should be made as they were keen to secure their daily bread. Indeed a few weeks before the order directing the winding-up of the company was passed, a provisional liquidator who had by then been appointed (for the re-starting of the mills) re-started the mills and the workers were taken in and the mills began to function till the provisional liquidator P. L. Attullah handed over charge of the same on 8 May, 1959 to the Official Liquidator. Under the later orders of Court in Application No. 986 of 1959, the mills were leased out to Attullah himself to run the same on the same lines as before. The mills continued to work thereafter, though there had been a change in the lessee. An appeal was filed against the judgment directing the winding-up of the company presumably with the object of utilizing the time during which the appeal would be pending to make fresh efforts to have a settlement effected with the creditors and to re-start the mills. In this attempt everybody concerned met with success. A scheme was put forward before the appellant Court which provided that the Official liquidator should draw up a list of creditors as on 30 April, 1959. The appellant came forward as the financier to provide the Official Liquidator with sufficient funds for paying off the creditors as settled by him in full by four equal yearly installments, the first installment to commence within four months form the date of the order sanctioning the scheme. As consideration for the moneys to be advanced for paying off the debts of the company, it was agreed that a lease of the mills was to be granted to the appellant for a period of ten years by the Official Liquidator on a monthly rental of Rs. 6, 000 which was to be set off against the advance made. The Court sanctioned the scheme by its order dated 29 April, 1960. The memorandum, which was filed as part of the petition praying for the sanctioning of the scheme, was duly recorded by the Court and the proposed lease was approved. The Official Liquidator was directed to grant the lease to the appellant on the terms and conditions set out in Cl. 4 of the memorandum. The Official Liquidator was further directed not to sell the mills and other properties of the company so long as the lessee honoured his obligations under the contract. The Official Liquidator was directed to grant the lease to the appellant on the terms and conditions set out in Cl. 4 of the memorandum. The Official Liquidator was further directed not to sell the mills and other properties of the company so long as the lessee honoured his obligations under the contract. The memorandum, which formed the basis of the ultimate order of this Court, proceeded on the footing that the workers would have to be re-employed by the company. The relevant portions of it are : "11. Subject to the above provision, expenses necessary for running the mills including wages, salaries and other payments to the workers, employees and staff of the mills shall be borne by Jayajothi & Co. 12. The company is to pay the municipal property tax, insurance premia on the building, machinery and plant and incometax on the lease amounts. Subject to this reservation all other taxes and public charges are to be borne by Jayajothi & Co. 14. Jayajothi & Co. is to hold a charge over the company's properties and assets in respect of the amounts due to it by the Company, but the charge shall take effect only after the payment in full to the creditors is completed. 17. The winding-up order is to be stayed permanently on payment in full to the creditors by the Official Liquidator and on a report to that effect being filed in this Court." * It will be apparent from Cl. 11 of the memorandum set out above and also from the other provisions of the scheme, that the workers were treated as employees of the company and the obligation of the lessee was merely to pay the wages, salaries, etc., due to them. The scheme does not indicate that the workers were to take any fresh employment under the lessee. That this is so, will be clear from the fact that possession of the mills was handed over to the lessee as a going concern by the Official Liquidator. The mills were being run from the date of the winding-up petition up to the date of the winding-up order with almost all the workers; and even thereafter it continued to work. The only change brought about as a result of the orders of the Court was that the Official Liquidator was running it through his lessee. The mills were being run from the date of the winding-up petition up to the date of the winding-up order with almost all the workers; and even thereafter it continued to work. The only change brought about as a result of the orders of the Court was that the Official Liquidator was running it through his lessee. The learned Judge appears to have thought that the lessee of the mills directly employed the workers of the company : he held that there was nothing to show that such employment constituted a continued service under the company. That question has to be considered in the light of all that has happened. The scheme for the working of the mills was the result of a combined effort made by the company, its workers and its creditors, each one of them accepting the position that it was only the continued working of the mills that would improve their position and that liquidation would be prejudicial to all. How best was that object to be achieved was the problem before them. Having regard to the shattered fortunes of the company, a financier who could manage the company for a time was found essential. Such a financier, they found in the appellant. For the advances to be made by him for payment in full to the creditors, the appellant was to have a charge over the assets of the company. He was granted lease of the mills which obliged him to pay Rs. 6, 000 per mensem to the company after payment to the workers. In these circumstances. It is clear to our mind that it will not be right to say that the scheme envisaged termination of the service of the workers by the company, and the re-employment of some or all of them by the lessee afresh as workers under him. On the other hand, the lease was granted as that would be the convenient way of managing the mills for a short period. Factually there was no discontinuity in the services of the workers. Secondly, the effect of the scheme was to stay the winding-up of the company.The appellant entered into possession of the mills on 12 June, 1960 and it is stated that all but fifteen workers were taken in by the lessee. The appellant's case is that those fifteen workers did not turn up as they had secured employment elsewhere. Secondly, the effect of the scheme was to stay the winding-up of the company.The appellant entered into possession of the mills on 12 June, 1960 and it is stated that all but fifteen workers were taken in by the lessee. The appellant's case is that those fifteen workers did not turn up as they had secured employment elsewhere. The respondents however attribute this to the refusal of the appellant to re-entertain them. We are not, however, concerned in this case as to which version is true. If these workers are willing to come back and they are not given work, they can certainly seek their remedies in appropriate proceedings. That circumstance, viz., the non-entertaining of some workers, can have no bearing on the question whether the workers now under the employ of the appellant continued to be the workers of the company or not. It must be noticed that although the workers were fully aware of the winding-up proceedings, both before the company judge as well as in the appeal, there was no attempt on their part to put forward their claim on the basis of the award of the industrial tribunal that they were entitled to be paid closure compensation from out of the assets of the company. Strangely enough, after the lessee had started the working of the mills and began to make payments in accordance with the terms of the scheme, they made a claim to the Official Liquidator that they were entitled to be included as creditors of the company in respect of closure compensation awarded to them under the industrial tribunal's award. That application was contested by some of the shareholders of the company and also by the lessee. The question as to whether the workers were entitled to closure compensation under the circumstances mentioned above cannot be said to be an easy one. The Official Liquidator could very well, having regard to the opposition by the shareholders, have referred the workers to agitate their claims under S. 33(c)(2) of the Industrial Disputes Act. The Official Liquidator did not do so. He evidently though that in view of the terms of the award he was bound to make the payment. He accepted the claim of the workers rejecting the contention of the shareholders that there was continuity of service of the workers and that there was no case for payment of closure compensation. The Official Liquidator did not do so. He evidently though that in view of the terms of the award he was bound to make the payment. He accepted the claim of the workers rejecting the contention of the shareholders that there was continuity of service of the workers and that there was no case for payment of closure compensation. He said : "The liquidation continues whereas there is no continuity of business. The lease is only in respect of the factory and mills and cannot be considered as continuity of business." * We are unable to understand what precisely was intended to be conveyed by the Official Liquidator by the order extracted above. The liquidation proceedings were, under the terms of a scheme which was adopted by the appellant Court, stayed. The workers were regarded as the employees of the company. There was only a change in the manner of the doing of the business by the company. That is to say, instead of directly running the mills, the management (Official Liquidator) granted a lease of the company to the appellant. It was banded over to him as a going concern. It may be that if the lessee was unable to perform his obligations under the lease, liquidator proceedings had to be recommenced but so long as the scheme was working, there was undoubtedly a continuity of the business by the company. There has been, we are afraid, a certain amount of mixing up of the rights accruing to the workers under a retrenchment or transfer of business and rights arising on a closure of business, involving termination of service by the employer. The learned Judge has dealt with the matter thus : "Under S. 25FFF as amended, a change of employer entitles the workmen to compensation if their service had been interrupted by reason of the transfer. On the facts and circumstances of this case, I am inclined to hold that not only had the mills been closed down within the meaning of S. 25FFF but there was also interruption in the service of the workmen to their prejudice. Nor, in the circumstances, am I inclined to accept the contention of the applicant that there was no liquidation of the company for the reason that the sale of the mills had been stayed. Nor, in the circumstances, am I inclined to accept the contention of the applicant that there was no liquidation of the company for the reason that the sale of the mills had been stayed. It is true that if the scheme is fully implemented liquidation might be averted; but as matters now stand, it cannot be said that the company is not under liquidation, or the employment under the lessee is a continuous employment under the company." * We have already found with reference to the scheme that the liquidation proceedings had been stayed and that the workers continued to be workers under the company though the management of the mills was entrusted to be lessee (appellant) for a limited period. It must be remembered that the claim of the workers is laid on there having been a closure of the mills and not on the footing of there having been a retrenchment or lay-off. We are, therefore, unable to appreciate how the fact that there had been an interruption of service of the workers to their prejudice would at all entitle them to the relief that they now seek. In order to ascertain whether there has been a closure of business in the circumstances of this case it is necessary to appreciate first the distinction between retrenchment or transfer, lay-off and closure. All of these involve in one sense or another a change or stoppage of service by the worker. As has been pointed out by the Supreme Court in Haroprasad Shivasankar Shukla v. A. D. Divakar retrenchment means discharge of surplus labour by the employer otherwise than by way of punishment. In that case the business continues to be run by the same employer. In the case of a transfer of the business there is a change of employer which will ordinarily import a fresh contract of service between the workers on the one hand and the new employer on the other. In one sense, therefore, in the case of a transfer the old service cases and a new one comes into existence. The case of closure is different. There the business stops and there is termination of service thereby. It may be that as a result of the stoppage of business, its undertaking and goodwill are sold to a third party and that third party employs the same workers. The case of closure is different. There the business stops and there is termination of service thereby. It may be that as a result of the stoppage of business, its undertaking and goodwill are sold to a third party and that third party employs the same workers. That will be a case of a new contract of service between the workers and the purchaser. The old employer in such a case will have no further interest in the business.The Industrial Disputes Act provides for compensation to the workman for all the above cases. If he were to be retrenched, S. 25F provides for the notice and compensation at a specified rate. Where there has been a termination of service by reason of the transfer of business, S. 25FF will be applicable and compensation has to be pad by the old employer to the worker at the same rate as in the case of retrenchment. But there will be no right to compensation to the worker if the transferee were obliged under the terms of transfer to continue to employ him on the same terms and conditions of service as before. Section 25FF provides that if the services of the worker were not interrupted by reason of the transfer of the business or the terms and conditions of service under the new employer were in no way less favourable to the workman than before and where the employer under the terms of transfer is legally liable to pay the workman, in the event of his retrenchment, compensation on the basis of his previous service, there would be no liability for compensation on the transfer of business. A lease can, in a limited sense, be paid to partake of the character of transfer, but we are not however concerned in this case whether S.25FF of the Industrial Disputes Act could be invoked. The claim in the present case is on the basis of a closure. There, as we stated, business will be at an end and if somebody else purchases the goodwill or the machinery and starts the business, it will be a new business or undertaking of the purchaser and it will have no nexus with the told one. In such a case the old employer will be liable to pay the discharged worker compensation under S. 25FF. The question then is whether there has been such a closure. In such a case the old employer will be liable to pay the discharged worker compensation under S. 25FF. The question then is whether there has been such a closure. The company has continued to have title to and owns the mills. The mill is now working with the same old employees who were being engaged when the company was directly managing the affairs of the mills. There has now been only a lease of the factory or the mills as a going concern with an obligation on the part of the lessee to pay the wages of the workmen and the existing creditors. That too is only for a limited period of time. It is cannot be said that the company does not do any business at all. If the terms of the scheme were to be fully implemented, it will mean that there has been no break in the business of the company. The goodwill of the company has not been parted with. There is no specific clause in the scheme empowering the lessee to employ his own workers. On the other hand, Cl. 11 of the scheme puts the staff of the company as well as the workers in the mills on the same footing as the employee of the company for whom salaries were to be paid by the lessee. The case before us is unlike the one in S. K. G. Sugars, Ltd. v. Industrial Tribunal, Bihar where the lessees worked the mills not for and on behalf of the company but on their own account having liberty to take outsiders as employees. But here no discharge of the workers has been contemplated under the scheme.To sum up, the present case cannot be said to be one of retrenchment either. Nor is it a case of transfer of business, because the goodwill of the company continues to be with the company. Not as we said can this be said to be a closure, because the workers and the staff continue to be employed. Only the liability to pay their salaries and wages is cast upon the appellant who has taken the lease of the mills. Stoppage of service under the circumstances mentioned above might perhaps be termed as a lay-off. We prefer to express no final opinion on the matter. The Official Liquidator who appeared in person referred to S. 445, Sub-sec. Only the liability to pay their salaries and wages is cast upon the appellant who has taken the lease of the mills. Stoppage of service under the circumstances mentioned above might perhaps be termed as a lay-off. We prefer to express no final opinion on the matter. The Official Liquidator who appeared in person referred to S. 445, Sub-sec. (3), of the Indian Companies Act in support of his order. That section provides that once the winding-up order had been made, it shall be deemed to be notice of discharge to the officers and employees of the company, except when the business of the company is continued. The company judge no doubt passed an order for the winding-up of the company : but that order was expressly stayed by the appellant judgment which approved of and adopted the scheme. If the scheme were to be worked out properly and fully, every creditor would have to be paid and the company will be in position to resume its activities. Secondly, this is a case in which it can be said that the business of the company is being continued. There is, therefore, no scope for holding that there has been a discharge of the workers under the provisions of S.445(3) of the Companies Act. Mr. Sankaran, who appeared on behalf of the workers, conceded that if it were to be held that there has been a stay of the winding-up order by the appellate Court, there would in law be no discharge of the workers. There has been such a stay in the present case. It would follow that there has been no closure of the business of the mills albeit there might have been a lay-off of the workers. Under the circumstances, we are of opinion that the workers will not be entitled to any closure compensation either on the terms of the award or otherwise. The admission of their claims by the Official Liquidator will, therefore, have to be set aside, and is accordingly set aside. The appeals are allowed but there will be no order as to costs.