Research › Search › Judgment

Madras High Court · body

2005 DIGILAW 781 (MAD)

Capt. P. K. Passi & Others v. NEPC India Ltd.

2005-04-29

S.ASHOK KUMAR

body2005
Judgment :- Common Order These Company Petitions are filed under Section 433, 437 and 439 of the Companies Act for winding up of the respondent Company viz., NEPC India Limited. 2. According to the petitioners, they were employed as Pilots in the Respondent-Company. Salaries for the petitioners were not paid for a long period of time and their claims are as follows:- In view of the inability of the respondent company to pay the salaries and for the reasons that the substratum of the company had collapsed and also for the reason also that the company was incapable of discharging its debts and liability, the petitioners had sought for winding up of the company under the provisions of the Company Act. 3. While the respondent have not disputed the facts that they are due and payable any amount to the petitioners, the salaries and other connected benefits, they have chosen to raise technical pleas with an intent to direct the focus o the matter to extraneous issues. To substantiate their contention, the petitioners rely upon the following judgments:- (a) Anand Synthetics Vs. Anand Synthetics Employees Union reported in 2002 36SCL 744 (Delhi) (b) M.Syrya Narayana Vs. M/s. Stiles India Ltd., reported in 2002 CLC 450 (c) State of A.P. Vs. Hyderabad Vegetables Produts Co. Ltd., reported in AIR 1963 AP 243 ; (d) Chandrakant Tukaram Nikam & Ors Vs. Municipal Corpn. of Ahemedabad and anr., reported in AIR 2002 SC 997 . 4. In the respective counter affidavit filed by the respondent the entire averment set out in the petitions are denied. According to the respondent, the above company petitions have been filed by the petitioners alleging that they were in service with NEPC Airlines and that amounts towards arrears of salary were due for certain period as set out in the respective petitions. 5. According to the respondent, the above company petitions have been filed by the petitioners alleging that they were in service with NEPC Airlines and that amounts towards arrears of salary were due for certain period as set out in the respective petitions. 5. The respondent has raised the issue of maintainability of the company petitions for admission filed by the petitioners and opposing the company petitions on the following grounds:- (a) Maintainability of the Company Petitions by the petitioners who are workmen; (b) Maintainability of the Company Petitions when statutory notice has not been served on the Registered Office; (c) Maintainability of the company petitions when notice of petition under Rule 28 of the Companies (Court) Rules not served on the Registered Office; (d) Whether salary is a debt; (e) When Sec.33(c)(2) of the Industrial Disputes Act provides for computation without recourse to the same, a company petition is not maintainable; (f) When voluminous documents and records are placed and proof of quantification of amounts by evidence is required, a company petition is not maintainable; (g) When liability is bonafidely disputed, a company is not maintainable; To substantiate their case the respondent rely upon the following judgments:- (i) Mathur Aviation Vs. Lt. Governor Delhi & others reported in 1977 II LLJ 255; (ii) National Textile Workers Union Vs. P.R. Ramakrishnan & others reported in 1983 Vol 53 CC 184 (iii) Mumbai Labour Union and Indo French Time Industries Ltd., reported in 2002 Vol.38 SEBI and Corporate Laws 924; (iv) Pawan Kumar Khullar Vs. Kaushal Leather Board Ltd., reported in AIR 1996 MP 85 (v) Bennet Coleman & Co., Ltd., Vs. RSA Fox Advt. Pvt., Ltd., reported in 2001 (vol.107) CC 133; (vi) Madhusudan Govardhandas & Co., and Madhan Woolen Industries Pvt. Ltd., reported in AIR 1971 SC 2600 (vii) NEG Micon A/S Vs. NEPC India Ltd., reported in 2000(3) CTC 107 (viii) Pradeshiya Industrial Investment Corpn. of UP vs. North India Petro Chemicals Ltd., and another reported in 1994 (3) SCC 348 ; and (ix) Grenhills Exports () Ltd., Vs. Coffee Board reported in 2001 (vol.106) CC 391. 6. The points that arise for consideration in these company petitions are:- (i) Whether arrears of salary amounts to debts; (ii) Whether the petitioners have right of invoking the jurisdiction of this court in its company jurisdiction? Coffee Board reported in 2001 (vol.106) CC 391. 6. The points that arise for consideration in these company petitions are:- (i) Whether arrears of salary amounts to debts; (ii) Whether the petitioners have right of invoking the jurisdiction of this court in its company jurisdiction? (iii) Whether when a remedy for computation is available under the Industrial Disputes Act without exhausting the same and without computing and quantifying the claim, the company petitions are maintainable? 7. I have gone through the documents filed by both the parties. The submission of the learned petitioners' counsel that the respondent company have not disputed the liability towards salaries is denied by the learned counsel for the respondent and to substantiate his contentions, the learned counsel for the respondent has invited the attention of this court to the statements in the counter affidavit, particularly to paragraph Nos.7 to 11. In Paragraph 7 of the counter in C.P.No.193 of 1999, it has been averred that "the petitioner and persons similarly placed employed with the respondent were entitled for a basic salary and allowances only if they fly. The allowances payable were depend upon the hours of flying, time of flying and on various other factors which varies from person to person, sector to sector and month to month". In paragraph 8 it has been averred that "the aircrafts were grounded for various reasons beyond the control of the respondent and thus the salary of the petitioners was revised to Rs.40,000/= and a sum of RS.500/= per flying hours from 1.8.1997. This revision was fully in concurrence with the petitioners and persons similarly placed. In fact at no point of time had the petitioners or persons similarly placed raised any dispute over the same". To disprove the same, the petitioners have not filed any supporting documents in this court. The learned counsel for the respondent has submitted that the petitioners have willfully not addressed the issues 2 and 3 raised by the respondents relating to the non service of statutory notice on the registered office of the respondent and service of notice of petition under Rule 28 of the registered office of the respondent company. In the statutory notice, copy produced by the petitioners, it could be seen that it has been served only on the Corporate Office at 36, Wallajah Road, Chennai and not on the registered office at No.1678, Trichy Road, Ramanathapuram, Coimbatore. In the statutory notice, copy produced by the petitioners, it could be seen that it has been served only on the Corporate Office at 36, Wallajah Road, Chennai and not on the registered office at No.1678, Trichy Road, Ramanathapuram, Coimbatore. The petitioners have not made any statement to the above averment of the respondent. 8. The Black's Dictionary defines "Debt" as follows:- "A sum of money due by certain and express agreement. A specified sum of money owing to one person from another, including not only obligation of debtor to pay but right of creditor to receive and enforce payment". Similarly, Black's dictionary defines "remuneration" as under: "Payment; reimbursement; reward; recompense; salary; compensation". Black's Dictionary defines "salary" as follows: "A reward or recompense for services performed. In a more limited sense, a fixed periodical compensation paid for services rendered. As stated compensation paid periodically as by the year, month or other fixed period, in contract to wages which are normally based on an hourly rate". 9. This court is of the view that no proof has been filed as to whether the petitioners have a right to receive and enforce the payment and whether they have discharged their duties as required under the contract of the employment. It is admitted fact that the Airlines had grounded even as early as January 1997. The salaries have been alleged to be due ranging from February 1997 to March, 1998, excluding the months August to November, 1997. The proof whether they are entitled to the said amounts is an issue to be established by the petitioners. 10. Section 33 (c)(2) of the Industrial Disputes Act, 1947 provides for preferring of a petition for computation in terms of money where any workmen is entitled to receive from the employer. Unless the computation is made and the petitioner establishes that he has served during the period and is entitled to the wages the amounts cannot be held to be paid. The decision reported in 2002 Vol.36 SCL page 744 (Delhi), relied on by the petitioners is not applicable to the facts and circumstances of the case. In the said judgment, there was a settlement to pay and the management therein had entered into an agreement with the workmen to pay is debts and the same was not fulfilled. There the company had closed its business for 8 or more years. In the said judgment, there was a settlement to pay and the management therein had entered into an agreement with the workmen to pay is debts and the same was not fulfilled. There the company had closed its business for 8 or more years. Here the respondent company is a running company. In any event, the decision in National Textiles Worker's Union Vs. P.R. Ramkrishnan reported in 1983 Vol. 53 (SC) Company Cases 184, as cited by the respondent, is relied on where the Apex Court has held that the workmen have no locus standi to maintain a company petition. 11. A Division Bench of this Court in Neg Micon A/s Alsvoj Vs. NEPC India Ltd., reported in 2000 (III) CTC 107 , where the respondent itself was a party, while dismissing the O.S.A., their Lordships have held as follows:- "Headnotes:-The Word "debt" has to be understood in practical and pragmatic sense. Debt should become absolutely due viz., creditor should be entitled to payment of debt presently and relationship of debtor and creditor should exist and the company shall be able to meet its liabilities as and when they become due. The company cannot be wound up merely because its liabilities are more than its assets. The company shall be commercially solvent and shall be in a portion to meet its liabilities as and when they arise. The order under section 433(e) is discretionary. The prayer for winding up cannot be entertained if it is intended to exercise pressure to enforce payment of debt. 13. Invoking the provisions of the Companies Act and seeking a prayer for winding up will not be entered if it is only in the nature of exercising pressure to enforce payment of a debt. The Supreme Court of India in the case of Amalgamated Commercial traders Pvt. Ltd., V. A.C.K.Krishnaswamy, (1965 (35) Com. Cases 456) ruled thus:- "It is well settled that winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court". 16. If the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. A petition presented ostensibly for a winding up order but really to exercise pressure will be dismissed, and under circumstances may be stigmatised as a scandalous abuse of the process of the court". 16. If the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. In determining whether a debt is disputed bona fide or mala fide the conduct of the parties, the character of the pleas and the circumstances which will be peculiar to each case will be the contributing factors. The test is whether the dispute is raised only to avoid payment of the debt and not based on the substantial around." 12. This court is of the view that the debt must be due and payable an a present obligation. In this instant case, the liability to pay salary for the period alleged is disputed. The liability to pay and the right to receive the amount is to be established only in a matter known to law. No document has been filed by the petitioners in proof of the contention that they have served the Airlines during the relevant period. When the petitioners have no locus standi to maintain a company petition, the decision reported in AIR 2002 SC 997 has got no relevance to the case on hand. In the said decision, it has been categorically held that the jurisdiction of Civil Court was impliedly barred. The said decision does not advance the case of the petitioners. 13. Section 2(k) of the Industrial Disputes Act, 1947 defines `Industrial Dispute' which reads thus:- "Industrial Dispute" means any dispute or difference between employers and employers or between employers and workmen or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour of any person; 14. It has been held in Mathur Aviation Vs. Lt. Governor, Delhi and others (1977 (II) LLJ 255) that "whether, a pilot, engaged by an aviation company, is a workman, where part of a reference is bad and whether the entire reference would become incompetent, it was held that the respondent workman cannot be held to be doing Aerial spraying work in a supervisory capacity. The employee himself is a workman doing his own job. The tribunal has rightly held him to be a workman". 15. The employee himself is a workman doing his own job. The tribunal has rightly held him to be a workman". 15. In National Textile Workers' Union vs. P.R.Ramakrishnan ((1983) Vol.53 Company Cases 184) it has been observed as follows:- "It is only the creditors and contributories who are entitled to appear and he heard in a winding up petition... it is no doubt true that section 439 confers the right to present a winding up petition only on certain specifically enumerated persons and he workers are not included in that enumeration and, therefore, obviously, the workers have no right to prefer a petition for the winding up of a company. The right to apply for a winding up of a company being a creature of statute, none other than those on whom the right to present a winding up petition is conferred by the statute can make an application for winding up of a company and no such right having been conferred on the workers, they cannot prefer a winding up petition against a company. 16. Therefore, this court is of the considered view that there is a dispute between the petitioners and the respondent and when a remedy for computation is available under the Industrial Disputes Act, without exhausting the same and without computing and quantifying the claim, the company petition is not maintainable. In 2001 (Vol-107) Company Cases 133, (Bennet Coleman Co Ltd., Vs. RSA Fox Advertising Pvt. Ltd.,) the Bombay High Court has held that when some other remedy is available to the petitioning creditor, the company court would be justified in refusing to exercise its jurisdiction under Section 433 of the Companies Act. Further, no proof for the basis of the claim has been filed. When there is no liability to pay the fanciful amounts claimed by the petitioners, alleging the same to be the arrears of the salaries, there is no question of inability to pay. It could be seen from the balance sheet, copy produced by the petitioners, the respondent is carrying on business and discharging their debts and liabilities as and when they fall due. Further, the substratum of the respondent company has not collapsed and the assets are far in excess of the liabilities. I need not go into the issue of arrears of salary in the light of what I have set out earlier. Further, the substratum of the respondent company has not collapsed and the assets are far in excess of the liabilities. I need not go into the issue of arrears of salary in the light of what I have set out earlier. Thus, the petitioners have not made out a prima facie case for admission of these company Petitions and therefore there is no merit in these petitions on both the counts, and the points are answered accordingly and the company petitions are dismissed accordingly. However, in the circumstances of the case, there shall be no order as to costs and the parties shall bear their respective costs.