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2009 DIGILAW 557 (CAL)

Duncans Tea Ltd. v. Sudhir Chandra Bowry

2009-07-29

PINAKI CHANDRA GHOSE, SANKAR PRASAD MITRA

body2009
Judgment Pinaki Chandra Ghose, J. This appeal is directed against an order and judgment dated August 18, 2008, passed by the Hon'ble Company Court when His Lordship after appreciation of the facts placed before His Lordship was pleased to hold as follows: "The company is liable to pay the gratuity and superannuation benefits to the petitioner. Since the company has not disputed the amounts claimed but has merely denied the heads of claim, it would appear that the company does not dispute the quantum under each head (except earned leave encashment) claimed by the petitioner. Accordingly, the company is liable to pay the petitioner a sum of Rs.7,20,000/- on account of the gratuity notwithstanding section 4(3) of the Act of 1972 since nothing in the Act precludes a company from conferring additional benefit on an employee. The company is also liable to pay interest at the statutory rate of 1 percent per month on the amount due on account of gratuity till payment. The company is liable to pay the superannuation allowance for the period November, 2002 to December, 2004 (the company says that for the period beginning January, 2005, the superannuation allowance has been paid). The company is also liable to pay a sum of Rs.37,00.000/- on account of superannuation scheme which the petitioner has calculated in accordance with the Duncuns Agro Industries Limited Senior Staff Superannuation Fund Rules. The petitioner is also entitled to pension at the rate of Rs.24.750/- per month from October, 2006. As far the petitioner's claim on account of earned leave encashment is concerned, the company's stand is accepted and apart from the sum of Rs.44,433/- which the company should pay within three weeks from date, the balance claim of the petitioner relating to earned leave encashment is relegated to a suit. In view of the company's failure to make payment of such amount that appears to be due to the petitioner save the offered sum of Rs.44,433/- on account of earned leave encashment, Company Petition No.218 of 2008 is admitted. In view of the company's failure to make payment of such amount that appears to be due to the petitioner save the offered sum of Rs.44,433/- on account of earned leave encashment, Company Petition No.218 of 2008 is admitted. It will be up to the company to offer all sums due to the petitioner as on the date of payment within a period of three weeks from the date, failing which the petitioner will be entitled to advertise the petition in the 'Times of India', 'The Telegraph' and 'Bartaman' and such other newspapers that the petitioner may choose." Being aggrieved, this appeal has been filed by the appellant/company. 2. The facts of the case briefly are as follows: The respondent had initially joined in the Duncan Industries Limited on 6th January, 1975 in the Executive Cadre and reached to the Senior Executive Cadre of the said company and was eligible for pension upon normal retirement from services of the company as per the rules of the said company. On the persuasion made by the Chairman of the Duncan Group of Companies, the respondent was insisted by the company to take immediate retirement from the said Duncan Industries Limited (hereinafter referred to as "DIL") and to join M/s. Duncan Tea Limited (hereinafter referred to as "DTL"), On 30th of September, 2002, the petitioner appointed the respondent in the said DTL in the same cadre and in the post of Assistant Vice President - (Sales) under the same terms and conditions which was prevailing in the company DIL. The company issued a letter of appointment. Accordingly, the petitioner took earlier retirement from DIL and joined DIL with effect from 1st November, 2002. It was assured by the "Duncans" that the length of service in DIL also to be taken into account in respect of calculation of the length of service of the respondent while he will serve "DTL" including benefit of Superannuation and Gratuity. The said assurances were later confirmed in writing by the Chairman of the said company by a letter dated 31st October, 2003 which reads as follows: "Further to our letter dated 30.9.2002, we confirm that at the time of severance of your services with the company, your period of employment with Duncans Industries Ltd. will be taken into consideration for the purpose of calculation of benefits, based on length of service, including Superannuation and Gratuity". Subsequently, on 15th December, 2004, the company issued another letter informing the petitioner reviewing the terms of appointment and restructuring some of the terms for their administrative convenience. In the said letter dated December 15, 2004 the benefit of superannuation at the time of retirement was being substituted with superannuation allowance equivalent to 15%, of the basic salary to be paid along with the salary every month with effect from January, 2005. It is further stated that the superannuation benefit for the period of service prior to January 1, 2005 would be paid to executives at the time of their retirement provided they meet the criteria specified under the Superannuation Funds Rules. The criteria as specified in the said superannuation fund stated that an executive would be entitled to superannuation benefit for the period of service prior to January 1, 2005 upon fulfillment of either the one or the other condition set out therein. The first condition is that the executive should complete a minimum of five years of continuous service in managerial cadre and the other condition is not necessary in the facts and circumstances of this case. 3. The respondent submitted that he is entitled to get a sum of Rs.7,20,000/- on account of gratuity with interest at the rate of 1 per cent per month thereon till actual payment in accordance with the relevant statute; for leave encashment to the extent of Rs.5,93,506/-; superannuation allowance of Rs.1,37,700/- annuity purchase value under the Superannuation Scheme to the extent of Rs.37,00,000/- and pension at the rate of Rs.24,750/- per month amounting to Rs.3,96,000/- till January, 2008. 4. The respondent attained the age of superannuation but the company extended the service of the petitioner till 30th of April, 2007. However, the respondent resigns from the company with effect from September 30, 2006 after serving a notice on the company. 5. The respondent wrote to the DIL as well as DTL for payment of the pension as well as the other statutory dues. On June 21, 2007 the learned Advocate for and on behalf of the company accepted the liability of the company in respect of the retirement dues of the respondent. 6. 5. The respondent wrote to the DIL as well as DTL for payment of the pension as well as the other statutory dues. On June 21, 2007 the learned Advocate for and on behalf of the company accepted the liability of the company in respect of the retirement dues of the respondent. 6. In these circumstances, the respondent also addressed a letter to the Trustees of the Duncan Agro Industries Limited Senior Staff Superannuation Fund (hereinafter referred to as "DAIL"), asking them to release the pension as well as the statutory dues on and from October, 2006. After acknowledging the said letter one of the Trustees informed the respondent to wait for an appropriate time on the plea that the Superannuation benefits were being attended to in chronological order. Subsequent thereto, the respondent was requested to give his consent to accept the reduce rate of pension. Hence, petitioner served a notice under section 434 of the Companies Act. 1956 and filed a petition claiming the amount from the respondent. 7. Mr. Anindya Mitra, learned Senior Advocate appearing on behalf of the appellant contended that the superannuation benefits of the respondent is governed by the letter dated December 15. 2004. The respondent IS entitled to superannuation allowance equivalent to 15%, of basic salary paid to him along with the salary every month with effect from January, 2005 and the other criteria has been specifically mentioned in the said letter. The respondent did not complete five years of employment with the company. Since he has not fulfilled the criteria the respondent is not entitled to get the superannuation allowance prior to 1st January, 2005. According to him the respondent is seeking to foist the liabilities on the company which in fact the company has not liable to pay. 8. Mr. Anindya Mitra, appearing on behalf of the appellant contended that the claim of the respondent is against DIL. therefore such claim cannot be entertainable by another group company. According to Mr. Mitra both the companies are separate juristic entity. Debt of DAIL cannot be treated as debt of the DTL. 9. He further contended that the Court proceeded on the basis of a scheme of arrangement but the said process has no basis at all. He further contended that the letter of the Chairman was modified subsequently by the company. Mitra both the companies are separate juristic entity. Debt of DAIL cannot be treated as debt of the DTL. 9. He further contended that the Court proceeded on the basis of a scheme of arrangement but the said process has no basis at all. He further contended that the letter of the Chairman was modified subsequently by the company. He further submitted that the superannuation scheme was accepted by the respondent which was not considered at all by the Hon'ble First Court. According to him, there is no basis to admit the winding up petition. 10. He further drew our attention to a letter dated December 15, 2004 informing the petitioner for a review of all terms of appointment and restructuring of some of the terms in line with the practice in the industry and for administrative convenience. In the said letter the benefit of superannuation at the time of retirement was substituted with superannuation allowance equivalent to 15% of the basic salary to be paid along with the salary for every month with effect from January, 2005 and, according to him' it would be clear from the said letter that the superannuation benefit for the period of service prior to January 1, 2005 would be paid to the executive at the time of their retirement. 11. He further submitted that there was no failure on the part of the appellant to pay the dues to the respondent and the appellant had enjoyed benefit upon his resignation and the claim of the respondent is fictitious, inflated, without any basis and not payable by the petitioner. 12. He further tried to substantiate his argument and pointed out that there was no basis with regard to the scheme of arrangement as has been stated by the Court. There was no scheme of arrangement between DTL and DIL on record. The very basis is wrong. 13. Mr. Anindya Mitra further contended that the amount so reached or directed to be paid by the Court would show that there is no basis to reach the said amount as claimed by the respondent. 14. Mr. Anindya Mitra cited the following decisions in support of his contention which are as follows: 1. Amalgamated Commercial Traders (p) Ltd. vs. A.C.K. Krishnaswami & Anr., reported in 1965 Vol. XXXV Company Cases 456 2. Madhusudan Gordhandas & Co. vs. Madhu Woolen Industries Private Limited. 14. Mr. Anindya Mitra cited the following decisions in support of his contention which are as follows: 1. Amalgamated Commercial Traders (p) Ltd. vs. A.C.K. Krishnaswami & Anr., reported in 1965 Vol. XXXV Company Cases 456 2. Madhusudan Gordhandas & Co. vs. Madhu Woolen Industries Private Limited. reported in AIR 1971 Supreme Court 2600. 15. Mr. Anindya Mitra relying on the said decisions submitted that it is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of a debt which is bona fide disputed by the company. In the case of Mediqup Systems (P) Ltd. vs. Proxima Medical System GMBH reported in 2005(7) SCC 42 , where the Court also held that if a debt is bona fide dispute and the defence is a substantial one, the Court will not order to wind up the company and in the case of Madhusudan Gordhandas (supra) the Apex Court held that two rules are well settled. First if the debt is bona fide disputed and the defence is a substantial one the Court will not wind up the company. 16. Mr. Anindya Mitra also cited the following decisions in support of his contention which are as follows: i) (2002) Company Cases Vol. 109 page 450, M.V. "DONG DO" & Anr. vs. Ramesh Kumar & Co. Ltd.; ii) (2003) Company Cases Vol. 116 page 448, M. Suryanarayana vs. Stiles India Ltd.: iii) (1996) Company Cases Vol. 86 page 610, WIMCO Ltd. vs. Sidvink Properties (P) Ltd.; iv) AIR 1975 Vol. 62 SC 32, Godhra Electricity Co. Ltd. & Anr. vs. State or Gujarat & Anr. 17. On the contrary, Mr. Hirak Mitra, learned Senior Advocate drew our attention to the relevant documents and submitted that the petitioner was requested by the Chairman to join DTL which was an understanding and/or arrangement between DIL and DTL. In terms of such arrangement, salaries of the petitioner were transferred. All these arrangements were made following the scheme of the arrangement between the said two companies. The letter which was issued on September 30, 2002 would show that the letter was issued by the Chairman of the company G.P. Goenka and he himself confirmed that the period of employment with DIL will be taken into consideration for the purpose of calculation of benefits, based on length of service including Superannuation and Gratuity. 18. Mr. The letter which was issued on September 30, 2002 would show that the letter was issued by the Chairman of the company G.P. Goenka and he himself confirmed that the period of employment with DIL will be taken into consideration for the purpose of calculation of benefits, based on length of service including Superannuation and Gratuity. 18. Mr. Hirak Mitra also drew our attention to the Superannuation Fund Rules which is annexed to the petition and he further submitted that the Hon'ble Company Court duly considered the same and after considering the said rules the Court came to the conclusion that the petitioner is entitled to get the benefit. 19. Mr. Hirak Mitra further contend that "the point which has been taken by the company that the petitioner did not meet the fundamental criterion of completing five years continuous service with the companies and as such the petitioner was not entitled to any superannuation benefits save and except superannuation allowance cannot be accepted. 20. Mr. Hirak Mitra further pointed out that under section 4(1) of the Payment of Gratuity Act, 1972, if the petitioner is not entitled to get the payment of gratuity in accordance with the said Act, the claim cannot be the basis of a winding up petition. According to Mr. Mitra the Chairman of the Group Companies, he himself recorded the terms and conditions of appointment and once it has been accepted by the company subsequent to the appointment the same cannot be changed unilaterally without the eon sent or the respondent, Accordingly, he submitted that the respondent is entitled to get all the benefits as claimed in the winding up petition and the Court correctly came to the conclusion that the respondent is entitled to get all the benefits as claimed in the petition. 21. Mr. Hirak Mitra further pointed out that service of notice under Section 434 of the Company's Act was duly served upon the company and the company did not even answer to the said statutory notice. 22. Having heard the learned Counsel for the parties and' after analyzing the decisions cited at the Bar and also analyzing the facts of this case it appears to us that admittedly the petitioner was working with DIL and he joined Duncan Tea Limited on an assurance given by the Chairman on 31st October, 2003. 23. 22. Having heard the learned Counsel for the parties and' after analyzing the decisions cited at the Bar and also analyzing the facts of this case it appears to us that admittedly the petitioner was working with DIL and he joined Duncan Tea Limited on an assurance given by the Chairman on 31st October, 2003. 23. It is also not in dispute that on December 15, 2004, the company issued another letter reviewing all the terms of the appointment and restructuring some of the terms in line with the practice in the industry and for administrative convenience and in the said letter it has been specifically stated that the respondent was entitled to superannuation allowance equivalent to 15% of the basic salary paid to him along with the salary for every month with effect from January, 2005. 24. It is further stated that the petitioner is also not entitled to any pension since the company has no pension scheme and accordingly the amount which has been claimed by the petitioner per month being a sum of Rs.24,750/- was also disputed by the company. The company in the affidavit gave an explanation' that the company did not have the statutory notice in its file and hence cannot be able to give any reply thereto. 25. In our considered opinion, we are not in a position to accept such suggestion as made by the company. It further appears that a settlement was addressed to the respondent which is appearing in the paper book at page 98 dated November 3, 2006. The heading "settlement" addressed by one Soma Bhattacharya on behalf of the company to the respondent wherefrom the full particulars of the claims of the respondent would appear from the said document which is appearing at pages 98 to 101 of the said document. 26. Therefore, in our considered opinion, the Hon'ble First Court duly considered the claim on the basis of the particulars and materials furnished before it by the respondent and, thereafter, admitted the winding up petition. 27. 26. Therefore, in our considered opinion, the Hon'ble First Court duly considered the claim on the basis of the particulars and materials furnished before it by the respondent and, thereafter, admitted the winding up petition. 27. We have also considered the extracts of Rules and Regulations of the Duncan Agro Industries Limited, Senior Staff Superannuation Fund (appearing at page 103 of the paper book), where it has been specifically stated that the 'proprietor' shall mean Duncan Industries Limited and it has also stated that under the said Rules and Regulations 'beneficiaries' shall mean any employee or employees of the proprietor i.e. DIL who is or are eligible for the grant of a pension or pensions annuity or annuities or other benefit or benefits under the Rules and Regulations of the Fund. Therefore, we do not have any hesitation to hold that the petitioner satisfies the criteria and comes within the meaning of "beneficiaries" made under the said rules and is entitled to get the benefit thereof. 28. We find that the respondent on the basis of the assurance of the Chairman of the Group Companies accepted his transfer to DTL and on the basis of such assurance the length of service of the respondent in DIL also to be added to his total service at the time of his retirement from the DTL for the purpose of calculating his retirement benefits and other benefits. Therefore, in our considered opinion, he has also fulfilled all the criteria to get the benefit under the said Superannuation Fund and furthermore under the said DAIL fund it has been specifically stated that DIL is the proprietor and all the employees who are serving either in DIL or DTL or in DAIL are entitled to get the benefit out of the said superannuation fund. Therefore, we do not have any hesitation to hold that the respondent is entitled to get all the benefits he has claimed and, accordingly, we do not find any reason to accept the contention of Mr. Anindya Mitra, learned Senior Advocate appearing on behalf of the appellant. 29. Therefore, we do not have any hesitation to hold that the respondent is entitled to get all the benefits he has claimed and, accordingly, we do not find any reason to accept the contention of Mr. Anindya Mitra, learned Senior Advocate appearing on behalf of the appellant. 29. Furthermore, we find that the respondent did accept the position with regard to the transfer of his service from DIL to DTL on the basis of the assurance given by the Chairman of the Group Companies and, therefore, we do not have any hesitation to hold that on such assurance the respondent accepted the said change and continued with the DTL. It further appears to us that after the rights of the respondent have been crystallized in respect of his claims, such rights cannot be changed unilaterally by the company to the detriment of the respondent. 30. Accordingly, we hold that there is no illegality or irregularity in respect of the order so passed by the Hon'ble First Court and we affirm the said order to make such payment as directed by His Lordship within a period of twelve weeks from date. In the event, the said amount is paid within the aforesaid period, the winding up petition will remain permanent stayed and in default thereof the respondent shall be entitled to advertise the petition in 'The Times of India', 'The Telegraph' and 'Bartaman' and such other newspapers as directed by the Trial Court and the matter would be returnable six weeks after the date of such publication. 31. For the reasons stated hereinabove, this appeal is dismissed. 32. Urgent xerox certified copy of this order, if applied for be supplied to the parties subject to compliance with all requisite formalities. Sankar Prasad Mitra, J.: I agree. Appeal dismissed.