Companies Act, 1956 labour laws to recover their outstanding dues

Workers can file a winding-up petition against the company

Q: I am employed with a private limited company for the last six years. However, for the last three financial years, my company has not being doing well and has even not paid the workers’ salaries for the last five months. Despite several promises, the management of the company has made no attempt to clear the outstanding salaries of the workers. I would like to know if, under such a situation, the workers have a right to file for winding up of the company? I was advised that since the workers have other labour laws to recover their outstanding dues, they would not be considered as creditors for filing the winding-up petition. Is this correct? – D Rajan A: A similar question came up for consideration before the Bombay high court in the case of Khandelwal Tube Mill Kamgar Sangh vs Government of Maharashtra and Ors. wherein the court, after analysing the provisions of the Companies Act, 1956 (the ‘Act’) and the previous judgments of the apex court has held that a workman who is a creditor shall be entitled to file a winding-up petition against the company. While explaining the reasons behind the judgment, the court has held that Section 439 of the Act provides as to who can move the company court for winding up of the company. Amongst them is a creditor or creditors including any contingent or prospective creditor or creditors. Under Section 433(e) of the Act, one of the grounds for winding up of the company is if the company is unable to pay its debts in which event Section 434 comes into play. Section 434 sets out that company shall be deemed to be unable to pay its debts if a creditor by assignment or otherwise to whom the company is indebted in a sum exceeding Rs500 has served on the company by causing it to be delivered at its registered office by registered post or otherwise, a demand under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter has neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditors. Therefore, all that is required is that there must be a creditor who serves a notice on the company and there is an amount due and payable for the sum of over Rs500 which the company on service of notice fails to pay or to secure or compound or explain. Under Section 529-A of the Act brought by the amendment in 1985, the dues of workmen are considered pari passu with other secured creditors. In other words in the Act itself, the Parliament itself has taken note of the fact the workmen’s dues in a case of winding up have to be placed on the same footing as secured creditors. Even otherwise it will be difficult to hold that a workman like any other creditor to whom the company is indebted will not fall under the expression creditor under Section 439 Act. The court has further held that merely because there are other legislations, providing a forum for the workmen to apply for recovery of their dues cannot be an answer to deny to the workman as a creditor the right to file a petition for winding up as the jurisdiction of the company court is neither expressly nor impliedly barred by any labour legislation. Q: I have an account with a private sector bank and have been issued a cheque book in respect of my account. Recently, I had issued a cheque for Rs2,00,000 to a vendor who had agreed to deliver me certain good by August 30, 2012. However since, no such delivery was made, on August 31, 2012, I issued stop payment instructions to my bank and I have a copy of the letter acknowledged by the bank employee in proof of this. However, despite the stop payment instructions, the bank honoured the cheque when it presented for encashment on September 10, 2012. On enquiry, the bank informed me that it was due to a system mistake. Can I file a consumer complaint against the bank for this deficiency? –Rajeev Khandhar A: Yes, a consumer complaint is surely maintainable under the facts narrated by you. Under the facts it can be said that the payment made by the bank was clearly without authority and it cannot be said to be a payment in due course. It is well settled that the customer has the right to countermand the payment of cheque as he has the right to issue a cheque and the banker has no right to challenge the wisdom or moral right of the customer to countermand payment of a cheque issued by him.