Paper Workers and Labour Union Vs. M/S Anco Papers Ltd. and Another - Court Judgment

SooperKanoon Citationsooperkanoon.com/1143188
CourtPunjab and Haryana High Court
Decided OnMay-06-2014
AppellantPaper Workers and Labour Union
RespondentM/S Anco Papers Ltd. and Another
Excerpt:
cp no.13 of 2013 (o&m) -1- in the high court of punjab and haryana at chandigarh cp no.13 of 2013 (o&m) date of decision: 06.05.2014 paper workers & labour union ....petitioner versus m/s anco papers ltd.and another ....respondents coram:- hon'ble mr.justice rajiv narain raina present: mr.anand chhibber, sr.advocate, with ms.harpriya khaneka, advocate, for the petitioner. ms.madhu dayal, advocate, for respondent no.2. 1. to be referred to the reporters or not?. 2. whether the judgment should be reported in the digest?. rajiv narain raina, j. this is a petition under sections 433, 434 and 439 of the companies act, 1956 (for short “the act”.) for winding up the respondent company, m/s anco papers ltd.(for short “anco”.).the petition has been presented by the paper workers & labour union representing the body of workers employed by anco which has turned sick and is lying closed since 2-3 years.anco is unable to pay its admitted dues even to its secured creditors i.e.punjab state industrial development corporation (psidc) or wages and salaries to its workers.the petitioners are creditors secured in view of section 529-a of the act. the right to wages of the workers represented by the petitioning union stand determined by various orders passed by the labour courts under the provisions of the industrial disputes act, 1947 (for short "id act") ordering or awarding wages/salaries which mittal manju 2014.05.19 14:04 i attest to the accuracy and integrity of this document chandigarh cp no.13 of 2013 (o&m) -2- anco has failed to pay. these periods range from september 1, 1999 to december 31, 1999 and then again from september 1, 2000 to january 31, 2003 which is a secured debt. anco is said to be commercially insolvent. it is stated in the petition that anco failed to be represented before labour courts and tribunals in proceedings under section 33 c (2) of the id act and remained ex parte. steps taken by the workers in implementation of orders/wages through the process of section 33-c (1) of the id act for recovery of money quantified at rs.17,05,530/- in the process of recovery which dues were discovered by the revenue authorities when they found mutations of the immovable property of anco was not sanctioned and, therefore, it was not possible to put the property to auction to satisfy the claims of the workers.other than the workers.psidc made a run on anco to recover its secured loan and began taking steps towards auctioning the assets/property of anco mortgaged to psidc to secure the loan. at the auction, a bidder made an offer of rs.63 lacs on july 21, 2008.the workers preferred an application before the assistant labour commissioner, sangrur on march 20, 2009 for attachment of property of anco to satisfy the claims of the workers then running into rs.81,66, 738/-. the strength of workers when the going was good was between 100 to 150. on failure to satisfy their claims.they had approached labour courts. it is stated in the petition that psidc had sold the plant and machinery of anco for total sale consideration of rs.77 lacs which according to the workers was undervalued. the long history of the case is narrated in the petition which needs no further detailing. in the circumstances, mr.anand chhibber, learned senior mittal manju 2014.05.19 14:04 i attest to the accuracy and integrity of this document chandigarh cp no.13 of 2013 (o&m) -3- counsel appearing for the petitioning union submits that no useful purpose will be served by keeping anco floating aimlessly and the company deserves to be wound up for its inability to discharge its admitted debts to the two secured creditors i.e.psidc and the workers represented by the union. besides, anco deserves to be wound up under section 433 (c) of the act since it has become nonfunctional as its working stands suspended for over one year. therefore, it would be just and equitable to pass orders of winding up. the petitioner has filed separately company application no.47 of 2013 under section 450 of the companies act, 1956 read with rule 9 of the companies (court) rules, 1959 read with section 151 cpc praying that a provisional liquidator be appointed to take over the assets of the respondent company and to restrain the respondent from alienating, transferring, selling or otherwise parting with possession and/or creating a charge of encumbrances on its movable and immovable properties and to restrain the respondent from withdrawing any amount from any of its current credit account and to attach its bank accounts etc.this application was filed on january 23, 2013. learned counsel appearing for respondent no.2 – psidc took time for filing reply to the main petition which has been filed today and the same is taken on record with copy to opposite counsel. no one appears for respondent no.1 – anco.in the reply, psidc states that the petitioner is not a registered trade union under the trade unions act, 1926 and no details of members of the union have been disclosed in the petition nor any resolution authorising sh. sukhwinder singh to file the present petition has mittal manju 2014.05.19 14:04 i attest to the accuracy and integrity of this document chandigarh cp no.13 of 2013 (o&m) -4- been annexed. psidc seeks to deny the claim of the workers and presses that the petition has been filed only to deny the corporation of its dues which are a term loan of rs.235 lacs and a bridge loan of rs.30 lacs availed by anco from it. these loans have been secured by way of equitable mortgage deeds dated june 19, 1996 and june 24, 1996 vide hypothication deed dated may 28, 1996 and the charge has been duly entered before the registrar of companies vide memo of entry dated june 19, 1996. there can be no doubt that psidc is a secured creditor having firs.charge over the movable and immovable assets of anco.it has been stated that psidc has taken action against anco under section 29 of the state financial corporations act, 1951 and it had passed an order under section 29 of the said act on july 19, 2002. psidc seeking to recover public money for which it took steps to auction the assets of anco and the petition has been filed to subvert execution of the sale of assets of anco by open auction held on march 17, 2011. it is urged that when the petitioner- union in its cwp no.5935 of 2011 wrongly claimed themselves to be secured creditors having pari-passu charge over the assets of anco in view of section 529-a of the act then psidc entered appearance and took a preliminary objection that section 529-a of the act comes into play only if the company has been wound up which was not the case. there is no order winding up the company so far, therefore, psidc being a secured creditor has an overriding claim over the petitioner union which is an unsecured creditor. a sale letter had already been issued by psidc in favour of m/s swami agro industries and the bid has been approved by the board of directors of psidc on the recommendations of the assets sales committee mittal manju 2014.05.19 14:04 i attest to the accuracy and integrity of this document chandigarh cp no.13 of 2013 (o&m) -5- on march 31, 2011. in its third attempt to sell the assets, psidc accepted offered the highest bid of rs.208 lacs by m/s swami agro industries. therefore, psidc opposes winding up and prays that this court should permit it to realize the proceeds of the auction and appropriate it to themselves as a secured creditor with firs.charge. heard the learned counsel for the parties. read the material placed before this court in the winding up petition and having regard to the non-functional status of anco and its inability to discharge its admitted debts and having regard to the stand taken by psidc in its written statement it cannot be said by any stretc.of imagination that the body of workers of anco represented by the petitioner union are not secured creditors within the meaning of section 529-a of the act on account of orders passed by labour courts and tribunals under section 33 c (2) of the id act against anco representing salaries and wages due for the period specified in para.4 of the petition. mr.anand chhibber, learned senior counsel has been able to bring his case within the parameters of sections 433, 434 and 439 of the act and to successfully show that it would be just and equitable to wind up the respondent company and to issue citation. the argument that the workers represented by the petitioning union are not secured creditors or that they have not been identified hardly merits consideration. workers has have secured labour court awards in their favour against anco are plainly secured creditors.if there identity is not known in this petition that could be determined by the liquidator in proceedings consequent upon the passing of winding up order by this court. merely because psidc has acted under mittal manju 2014.05.19 14:04 i attest to the accuracy and integrity of this document chandigarh cp no.13 of 2013 (o&m) -6- section 29 of the state financial corporations act and has held an auction and confirmed the bids of the highest bidder would give no right to them except to share the proceeds pari-passu etc.with its co-secured creditors which are the workers of anco.any other interpretation applied may cause right deprivation of workers under section 529-a and would lead to unjust enrichment of psidc at the cost of workers whose claims would deserve to be adjudicated and examined by the liquidator. having considered the submissions of mr.anand chhibber, learned senior counsel and the contentions of the learned counsel for the corporation, i am of the view that this is a fit case where anco should be ordered to be wound up for its inability to discharge its debts and also for the reason that it is lying defunct in terms of section 433 (c) of the act. it is so ordered and anco is ordered to be wound up. in the absence of presence of any other secured creditors and unsecured creditors etc.publication of the winding up is exempted on account of lack of funds to support publication which may put the workers to onerous financial burden. the official liquidator attached to this court is appointed as the liquidator of anco to take over its assets and liabilities and to proceed further in the matter in accordance with law and subject to further orders of the company court. (rajiv narain raina) judge0605.2014 manju mittal manju 2014.05.19 14:04 i attest to the accuracy and integrity of this document chandigarh
Judgment:

CP No.13 of 2013 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CP No.13 of 2013 (O&M) Date of Decision: 06.05.2014 Paper Workers & Labour Union ....Petitioner Versus M/s Anco Papers LTD.and another ....Respondents CORAM:- HON'BLE Mr.JUSTICE RAJIV NARAIN RAINA Present: Mr.Anand Chhibber, Sr.Advocate, with Ms.Harpriya Khaneka, Advocate, for the petitioner.

Ms.Madhu Dayal, Advocate, for respondent No.2.

1.

To be referred to the Reporters or not?.

2.

Whether the judgment should be reported in the Digest?.

RAJIV NARAIN RAINA, J.

This is a petition under Sections 433, 434 and 439 of the Companies Act, 1956 (for short “the Act”.) for winding up the respondent Company, M/s Anco Papers LTD.(for short “Anco”.).The petition has been presented by the Paper Workers & Labour Union representing the body of workers employed by Anco which has turned sick and is lying closed since 2-3 yeaRs.Anco is unable to pay its admitted dues even to its secured creditors i.e.Punjab State Industrial Development Corporation (PSIDC) or wages and salaries to its workeRs.The petitioners are creditors secured in view of Section 529-A of the Act.

The right to wages of the workers represented by the petitioning Union stand determined by various orders passed by the Labour Courts under the provisions of the Industrial Disputes Act, 1947 (for short "ID Act") ordering or awarding wages/salaries which Mittal Manju 2014.05.19 14:04 I attest to the accuracy and integrity of this document Chandigarh CP No.13 of 2013 (O&M) -2- Anco has failed to pay.

These periods range from September 1, 1999 to December 31, 1999 and then again from September 1, 2000 to January 31, 2003 which is a secured debt.

Anco is said to be commercially insolvent.

It is stated in the petition that Anco failed to be represented before Labour Courts and Tribunals in proceedings under section 33 C (2) of the ID Act and remained ex parte.

Steps taken by the workers in implementation of orders/wages through the process of Section 33-C (1) of the ID Act for recovery of money quantified at Rs.17,05,530/- in the process of recovery which dues were discovered by the revenue authorities when they found mutations of the immovable property of Anco was not sanctioned and, therefore, it was not possible to put the property to auction to satisfy the claims of the workeRs.Other than the workeRs.PSIDC made a run on Anco to recover its secured loan and began taking steps towards auctioning the assets/property of Anco mortgaged to PSIDC to secure the loan.

At the auction, a bidder made an offer of Rs.63 lacs on July 21, 2008.The workers preferred an application before the Assistant Labour Commissioner, Sangrur on March 20, 2009 for attachment of property of Anco to satisfy the claims of the workers then running into Rs.81,66, 738/-.

The strength of workers when the going was good was between 100 to 150.

On failure to satisfy their claiMs.they had approached Labour Courts.

It is stated in the petition that PSIDC had sold the plant and machinery of Anco for total sale consideration of Rs.77 lacs which according to the workers was undervalued.

The long history of the case is narrated in the petition which needs no further detailing.

In the circumstances, Mr.Anand Chhibber, learned Senior Mittal Manju 2014.05.19 14:04 I attest to the accuracy and integrity of this document Chandigarh CP No.13 of 2013 (O&M) -3- Counsel appearing for the petitioning Union submits that no useful purpose will be served by keeping Anco floating aimlessly and the company deserves to be wound up for its inability to discharge its admitted debts to the two secured creditors i.e.PSIDC and the workers represented by the Union.

Besides, Anco deserves to be wound up under Section 433 (c) of the Act since it has become nonfunctional as its working stands suspended for over one year.

Therefore, it would be just and equitable to pass orders of winding up.

The petitioner has filed separately Company Application No.47 of 2013 under Section 450 of the Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules, 1959 read with Section 151 CPC praying that a provisional Liquidator be appointed to take over the assets of the respondent company and to restrain the respondent from alienating, transferring, selling or otherwise parting with possession and/or creating a charge of encumbrances on its movable and immovable properties and to restrain the respondent from withdrawing any amount from any of its current credit account and to attach its bank accounts etc.This application was filed on January 23, 2013.

Learned counsel appearing for respondent No.2 – PSIDC took time for filing reply to the main petition which has been filed today and the same is taken on record with copy to opposite counsel.

No one appears for respondent No.1 – AnCo.In the reply, PSIDC states that the petitioner is not a registered Trade Union under the Trade Unions Act, 1926 and no details of members of the Union have been disclosed in the petition nor any resolution authorising Sh.

Sukhwinder Singh to file the present petition has Mittal Manju 2014.05.19 14:04 I attest to the accuracy and integrity of this document Chandigarh CP No.13 of 2013 (O&M) -4- been annexed.

PSIDC seeks to deny the claim of the workers and presses that the petition has been filed only to deny the Corporation of its dues which are a Term loan of Rs.235 lacs and a Bridge loan of Rs.30 lacs availed by Anco from it.

These loans have been secured by way of equitable mortgage deeds dated June 19, 1996 and June 24, 1996 vide Hypothication Deed dated May 28, 1996 and the charge has been duly entered before the Registrar of Companies vide memo of entry dated June 19, 1996.

There can be no doubt that PSIDC is a secured creditor having fiRs.charge over the movable and immovable assets of AnCo.It has been stated that PSIDC has taken action against Anco under Section 29 of the State Financial Corporations Act, 1951 and it had passed an order under Section 29 of the said Act on July 19, 2002.

PSIDC seeking to recover public money for which it took steps to auction the assets of Anco and the petition has been filed to subvert execution of the sale of assets of Anco by open auction held on March 17, 2011.

It is urged that when the petitioner- Union in its CWP No.5935 of 2011 wrongly claimed themselves to be secured creditors having pari-passu charge over the assets of Anco in view of Section 529-A of the Act then PSIDC entered appearance and took a preliminary objection that Section 529-A of the Act comes into play only if the Company has been wound up which was not the case.

There is no order winding up the Company so far, therefore, PSIDC being a secured creditor has an overriding claim over the petitioner Union which is an unsecured creditor.

A sale letter had already been issued by PSIDC in favour of M/s Swami Agro Industries and the bid has been approved by the Board of Directors of PSIDC on the recommendations of the Assets Sales Committee Mittal Manju 2014.05.19 14:04 I attest to the accuracy and integrity of this document Chandigarh CP No.13 of 2013 (O&M) -5- on March 31, 2011.

In its third attempt to sell the assets, PSIDC accepted offered the highest bid of Rs.208 lacs by M/s Swami Agro Industries.

Therefore, PSIDC opposes winding up and prays that this court should permit it to realize the proceeds of the auction and appropriate it to themselves as a secured creditor with fiRs.charge.

Heard the learned counsel for the parties.

Read the material placed before this Court in the winding up petition and having regard to the non-functional status of Anco and its inability to discharge its admitted debts and having regard to the stand taken by PSIDC in its written statement it cannot be said by any stretc.of imagination that the body of workers of Anco represented by the petitioner Union are not secured creditors within the meaning of Section 529-A of the Act on account of orders passed by Labour Courts and Tribunals under Section 33 C (2) of the ID Act against Anco representing salaries and wages due for the period specified in para.4 of the petition.

Mr.Anand Chhibber, learned Senior counsel has been able to bring his case within the parameters of Sections 433, 434 and 439 of the Act and to successfully show that it would be just and equitable to wind up the respondent Company and to issue citation.

The argument that the workers represented by the petitioning Union are not secured creditors or that they have not been identified hardly merits consideration.

Workers has have secured Labour Court awards in their favour against Anco are plainly secured creditORS.If there identity is not known in this petition that could be determined by the Liquidator in proceedings consequent upon the passing of winding up order by this Court.

Merely because PSIDC has acted under Mittal Manju 2014.05.19 14:04 I attest to the accuracy and integrity of this document Chandigarh CP No.13 of 2013 (O&M) -6- Section 29 of the State Financial Corporations Act and has held an auction and confirmed the bids of the highest bidder would give no right to them except to share the proceeds pari-passu etc.with its co-secured creditors which are the workers of AnCo.Any other interpretation applied may cause right deprivation of workers under Section 529-A and would lead to unjust enrichment of PSIDC at the cost of workers whose claims would deserve to be adjudicated and examined by the Liquidator.

Having considered the submissions of Mr.Anand Chhibber, learned Senior counsel and the contentions of the learned counsel for the Corporation, I am of the view that this is a fit case where Anco should be ordered to be wound up for its inability to discharge its debts and also for the reason that it is lying defunct in terms of Section 433 (c) of the Act.

It is so ordered and Anco is ordered to be wound up.

In the absence of presence of any other secured creditors and unsecured creditors etc.publication of the winding up is exempted on account of lack of funds to support publication which may put the workers to onerous financial burden.

The Official Liquidator attached to this Court is appointed as the Liquidator of Anco to take over its assets and liabilities and to proceed further in the matter in accordance with law and subject to further orders of the Company Court.

(RAJIV NARAIN RAINA) JUDGE0605.2014 manju Mittal Manju 2014.05.19 14:04 I attest to the accuracy and integrity of this document Chandigarh