Arijit Pasayat, J. - (1.)All these appeals involve identical issues. By judgments rendered by Division Bench of the Madhya Pradesh High Court, impugned in the appeals held that Directors of Jiyajirao Cotton Mills Ltd. (hereinafter referred to as the Company) to be personally liable for the payment of wages to the workmen of the company under the Payment of Wages Act, 1936 (in short the Act). However, the authorities under the Act could proceed against the assets of the company in the hands of the Directors or the assets acquired from income of the company by the Directors. The personal property of the Directors, however, could not be proceeded against if it acquired from the sources other than the income of the company. The Letters Patent Appeals filed against the judgments of the learned single Judge were dismissed. It is to be noted that learned single Judge had held that writ petitions were not maintainable as the writ petitioners had an alternative remedy under Section 17 of the Act. However, the Letters Patent Court considered the case on merits and as noted above came to the conclusion about liability of the Directors.
(2.)While the Directors who were writ petitioners had questioned correctness of the judgments rendered by the Division Bench, the functionaries under the Act have questioned correctness of that part of the High Courts judgment which restricted recovery from the assets acquired out of the companys income.
(3.)Background facts on which the dispute arises are as under : In June 1991, the Company made an application to the State Government under Section 25-O of the Industrial Disputes Act, 1947 (in short the ID Act) as substituted by the Industrial Disputes (Madhya Pradesh Amendment) Act, 1983 (in short Madhya Pradesh Act) Act 32 of 1983 with effect from 28-10-1983 seeking permission for closure of cotton section of the Company. The State Government by order dated 18-8-1991 rejected the application on the ground that the same was premature and the solution actually lay in re-deployment of the workforce and technical upgradation. An application for review was made on 4-9-1991. Between April 1992 and April 1997 according to the Company all the factories ceased production on account of disconnection of electricity. One particular trade union filed an application, before the Labour Court in Gwalior under Sections 36, 61 and 64A of the Madhya Pradesh Industrial Relations Act, 1960 (in short the MPIR Act). The Labour Court held that the lay off was illegal and directed the Company to withdraw the same. On being moved under Section 67 read with Section 64A of the MPIR Act, the Industrial Court by order drated 2-5-1992 modified the same. The order was challenged by a writ petition before the High Court. An interim order was passed directing payment of 50% of total back wages plus dearness allowance. Disputes of this nature continued and on 28-8-1992 the Company made a reference to the Board of Industrial and Financial Reconstruction (in short the BIFR) under Section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (in short the SICA). Subsequently, application was filed by Mazdoor Congress demanding payment of wages for certain periods. In January 1993 BIFR declared the Company to be a sick industrial company under Section 3 (1) (o) of SICA. Notices were issued by the functionaries under the Act calling upon the Company through its Factory Manager to explain non-payment of wages for certain periods in violation of Section 5 of the Act. For subsequent periods also, similar notices were issued. Copies of the notices were endorsed to the Directors of the Company. Subsequently, the Payment of Wages Inspector filed application under Section 15 of the Act before the concerned Magistrate against the Factory Manager, Shri K. B. Kaul and eight others who were Directors of the Company including the present appellants praying for directions to them for payment of wages for various periods. The Factory Manager submitted his reply. In particular, it was submitted by him that the application was vague since details of the workmen whose wages were allegedly not paid had not been given as required under the law. It was also stated that notice could not be issued to the Directors as only the Company and the Factory Manager were responsible for payment of wages under the Act. Pendency of the proceedings under the BIFR was also referred to. However, the authorities under the Act rejected the contention and held that the Directors were also personally liable to pay. Such directions were questioned before the High Court and as noted above, impugned judgments were passed.