Ayushi Company Law Project

Hypothesis During the winding up of a company the rights of the workman and labourers are usually ignored. Although labour legislations have been made to save and protect the rights of the workman and labourers  but are the labour legislations legislations actually curbing curbing this problem is still a big question. question.

What is a Company? A voluntary association formed association formed and organized and  organized to carry on a business a  business.. Types of companies include sole include  sole  proprietorship, partnership  proprietorship, partnership,, limited liability, corporation, corporation, and public and public limited company. company.

Incorporation of a Company It is the first step in the making and formation of a company.

According to sec.  !"# !ii# of the

$ompanies Act, "%&' a company means a company formed and registered under the $ompanies Act, "%&' or any of the preceding Acts. Thus, a $ompany comes into e(istence only by registration under the Act, which can be termed as incorporation.

What is winding up of a Company? )inding up of a company is defined as a process by which the life of a company is brought to an end and its property administered for the benefit of its members and creditors. In words of *rofessor +ower, )inding )inding up of a company is the process whereby its life is ended and its *roperty is administered for the  benefit of its members members - creditors. An Administrator, Administrator, called called a liquidator is appointed appointed and he takes control control of the company, collec collects ts its assets, pays its debts and finally distributes any surplus among the members in accordance with their rights.

According to /alsburry0s 1aws of 2ngland, )inding up is a proceeding by means of which the dissolution of a company is brought about - in the course of which its assets are collected and realised3 and applied in payment of its debts3 and when these are satisfied, the remaining amount is applied for returning to its members the sums which they have contributed to the company in accordance with Articles Articles of the $ompany. )inding )inding up is a legal process.

4nder the process, the life of the company is ended - its property is administered for the benefits of the members - creditors. A liquidator is appointed to realise the assets - properties of the company. After After  payments of the debts, is any surplus of assets assets is left out they will be distributed distributed among the members members according to their rights. )inding up does not necessarily mean that the company is insolvent. A perfectly perfectly solvent company may be wound up by the approval of members in a general meeting. )ho is a workman5

Definition of 6workman6 , is provided under 7ec. 8!s# of the Act is as under9 6)orkman6 6)orkman6 is any person !including an apprentice# employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be e(press or implied and for the purposes of any proceedings under this act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute.

: In $hintaman rao vs. state of ;adhya *radesh AI< AI< !"%&=# 7$ &= it was held that there should be a contractual relationship between master and servant i.e. the workman is under the supervision, direction and control of his master.

: In Atam prakash - ors vs. state of /aryana - ors "%%> !8# 11? !* - /# it was held that to be a workman within section 8!s# of this Act he should be employed in an industry and there should be master servant relationship.

: In ?ohn @oseph khokar vs. bhadange . 7. - ors "%%= !"# 11? BB> !bom# it was held that in determining that whether a person is a workman or not the court has to principally see main or substantial work for which he is employed. Ceither designation nor any incidental work done by him will get him outside the  purview of this Act.

: In *illai +. ;. vs. A. *. *. lakhanikar, lakhanikar, @udge iii labour court - ors "%%= !8# 11? BB !bom# it was held to determine whether a person is a workman his main and substantial work have to be seen.

: In *hysical 8, a worker continuously employed for five years or more is entitled to a gratuity payment upon termination of service, e(cept where such termination has been as a result of his or her wilful omission or negligence resulting in damage or loss of the employerHs property, in which case the gratuity is forfeited to the e(tent of the damage caused. )here )here the employee has been dismissed on account of his or her riotous, violent or disorderly conduct or for an offence involving moral turpitude committed in the course of employment, the gratuity shall be wholly or partly forfeited. The sum is calculated at "& daysH average average pay for every completed year of service.

Preferential Payments On Winding Up Of The Company

7ection &G under the $hapter  of * art II of the $ompanies Act, "%&' provides for the s equence of the payments which shall be made in the course of winding up of a company. /owever, /owever, 7ection &8%A is an e(ception to 7ection &G which starts with a notwithstanding clause providing for the overriding  preferential payments. 7ection &8%A was introduced in the $ompanies Act, "%&' by the $ompanies $ompanies !Amendment# Act, "%=& in order to provide a protection to the workmen and the secured lenders of the $ompanies. 7ub 7ection 8 of 7ection &8%A further provides that 0the debts pa yable to the workmen and secured creditors of the $ompany shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate the equal proportions0. 7imilar to the provisions above, where a claimant has proceeded with filing its claim with the Debt recovery tribunal under the provisions of