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Promoter firm not liable to pay bankrupt company's employees: SC

Written by: Staff

New Delhi, Apr 5 (UNI) In a judgement with wide repercussions on Industrial workers, the Supreme Court has held that a promoter or third company cannot be held liable to pay the dues to the employees of the company in liquidation.

A bench comprising Mr Justice Arun Kumar and Mr Justice R V Raveendran in an April 14 judgment set aside the impugned judgment of the Punjab and Haryana High Court and held that appellant Punjab State Industrial Development Corporation (PSIDC), can not be directed to pay pending salary to the workers of Punjab National Fertiliser and Chemical Ltd. (PNFC) after PNFC was wound up in July 2001.

Earlier, PNFC Karamchari Sangh had filed an application before a Company judge who directed the PSIDC, which had promoted the PNFC along with over 100 other companies, to pay the six-month dues of the workers.

The union had based its case on a note of the state Chief Minister dated Aug.25,2001 directing the authorities to pursue the offer of finance department to permit PSIDC to raise funds by market borrowing, with state guarantee, to pay the workers' dues.

The apex court, while allowing the appeal of PSIDC, held that PSIDC could not be made liable for dues owed by the PNFC to its workers. The court, however, said that the state government may consider sympathetically whether it can provide any relief to the workers in view of the sympathetic view taken by the state chief minister in 2001.

PNFC had stopped paying wages to its workers from September 1999.

In view of the financial crunch, a winding up order was passed on recommendation of the BIFR (Board for Industrial and Financial Reconstruction).


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