Temporary employment under liquidation proceedings must adhere to statutory rules, emphasizing the necessity for justification in appointments and proper management of public funds.

JUDGMENT :

ANIL L. PANSARE J.

By present application, the Official Liquidator is seeking permission to appoint Mr. Jintendra Mangre as Peon (MTS) in liquidation of M/s Mahadeo Land Developers Private Limited on same terms and condition as mentioned in order dated 20-4-2018 and permit the Official Liquidator to pay salary and allowances from the common pool funds account maintained by the Official Liquidator.

2. The application was first heard on 14-12-2024. A detail order came to be passed noting serious lapses in appointment of company paid staff. Reference was made to the judgment of the Supreme Court in the case of Official Liquidator Vs. Dayanand and ors. [ (2008) 10 SCC 1 ] wherein while dealing with the scope of Rules 308 and 309 of the Companies (Court) Rules, 1959 (for short ‘the Rules of 1959’), the Supreme Court held that employees engaged by the Official Liquidator under court-sanctioned rules, specifically through employment sanctioned under Rule 308 of the Rules of 1959, do so on a purely temporary basis with full knowledge of the non-permanent nature of their employment. The Court further held that such employees cannot claim a right to regularization, absorption, or benefits equivalent to permanent government employees solely based on their long service or the similarity of duties performed. The Supreme Court further held that the company paid staff constitute a separate and distinct class and from the inception of their employment, they are paid from the fund created for disposal of the assets of the companies in liquidation. As against, not only the appointment is made in breach of spirit of Rule 308 but these employees are treated at par with government employees.

3. It will be appropriate here to first refer to Rule 308 and 309 of the Rules of 1959, which read as under :

“308. Employment of additional or special staff. - Where the Official Liquidator is of opinion that the employment of any special or additional staff is necessary in any liquidation, he shall apply to the Court for sanction, and the Court may sanction such staff as it thinks fit on such salaries and allowances as to the Court may seem appropriate.

309. Apportionment of expenses of common staff. - Where any staff is employed to attend to the work of more than one liquidation, or any establishment or other charges are incurred for more than one liquidation, the expenses incurred on such staff and the common establishment and other charges, shall be apportioned by the Official Liquidator between the several liquidations concerned in such proportions as he may think fit, subject to the directions of the Judge, if any.”

Thus, the Official Liquidator is required to form an opinion that there is a necessity of special or additional staff in a liquidation. Thereupon, he has to apply to Court for sanction which the Court may accord on such salary and allowances as deemed appropriate. Rule 309 provides that where the staff is employed to attend to the work of more than one liquidation, the expenses incurred of such staff shall be apportioned between the several liquidations proportionately.

4. Thus, what is most crucial is the necessity of special or additional staff in a liquidation