Unpaid wages/salary of a former workman/employee can be considered a debt within the meaning of Section 433(e) of the Companies Act, 1956, and the employee has the locus to file a Company Petition in respect of unpaid wages/salary and emoluments as a creditor of the Company.

A.M. KHANWILKAR, CJ.

1. This matter has been placed before the Full Bench in terms of order passed by the learned Company Judge dated 18.09.2013, in Company Petition No. 4 of 2010. The question formulated for consideration reads thus:-

Whether unpaid wages/salary of workman/employee can be covered within the meaning of debts under Section 433(e) of the Companies Act, 1956 and the view taken by learned Single Judge in the matter of Pawan Kumar Khullar vs. Kaushal Leather Board Limited, AIR 1996 MP 85 in this regard is correct?

2. Briefly stated, the Company Petition for winding up of Respondent-Company is filed on the assertion that the respondent-Company had engaged the petitioner to manage the Asset Management Business in Singapore vide letter dated 05.03.2008 and subsequent employment letter dated 18.04.2008. The petitioner was accordingly appointed as the Chief Executive Officer of the respondent-Company and was assured payment of a gross annual salary of S$ 650,000 being S$ 54,166 per month. The petitioner was also offered two years employment, a fixed and guaranteed annual bonus of S$ 450,000. Further, the respondent-Company was fully satisfied by the services rendered by the petitioner after his appointment and was receiving regular monthly salary till 31.03.2009. However, after 31.03.2009 as the respondent-Company failed and neglected to pay monthly salary to the petitioner in spite of several requests made by the petitioner to the respondent-Company in that behalf until 14.09.2009, which resulted in penury condition for the petitioner. The petitioner, therefore, resigned from service on 14.09.2009 by sending a resignation letter to the respondent- Company and also demanded his rightful dues including the outstanding salary of S$ 297,961.67 for the period between 1.4.2009 to 14.9.2009, the fixed and guaranteed bonus of S$ 131,250 for the period starting from 18.04.2009 till 14.09.2009, aggregating to S$ 879,211.67 which is equivalent to Indian Rs. 3,00,69,039 (Rupees Three Crores Sixty Nine Thousand and Thirty Nine Only) at the conversion rate of Indian Rs. 34.2 (Rupees Thirty Four and Two Paise) for each Singapore Dollar as on 14.09.2009.

3. According to the petitioner, in spite of repeated oral as well as written reminders, the respondent-Company paid no heed to discharge its debts payable to the petitioner towards outstanding salary and emoluments for the services rendered by him. The petitioner, however, was informed by the respondent-Company that the fund flow situation of the Company was yet to improve. Thus, being unconvinced with the excuse given by the respondent-Company, which was avoiding to discharge its obligation to pay its debt amount to the petitioner and was unable to pay the same, the petitioner sent a legal notice dated 26.09.2009 to the respondent-Company demanding a sum of S$ 879,211,67, giving the breakup of the amount.

4. According to the petitioner, the respondent-Company vide letter dated 14.12.2009 admitted its liability, by stating, inter alia, that the respondent-Company was facing financial crisis and unable to make the payment due to prevailing market situation. By the said communication, the respondent-Company also volunteered to amicably settle the matter with the petitioner. The petitioner vide letter dated 26.12.2009 responded by stating that he had shown enough patience for more than 6 months with a hope of settlement of his dues and for that had even given up his II year guaranteed bonus of S$ 131,250. Nevertheless, the petitioner informed that he was willing to discuss about amicable settlement, without prejudice to his rights and contentions. The respondent-Company, however, by letter dated 31.12.2009 even though admitted its liability to pay salary to the petitioner, raised issue of no business brought by the petitioner, for which, was not entitled to receive any bonus. In the said communication, the respondent-Company, however, expressed willingness to pay only salary of the