The Hindu : Tamil Nadu / Chennai News : Pondicherry depositors' Act upheld

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Sunday, Apr 01, 2007
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Tamil Nadu

Tamil Nadu - Chennai

Pondicherry depositors' Act upheld

Special Correspondent

Court orders retrenchment compensation for mill workers

CHENNAI: The Madras High Court has upheld the constitutional validity of the Pondicherry Protection of Interests of Depositors in Financial Establishments Act 2004.

It also made it clear that financial institutions mentioned in the Act would cover unincorporated as well as incorporated trading/financial establishments.

Passing orders on a batch of writ petitions and appeals, a Division Bench of Justice P. Sathasivam and Justice N. Paul Vasanthakumar also directed the Puducherry Labour Commissioner to complete payment of retrenchment compensation to workmen of New Horizon Sugar Mills Limited at Kandamangalam in Puducherry within four weeks.

Over 3,000 complaints

The judges said over 3,000 complaints were received by the Puducherry police and the investigation conducted by the Criminal Investigation Department showed that the deposits collected from the depositors of Pondicherry Nidhi Limited (PNL) had been channelled to New Horizon Sugar Mills.

With the funds of the Nidhi, property were purchased in the name of New Horizon Sugar Mills in Pondicherry and Arunachala Sugar Mills in Tiruvannamalai, besides other property in Chennai and Kumbakonam.

The assets of the mill, which defaulted on repayment of a secured credit of Rs. 30 crore to Indian Bank, were sold for Rs. 50.2 crore.

The issues before the court included the management's demand for the refund of the excess amount, the constitutional validity of the Act, claims of workers' unions and the contention of the EID Parry (India) Limited that employees were disentitled from claiming compensation after the transfer of the company from one employer to another.

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