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batman   11 November 2015

Is sudden closure valid in india ?

Hello Experts,

Please suggest if  closure of foreign IT company without notice period , without clearing pending salaries  is valid in India or Not.  A 10 years old foreign company continued its operation in India with almost three months salary backlog. When employees asked the HR to clear their salary, just after two days Company send email to all employees on weekend (offday) that compny will be liqudated and it stopped its operation. When employees asked about pending dues, notice period etc.. via official emails account,  immediately all official emails get blocked and they get response to their personal email that company is running with huge loss and will try to give all dues as soon as possible after damage control, but no specific date mention. Even the company blamed an employee that ;the closure was her advise though she was not a member of any bord/commitee; just an old employee who shouted for timely payment. The managing partners said their partnership still not on paper, though they have been declared as partners in a general official metting. The local partners and foriegn director are confident that court cases run very long here and declared verbally that no hope to get dues.

Please advise what can be done to recover the dues ?  even there is candidate who continues own treatment from his salary and facing terrible problem by such closure, still ready to fight.  while director/partners already confident that any legal dispute will take very long time within our present structure;  any hope for us ?




 12 Replies 971794 (Advocate)     12 November 2015

Unfortunately unscruplous persons who are running such companies are doing it.  Nothing much can be done, except legal recourse, which you have rightly said, will take years. 

1 Like

siddhartha sinha   12 November 2015

Foreign company in India cannot be liquidated except by court. While settling dues employees salary(with pf etc.) and secured creditors have priority over all others. These are to be paid in 4 months from wind up order date. This order itself is a notice to all stakeholders. For company it implies officially discharged from duty. Winding up proceedings are governed by companies act.
1 Like

siddhartha sinha   12 November 2015

**for employees it implies....correction

Kumar Doab (FIN)     12 November 2015

The notice has to be given to o/o Labor Commissioner. Instead of wasting time all affected employees may join hands and approach Employee's/Trade Unions leaders/Labor Law Consultant/Service Matters lawyer........................................and lodge complaint with:


O/o Labor Commissioner and demand to lodge police complaint and freeze the a/cs of company

Higher Officials of dept. of labor

Inspcetor appointed under Payment of Wages Act, State Shops & Estbs Act

Police : us/406,420, and approach higher officials



Create noise and petition media, CM,PM, Minister of labor (state/Central) etc...........  

1 Like

dr g balakrishnan (advocate/counsel supreme court)     12 November 2015

Any company closing shd pay all wages to employees as a first charge on company. 


If the company is not registered with any authority, file to the refistrar of companies or registrar of partnerships whoever is right person, to whom you employees make a complaint and he would swing into action, similarly file a private ctriminal complaint to the jurisdictional judicial magistrate then he might order police investigation and roud up the so called partners.


If it is really  foreign company, then issiue a legal notice to the secretary  to ministry of external afairs at new delhi informng him or her the status of the problems, besides you issue another legal notice to  the secretary to ministry of corporate affairs, witna confirmatory copies to the local police commissioner concerned and he would arrest the partners movements to escape from india or otherwise if bogus companies naturally the relevant criminal action would follow een under cyber laws.


it is not easy for the foreign company to escape from payng your dues  pls/

it is always important when you join any so caled foreign companies s]chech their credentials  else you might become a victim, like the one you suffered,


so also any company..never give any bonds, for the companies are trying to make you a bonded labor too, care is important...also check credentials of the company like the checks your credentials..that is no sin.


you have to take precaution, if not who will help you?

1 Like

Anand Bali Adv. (Advocate Solicitor & Consultant)     13 November 2015

Well narrated by Kumar Doab and Mr Blakrishnan, Nothing more to add in this.

Course of action needs a Joint approah to the the Labour Commissioner and With Registrar Companies where the company is registered.

 In India mostly these foreign compnies are Private Limited companies however the first charge on them is for clearance of their employees salary and other dues.

Winding up of a company is different then the closuer of business operations, please note.

1 Like

batman   13 November 2015

Dear Experts,

thank you for your valuable suggestion. As soon as we asked for our pending salaries, company announced huge loss hence winding-up process and stoped operation.  But we were really clue less if such incident valid in India or not. Thanks to you again for giving a clear view. We will follow these process.

batman   23 March 2016

Dear experts,

here is an update for you all in the year 2016.  The Illegal closure and salary freeze in India was been informed to various authority of Indian Gov't as well as foreign Gov't in year 2015. The matter has finally been forwared to State Asst Labour commissioner by Central Labour commissioner. Unfortunately the company has cooked a story of strike to balance the closure and non payment and not in a mood to clear wage backlogs. Possibly the matter will be forwarded to Tribunal Court. Since last 8 months employees are jobless and no money left.  The Indian director has been marked by Gov't but then foreigh M.D. introduce a HC advocate to defend the company in India.  Meanwhile a social group has raised a petition at to seek justice. Could you all please sign and share the petition to support jusctice ?

Company's advocate already threated to file defamation case against employees though employees are only seeking help from both the Government. A new setup has been opened by the company in India with different name and different ownership. 


Kumar Doab (FIN)     24 March 2016

The case before ALC/Tribunal shall be decided on facts and merits. Join hands and engage a senior counsel specializing in labor-service matters. Firm up your next employment
1 Like

batman   24 March 2016

Thank you for your supporting words Kumar sir. Can you advise some Judgements of India against salary freeze, bank interest on salay backlogs, compensasition, Illegal closure etc... ?

Kumar Doab (FIN)     24 March 2016

Let. Your counsel decide on citations if required at appropriate times in appropriate forum

compliance   06 May 2016

you need a legal advisor.

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