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2001 DIGILAW 368 (MP)

M. P. Laghu-Udyog Nigam Ltd. , Bhopal v. Mohd. Imran

2001-04-25

S.K.KULSHRESTHA

body2001
ORDER 1. By this petition, the petitioner has challenged the order dated 24.8.1993 of the Labour Court-I, Bhopal (Ann.P-15), passed in case No. 46/87 I.D Act Ref. under the provisions of section 33C (2) of the Industrial Disputes Act and notice Annexure P-16 for issuance of Revenue Recovery Certificate. 2. The petitioner M.P. Laghu Udyog Nigam (hereinafter referred to as LUN for short) is a company incorporated under the provisions of the Companies Act, 1956. Prior to the transfer of the Government Tool Room & Testing Laboratories to the petitioner LUN w.e.f 31.7.1985, the said establishment was under the Industries Department of the Government. The respondent No. 1 Mohd. Imran was an employee in the said Tool Room till termination of his services on 11.10.1982. It is not disputed that against termination of his service, the respondent No. 1 had raised a dispute and a reference was made by the Labour Commissioner by order dated 3.8.1983 (Ann.P-5) to the Labour Court as to whether the termination of the service of respondent No. 1 was legal and proper and if not, to what relief he was entitled and what direction needed to be issued to the employer. It is further not disputed that in the said dispute, the petitioner LUN was not made a party even after the said Tool Room had been transferred to it. The matter was proceeded ex parte against the second party to the dispute viz. respondent No.4, and on the basis of the evidence of respondent No.1, the Labour Court, by its award dated 26.6.1987 (Ann.P-9), had directed reinstatement of respondent No. 1 with full back wages. After the said award was passed, respondent no. 1 made an application Annexure P-2 under the provisions of section 33C(2) of the Industrial Disputes Act in which, for the first time, the petitioner was joined as a respondent and despite the defence of the petitioner that the petitioner as transferee of the establishment was not liable to discharge liability under the award Ann.P-9 and the award was executable only against the Industries Department of the Government; by the said order Ann.-P-15, the Labour Court held that the respondent shall be deemed to have continued on the post of Die-Maker and entitled to wages accordingly and the petitioner was directed to make payment. It is against this order under the provisions of section 33C(2) of the Industrial Disputes Act, that the petitioner LUN has filed the present petition. 3. Learned counsel for the petitioner has submitted that since the service of respondent no. 1 had been dispensed with long before transfer of the Government Tool Room to the petitioner LUN and despite knowledge of the said transfer, the petitioner was not impleaded as a party to the dispute pending at the time' of the transfer before the Labour Court, the award annexure P-9 dated 26.6.1987 did not bind the petitioner and, therefore, in proceedings under section 33C(2), which are in the nature of execution proceedings, the Labour Court grossly erred in fastening the liability on the petitioner. Learned counsel has submitted that upon transfer of the undertaking to the petitioner, the respondent at the most could be treated to have been retrenched from the date of the transfer even if his continuance could be deemed upto that date by virtue of the award passed by the Labour Court later on and could have claimed only compensation in accordance with section 25FF of the Industrial Disputes Act from the transferor company and, therefore; the award of the Labour Court was not enforceable against the petitioner. Reference has been made to the decision of the Constitution Bench of the Supreme Court in ACA & I Society v. Workmen ( AIR 1963 SC 1489 ) and to the decision in Central Inland Water Transport Corpn. v. Workmen [ (1974) 4 SCC 696 ] as followed in Inland Steam Navigation Works' Union & , Anr. v. Union of India and Ors. [2001 (1) CLR 695] in support of the contention that deeming retrenchment of the employee will only entitle him to the benefit under section 25F from the transferor and not the transferee. 4. Respondent no. 1 has filed return in which, while not disputing that during the pendency of the dispute before the Labour Court against termination of the service of the said respondent, the establishment was transferred to the petitioner LUN, it has been pointed out that since liabilities of the establishment were taken over by LUN, transferee LUN was under an obligation to reinstate respondent no. 1 in service and to pay him all back wages in accordance with the award (Ann.P-9). 1 in service and to pay him all back wages in accordance with the award (Ann.P-9). Learned counsel for the respondent has contended that since the assets and liabilities were transferred to LUN during the pendency of the dispute, LUN, as successor of the company, was liable under the award as the amount payable therein was a determinable sum which did not require reference of any dispute separately for adjudication. Reliance has been placed on the decision of the Supreme Court in KPTC Ltd. v. Amalgamated Electricity Co. Ltd. (2000 AIR SCW 4490). While not disputing that the proceedings under section 33C (2) are in the nature of execution proceedings, it is contended by the learned counsel by reference to the decision of the Supreme Court in M/s Fabril Gasosa v. Labour Commissioner ( AIR 1997 SC 954 ) and in Shreenath v. Rajesh ( AIR 1998 SC 1827 ) that it is permissible in such proceedings for the Labour Court to decide as to whether it is executable against the transferee and, therefore, the order Annexure P-15 did not call for any interference. Respondents no. 3 and 4 have filed separate return supporting the case of the respondent no. 1. 5. During hearing, learned counsel for respondent No. 1 raised a preliminary objection that since the petitioner has not complied with section 17B of the Industrial Disputes Act, the claim of the petitioner against the award directing reinstatement cannot be considered and, therefore, the petition deserves to be dismissed. The submission of the learned counsel for the first respondent is that in view of the object underlying the provision to relieve hardship that is caused to the workman due to delay in implementation of the award, it is imperative that the provisions in every case are complied with and since the petitioner has failed to do so, the petition should be dismissed. 6. Section 17B of the Industrial Disputes Act guarantees the workman payment of wages by employer during the course of proceedings in. the High Court or Supreme Court where the award directs reinstatement of any workman and the employer prefers any proceedings against such award in a High Court or the Supreme Court. Section 17B reads as follows: "17B. 6. Section 17B of the Industrial Disputes Act guarantees the workman payment of wages by employer during the course of proceedings in. the High Court or Supreme Court where the award directs reinstatement of any workman and the employer prefers any proceedings against such award in a High Court or the Supreme Court. Section 17B reads as follows: "17B. Payment of full wages to workman pending proceedings in higher Courts -- where in any case a Labour Court, Tribunal or National Tribunal by its award directs reinstatement of any workman and the employer prefers any proceedings against such award in a High Court or the Supreme Court, the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the High Court or the Supreme Court, full wages last drawn by him, inclusive of any maintenance allowance admissible to him under any rule if the workman had not been employed in any establishment during such period and an affidavit by such workman had been filed to that effect in such Court : Provided that where it is proved to the satisfaction of the High Court or the Supreme Court that such workman had been employed and had been receiving adequate remuneration during any such period or part thereof, the Court shall order that no wages shall be payable under this section for such period or part, as the case may be." 7. In the present case, it is not disputed that the award dated 26.6.1987 by which the Labour Court had directed reinstatement of respondent no. 1 has not been challenged by the petitioner and what has been challenged is the order dated 24.8.1993 (Ann.P-15), by which the Labour Court has held that the respondent no. 1 shall be deemed to have continued in service and directed the petitioner to pay the amount due treating him to be in uninterrupted service. Section 17B comes into operation only when proceedings are preferred before a High Court or Supreme Court against the award directing reinstatement and, therefore, the provisions contained in section 17B would not apply in case the award as to reinstatement has not been chal1enged. Section 17B comes into operation only when proceedings are preferred before a High Court or Supreme Court against the award directing reinstatement and, therefore, the provisions contained in section 17B would not apply in case the award as to reinstatement has not been chal1enged. Learned counsel for respondent No.1 has referred to the decision of the Supreme Court in Dena Bank v. Kiritikumar T. Patel [ (1999) 2 SCC 106 ] and submitted that since the principle underlying the provision is to relieve to a certain extent the hardship that is caused to the workman due to delay in the implementation of the award, in all cases where the implementation is so delayed on account of preceedings initiated by employer, the benevolent object of section 17B cannot be frustrated merely because the award directing reinstatement has not been challenged although reinstatement is delayed on account of such proceedings. From a plain reading of section 17B, it is clearly discernible that in order to attract the said provision, two conditions should be satisfied: (i) that employer has preferred proceedings against the award and (ii) that such award directs reinstatement of workman. In the present case, proceedings have been filed on the ground that the petitioner is not employer and, therefore, what is in issue is as to whether the petitioner is employer liable to satisfy the award passed by the Labour Court. It is not a case where the petitioner has challenged the award directing reinstatement but only the order passed under section 33C(2) of the Industrial Disputes Act directing the petitioner to comply with the award although the petitioner was not a party to the award Annexure P/9. In my considered view, therefore, the provisions of section 17B, I.D. Act, are not applicable in the present case. 8. Coming to the merits of the case, learned counsel for the petitioner has referred to section 25FF and pointed out that the status of an employee at best would be no different from the status of workman who had• continued in the undertaking till its transfer to the petitioner, with the result, respondent no. 1 could not have made a claim outside the scope of section 25FF of the Industrial Disputes Act. 1 could not have made a claim outside the scope of section 25FF of the Industrial Disputes Act. Learned counsel has referred to the decision of the Constitution Bench of the Supreme Court in ACA & I Society (supra), in which the observations contained in paragraphs 16 and 17 read as follows: "The Solicitor General contends that the question in the present appeal has now to be determined not in the light of general principles of industrial adjudication, but by reference to the specific provisions of S. 25FF itself. He argues, and we think rightly, that the first part of the section postulates that on a transfer of the ownership or management of an undertaking, the employment of workmen engaged by the said undertaking comes to an end, and, it provides for the payment of compensation to the said employees because of the said termination of their services, provided, of course, they satisfied the test of the length of service prescribed by the section. The said part further provides the manner in which and the extent to which the said compensation has to be paid. Workmen shall be entitled to notice and compensation in accordance with the provisions of S. 25F, says the section, as if they had been retrenched. The last clause clearly brings out the fact that the termination of the services of the employees does not in law amount to retrenchment and that is consistent with the decision of this Court in Hariprasad's case, 1957 SCR 121 = 1 (S) AIR 1957 SC 121 ). The Legislature, however, wanted to provide that though such termination may not be retrenchment technically so-called, as decided by this Court, nevertheless, the employees in question whose services are terminated by the transfer of the undertaking should be entitled to compensation, and, so, S. 25FF provides that on such termination, compensation would be paid to them as if the said termination was retrenchment. The words "as if" bring out the legal distinction between retrenchment defined by S. 2(oo) as was interpreted by this Court and termination of services consequent upon transfer with which it deals. In other words, the section provides that though termination of services on transfer may not be retrenchment, the workmen concerned are entitled to compensation as if the said termination was retrenchment. In other words, the section provides that though termination of services on transfer may not be retrenchment, the workmen concerned are entitled to compensation as if the said termination was retrenchment. This provision has been made for the purpose of calculating the amount of compensation payable to such workmen; rather than provide for the measure of compensation over again, S. 25FF makes a reference to S. 25F for that limited purpose, and, therefore, in all cases to which S. 25FF applies, the only claim which the employees of the transferred concern can legitimately make is a claim for compensation against their employers. No. claim can be made against the transferee of the said concern. "(17) The scheme of the proviso to S. 25FF emphasises the same policy. If the three conditions specified in the proviso are satisfied, there is no termination of service either in fact or in law, and so there is no scope for the payment of any compensation. That is the effect of the proviso. Therefore, reading S. 25FF as a whole, it does appear that unless the transfer falls under the proviso, the employees of the transferred concern are entitled' to claim compensation against the transferor and they cannot make any claim for re-employment against the transferee of the undertaking. Thus, the effect of the enactment of S. 25FF is to restore the position which the Legislature had apparently in mind when S. 25FF was originally enacted on September 4,1956.By amending S. 25FF, the Legislature has made it clear that if industrial undertakings are transferred, the employees of such transferred undertakings should be entitled to compensation, unless of course, the continuity in their service or employment is not disturbed and that can happen if the transfer satisfies the three requirements of the proviso." 9. Reference has also been made to the decision of the Supreme Court in Central Inland Water Transport Corpn. v. Workmen [ (1974) 4 SCC 696 ] in which it has been explained that the scope of section 33C(2) of the Industrial Disputes Act is limited and such proceedings are akin to the execution proceedings, and the right to receive compensation under section 25FF, as if workmen are retrenched, is available only against the owner of the undertaking, viz., the transferor and not against the transferee. Learned counsel for the petitioner has also invited attention of this Court to the decision in Inland Steam Navigation Works' Union and anr. (supra) to the effect that the transferee, even if a successor, would be liable neither to pay compensation nor to re-employ workmen whose employment stood automatically terminated on the transfer. 10. Per contra, the contention of the learned counsel for respondent no. 1 is that since there was no dispute as to the entitlement of the workman to the amount towards his back wages and that he was to be reinstated, there remained no dispute to be resolved by reference under the provisions of section 10 of the Industrial Disputes Act and such matters could be decided by the Labour Court even under the provisions of section 33C(2), I.D. Act on the analogy of the provision contained in Order 21 Rule 101 of the Code of Civil Procedure, which permits the executing Court to decide questions relating to right, title or interest in the property. Reference has been made to the decision in Shreenath (supra) to the effect that independent right asserted by a third party can be adjudicated by the Court executing decree. 11. In the present case, it is not any third party which is making a claim on the basis of any independent right to property but the respondent no. 1 is seeking to enforce the award against the petitioner who was not a party to the dispute in which the award (Ann. P-9) was passed. It is, therefore, clearly a case which is covered by the provisions of section 25FF and it has not been demonstrated that the case of respondent no. 1 falls within the category covered by the proviso to section 25FF. In a situation like this, therefore, respondent no. 1 was entitled only to the benefit available under section 25FF against the transferor as held by the Supreme Court in ACA & I Society (supra). Correspondence relating to transfer has also been filed by the petitioner, which indicates that out of the services of employees proposed to be transferred, the petitioner had absorbed 15 persons, as communicated by letter Annexure P/14. Correspondence relating to transfer has also been filed by the petitioner, which indicates that out of the services of employees proposed to be transferred, the petitioner had absorbed 15 persons, as communicated by letter Annexure P/14. The Labour Court did not frame any issue on the subject and merely on the basis of the deposition of witness B.B. Shrivastava examined by the petitioner, it proceeded to hold that since entire rights and liabilities were transferred to LUN by the Government, the LUN was liable to satisfy. the award. It did not examine the question in proper perspective as to whether it could adjudicate the dispute whether the award was executable against the transferee in proceeding under section 33C(2). The decision in KPTC Ltd. (supra) is distinguishable. 12 In view of the fact that the respondent workman's status could at best be treated to be of an employee who had continued till transfer of the establishment, he could at the most have claimed benefit accruing to such workman under the provisions of section 25FF on the strength of the award Annexure-P/9 passed by the Labour Court directing his reinstatement and payment of back wages. Such claim could have been enforced by him only against transferor and not against transferee. 13. In view of the aforesaid discussion, the petition deserves to be allowed. The order Annexure P/15 passed by the Labour Court as against the petitioner is quashed. This order shall, however, not preclude the petitioner from claiming the benefit under the award in accordance with law from the parties liable thereunder. There shall, however, be no order as to costs.