WORKMEN OF BRAHMPUTRA TEA ESTATE, REPRESENTED BY ASSAM CHAH KARAMCHARI SANGHA, DIBRUGARH versus THE INCOMING MANAGEMENT OF BRAHMPUTRA TEA ESTATE & ORS.

626

WORKMEN OF BRAHMPUTRA TEA ESTATE, REPRE· A

SENTED BY ASSAM CHAH KARAMCHARI SANGHA, DIBRUGARH v.

THE INCOMING MANAGEMENT OF BRAHMPUTUA TEA ESTATE & ORS. September 25, 1967

B

(M. H!DAYATULLAH, V. BHARGAVA AND C. A. VAIDIALINGAM, JJ.)

Industrial Disputes Act (14 of 1947). ss. 18 and 25 F-SeTvices terminated by Receiver appointed by court-Reference of dispute- C PuTChase of Company-Purchase. not party-Liability of purchaser Reference if infructuous-Duty of Labour Court to issue notice.

im· D

On reference of an industrial dispute, the Labour Cour~ took the view that the services of the workmen concerned had been ter·, minated, under instructions of the Receiver of the Company appoint· ed in a suit long before the first respondent became owner of the company; that the Receiver in possession was the only party pleaded and the new management, viz., the first respondent had not been brought on record, nor was it a party to the reference, made by the the State Government; that the purchase of the company, by first respondent, did not show that the latter had taken over any liabilities of the previous management, \vith regard to the claim Of the workmen; and that there had been no purchase of the goodwill of the company. On these grounds, the Labour Court held that no relief could be granted, as against the first respondent, and that the E reference itself had become infructuous. In appeal to this Court, the workmen-appellants contended that (i) the view of the Labour Court that the first respondent was not liable for tbe claims of workmen, was erroneous; and (ii) even iI it be held that the first respondent was not liable, the Labour Court, which had ample jurisdiction, in this regard, should have issued notice. either to the Receiver ap pointed in the suit. or the Official Liquidator, or to both of them and proceeded to investigate and adjudicate upon the claims of the work- F men.

HELD: (i I The first respondent was not liable to answer any of the claims of the workmen. He was not in the picture when the or der terminating their service was made, nor when the order referring the dispute to the Labour Court was made. Having due regard to the various recitals in the sale deed and considered in the light of G the principles laid down by this Court. in Anakapalla Cooperative, Agricultural & Industrial Societu Ltd. v. WoTkmen. the first respon dent was not the successor-in-interest of the Company. What was purchased. by the first respondent. was only the equity of redemp tion in a part of the assets of the Tea Compan_v, with respect to which the Official Liquidator was still functioning, Even on the basis that the the first respondent was considered to be a person, ownership of the undertaking has been transferred, the claims of the B workmen had to be considered, as against the Company. in accord ance with s. 25 FF of the Industrial Disputes Act, when its pro viso could not be invoked. Section 25F was in force when the ser vices of the workmen were terminated and s. 25FF had come into effect jong before the purchase by the first respondent. [632G-633F]

to whom

\

WORKMEN v MANAGEMENT 'fEA ESTATE {Vaidiatingmn J.) 'I

627

A

Anakapalla C~perative Agricultural and Industrial Societu Ltd.

v. Its Workmen, (1963] Supp. 1 S.C.R. 730, followed.

(ii) Even after negativing the claims of the workmen. as against the first respondent, the Labour Court should not have merely closed the proceedings, by holding that the reference had lapsed. On the other hand. the Labour Court should have issued notices to the Re-t ceiver. or the Liquidator or to both, and, in their presence, should B have considered the question as to whether the workmen were en titled to claim relief. In fact, the order of reference also clearly showed that the Labour Court had full jurisdiction to consider as to whether the termination of the services of the workmen, was justi fied, and whether they were entitled to either reinstatement, or any other relief. in lieu thereof. [634B-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 752 of

c 1966.

Appeal by special leave from the Award dated february 18,

1965 of the Labour Court. Assam in Reference No. 38 of 1962. H. R. Gokha/e, G. L. Sangh! and K. P. Gupta, for the appel

!ants.

D

S. V. Gupte, Solicitor-General and D. N. Mukherjee, for r~.

pondent No. 1.

M. M. Kshatriya, G. S. Chatterjee for P. K. Bose, respondentl!o

Nos. 2 and 3.

The Judgment of the Court was delivered by Vaidialingam, J. This appeal. by special

the E workmen of Brahmputra Tea Estate, is directed against the award. dated February 18, 1965, of the Labour Court, Assam, in Refer· ence No. 38 of 1962, holding that the Reference has become in fruct\lous.

leave, by

The circumstances, under which the Reference was made, by the Government of Assam, may be stated. The Brahmputra Tea F Estate (hereinafter called the Tea Company), comprised of three gardens, viz., Negheritting, Rangamati and Missamara Tea Estates, with their outer-gardens. were owned and managed by Brahm putra Tea Co. <lndia) Ltd. The Tea Company had incurred wery heavy liabilities; and hence, on November 6, 1956, it created an equitable mortgage, by deposit of title deeds, in favour of the G Eastern Bank Ltd.. (hereinafter called the Bank). The gardens, mentioned above. formed part of the security covered by the equitable mortgage. This memorandum of equitable mortgage was registered on November 26. 1956. As the Tea Company failed to make payment of the money due to the Bank, the latter filed Suit No. 21 of 1957, in the Court of the Subordinate Judge. H Upper Assam, District Jorhat, for enforcing its rights. under the equitable· mortgage. A preliminary decree was passed, on Febru· ary 21. 1958; this was followed, by a final decree, on September 19. 1960. L}J(ll~7tiSCI-li(•)

SUPllEME COUR'f REPORTS

[1968] I s.c.R.

!11 the meantime. on September 16, 1958, the Calcutta High A

Court had ordered the winding-up of the Tea Company. because of certain defaults made by it. Mr. D. A. Weatherson, of the Bank. who had been appointed. by the Jorhat Court, as Receiver of the Tea Gardens. by his letter. dated December 30. 1958, inti mated the Superintendent of the Tea Gurdens, about the winding- up order. passed by the Calcutta High Court on September 16. B 1958. and slated that the winding-up order operated as a statutory notice of discharge. of all officers and employees of the Tea Company: nevertheless. the Receiver stated that he desired to offer employment to all the members of the staff who were em ployed in the Tea Gardens on November 18. 1958, with the excep tion of fifteen employees. mentioned by him. The Superintendent w;1s requested to obtain the consent of the members of the staff, C regarding the offer made by the Receiver.

It may be stated, at this stage, that the fifteen employees. who were excluded in the letter of the Receiver, were the persons, whose claims were referred. by the Government of Assam, to the Labour Court, in Reference No. 38 of 1962. The Superintendent, D in his turn, sent communication. dated fanuary 19. 1959. to the various workmen, offering employment. on behalf of the Receiver, and requesting them to intimate their acceptance; but. so far as the liflecn workmen. referred to above. were concerned. the Superin kndent sent communication. to each of them on August 21, 1961. terminating their services. with one month's notice. The work· men concerned were also promised to be paid the Provident Fund amounts that might stand to II was specifically stated, by the Supcrintemknt. that the communication was being sent. by him. on behalf or the Receiver of the Tea Company and that the termination of the services of the workmen was because of iheir age.

their credit.

1

The Assam Chah Karrnachari Sangha <hereinafter called the Karmacbari Sanghal compl;lincd to the Conciliution Ofticer, Assam, stilling that the termination o[ the services of the fifteen workmen. concerned. w:1s illegal and arbitrary. Though the Con ciliation Officer appears to have taken some steps to effect conci liation, he could not pn•:ecd further. because the Superintendent of the Tea Gardens regretted his inability lo pilrticipale in the conciliation proceedings. as he had not been authorized to do so, by the Receiver of the Tea gardens. Nevertheless. the Concilia tion Officer. on September 18. 1961. wrote to the Receiver, direct, suggesting payment of ciimpcnsation to the workmen concerned; but that suggestion was not accepted, by the Rccciwr.

On February 18, 1961. the Hank assigned all its rights, under the mortgage dated November 6, 1956 and the decree in Suit No. 21 of 1957. in favour of Mis Shaw Wallace & Co. Ltd. The Registrar of Companies, West Bengal, Calcutta, in or about 1960,

F

0

B

W(IJ\ltllEN v. llANAGEMENT 1'EA ES''A'IE (Vairiial.'11gum, J.)

629

A had filed.a petition in the Cakutta High Court for the winding.up of. the Tea Company. as it had failed to comply with certain statu tory requirements. Ry order dated June 16. 1961. the Calcutta High Court ordered the winding-up .<>f the Tea Company and the Official Liquidator of the appointed Shri H. K. Ganguli. High Court. as the Ollicial Liquidator of the Tea Company. On B September 19. 1961. the Calcutta High Court passed an order, withdrawing to its file. suit No. 21 of 1957. from the Jorhat Court. and the said suit was numbered as Trnnsfcr Company Suit No. 7 of 1962. On October 5. 1961. the Calcutta High Court directed the substitution of the name of M /s Shaw Wallace & Co. Ltd .• in the place of the Ei1stern Bank Ltd .. in the suit; and it also appoint- C d Shri K. C. Ganguli as Receiver or the Tea Gardens in the place of the Receiver appointed by the Jorhat Court. The new Receiver, Shri I<. C. Ganguli. was also put in p1issession and management of 'the said properties. Therefore, the position was that the Tea Company. whose winding-up had been ordered, was with the Ollicial Liquidator, and the Tea Gardens of the company. were in the possession and management of the Receiver. appointed in the

D mortgage suit.

On July 27, 1962, the Government of Assam referred to the Labour Court, Assam. an industrial dispute between the manage ment of Brahmaputra Tea Estate (Receiver in Possession) and their workmen, represented by the Karamchari Sangh. The dis- E pule that was referred, related to the justification. of the action of the management of the Tea Estate, in terminating the services of the fi[teen employees, and, as to whether those fifteen workmen were entitled to reinstatement, or any other relief, in lieu thereof. The .fifteen workmen, referred lo in this reference, are the identi cal workers whose services had been terminated. by the issue of the notice on August 21. 1961, by the Superintendent of the Tea F Gardens, on behalf of the Receiver. This is the reference, which had been numbered as Reference No. 38 of .1962. We shall ad vert. later, to the claims made by the workmen, as well as the contest made, by the first respondent. before us. The La,bour Court. on receipt of this reference, issued the necessary notices. on August 26, 1962.

G

In the liquidation proceedings. the Calcutta High Court, on August 17. 1962, permitted the Official Liquidator to sell the Tea Gardens. which were the subject of mortgage, and also certain other items of moveables. The Official Liquidator. on the basi~ of this order. conveyed. by registered sale deed. dated August 11. R 1962. in favour of Shri Ram Gopal Sahariya. the first respondent herein. the equity of redemption in the three Tea Gardens. and :ilso certain tractors. lorries and other items of machinery. for a total consideration of Rs. 5.20.000. This total consideration was made up of Rs. 2.20.000. being the price 11f the n1oveable.s. and

630

SUPREME COURT RBPORTS

(1968) 1 S,C,R,

Rs. 3,00,000 stated to be the value of the equity of redemption. A The sale, in favour of the first respondent, was specifically by the Official Liquidator, acting on behalf of the Tea Company, and what was conveyed in the Ten Gardens, was the equity of re· demption, owned by the Tea Company, and the sale was subject to the mortgage decree and the liabilities payable to Mis Shaw Wallace & Co., Ltd.

B

On September 18. 1962, the first

respondent's name was ordered, by the Calcutta High Court, to be included in Transfer Company Suit No. 7 of 1962. The Court further discharged Shri K. C. Ganguli, from his Receivership in the suit. and he was also directed to deliver possession of the three Tea Gardens be· longing to the Tea Company, to the first respondent. The first c respondent, on his own claim, by virtue of the purchase from the Official Liquidator, has become the sole proprietor of the Tea Gardens; he also got actual possession of the Tea Gardens, on September 21, 1962.

To resume the narrative, regarding the proceedings in Refer ence No. 38 of 1962, the Labour Court, as we have stated earlier, D had issued notices to the parties concerned. on August 26, 1962. The workmen filed a written statement, on February 23, 1963. In that statement, they had stated that the fifteen workmen, concern ed. had completed service, ranging from 8 to 47 years, in the Tea Estates. and that the termination of their services, by the Superin tendent of the Tea Gardens, on behalf of the Receiver, was abso- E lutely illegal and arbitrary. They also referred to various other matters, which it is not necessary to advert. in this appeal. It is enough to note that the workmen required relief, by way of rein statement

On June 27. 1963, one K. A. Muddu, as Superintendent of the Tea Estates, filed a written statement, on behalf of the manage- F ment. He has stated therein. that the services of the fifteen em ployees were terminated on account of their age. and also because some of them were too ill to be continued in service. He has adverted to the fact that two of the workmen had expressed a desire to retire voluntarily, from service. It is further stated therein, that, as the employees concerned were 60 years or more. G of age. it was not possible to continue them in service. Again. the action of the Receiver, who was in management of the Tea Gardens. in terminating the services of the workmen. was also be justified.

The workmen filed an additional written statement, on Sep tember 2, 1963, controverting the allegation that they were either H too ill or they had completed 60 years of age. They again re iterated that the stand, taken by the management. was absolutely illegal and the Receiver had no right to authorize the termination of their services.

WORKMEN v MA.'l'AGEMENT 'fEA ESTATE (Vaidia!i1igam, J.)

631

B

A

On July 18, 1964/September 10, 1964, Shri R. G. Sahariya. as sole proprietor of the Tea Estates, filed an additional written statement, before the Labour Court, on behalf of the incoming management. He· has referred therein to the fact that the Tea Estate was no longer in the hands of a Receiver, and its manage ment had vested in him as sole proprietor. He has further refer- red to the fact that there is no continuity between the present management of the Tea Company. represented by him, and that of the past. when the Tea Gardens were owned by the Tea Com pany and were managed by the Receiver, appointed by the Court. He then refers to the purchase made by him, on August 18, 1962, from the Official Liquidator of the Tea Company, of the equity C of redemption in the Tea Gardens. He bas further stated that the services of the workmen concerned, had been terminated by the Superintendent of the Tea Gardens. acting on behaH of the Court Receiver. as early as August 21. 1961, long before the Tea Estates were purchased by him.

D

Shri Sahariya has further stated that, on July 27, 1962, when the Government of Assam made the present Reference, the incom- ing management was nowhere in the picture and it was not, in any manner concerned with the claim of the workmen, inasmuch as it had no liability, whatsoever. towards them. He averred that he had not purchased the Tea Estates with the goodwill of the Tea Company, or, as a running concern. Therefore, on all those grounds, he urged, that he was, in no manner, bound to E reinstate or to compensate for the loss of employment of the work men, concerned. In fact, he has specifically prayed that an order may be passed, by the Labour Court. that the dispute. referred to it. by tke Government of Assam. has lapsed.

The Labour Court, in its order under attack, has taken the view that the services of the workmen concerned, have been termi- F nated. under instructions of the Receiver of the· Tea Gardens, appointed in the suit. long before the first respondent became It is also of the view that "the owner of the Tea· Gardens. in possession)", is the only (Receiver Brahmputra Tha Estate party impleaded, and the new management, viz .. the first respon dent. has not been brought on record. nor was it a party to the G reference. made by the State Government. The purchase of the Tea Gardens, by the first respondent, does not show that the latter has taken over any liabilities of the previous management. with regard to the claims of the workmen, and that there has been no purchase of the goodwill of the Tea Company. On these grounds. the Labour Court held that no relief could be granted. B as against the first respondent, arid that the reference itself had

become infructuous.

Mr. Gokhale. learned counsel for the workmen-appellants. raised two contentions before us: (i) that the view of the Labour Court, that the first respondent is not liable for the claims of the

'

632

SUPBEKE OOUllT RBPORTB

[1968] 1 8.0.11.

workmen, is erroneous; and (ii) that even if it is held that the first A respondent is not liable, the Labour Court. which had ample juris diction, in this regard. should have issued notice, either to the Receiver. appointed in the suit, or the Official Liquidator. or to both of them. and proceeded to investigate and adjudicate upon rn the cla.ims of the workmen. this connection. Mr. Gokhale pointed out that the document of purchase. by the first respondent. B would clearly show that the Official Liquidator had realised a sum there might also be of Rs. 5.20.000. as sale consideration. and other assets of the company; if a proper adjudication. in the pre sence of those parties. had been made. and relief granted to the workmen. they would have been in a position to enforce their claims, as against these amounts and assets of the company.

c

The learned Solicitor General. appearing on behalf or the first respondent. urged that his client was not, in any manner, answerable to the claims made. by the workmen. The first res pondent was not the successor-in-interest of the Tea Company; nor did he claim through the Receiver, who was one of the parties to the Reference, before the Labour Court. Even if the Tea Company could be considered to be a party to the Reference. his D client could not be considered to be a successor-in-interest of the Tea Company, because he had purchased only some of the assets belonging to the said company, hy virtue of tlie sale. The docu ment of purchase. by the first respondent. would clearly show that he has not taken over any other liabilities of the Tea Com pany. in pointed out that the remedy. if any, of the appellant. if so advised" was only to proceed against the Receiver, or the Officiaf Liquida tor; even if it be held that the ownership or management nf the undertaking had been transferred in favour of the first respondent, the rights of the workmen would have to be worked out. as against F the Receiver, or the Official Liquidator. under s. 25FF. of the Industrial Disputes Act, 1947 (Ac! XIV of J 947) (hereinafter called the Act), inasmuch as there was nothing to show that the transfer. in this case. came within the proviso to that section.

that regard. The learned Solicitor General further E

is perfectly

justified. From

We are in agreement with the

contentions of the learned Solicitor General that the view of the La.hour C'ourl. that the first respondent is not liable to answer any of the claims of the G the various workmen concerned. facts. given above, it will clearly be seen that the order terminat ing the scrvkcs of the workmen. was made on August 21. 1961. by the Superintendent of the Tea Gardens. under instructions from the Receiver. appointed by tile Jorhat Court, in the mortgage suit. On October 5. 1%1. the Migh Court had app1>intcd a H Receiver. for the Tea Gardens. as separate from the Tea Company. in the suit. Trausfcr Company Suit Ni>. 7 of 1961. The order. referring the dispuk to tlw Lahour Court was made. hy th,• Government. on July 27. 1962. The Isl respondent. a<lmiUe<lly,

WORXMEN ~ MANAOEMENT TEA ESTATE (Vaidinliflgam, J.)

633

A was not in the picture, on these various dates.

It cannot also be stated·. having due regard to the various recitals. contained in the sale deed. dated August 11. 1962. and considered. in the light of the principles, laid down hy this Court, in A naka1>alla CooJ>era tive Agric11/111ral & lnd11:1·trial Society Lttl., v. Workmen('), that the first respondent is the successor:in-interest of the Ten Com- B pany. What was purchased, by the first respondent. was only the equity of redemption in a part of the assets of the .Tea Com pany. in respect of which the Official .Liquidtttor was still function ing. Therefore. the learned ·Solicitor General is perfectly justi fied in his contention that the first respondent cannot he consi dered to be a successor-in-interest of the Tea Company. nor can C he be considered to claim through the Receive~. or Liquidator. Even on the basis that the first respondent is considered to be a person, to whom the ownership of the undertaking has been transferred, it will be seen that the claims of the workmen will have to be considered, as against the Tea Company. in accordance with s. 25FF of the Act, when its proviso cannot be invoked.

D

Learned counsel, for the appellant, has not been able to satisfy us that the transfer, in this case. in favour of the respon dent, comes within the proviso to s. 25FF. The appellants. as laid down by this Court, under the circumstances, in the decision refered to above, will not be entitled to claim reinstatement. as against the first respondent. Section 25FF was first introduced in the Act, by the Industrial Disputes (Amendment) Act, 1956 (LXI E of 1956); and, in its present form. it has been substituted. by the Industrial Disputes (Amendment) Act, 1957 (Act XVllI of 1957). Section 25F was in force, on August 21, 1961, when the services of the workmen were terminated. and s. 25FF had come int@ effect long before the purchase, by the first respondent of the Tea Gar dens; and, we have already shown; that there is no liability, so far F as the first respondent is concerned,. Therefore. the first conten

tion of Mr. Gokhale, will have to he rejected.

G granted to the appellants.

But we are impressed by th<i second contention of Mr. Gokhale, that the Labour Court should have issued notices to the Receiver, or Official Liquidator. or to both .. as it was entitled to. and proceeded to .consider, as to whether any reliefs could be In this connection, counsel pointed out thats. 18 of the Act clearly visualizes parties being summoned·. to appear, by the Labour Court. in proceedings. as parties to the disputes, in which case, the award made, will be binding on them In this appeal, before us, the Tea Company, in Liquida also. tion. and the Official Liquidator of the Tea Company, figure :1s 11 respondents Nos. 2 mu! J, respectively. and arc represented by same counsel. Learned counsel. appearing for those parties, pointed out that the Official Liquidator may have various defences,

(') [1963] Supp. 1 S.C.R. 730.

634

SUPREME COURT REPORTS

(1968] l s.c.R.

available to him, if any claim is sought to be enforced against the A company, in liquidation, or the Official Liquil;lator. Those matters do not arise for consideration, at this stage, in this appeal, because tho claim of the appellants, as against those persons, remains yet to be considered by the Labour Court.

thereof. When

We are satisfied that, even after negativing the claims, of the workmen, as against the first respondent, the Labour Court should B not have merely closed the proceedings, by holding that the reference has lapsed. On the other hand, the Labour Court should have issued notices to the Receiver, or the Liquidator. or to both, and, in their presence, should have considered the question as to whether the workmen were entitled to claim any relief. In fact, the order of reference also clearly shows that the Labour c Court will have full jurisdiction to consider as to whether the termination, of the services of the workmen concerned, is justified and, whether they are entitled to either reinstatement, or any other the proceedings are being dealt relief, in lieu with, afresh, as against the parties indicated above, the Tribunal willl bear in mind the observations made above. and consider the D nature of the relief, if any. that may be granted to the workmen that if and when either the concerned. We make Receiver, or the Tea Company, in liquidation, or the Official Liquidator, or all of them, are brought before the Labour Court, they will be entitled to raise any plea in defence of the claim of the workmen. Jn that adjudication, the first respondent herein, will be completely out E of the picture, as no relief can be claimed by the workmen, against him. Further. if the claim of the workmen, is that their services have been dispensed with, by way of retr~nchment, that . claim will have to be adjudicated in accordance with s. 25F, of If. on the other hand, their claim is based, on the event the Act. of a transfer having been effected. that claim will have to be ad- F judicated, under s. 25FF of the Act. All these aspects will have to be properly considered. and adjudicated upon, by the Labour Court.

that may be available to them, in law.

it clear,

·

In the result, while confirming the findings of the Labour Court, that the first respondent is not answerable for any of the claims of the workmen. the award. dated February 18. 1965, is G ; set aside and the Labour Court is directed to take up the Refe rence, over again. for being dealt with. afresh, in the light of th'e directions contained above. The appeal is allowed, to the extent. indicated above, and in other· respects, will stanu dismissed as against 1st respondent. Parties will bear their own costs. in this appeal.

H

Y.P.

A ppea/ allowed in part.

,_