Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8
PETITIONER:
WORKMEN OF BRAHMPUTRA TEA ESTATE, REPRESENTED BY ASSAM CHAH
Vs.
RESPONDENT:
THE INCOMING MANAGEMENT OF BRAUMPUTRA TEAESTATE & ORS.
DATE OF JUDGMENT:
25/09/1967
BENCH:
VAIDYIALINGAM, C.A.
BENCH:
VAIDYIALINGAM, C.A.
HIDAYATULLAH, M.
BHARGAVA, VISHISHTHA
CITATION:
1968 AIR 514 1968 SCR (1) 626
ACT:
Industrial Disputes Act (14 of 1947), ss. 18 and 25
F--Services terminated by Receiver appointed by court-
Reference of dispute--Purchase of Company--Purchaser not
party-Liability of purchaser-Reference if infructuous-Duty
of Labour Court to issue notice.
HEADNOTE:
On reference of an industrial dispute, the Labour Court
took, the view that the services of the workmen concerned
had been terminated, under instructions of the Receiver of
the Company appointed in a suit long before the first
respondent became owner of the company; that the Receiver in
possession was the only party impleaded 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
State Government; that the purchase of the company, by the
first respondent, did not show that the latter had taken
over any liabilities of the previous management, with 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 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 the
claims of workmen was erroneous; and (ii) even if 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 appointed in the suit,
or the Official Liquidator, or to both of them an proceeded
to investigate and adjudicate upon the claims of the work
men.
HELD: (i) The first respondent was not liable to answer
any the claims of the workmen. He was not in the picture
when the order 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 the principles laid down
by this Court, in Anakapalla Cooperative Agricultural &
Industrial Society Ltd. v. Workmen, the first respondent was
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8
not the successor-in-interest of, the Company. What was,
purchased, by the first respondent, was only the equity of
redemption in a part of the assets of the Tea Company, with
respect to whit the Official Liquidator was still
functioning. Even on the basis that the first respondent
was considered to be a person, to whom the ownership of the
undertaking has been transferred, the claims of the workmen
had to be considered, as against the Company, in accordance
with s. 25 FF of the Industrial Disputes Act, when its pro-
viso could not be invoked. Section 25F was in force when
the se vices of the workmen were terminated and s. 25FF had
come in effect long before the purchase by the first
respondent. [632G-633F]
627
Anakapalla Co-operative Agricultural and Industrial Society
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 Receiver, or the
Liquidator or to both, and, in their presence, should 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 justified, and whether they
were entitled to either reinstatement, or any other relief,
in lieu thereof. [634B-D]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 752 of 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. Gokhale, G. L. Sanghi and K. P. Gupta, for the
appellants.
S. V. Gupte, Solicitor-General and D. N. Mukherjee, for
respondent No. 1.
M. M. Kshatriya, G. S. Chatterjee for P. K. Bose,
respondents Nos. 2 and 3.
The Judgment of the Court was delivered by
Vaidialingam, J. This appeal, by special leave, by the
workmen of Brahmputra Tea Estate, is directed against the
award, dated February 18, 1965, of the Labour Court, Assam,
in Reference No. 38 of 1962, holding that the Reference has
become infructuous.
The circumstances. under which the Reference was made, by
the Government of Assam, may be stated. The Brahmputra Tea
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 Brahmputra Tea Co. (India) Ltd. The Tea Company
had incurred very heavy liabilities; and hence, on November
6, 1956, it created an equitable mortgage, by deposit of
title deeds, in favour of the 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, Upper Assam, District Jorhat, for enforcing its
rights, under the equitable mortgage. A preliminary decree
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8
was passed, on February 21, 1958; this was followed, by a
final decree, on September 19, 1960.
L/J(N)76SCI--14(a)
628
In the meantime, on September 16, 1958, the Calcutta High
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, intimated the Superintendent of the Tea Gardens,
about the windingup order, passed by the Calcutta High Court
on September 16, 1958, and stated 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 employed in tile Tea
Gardens on November 18. 1958, with the exception of fifteen
employees, mentioned by him. The Superintendent was
requested to obtain the consent of the members of the staff,
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, in his turn, sent communication, dated
January 19, 1959, to the various workmen, offering
employment, on behalf of the Receiver, and requesting them
to intimate acceptance; but, so far as the fifteen workmen,
referred to above, were concerned, the Superintendent sent
communication. to each of them on August 21, 1961,
terminating their services, with one month’s notice. The
workmen concerned were also promised to be paid the
Provident Fund amounts that might stand to their credit. It
was specifically stated, by the Superintendent, that the
communication was being sent, by him. on behalf of tile
Receiver of the Tea Company and that the termination of the
services of the workmen was because of their age.
The Assam Chah Karmachari Sangha (hereinafter called the
Karniachari Sangha) complained to the Conciliation Officer,
Assam, stating that the termination of the services of the
fifteen workmen, concerned, was illegal and arbitrary.
Though tile Conciliation Officer appears to have taken some
steps to effect conciliation, he could not proceed further,
because the Superintendent of the Tea Gardens regretted his
inability to participate in the conciliation proceedings, as
he had not been authorized to do so, by the Receiver of the
Tea gardens. Nevertheless, the Conciliation Officer, on
September 18, 1961, wrote to the Receiver, direct,
suggesting payment of compensation to the workmen concerned;
but that suggestion was riot accepted. by the Receiver.
On February 18, 1961. the Bank assigned all its rights,
under the mortgage dated November 6, 1956 and the decree in
Suit No. 21 of 1957, in favour of M/s Shaw Wallace & Co.
Ltd. The Registrar of Companies, West Bengal, Calcutta, in
or about 1960,
629
had filed a petition, in the Calcutta High Court for the
winding-up of the Tea Company, as it had failed to comply
with certain statutory requirements. By order dated June
16, 1961,the Calcutta High Court ordered the winding-up of
the Tea Company. and appointed Shri H. K. Ganguli, the
Official Liquidator of the High Court, as the Official
Liquidator of the Tea Company. On September 19, 1961. the
Calcutta High Court passed an order, withdrawing to its
file, suit No. 21 of 1957, from the Jorbat Court, and the
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8
said suit was numbered as Transfer, 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 (lie place of the Eastern Bank Ltd., in the suit; and it
also appointed Shri K. C. Ganguli as Receiver of the Tea
Gardens in the place of the Receiver appointed by the Jorhat
Court. The new Receiver, Shri K. C. Ganguli, was also put
in possession and management of the said properties.
Therefore, the position was that the Tea Company, whose
windingup had been ordered, was with the Official
Liquidator. and the Tea Gardens of the company, were in the
possession and management of tile Receiver, appointed in the
mortgage suit.
On July 27, 1962, the Government of Assam referred to the
Labour Court, Assam, an industrial dispute between the
management of Brahmaputra Tea Estate (Receiver in
Possession) and their workmen, represented by the Karamchari
Sangh. The dispute that was referred, related to the
justification, of the action of the management of the Tea
Estate, in terminating the services of the fifteen
employees, and, as to whether. those fifteen workmen were
entitled to reinstatement, or any other relief, in lieu
thereof. The fifteen workmen, referred to in this
reference, are the identical workers whose services had been
terminated, by the issue of the notice on August 21, 1961,
by the Superintendent of the Tea Gardens, on behalf of the
Receiver. This is the reference, which had been numbered as
Reference No. 38 of 1962. We shall advert, later, to the
claims made by the workmen, as well as the contest made, by
the first respondent, before us. The Labour Court, on
receipt of this reference. issued the necessary notices, on
August 26, 1962.
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 basis of this order, conveyed, by
registered sale deed, dated August 11. 1962, in favour of
Shri Ram Gopal Sahariya, the first respondent herein, the
equity of redemption in the three Tea Gardens, and also
certain tractors, lorries and other items of machinery, for
a total consideration of Rs. 5,20,000. This total
consideration was made Lip of Rs. 2,20,000, being the price
of the moveables and
630
Rs. 3,00,000 stated to be the value of the equity of
redemption. 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 Tea
Gardens, was the equity of redemption, owned by the Tea
Company, and the sale was subject to the mortgage decree and
the liabilities payable to M/s Shaw Wallace & Co., Ltd.
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 belonging to the Tea Company, to the first
respondent. The first 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, had issued notices to the parties concerned, on
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8
August 26, 1962. The workmen filed a written statement, on
February 23, 1963. In that statement, they had stated that
the fifteen workmen, concerned, had completed service,
ranging from 8 to 47 years, in the Tea Estates, and that the
termination of their services, by the Superintendent of the
Tea Gardens, on behalf of the Receiver, was absolutely
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 reinstatement
On June 27, 1963, one K. A. Muddu, as Superintendent of the
Tea Estates, filed a written statement, on behalf of the
management. He has stated therein. that the services of the
fifteen employees 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, 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 too ill or they had completed 60 years of age. They
again reiterated that the stand, taken by the management,
was absolutely illegal and the Receiver bad no right to
authorize the termination of their services.
631
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 management had vested in him as sole
proprietor. He has further referred 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 Company 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 of
redemption in the Tea Gardens. He has further stated that
the services of the workmen concerned, had been terminated
by the Superintendent of the Tea Gardens, acting on behalf
of the Court Receiver, as early as August 21, 1961, long
before the Tea Estates were purchased by him.
Shri Sahariya has further stated that, on July 27, 1962,
when the Government of Assam made the present Reference, the
incoming 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 reinstate or to compensate for the loss
of employment of the workmen, concerned. In fact, he has
specifically prayed that an order may be passed, by the
Labour Court, that the dispute, referred to it, by the
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
terminated, under instructions of the Receiver of the Tea
Gardens, appointed in the suit, long before the first
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8
respondent became owner of the Tea Gardens. It is also of
the view that "the Brahmputra Tea Estate (Receiver in
possession)". is the only party impleaded, and the new
management, viz., the first respondent, has not been brought
on record, nor was it a party to the 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, as against the first respondent, and 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
workmen, is erroneous; and (ii) that even if it is held that
the first respondent is not liable, the Labour Court, which
had ample jurisdiction, in this regard, should have issued
notice, either to the Receiver, appointed in the suit, or
the Official Liquidator, to the both of them, and proceeded
to investigate and adjudicate upon the claims of the
workmen. In this connection, Mr. Gokhale pointed out that
the document of purchase, by the first respondent, would
clearly show that the Official Liquidator ha(1)realised a
sum of Rs. 5,20,000, as sale consideration, and there might
also be other assets of the company; if a proper
adjudication, in the presence 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.
The learned- Solicitor General. appearing on behalf of the
first respondent, urged that his client was not, in any
manner, answerable to the claims made, by the workmen. The
first respondent was not the successor-in-interest of the
Tea Company-, nor did he claim through the Receiver, who wag
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 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, by virtue of the sale. The document of
purchase, by the first respondent. would clearly show that
he has not taken over any other liabilities of the Tea Com-
pany, in that regard-. The learned Solicitor General
further pointed out that the remedy. if any. of the
appellant, if so advised, was only to proceed against the
Receiver, or the Official Liquidator; even if it be held
that the ownership or management of the undertaking had been
transferred in favour of the first respondent, the rights of
the workmen would have to be worked out, as against the
Receiver, or the Official Liquidator, under s. 25FF, of the
Industrial Disputes Act, 1947 (Act XIV of 1947) (hereinafter
called the Act), inasmuch as there was nothing to show that
the transfer, in this case, came within the proviso to that
section.
We are in agreement with the contentions of the learned
Solicitor General that the view of the Labour Court, that
the first respondent is not liable to answer any of the
claims of the workmen concerned, is perfectly justified.
From the various facts, given above, it will clearly be seen
that the order terminating the services of the workmen, was
made on August 21, 1961, by the Superintendent of the Tea
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8
Gardens, under instructions from The Receiver appointed by
the Jorhat Court, in the mortgage suit. On October 5. 1961,
the High Court had appointed a Receiver, for the Tea
Gardens. as separate from the Tea Company, in the suit,
Transfer Company Suit No. 7 of 1962. The order, referring
the dispute to the Labour Court was made, by the Government,
on July 27, 1962, The 1st respondent, admittedly,
633
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 by
this Court, in Anakapalla Cooperative Agricultural &
Industrial Society Ltd., v. Workmen(1), that the first
respondent is the successor-in-interest of the Tea Company.
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 Liquidator was still
functioning. Therefore, the learned Solicitor- General is
perfectly justified in his contention that the first
respondent cannot be considered to be a successor-in-
interest of the Tea Company nor can he be considered to
claim through the Receiver, 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.
Learned counsel, for the appellant, has not been able to
satisfy us that the transfer, in this case, in favour of the
respondent, comes within the proviso to s. 25FF. The
appellants, ,is laid down by this Court, under the
circumstances, in the decision referred 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 of
1956), and, in its present form, it has been substituted, by
the Industrial Disputes (Amendment) Act, 1957 (Act XVIII of
1957). Section 25F was in force, on August 21, 1961, when
the services of the workmen were terminated, and s, 25FF
had(1) come into effect long before the purchase, by the
first respondent of the Tea Gardens; and, we have already
shown, that there is no liability, so far as the first
respondent is concerned. Therefore, the first contention of
Mr. Gokhale, will have to be rejected.
But we are impressed by the 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 granted to the appellants. In this
connection, counsel pointed out that s. 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 also. In this appeal, before us. the Tea Company, in
Liquidation, and the Official Liquidator of the Tea Company,
figure as respondents Nos. 2 and 3, respectively, and are
represented by same counsel. Learned counsel, appearing for
those parties, pointed out that the Official Liquidator may
have various defences,
(1) [1963] Supp. 1 S.C.R. 730.
634
available to him, if any claim is sought to be enforced
against the company, in liquidation, or the Official
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8
Liquidator. Those matters do not arise for consideration,
at this stage, in this appeal, because the claim of the
appellants, as against those persons, remains yet to be
considered by the Labour Court.
We are satisfied that, 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 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 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 relief, in lieu thereof. When
the proceedings are being dealt with, afresh, as against the
parties indicated above, the Tribunal will bear in mind the
observations made above, and consider the nature of the
relief, if any, that may be granted to the workmen
concerned-. We make it clear, that if and when either the
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, that may be available
to them, in law. In that adjudication, the first
respondent herein, will be completely out 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 retrenchment, that claim
will have to be adjudicated in accordance with s. 25F, of
the Act. If, on the other hand, their claim is based, on
the event of a transfer having been effected, that claim
will have to be adjudicated, under s. 25FF of the Act. All
these aspects will have to be properly considered, and
adjudicated upon, by the Labour Court.
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 set aside and the Labour Court is directed to take
up the Reference, over again, for being dealt with, afresh,
in the light of the directions contained above. The appeal
is allowed, to the extent, indicated above, and in other
respects, will stand dismissed as against 1st respondent.
Parties will bear their own costs, in this appeal.
Y.P. Appeal allowed in part,
635