Full Judgment Text
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PETITIONER:
BHAGWAN DASS CHOPRA
Vs.
RESPONDENT:
UNITED BANK OF INDIA & ORS.
DATE OF JUDGMENT17/11/1987
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
VENKATARAMIAH, E.S. (J)
SINGH, K.N. (J)
CITATION:
1988 AIR 215 1988 SCR (1)1088
1987 SCC Supl. 536 JT 1987 (4) 373
1987 SCALE (2)1107
ACT:
Industrial Disputes Act, 1947: Section 18-Labour Court
Industrial Tribunal-Pending Proceedings-Whether party to
proceedings entitled to re-open proceedings on being
impleaded in place of party whose rights liabilities have
been taken over.
Civil Procedure Code, 1908: order 20 Rule 10-
Applicability to proceedings pending before Labour Court
Industrial Tribunal.
HEADNOTE:
%
The appellant joined the service of a Commercial Bank
on July 12, 1974 and was confirmed on October 1, 1974. His
services were terminated by the Bank on February 10, 1975
without assigning any reason. On an industrial dispute being
raised, the Central Government, by its order dated July 9,
1975 referred the dispute, as to whether the Bank was
justified in terminating his services and if not, what
relief the workman was entitled to, to the Central
Government Industrial Tribunal for adjudication. The claim
made by the appellant was disputed by the management. In the
course of the trial, the appellant examined himself and was
cross-examined. His evidence was closed on 21.5.76.
On July 25, 1976 the Bank entered into an agreement
with the first respondent Bank where under all the assets
and liabilities of the erstwhile Bank were taken over by the
respondent Bank. The employees of the erstwhile Bank became
the employees of the first respondent Bank by virtue of cl.
20 of the said agreement. On August 1, 1976 the erstwhile
Bank totally merged with the first respondent Bank.
Thereafter, on behalf of the former Bank, five witnesses
were examined.
On an application made by the appellant, first
respondent Bank was impleaded as a party, in view of the
merger which had taken place. Thereafter, the first
respondent Bank examined its Personnel Officer and formally
closed the evidence.
On October 3, 1978 the first respondent Bank submitted
an application for cross-examining the appellant whose
evidence had been
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closed on May 21, 1976. The Tribunal dismissed the
application on the ground that since no new plea had been
taken there was no ground to recall the appellant and
subject him to further cross-examination.
The Tribunal made the award on January 30, 1981 holding
that the termination of the service of the appellant was not
justified and was bad, illegal and not enforceable.
The first respondent Bank filed a writ petition before
the High Court. A Single Judge set aside the award on the
ground that when once a person was impleaded as a party to
the proceedings, principles of natural justice required that
he should be given an opportunity to crossexamine those
witnesses whose evidence had been recorded earlier and since
the Tribunal had rejected first respondent Bank’s prayer to
crossexamine the appellant whose evidence had been closed on
May 21, 1976, the award was liable to be quashed. It,
however, remanded the case to the Industrial Tribunal to
decide the case again after giving an opportunity to the
first respondent Bank to cross-examine the appellant and
other witnesses. The Letters Patent Appeal filed by the
appellant was dismissed by the Division Bench holding that
the first respondent Bank had the right to cross-examine the
appellant on the sole ground that it had been impleaded as a
party after the merger of the erstwhile Bank with the first
respondent Bank.
Allowing the appeal,
^
HELD:1.1 There is no express provision, corresponding
to Rule 10 Order 22 of the Code of Civil Procedure, 1908
providing that in cases of an assignment, creation or
devolution of any interest during the pendency of a suit,
the suit may, by leave of the court, be continued by or
against the person who or upon whom such interest has come
or devolved, which is applicable to the proceedings before
the Industrial Tribunal. [1095B-C]
1.2 In every case of transfer, merger, takeover or
scheme of amalgamation, the rights and liabilities of the
transferee Company or Corporation shall be the same as that
of the tansferor company or corporation, and subject to the
terms and conditions of the contract of transfer or merger,
the scheme of amalgamation and the legal provisions as the
case may be under which such a transaction may have taken
place, the transferee company or corporation becomes liable
to be impleaded or becomes entitled to be impleaded in place
of or in addition to the transferor company or corporation
in any action, suit or proceeding
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filed against or by the transferor company or corporation by
or against a third party, and that whatever steps have
already taken place in those proceedings will continue to
operate against and be binding on such parties in any of the
ways mentioned in Rule 10 Order 22 of the Code of Civil
Procedure, 1908. [1095F-H, 1096A-B]
1.3 Generally speaking, an assignee cannot set up a
case inconsistent with the one put forward by his assignor
and it is only in exceptional cases that an assignee could
be permitted to raise any new plea and that too only for
avoiding multiplicity of the proceedings. [1097B]
In the instant case, by reason of impleading the first
respondent as a party there was no change in the character
of the proceedings pending before the Tribunal. The
respondent Bank only stepped into the shoes of the erstwhile
Bank and all the proceedings that had gone on till the date
on which the respondent Bank was so impleaded were binding
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on the respondent Bank. It was bound by the proceedings
which had taken place till then and could not go back on the
proceedings. [1096G-H; 1097A]
The Single Judge was in error in taking the view that
the first respondent Bank was appearing before the Tribunal
in its own right and was entitled to protect its own
interest. The proceeding pending before the Tribunal on the
date of merger could not be considered as a new proceeding
instituted against the respondent Bank, on its being
impleaded. It was the same old proceeding to which the
erstwhile Bank was a party and the rights of the respondent
Bank in the conduct of the proceedings could not be larger
than the rights which the erstwhile Bank itself possessed.
[1097D-E]
There were no such exceptional circumstances which
entitled the respondent Bank to put up a plea different from
the pleas which had already been taken up by the erstwhile
Bank and there was also no need to permit it to reopen the
proceedings which had gone on till then. Therefore, in the
absence of any exceptional circumstances which would have
entitled the party to a proceeding to recall a witness whose
evidence had already been completed for further cross-
examination, the first respondent Bank could not make such a
claim at all. The Single Judge who set aside the award and
the Division Bench, which merely affirmed the decision, have
erred in overlooking the true legal position. [1097B,G]
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On the facts and in the circumstances of the case the
respondent Bank was, therefore, not entitled to recall any
of the witnesses examined on behalf of the appellant for
further cross-examination, particularly after both the
parties had closed their respective cases before the
Tribunal. The dismissal of the application made by the
respondent for recalling the appellant for further cross-
examination, in the absence of any exceptional
circumstances, could not be considered as a ground for
setting aside the award. The principles of natural justice
had not, therefore, been violated by the Tribunal in passing
the award. [1097H, 1098A-B]
The judgment of the Division Bench as also of the
Single Judge set aside. However, as the respondent Bank had
some other grounds to urge before the Single Judge, the case
is remanded to the Single Judge to consider any other
relevant ground that may be urged by the respondent Bank and
to dispose of the writ petition. [1098B-C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2984 of
1987.
From the Judgment and Order dated 30.3.1987 of the
Delhi High Court in L.P.A. No.67 of 1987.
M.K. Ramamurthi, Mrs. C. Ramamurthi and M.A.
Krishnamoorthy for the Appellant.
Dr. Y.S. Chitale, Ms. M. Roy, H.K. Puri and H.K. Dutt
for the Respondents.
The Judgment of the Court was delivered by
VENKATARAMIAH,J. The appellant joined the service of
the Narang Bank of India Ltd., New Delhi on July 12, 1974 as
a Clerk-cum-Typist and was confirmed in his service on
October 1, 1974. The Narang Bank of India Ltd., however,
terminated his services on February 10, 1975 without
assigning any reason. On an industrial dispute being raised
the Central Government by its order dated July 9, 1975
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referred the following dispute to the Central Government
Industrial Tribunal for adjudication:
"Whether the action of the management of the
Narang Bank of India, New Delhi in terminating the
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services of Shri Bhagwan Dass Chopra w.e.f.
10.2.1975 is justified? If not, what relief is the
said workman entitled?
The claim made by the appellant was disputed by the
management. On the basis of the pleadings filed by the
parties the Industrial Tribunal framed issues and directed
the parties to lead evidence. In the course of the trial the
appellant examined himself and he was cross-examined by the
representative of the Narang Bank of India Ltd. Thereafter
the evidence of the appellant was closed on 21.5.1976. On
July 25, 1976 the Narang Bank of India Ltd. entered into an
agreement with the United Bank of India, respondent No. 1
herein, whereunder all the assets and liabilities of the
Narang Bank of India Ltd. were taken over by the United Bank
of India, respondent No. 1. The employees of the erstwhile
Narang Bank of India Ltd. became the employees of the United
Bank of India, respondent No. 1 by virtue of clause 20 of
the said agreement. The relevant part of clause 20 read
thus:
"20. (a) The Transferee shall be under an
obligation to take over and absorb and retain with
effect from 1st August, 1976 in its employment
such staff, employees and assistants (hereinafter
called "the said employees") of the Transferor or
employed by the Transferor in relation to or in
connection with the said banking business intended
to be taken over or acquired by the Transferee as
aforesaid who were permanent employees of the
Transferor on the said date and on the same terms
and conditions including the remuneration and
wages and/or other lawful claims as were or are
applicable or payable to them on the said date
subject to the terms and conditions as contained
in the Third Schedule hereto PROVIDED ALWAYS that
such taking over or absorption of the staff and
employees of the Transferor by the Transferee on
the same terms and conditions as hereinbefore
mentioned and/or also referred to or otherwise
mentioned in the Third Schedule hereto shall not
however be so construed as to include or extend to
their or each of their rank and status.
(b) The Transferee shall not, however, be
bound to take over or absorb in their employment-
(i) all such staff, assistants and employees
against whom any show cause notice or any action
(penal or otherwise) or any enquiry or any actions
and/or proceedings whatsoever are pending on
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the said date by the Management or by any Tribunal
Court or otherwise and/or who are on the said date
involved or figuring in any such enquiries,
actions and/or proceedings and against whom any
adverse or suspension order finding or decision
has been passed or is likely to be passed prior or
subsequent to the said date. (ii) Any such staff
employees and assistants of the Transferor whose
services have been terminated by the Transferor on
or before the said date and/or against whom any
adverse or suspension order finding or decision
has been passed by any person holding any enquiry
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and/or Management of the Transferor and or by any
court, Tribunal or otherwise subsequent to the
said date but prior to the formal taking over of
the said business or assets or properties of the
Transferor by the Transferee on the basis of this
Agreement.
PROVIDED NEVERTHELESS the Transferee shall
take over suspended employee, if any, of the
Transferor relating to the said business with
effect from the said date and/or condition as
herein before mentioned in clause 20(a) above in
so far as the same shall be applicable if and only
if such employee/employees is or are finally and
ultimately absolved/exonerated or acquitted from
or of all the charges levelled against him/them.
On August 1, 1976 the Narang Bank of India Ltd. was
totally merged with the United Bank of India. On August 2,
1976 three witnesses gave evidence on behalf of the former
Narang Bank of India Ltd., two of whom were employees of the
United Bank of India Ltd. by virtue of the agreement of
merger referred to above. On September 20, 1976 two more
witnesses were examined of whom one witness was a former
officer of the Narang Bank of India Ltd. On that date the
appellant made an application for permission to implead the
United Bank of India also as a party in view of the merger
which had taken place. The United Bank of India took time
till November 5, 1976 to file its reply to the application
made by the appellant. The evidence of the Narang Bank of
India Ltd. was, however, closed on November 5, 1976. The
United Bank of India sought further time to file a reply to
the appellant’s application. That reply was filed on
November 10, 1976. After hearing arguments on the
application the Tribunal directed that the United Bank of
India should be impleaded as a party and also gave time to
the appellant to file an amended statement of claim. The
term of the Presiding Officer having expired on December,
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1, 1976, a new Presiding Officer was appointed in July,
1977. On December 1, 1977 the United Bank of India filed its
written statement. On January 25, 1978 the United Bank of
India offered to reinstate the appellant but without
backwages and the case was adjourned for some time. But no
compromise was reached. On August 23, 1978 the United Bank
of India examined its Personnel Officer Shri R.B. Ray and
formally closed the evidence. The case was thereafter
adjourned to October 3, 1978 for arguments. On that date the
United Bank of India submitted an application praying that
the Bank should be allowed to cross-examine the appellant
whose evidence had been closed on May 21, 1976. By its order
dated October 17, 1978 the Tribunal dismissed the
application of the United Bank of India on the ground that
since no new plea had been taken there was no ground to
recall the appellant and subject him for further cross-
examination. The arguments were heard by the Tribunal on
November 2, 1978 and an award was given on January 30, 1981
holding that the termination of the services of the
appellant was not justified and was bad, illegal, and
unenforceable. The Tribunal also held that the appellant
should be deemed to be in continuous service of the Narang
Bank of India Ltd., New Delhi on and after the 10th
February, 1975 and consequently of the United Bank of India
on the date of the award. The Tribunal directed that the
appellant should be paid his full back wages upto the date
of his reinstatement. It also awarded costs of Rs. 1,000 to
the appellant. Aggrieved by the said award the United Bank
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of India filed a writ petition before the High Court of
Delhi in Civil Writ Petition No. 928 of 1981. That petition
was heard and disposed of by the learned Single Judge of the
High Court on February 24, 1987. The learned Single Judge
set aside the award made by the Tribunal on the ground that
when once a person was impleaded as a party to the
proceedings, principles of natural justice required that he
should be given an opportunity to cross-examine those
witnesses whose evidence had been recorded earlier and since
the Tribunal had declined to grant permission to the United
Bank of India to cross-examine the appellant whose evidence
had been closed on May 21, 1976 the award was liable to be
quashed. The learned Single Judge, however, remanded the
case to the Industrial Tribunal to decide the case again
after giving an opportunity to the United Bank of India to
cross examine the appellant and other witnesses. Aggrieved
by the judgment of the learned Single Judge the appellant
filed Letters Patent Appeal No. 67 of 1987 before the
Division Bench of the High Court. That appeal was dismissed
by the Division Bench of the High Court holding that the
United Bank of India had the right to cross-examine the
appellant on the sole ground that it had been impleaded as a
party after the merger of the
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Narang Bank of India Ltd. with the United Bank of India.
Aggrieved by the decision of the Division Bench of the High
Court the appellant has filed this appeal by special leave.
The question for consideration in this case is whether
a party who acquires the rights and liabilities of a party
to a proceeding is entitled to reopen as a matter of course
the proceedings on being impleaded as a party in the place
of the party whose rights and liabilities he had taken over.
No express provision corresponding to rule 10 order 22 of
the Code of Civil Procedure, 1908, which provides that in
cases of an assignment, creation or devolution of any
interest during the pendency of a suit other than those
cases dealt with earlier in order 22 of the Code of Civil
Procedure, 1908, the suit may by leave of the court, be
continued by or against the person to or upon whom such
interest has come or devolved is applicable to the
proceedings before the Industrial Tribunal has been brought
to our notice. Section 18 of the Industrial Disputes Act,
1947, however, provides that an award of a Labour Court,
Tribunal or National Tribunal which has become enforceable
shall be binding on all parties to the industrial dispute;
all other parties summoned to appear in the proceedings as
parties to the dispute, unless the Labour Court, Tribunal or
National Tribunal as the case may be records the opinion
that they were so summoned without proper cause; and where a
party referred to above is an employer, his heirs,
successors or assigns in respect of the establishment to
which the dispute relates.
It is, however, necessary to evolve a reasonable
procedure to deal with cases where a devolution of interest
takes place during the pendency of a proceeding arising
under the Industrial Disputes Act, 1947. In the
circumstances it is reasonable to hold that in every case of
transfer, devolution, merger, takeover or a scheme of
amalgamation under which the rights and liabilities of one
company or corporation stand transferred to or devolve upon
another company or corporation either under a private
treaty, or a judicial order or under a law the transferee
company or corporation as a successor-in-interest becomes
subject to all the liabilities of the transferor company or
corporation and becomes entitled to all the rights of the
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transferor company or corporation subject to the terms and
conditions of the contract of transfer or merger, the scheme
of amalgamation and the legal provisions as the case may be
under which such transfer, devolution, merger, takeover or
amalgamation as the case may be may have taken place. It
follows that subject to such terms it becomes liable to be
impleaded or becomes entitled to be impleaded in the place
of or in
1096
addition to the transferor company or corporation in any
action, suit or proceeding filed against the transferor
company or corporation by a third party or filed by the
transferor company or corporation against a third party and
that whatever steps have already taken place in those
proceedings will continue to operate against and be binding
on the transferee company or corporation in the same way in
which they operate against a person on whom any interest has
devolved in any of the ways mentioned in rule 10 of order 22
of the Code of Civil Procedure, 1908 subject of course to
any terms in the contract of transfer or merger, scheme of
amalgamation or other relevant legal provisions governing
the transaction under which the transferee company or
corporation has become the successor-in-interest of the
transferor company or corporation.
In the instant case admittedly all the rights and
liabilities of the Narang Bank of India Ltd. in its banking
business were taken over by the United Bank of India under
the agreement of merger dated July 25, 1976. Clause 22 of
the agreement of merger provides as follows:
"22. The Transferee shall be substituted in
place of the Transferor in respect of all Court or
Tribunal proceedings cases, suits and Government
and Municipal and records and shall apply to the
authorities, court, Tribunal or otherwise for
being added as the parties hereto and the benefits
of all orders, directions, decrees and award or
judgment if and when issued will pass on to the
Transferee, who shall be bound or abide by the
same subject to the liabilities not taken over by
the Transferee including those in respect of staff
assistants and employees concerned of the
Transferor as mentioned in clause 20 hereof. All
legal costs for such substitution and/or
prosectuion or contesting the said action and
proceedings existing or binding on the said date
shall be borne by the Transferee."
In view of the terms of the agreement of merger and in
particular clause 22 thereof the United Bank of India was
rightly impleaded as a party to the proceedings before the
Tribunal in the place of the Narang Bank of India Ltd. By
reason of impleading of the United Bank of India as a party
there was no change in the character of the proceedings
pending before the Tribunal. The United Bank of India only
stepped into the shoes of the Narang Bank of India Ltd. and
all proceedings that had gone on till the date on which the
United Bank of India was so impleaded were binding on the
United Bank of India.
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The proceedings before the Tribunal could thereafter be
continued against the United Bank of India. The United Bank
of India could thereafter take part in the further
proceedings before the Tribunal in the same capacity in
which the Narang Bank of India Ltd. was appearing in the
case. It was bound by all proceedings which had taken place
till then. It could not go back on the proceedings.
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Generally speaking an assignee cannot set up a case
inconsistent with the one put forward by his assignor and it
is only in exceptional cases an assignee could be permitted
to raise any new plea and that too only for avoiding
multiplicity of the proceedings. In the instant case there
was no such exceptional circumstance which entitled the
United Bank of India to take up a plea different from the
pleas which had already been taken up by the Narang Bank of
India Ltd and there was also no need to permit it to reopen
the proceedings which had gone on till then. The High Court
has not adverted to any such exceptional circumstance. The
learned Single Judge has not set out any justifiable reason
for observing that the principles of natural justice
demanded that all those witnesses whose evidence had been
recorded earlier could be recalled at the instance of the
United Bank of India and opportunity afforded to the United
Bank of India to cross-examine them. The learned Single
Judge was in error in observing that the United Bank of
India was appearing before the Tribunal in its own right and
was entitled to protect its own interest. As already
observed by us the proceeding pending before the Tribunal on
the date of merger could not be considered as a new
proceeding instituted against the United Bank of India on
its being impleaded. It was the same old proceeding to which
the Narang Bank of India Ltd. was a party and the rights of
the United Bank of India in the conduct of the proceedings
could not be larger than the rights which the Narang Bank of
India Ltd. itself possessed. If the Narang Bank of India
Ltd. had no right to recall the witnesses who had been
examined on behalf of the appellant for cross-examination on
the date on which the United Bank of India made such prayer
before the Tribunal, the United Bank of India also could not
be granted permission to do so. In the absence of any
exceptional circumstance which would have entitled in the
ordinary course a party to a proceeding to recall a witness
whose evidence had already been completed for further cross-
examination the United Bank of India could not make such a
claim at all. The learned Single Judge who set aside the
award in the first instance and the Division Bench which
merely affirmed the decision of the learned Single Judge
have erred in overlooking the true legal position explained
above by us. On the facts and in the circumstances of the
case the United Bank of India was not entitled to recall any
of the witnesses examined on behalf of the appellant for
further
1098
cross-examination particularly after both the parties had
closed their respective cases before the Tribunal. The
dismissal of the application made by the United Bank of
India for recalling the appellant for further cross-
examination, in the absence of any exceptional circumstance,
could not be considered as a ground for setting aside the
award. The principles of natural justice had not, therefore,
been violated by the Tribunal in passing the award. We,
therefore, set aside the judgment of the Division Bench of
the High Court and also of the learned Single Judge. It is,
however, mentioned before us that the United Bank of India
had some other grounds to urge before the learned Single
Judge and the case may be remanded to the learned Single
Judge for considering those grounds. We, therefore, remand
this case to the learned Single Judge to consider any other
relevant ground that may be urged by the United Bank of
India and to dispose of the writ petition in accordance with
law. This appeal is accordingly allowed. The United Bank of
India is directed to pay the costs of the appellant.
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N.P.V. Appeal allowed.
1099