TMI Blog2008 (7) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... Laxmi Mill, and (ii) Vishnu Mill. Somewhere in the year 1961, Laxmi Mill was merged in Vishnu Mill and was given the present name i.e. Laxmi Vishnu Textile Mills Ltd. There were large number of workers in the mill and there was considerable profit in the business. By the passage of time, however, the Company started incurring losses and things turned worse in later eighties. Proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to `SICA') had been initiated. On April 28, 1994, the Board of Industrial and Financial Reconstruction, New Delhi (`BIFR' for short) issued an order declaring the Company as `sick unit' and in exercise of powers conferred on it under Section 22A of the Act, it restrained the promoters/management from disposing or transferring its assets described in the order without prior permission of the Board. It was also stated that violation of the order passed by the Board would be dealt with under Section 33 of SICA. 4. It is also the case of the appellant that without issuing notice and without obtaining permission from the Appropriate Authority as required under Sections 25-O and 25-N of the Industrial D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... desire to purchase the property. According to the appellant, respondent No.8--Union had no authority to represent the interests of workers of respondent No.1--Company and yet on March 8, 2005, it purportedly entered into a tripartite agreement with respondent No.1--Company, respondent No.8--Union and respondent No.7-M/s Trans Asia Global Company. Respondent No.1- Company under the tripartite agreement sold the property to respondent No.7 for ₹ 46.65 crores. The claim of the workmen was settled at ₹ 22.21 crores whereas in fact, the claim of the workmen was more than ₹ 132 crores. The purported agreement never brought to the notice of the workmen and they were kept in complete dark. The property of the Company was worth ₹ 250 crores which could have satisfied claims of SBI, legitimate dues of the workmen as also of financial institutions and other creditors. According to the appellant, the other agreement was also entered into between secured and unsecured creditors, labour representatives, the Company and the purchaser on April 20, 2005. The agreement states that all secured creditors, unsecured creditors and representatives of the workmen had a meeting and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER OF HIGH COURT 9. The High Court, as observed above, dismissed the writ petition observing that it was not a fit case to interfere with by an order dated February 12, 2007 in exercise of extraordinary jurisdiction under Article 226 of the Constitution. The said order is challenged by the appellant in this appeal. 10. Notice was issued by this Court on September 7, 2007 and meanwhile order passed by DRT was stayed. Affidavits and further affidavits were thereafter filed by the parties. The Registry was directed to place the matter for final disposal and that is how the matter is before us. 11. We have heard learned counsel for the parties. APPELLANT'S SUBMISSIONS 12. Learned counsel for the appellant contended that all orders passed and actions taken by the Authorities are unlawful, illegal and contrary to law. It was submitted that the first respondent-Company had resorted to illegal closure and unlawful lockout due to which workers had suffered a lot. It was also submitted that when proceedings had been initiated under SICA and an order was passed by BIFR restraining the management of the 1st respondent-Company from transferring, alienating or disposing its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cide the matter afresh in accordance with law. RESPONDENTS' SUBMISSIONS 13. The contesting respondents, on the other hand, strongly urged that the appeal deserves to be dismissed and no interference by this Court is called for. The appellant has no locus standi to file a petition either in the High Court or to prefer an appeal in this Court. It was contended that respondent No.1-- Company was in continuous loss since several years and in the year 1995, it was closed down. Crores of rupees were required to be paid to State Bank of India, other financial institutions as also to workers. Proceedings had been initiated under SICA and BIFR was satisfied that the Company could not be revived and it favoured winding up of the Compny. A decree was passed in favour of SBI by DRT-1, Mumbai for substantial amount of more than ₹ 80 crores with interest. Over and above the said amount, there were other secured and unsecured creditors. Moreover, outstanding dues of workers were also there. Movable and immovable property of the Company was not enough to clear up all the dues. It was, therefore, felt that a fair settlement could be arrived at so that all the parties could get an eq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissing the said petition in limine, particularly in the light of the order passed in previous PIL Writ Petition. 15. It was submitted that the situation today is irreversible inasmuch as after the settlement had been arrived at between the parties, the purchaser-respondent No.7 had deposited the entire purchase price with DRT. The secured creditors as well as labourers were paid their dues as per the said settlement and their respective shares. Creditors had issued `discharge certificates'. The Assistant Labour Commissioner had disbursed the amount to the workers and their family members who are more than four thousand. The appellant who was also one of the workers was paid more than ₹ 60,000/- and he issued a receipt in token of acceptance of the said amount. The order of sale in favour of respondent No.7 was confirmed by DRT and the sale became final. Sale certificate was also issued in favour of the purchaser. It had also paid an amount of ₹ 2.25 crores towards stamp duty and got the property registered in its name. All those orders were never challenged by the appellant by taking `appropriate proceedings'. If at this stage, this Court interferes and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not protected the interests of workers of Laxmi Vishnu Textile Mills, he ought to have approached Labour Forum. The appellant, however, did neither. As soon as the PIL Writ Petition was disposed of, within few days, he filed another writ petition in his individual capacity. The High Court, in our opinion, therefore, was right in dismissing it in limine by passing the impugned order that it was not a fit case to exercise extraordinary jurisdiction under Article 226 of the Constitution. MERITS OF THE MATTER 18. On merits also, we find no substance in the contention raised by the learned counsel for the appellant. From the record, it is clear that from eighties the respondent No. 1- Company was in financial doldrums. Day-by-day, the position deteriorated and it had incurred heavy losses. So much so that the Mill was required to be closed down somewhere in 1995. Admittedly, after February, 1995, the Company has never revived. It is also clear from the record that substantial amount was due and payable by the Company to State Bank of India, several other financial institutions, secured and unsecured creditors and to workers. Proceedings had been initiated under SICA. BIFR had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 8, 2005. It was decided to sell the property to respondent No.7 for ₹ 46.65 crores. The amount which was to be paid as per the final agreement came as under; Institutions/B Principa Rs. (in anks/ l O/S Crore) Labour On Proposed 31.3.199 share SBI 28.05 14.02 IDBI 4.08 2.04 ICICI 1.24 0.61 IFCI 1.28 0.63 IIBI 1.54 0.76 Labour 22.21 Bank of 1.50 0.50 Maharashtra MSEB 5.37 4.00 Sales Tax 0.99 Solapur 0.89 Municipal Corporation and Octroi GRAND TOTAL 46.65 19. On October 6, 2005, an order was passed by Recovery Officer, DRT-I, Mumbai in which all the above facts had been stated. The Recovery Officer referred to tripartite agreement and payment of amount to creditors and workers. The order also recited that as per the direction of the High Court, the workers' claim was to be adjudicated by DRT. The applicant Bank was, therefore, directed to issue advertisement and invite workmen as per the guidelines formulated by DRT. All the workers were directed to lodge their claims in appropriate format in the Tribunal and all such claims were ordered to be placed before the Presiding Officer for adjudication. 20. Regarding valuation of property, it was stated; Since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med sale and it could have been done only by the Debt Recovery Tribunal. Hence, all proceedings were non est and are required to be ignored altogether. 25. The learned counsel for the contesting respondents, on the other hand, submitted that the order passed by BIFR was merely an interim order and in 1996, it directed winding up of the Company and forwarded its opinion to the High Court. Moreover, no such point had been taken by the appellant earlier. As discussed above, even prior to the present petition which had been filed by the appellant-herein in the High Court under Article 226 of the Constitution, he had submitted a representation to the Chief Justice which was registered as PIL Writ Petition. No such contention was taken in that petition. Even in the present proceedings, what was contended by the appellant before the High Court was as regards a transaction under which property was sold by Chairman of the first respondent-Company Mr. M.L. Apte through his constituted Attorney Kantilal Shankarlal Shah. Nothing was stated as to other properties. 26. But even on merits, the impugned action calls for no interference. The order dated April 28, 1994 passed by BIFR reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmation of sale. Consequential action of confirmation of sale was thereafter taken on December 6, 2005 and sale certificate was also issued on January 20, 2006. All the actions were taken only after March/April 2005. They, therefore, could not be said to be contrary to law or in violation of the order passed by BIFR. 28. Even otherwise, on the facts and in the circumstances of the case, we are fully satisfied that had the agreements in question not been arrived at, all parties including workers for whom great concern had been shown by the appellant would have suffered. In fact, in an affidavit filed on behalf of the State Bank of India, it was stated that in the light of the decree passed in favour of State Bank of India by DRT-I, Mumbai, the Bank would be entitled to ₹ 222.34 crores. Similarly, other institutions were also entitled to substantial amount. It was because of conjoint and combined efforts of all the parties that agreements could be arrived at. It was stated that a Cabinet Minister used his good offices and One Time Settlement (OTS) had been arrived with Banks and financial institutions and workmen were able to get the amount which had not been paid to them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and informed the appellant that the grievance raised by the appellant is well-founded and they are entitled to much more amount than what had been paid under the settlement. 32. Even this contention has no force. The learned counsel for the Union, in our opinion, is right in submitting that under the Bombay Industrial Relations Act, 1946, it is the `Representative Union' which has all powers to enter into a settlement on behalf of workers in the industry and it is only that Union which can take a decision under 1946 Act. The said decision would bind not only the members of the Union, but also to those workers who are not members of such Union. 33. The learned counsel, in this connection, invited our attention to various provisions of 1946 Act. As the Preamble of the Act declares, the Act has been enacted to regulate the relations of employers and employees, to make provision for settlement of industrial disputes and to provide for certain other purposes . The Act contains elaborate provisions for registration of Unions and their powers. 34. Section 2 defines various terms. Chapter II deals with Authorities constituted or appointed under the Act. Chapter III provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttlement under section 58 unless the terms of such agreement or settlement, as the case may be, are accepted by them in the prescribed manner; Thirdly, where in any proceeding the persons entitled to appear or act under clause (v) are more than five, the prescribed number elected from amongst them in the prescribed manner shall be entitled to appear or act instead. 37. It is thus clear that Representative Union is having priority and `preference' over other Unions to appear on behalf of employees of such industry in the area. Section 42 in Chapter VIII provides for change and lays down procedure for such change. It reads; 42. Notice of change (1) Any employer intending to effect any change in respect of an industrial matter specified in Schedule II shall give notice of such intention in the prescribed form to the representative of employees. He shall send a copy of such notice to the Chief Conciliator, the Conciliator for the industry concerned for the local area, the Registrar, the Labour Officer and such other person as may be prescribed. He shall also affix copy of such notice at a conspicuous place on the premises where the employees affected by the change are empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of closure of `G', a dispute was pending between the company and its workmen with respect to bonus. A `Representative Union' of the Textile Workers in the city of Ahmedabad filed an application before the Labour Appellate Tribunal wherein the dispute was pending and the matter was sub-judice. The matter was compromised and `G' consented to pay agreed bonus. The Representative Union accepted the amount and gave an undertaking not to claim compensation in future. Later on, however, about 400 employees issued a notice and claimed compensation for closure. The Representative Union appeared before the Labour Court and contended that the application was liable to be dismissed in view of the compromise arrived at between the Mill Company and Representative Union. The Labour Court upheld the objection and dismissed the application. The order was confirmed by Industrial Court in appeal as well as by the High Court in a petition under Article 227. The employees approached this Court. 39. This Court considered the relevant provisions of the 1946 Act, the object underlying conferment of power on Representative Union and the action taken by it and held that when a Representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that the complete ban imposed by s. 27A can be removed if the authorities under the Act think it expedient to permit another person to appear and that person may be an employee or not. Thus the employee who has made an application under s. 42(4) may be permitted to appear before the authorities under the Act; but this provision is subject to a proviso namely that no such individual which would include an employee who has himself made an application under s. 42(4), shall be permitted to appear in any proceeding in which the Representative Union has appeared as the representative of employees. Reading therefore ss. 27A, 30 and 32 together, it is clear that on one else can appear in any proceeding under the Act except a representative of employees; but the authorities are empowered to permit anyone to appear whether he be an employee or not, if they consider it expedient for the ends of justice (and we have no doubt that where representative of employees does not choose to appear the authorities will generally permit the employee who has made the application under s. 42(4) to appear), but this power is subject to the proviso, namely, that on one will be allowed to appear if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntative Union. This Court, however, negatived even that argument and observed that the so-called tyranny or motive of Representative Union cannot change the legal position and it has no relevance if the intention of the Legislature is clear and unambiguous. 43. The Court, therefore, concluded; The result therefore of taking ss. 27A, 32 and 33 together is that s. 27A first places a complete ban on the appearance of an employee in proceedings under the Act once it has commenced except through the representative of employees. But there are two exceptions to this ban contained in ss. 32 and 33. Section 32 is concerned with all proceedings before the authorities and gives power to the authorities under the Act to permit an employee himself to appears even though a representative of employees may have appeared but his permission cannot be granted where the representative Union has appeared as a representative of employees. Section 33 which is the other exception allows an employee to appear through any person in certain proceedings only even though a representative of employees might have appeared; but here again it is subject to this that no one else, not even the employee who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder 1946 Act, individual workman has no locus standi. According to the Court, combined reading of Sections 27A, 30, 32, 33 and 80 of the Act make it clear that consistent with the avowed policy and prevention of exploitation of workmen and augmentation of their bargaining power, the Legislature has clothed the Representative Union with plenary power to appear or act on behalf of employees in any proceeding under the Act. Keeping in view the said object, it has deprived individual employees or workmen of the right to appear or act in any proceeding under the Act where the Representative Union enters appearance or acts as representative of the employees. 46. Following Girja Shankar, the Court observed that mala fides or bona fides of the Representative Union has no relevance in construing the relevant provisions of the Act. In case the employees find that the Representative Union is acting in a manner which is prejudicial to their interests, their remedy lies in invoking the aid of the Registrar under Chapter III of the Act requesting him to cancel the registration of the union. 47. Respondent No.8 in its affidavit asserted that it is a Representative Union under the Act of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t merely to prefer an application seeking leave to appeal and the discretion is vested in this Court to grant or refuse such leave in its wisdom. In view of the language of Article 136, this Court is not expected to act as `regular Court of appeal' settling disputes by converting into a `Court of Error'. It interferes only when justice demands intervention by the highest Court of the country. 50. It is undoubtedly true that the power of this Court is plenary, overriding and extensive and there are no words qualifying, restricting or limiting that power. The very conferment of discretionary power defies any attempt at exhaustive definition of that power. The power, however, has to be exercised for doing full and complete justice. But wider the discretionary power, the more sparing its exercise. Times out of number this Court has stressed that though parties promiscuously provoke this jurisdiction, the Court parsimoniously invokes the power [vide Sadhanathan v. Arunachalam, (1980) 3 SCC 141]. 51. While exercising power under Article 136 of the Constitution, this Court not only acts as a Court of law but also as a Court of equity and hence the power exercised by this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a joint meeting was held between secured and unsecured creditors, representatives of the Union, the Company and the purchaser in April, 2005 and in that meeting, One Time Settlement (OTS) had been reached. Several actions were taken in pursuance of the settlement. The amount was deposited by the purchaser, dues of creditors were paid, workers and laborers were informed and they were also paid the amount. The property was sold by respondent No.1 to respondent No.7 on October 6, 2005, sale was confirmed on December 6, 2005, possession of the property was given to respondent No.7 on December 14, 2005, sale certificate was issued on January 20, 2006, respondent No.7 got the property registered in its name on January 30, 2006 by paying stamp duty of ₹ 2.25 crores, secured creditors gave discharge to respondent No.1-Company on March 30, 2007. By May 17, 2007, 4054 workers were paid and the said figure, at the time of hearing of this appeal reached to 4105. It was also stated by respondent No.7-purchaser that plant and machinery were removed and sold as scrap materials. 55. If, at this stage, we set aside sale in favour of respondent No.7, serious prejudice will be caused not on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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