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2016 (2) TMI 777

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..... f of the applicant that this Court may consider the present application as one for leave to appear at the hearing of the petition, under Rule34 of the Rules. The applicant had notice of the petition which, admittedly, was advertised. It, however, did not file any objections within the stipulated period of time. It has now appeared belatedly by the present application for joining. This Court is unable to accede to the submission regarding leave to appear, in view of the total lack of reasons why objections were not filed at the relevant point of time. Further, in view of the settled position of law, as the applicant is not the Representative Union or even a recognized one, but appears to be a loose body of workmen without any legal status, it is not possible to grant the prayer for impleadment. The interest of the workmen can be protected by the Representative Union at the relevant point of time. For this purpose, the presence of the applicant is not necessary. Mr.S.I.Nanavati, learned Senior Advocate has clarified that the secured creditors have been paid by the Sponsor of the Scheme and not through the funds of the Company. This aspect further reduces the relevance of the su .....

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..... got the meeting dispensed with, by filing an affidavit dated 26.07.2008, deposed by one Shri Jagjivan Khimjibhai, giving consent to the Scheme. According to the applicant, the affidavit filed by the TLA was without the consent of the workers and had been filed with the intention of prejudicing their interest. It is alleged that the workers have not been taken into confidence about the Scheme and the authorized person of the TLA had agreed to the Scheme proposed by the said opponents, in order to gain undue advantage from opponents Nos.1 and 2. It is the case of the applicant that the compromise arrived at between the TLA and opponents Nos.1 and 2, is not in the interest of the workers, therefore, the applicant, which is a separate body, had to be formed in order to protect the interest of the workmen. For this reason, the applicant is desirous of being impleaded in the Company Petition. 4. Mr.Anshin H. Desai, learned advocate for the applicant has made elaborate submissions the gist of which is as follows : 4.1 That the applicant comprises of 521 workers of the Company. The list of members has been annexed at AnnexuresA and I to the affidavit. It is submitted that the present .....

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..... of all the workers upon its sale. There would be a balance amount available, which could be further distributed towards interest and other dues. This can only be done if proper representation of the workmen is permitted. For this reason, as well, the applicant is required to be joined as partyrespondent in the Company Petition. 4.5 That, by an order dated 26.02.2014, the Deputy Registrar under the Trade Union Act, 1926, has cancelled the registration of the TLA. Though the said registration has been partially restored by the Industrial Tribunal vide its order dated 16.06.2014, however, the restoration is conditional and the TLA is prohibited from taking any policy decision without the permission of the Court. Hence, the TLA is not competent to defend the interest of the workmen as it cannot take a policy decision in their favour. For this reason as well, the impleadment of the applicant becomes necessary. 4.6 That, the opponents cannot object to the impleadment of the applicant, as it is undisputed that more than 95% of the workmen have received only a meagre amount so far. Neither the TLA nor opponents Nos.1 and 2 have locus standi to oppose the impleadment of the applicant .....

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..... , then court would prefer, in absence of any cogent evidence establishing petitioner's claim to accept and rely on liquidator's assertions. 10.12 If there are such claims then it would be permissible to the Court, rather an obligation on the Court, to direct the companyapplicant to make appropriate provision in the scheme and / or to provide appropriate and sufficient measures in the order and to prescribe proper and sufficient safeguards to protect the interest and claims of the workmen and in the event of petitioner's refusal or failure to comply, to decline the sanction and reject the scheme. 11. The company has attempted to claim that the respondent union has no locus to represent the worker since its recognition was cancelled in December 1992. A copy of order said to have been passed by the Registrar is placed on record. A glance at the said order clarifies that the Registrar has only cancelled the status of the union as the representative union under the provisions of B.I.R. Act. The registration of a union as an association / union (under Trade Unions Act, 1926) is a different matter and concept from the conferment of status of representative union unde .....

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..... Shri Shamsuddin Shaikh . However, in the causetitle of the affidavit in support of the Judges Summons, at running Page4, Shri Shamsuddin Shaikh is described as its Secretary. Again, in the affidavit in support of the Judges Summons, Shri Shamsuddin Shaikh is described as its Convener. In the additional affidavit in support of the Judges Summons, affirmed on 09.03.2015, the deponent is Shamsuddin Shaikh, who describes himself as a member of the new representative Committee of the applicant. In the third affidavit, affirmed on 20.07.2015, Shri Shamsuddin Shaikh appears to have deposed in his individual capacity. 5.3 It is submitted that there is no consistent description of the proper designation of Shri Shamsuddin Shaikh, who sometimes describes himself as a Convener of the Committee, sometimes as the Secretary of the Committee, sometimes as a member of the new representative committee and sometimes deposes an affidavit in his individual capacity. It is contended that no Vakalatnama has been filed on behalf of 521 persons, who are supposed to be the members of the applicant Committee. Only Shri Shamsuddin Shaikh has signed the Vakalatnama in his individual capacity. It is submit .....

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..... e not been paid their dues and injustice had been done to them. To us, even there, the appellant is not right. A Representative Union has taken a decision which is binding on all employees. That aspect, however, we will deal with at a later stage. 30. ***** STATUS AND POSITION OF REPRESENTATIVE UNION 31. The learned counsel for the appellant contended that respondent No. 8 could not have agreed to accept a meagre amount of ₹ 22 crores when the outstanding dues were more than ₹ 130 crores. It was also stated that majority of workers are with the appellant and they are opposed to the settlement. Thousands of workers have so stated in writing and informed the appellant that the grievance raised by the appellant is wellfounded and they are entitled to much more amount than what had been paid under the settlement. 32. Even this contention has no force. Th e 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 decisi .....

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..... Workers in the city of Ahmedabad filed an application before the Labour Appellate Tribunal wherein the dispute was pending and the matter was subjudice. 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 Union appears in any proceeding under the Act, none else can be allowed to appear not even the employee at whose instance proceedings might h .....

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..... of the Representative Union. This Court, however, negatived even that argument and observed that the socalled 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. ***** 44. Again, in Textile Labour Association, Bhadra, Ahmedabad v. Ahmedabad Mill Owners Association, Ahmedabad, (1970) 3 SCC 890, this Court held that once Representative Union of Textile Industry in the local area of Ahmedabad entered into a compromise, such compromise would bind all the employees and those employees who are not members of the Representative Union cannot contend that they are against such compromise and are not bound by it. 45. In Santuram Khudai v. Kimatrai Printers and Processors Pvt. Ltd. and Ors., (1978) 1 SCC 162, a similar question arose. The Court reiterated the law laid down in Girja Shankar and held that once the Representative nion appears on behalf of the employees in a proceeding before a Labour Court under 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 .....

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..... x Court in the matter of Santuram Khudai Vs. Kimatrai Printers and Processors Pvt. Ltd. Ors., reported in (1978) 1 SCC 162. Learned Senior Advocate for the mill company invited attention of the Court to para12 of the said decision. The same is reproduced for ready perusal:- Now a combined reading of sections 80, 27A, 30, 32 and 33 of the Act leaves no room for doubt that consistent with its avowed policy of preventing the exploitation of the workers and augmenting their bargaining power, the Legislature has clothed the representative union with plenary power to appear or act on behalf of the employees in any proceedings under the Act,and has deprived the 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 employees. We are fortified in this view by a decision of this Court in Girja Shankar Kashi Ram v. The Gujarat Spinning Weaving Co. Ltd.(1) where Wanchoo, J. (as he then was) speaking for the Court observed as follows: It will be seen that s. 27A provides that no employee shall be allowed to appear or act in any proceeding under the Act, except t .....

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..... 5.7. ***** 5.8 ***** 6. The Court has no hesitation in holding that the issue is well covered by the aforesaid decisions of the Honble the Apex Court and the present applicants have no locus standi and therefore, the present application seeking leave to appeal cannot be allowed. The same is accordingly rejected. Rule is discharged. No costs. 5.9 The learned Senior Counsel has further placed reliance upon an order dated 30.09.2014, passed by this Court (Coram:Hon ble Mr.Justice Paresh Upadhyay), in Special Civil Application No.11550/2014. 5.10 It is submitted by the learned Senior Counsel that the TLA gave its consent to the Scheme on 26.07.2008, by filing an affidavit. The present application has been taken out on 30.07.2014. In the affidavit in support of the Judges Summons, there is no mention of the delay or the reasons why such delay is required to be condoned. No explanation, whatsoever, emerges to explain the delay. The Scheme was advertised as per Section391 of the Companies Act on 14.10.2008. Nobody has come forward to object. The applicant has not uttered even a single word, though it is deemed to have full knowledge. The prayer of the applicant to j .....

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..... figure cannot be stated as of now, as it is not clear when the Scheme would be sanctioned. 5.15 Distinguishing the judgment dated 16.06.2012, passed in Company Petition No.135/2005 and connected matters, relied upon by the learned advocate for the applicant, it is submitted by the learned Senior Counsel that, in that case the question before the Court was if the registration is cancelled under the GIR Act, whether the representative union would lose its status or still continue as a recognized union. Paragraph11 of the judgment does not assist the contention raised by the applicant. The case before the Court was factually different from the present application. In the present case, as there is a Representative Union, only that union would be entitled to plead the case of the workmen and none else, not even a recognized union, which status the applicant does not have. 6. Mr.S.N.Soparkar, learned Senior Advocate with Mr.A.S.Vakil, learned advocate for respondents Nos.1, 1.1, 1.2 and 2 has made additional submissions by referring to Rule34 of the Companies (Court) Rules, 1959 ( the Rules , for short), which provides for notice to be given by a person intending to appear at the .....

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..... which is objecting to the impleadment of the applicant has no locus standi. The Scheme is not yet sanctioned. In any case, the Scheme has outlived his life. The TLA has joined hands with the Sponsor of the Scheme, therefore, in the interest of the workmen, it would be necessary to join the applicant. 9. Learned advocate for the applicant has reiterated the submissions advanced earlier and has relied upon certain additional judgments, as below : 9.1 Forbes Company Ltd. Vs. Official Liquidator of Bombay High Court, reported in (2013) 38 taxmann.com 299 (Bombay), wherein the High Court of Bombay had held as below : 22. The judgment of the Supreme Court in Meghal Homes (supra) is sought to be distinguished by learned Senior Counsel appearing on behalf of the Appellant on the ground that in that case, there was a private arrangement between the promoters and developer under which the assets of the company in liquidation were sought to be sold to the developer whereas in the present case, there would be no transfer of the assets of the company and the assets would be used to carry on real estate business. We are unable to subscribe to the submission. In the present case, wha .....

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..... at the objects clause permitted carrying on of real estate business, it is evident from the averments in the company application that the Appellants themselves proceeded on the basis that an amendment of the objects would be required in order to enable the company to enter upon real estate construction. Whether such an amendment would or would not be granted is something which may depend upon the decision of the competent authority in future but it is evident that presently, the carrying on of real estate construction would be ultravires the objects of the company. Besides, under Section 17 of the Companies Act, 1956, an amendment of the objects requires a special resolution which in view of the provision of Section 189 requires 3/4th majority of members present and voting. No circumstances have been placed before the Court to indicate as to whether the Appellants have the support of the requisite majority for a special resolution under Section 189. 24. ***** 25. ***** 26. ***** 27. ***** 28. Before we conclude, we may note that RMSS a registered union of the objecting workers has sought to allege that RMMS as a representative union is alone entitled t .....

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..... of an insolvent company, which is being wound up and which has been offered as a security to a secured creditor is subject statutorily to a pari passu charge in favour of the workmen to the extent of the workmen s portion by virtue of the proviso to Section 529(1) of the Companies Act. Therefore, the first limb of the proviso to Section 529(1) does not create any pari passu charge in favour of secured creditor over property or asset of the company which has not been given as security by the company to the secured creditor. Rather, the language of the first limb of this proviso makes it crystal clear that the security of every secured creditor created dehors the proviso to Section 529(1) of the Companies Act is statutorily subjected to a pari passu charge in favour of the workmen by the first limb of the proviso to Section 529(1) of the Companies Act. (Para 12) 9.4 Yet another judgment relied upon by the learned advocate for the applicant is Bank of New York Mellon Vs. JCT Ltd., reported in (2015) 190 Comp Cas 396 (P H). 9.5 On the basis of the above judgments, it is reiterated by Mr.Anshin H. Desai that if the applicant is not impleaded there would be nobody to point ou .....

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..... Shri Jagjivan Khimjibhai, one of the officebearers of the TLA. According to the applicant, while doing so, the Representative Union has not taken the interest of the workmen into consideration. It is further alleged that the TLA is committing violation of its byelaws and indulging in illegal activities, therefore, the majority of the workmen, who are the members of the applicant Committee, have lost faith in it. 13. It has been submitted on behalf of the applicant that it is the only body of majority workmen which can effectively assist the Court by bringing out correct facts and pointing out the proper position, so as to protect the interest of the workmen, which is supreme and paramount. It is alleged that the workmen have been paid only a meagre amount, though the secured creditors have been fully paid. The main ground raised for impleadment is that the presence of the applicant is necessary to ensure that the interest of the workmen does not suffer. 14. The learned advocate for the applicant has placed reliance upon a judgment of the High Court of Bombay in Forbes Company Ltd. Vs. Official Liquidator of Bombay High Court (Supra.), which is a judgment regarding the windi .....

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..... *** 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 Union appears in any proceeding under the Act, none else can be allowed to appear not even the employee at whose instance proceedings might have been started under Section 42(4) of the Act. The Court held that if the Representative Union appears, the decision taken by that Union would be final and binding. (emphasis supplied) 19. Admittedly, the TLA is the Representative Union which has already taken a decision to accord its consent to the Scheme. When there is a Representative Union, duly recognized as such under the GIR Act, in the view of this Court, the applicant, which is purported to be a Committee formed by 521 workmen, would not have locus standi to appear in the matter. The decision to sanction the Scheme has already been taken by the representative union by filing an affidavit dated 26.07.2008. 20. The submission that the registration of the TLA, the Representative Union was cancelled vide order dated 26.02.2014, passed by the Deputy Registrar under the Trade Unions .....

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..... onfidence in the Representative Union, therefore, have no relevance in view of the dictum of the Supreme Court. 25. A submission has been advanced on behalf of the applicant that this Court may consider the present application as one for leave to appear at the hearing of the petition, under Rule34 of the Rules. The applicant had notice of the petition which, admittedly, was advertised. It, however, did not file any objections within the stipulated period of time. It has now appeared belatedly by the present application for joining. This Court is unable to accede to the submission regarding leave to appear, in view of the total lack of reasons why objections were not filed at the relevant point of time. Further, in view of the settled position of law, as the applicant is not the Representative Union or even a recognized one, but appears to be a loose body of workmen without any legal status, it is not possible to grant the prayer for impleadment. 26. The interest of the workmen can be protected by the Representative Union at the relevant point of time. For this purpose, the presence of the applicant is not necessary. 27. Mr.S.I.Nanavati, learned Senior Advocate has clarifie .....

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