TMI Blog2018 (12) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... third respondent was transferred, the candid and frank answer of the counsel for the third respondent was that the transfers were authorized by the management and there were no stay or interim orders in operation on the dates when transfers were made. Given these facts, we have to express our concern for the ex-workmen/workmen, whose claims have not been decided and adjudicated upon. It is in this context that the order passed by the Supreme Court on 13th November, 2014 and the directions given therein assume importance, for if the ex-workmen/workmen have not been paid their dues, the transfer made by the third respondent to the fourth respondent vide sale deed registered on 2nd July, 2014 would require scrutiny and examination. Of course, any answer would require consideration of the findings recorded in the contempt proceedings vide order dated 18th November, 2016. Thus, even if the ex-workmen/workmen or the Labour Union initiate proceedings under the Industrial Disputes Act, interim protection may be required and necessary against sale, transfer and creation of third party interest in respect of the capital assets and immoveable properties. The Supreme Court has already grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eta Luthra, Sr. Advocate with Mr. Ujjawal Jain Mr. Prateek Yadav, Advs Mr. Gaurav Kejriwal Mr. Atanu Mukherjee, Advocates, Mr. Ashok Kumar Jain Mr. Karan Khanna, Advocates, Mr. G.S. Narula, Mr. Bhavit Yadav, Mr. Kushal Mangal Ms. Shefali Chopra, Advocates And Mr. Avneesh Garg Ms. Vaishali Dixit, Advocates ORDER Sanjiv Khanna, J.: Shiv Kant, who claims that he is an existing worker of M/s J.K. Jute Mills Company Limited, (now known as Geo Jute Limited) has filed the present writ petition with the following prayers:- (a) pass an appropriate order, direction, writ declaring section 4(b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 read with section 252 of the Insolvency and Bankruptcy Code, 2016 as unconstitutional in so far it abates the proceedings before BIFR AAIFR and does not provide for efficacious remedy for implementing the directions passed by the Hon ble Supreme Court on 13-11-2014 and 18-11-2016 before the Adjudicating Authority under the provisions of IB Code, 2016; (b) pass an appropriate order, writ, direction upon Union of India to remove difficulty and provide remedy for implementing/execution of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Kalpi Road, Kanpur, subject matter of lease deed dated 15th May, 2017 with M/s Skyscrappers Niwas Private Limited (now known as M/s Skyscraper Jute and Mining Private Limited), the Respondent No. 9 for short. 3. Reference made by the third respondent under the Sick Industrial Companies (Special Provisions) Act, 1985 ( the SIC Act , for short) was registered on 16th December, 1994 and the third respondent was declared a sick company by the Board for Industrial and Financial Re-construction ( the BIFR for short). 4. During pendency of the proceedings, a civil suit was instituted in District Kamrup, Assam to declare that the BIFR had ceased to have jurisdiction as the net worth of the third respondent had turned positive and it was not a sick company under SIC Act. The third respondent in the written statement did not object to the jurisdiction of the civil court and had admitted that their net worth had become positive. The civil court passed an order restraining further proceedings before the BIFR. Thereupon, appearance was made by third parties opposing the proceedings before the civil court. The matter reached the Supreme Court. On 8th May, 2014, a restraint order was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess of the consideration money towards stamp duty and registration shall be recovered from the Directors and persons responsible for effecting such sale on behalf of the Company. As the transfer of the Katihar property to the fourth respondent was despite the restraint order dated 8th May, 2014 directing the third respondent not to transfer their capital assets, the Supreme Court vide order dated 13th November, 2014 had observed and held:- 40 . The appeals are allowed in the aforesaid terms. FAO No. 10 of 2013 thus stands allowed and Writ Petitions Nos. 4303 and 6286 of 2013 are dismissed. As regards Contempt Petitions Nos. 338 and 375 of 2014, since this Court had not issued any notice to the alleged contemnors, we have not dealt with said petitions. By a separate order we issue appropriate notice to the alleged contemnors. 5. The fourth respondent was not impleaded as a party to the appellate proceedings disposed of by the Supreme Court vide aforesaid judgment dated 13th November, 2014. However, the said respondent was impleaded as a party to the contempt proceedings, which were disposed of and decided vide decision dated 18th November, 2016 Ghanshyam Sarda v. Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undoubtedly true that alleged Contemnor 17 in his affidavit stated that he used to work under the directions of alleged Contemnors 2 and 3 and that the registration of the document on 2-7-2014 was done under the express directions of alleged Contemnor 3. However, such a statement coming from a co-contemnor, in our view, is not sufficient to reach a conclusion about the involvement of alleged Contemnor 3. Further, the documents pertaining to Writ Petition No. 5670 (W) of 2016 pending in the Calcutta High Court as well as the affidavit filed by Dinesh Sarda are also not conclusive enough. The criticism that such documents and the affidavit of Dinesh Sarda are conveniently brought on record, would also require assessment of facts. Thus, though there is room to suspect the involvement of the said Contemnors 2 and 3, the material on record is not conclusive enough to hold them guilty of violation of the order of 8-5-2014 [Ghanshyam Sarda v. Shiv Shankar Trading Co., (2015) 1 SCC 298, 316 (footnote 14)]. We, therefore, close these proceedings as against them. 25. XXXX 26 . In the present case the Company and its Directors/servants were certainly guilty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, 2016 (IBC, for short) was enacted and enforced with effect from 1st December, 2016. As DRS was pending before the BIFR and had not been approved, the provisions in the IBC relating to deemed resolution plan were not applicable. (It was stated by the counsel for the third respondent that two DRS including one by the present management were pending when the Repeal Act was enforced and proceedings before the BIFR had abated.) This issue and question whether the third respondent had ceased and was not a sick company under SIC Act thus was not decided and adjudicated. 7. M/s. J.K. Jute Mills Mazdoor Ekta Union, a Trade Union, eighth respondent in the present writ petition, was a party to the proceedings before the Supreme Court. Similarly, Ghanshyam Sarda, who is respondent No. 7 in the present writ petition, was the appellant before the Supreme Court. 8. M/s. J.K. Jute Mills Mazdoor Ekta Union (hereinafter also referred to as the Union ) had filed W.P. (C) No. 440/2017 before this Court for various reliefs, including a writ for declaring Section 4(b) of the Repeal Act, 2003 read with Section 252 of the IBC as unconstitutional insofar as the provisions abate the pending proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of repeal of the Act (i.e. 01.12.2016); (ii) the date on which the assets were alienated; (iii) details of the transaction including the amounts received and (iv) details of the disbursement of the amounts received on account of the transaction, an affidavit has been filed by respondent No.3, which, inter alia, reads as under:- 6. It may be noted that the respondent No.3 Company was constrained to declare a lockout in the year 2014 and presently, also is in lockout and no dues as alleged in the writ petition are payable to the workers/employees. The lockout of the Company was challenged by the workers before the Government of Uttar Pradesh and the same was declared illegal under the provision of Section 3 (a) of the U.P. Industrial Dispute Act 1947, which was challenged by the J. K. Jute Mills Company Limited in MISC. SINGLE No. 7208/2014 before the Hon ble Allahabad High Court, Lucknow Bench. Thus the said legal issue is already pending before the Hon ble Allahabad High Court in MISC. SINGLE No. 7208/2014, wherein the Hon ble Allahabad High Court was pleased to issue interim order dated 19.11.2014. A copy of the MISC SINGLE No. 7208/2014 pending before the Hon ble Alla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession of the same. 14. It may be noted that the plant including land and machinery has been leased by the respondent No.3 Company in order to make best efforts to revive the plant and machinery which is evident from various clauses of the Agreement. 15. It is stated that Respondent No.3 Company will not get any amount from the sale of godown situated at Gulab Bagh, Bihar and the same will be received by JKJM Housing Pvt Ltd as per the enclosed sale deeds. 16. As aforesaid, the present petition has not been filed by any genuine workmen and no specific claim or crystallized amount supported by any documents has been raised therefore the present petition is a mala fide attempt to harass the Respondent No.3 Company. (underlining supplied) 6. Reading of above paragraphs of the affidavit shows that respondent No.3 has been very vague in its disclosure. Respondent No.3 has stated that it owns property in Kolkata, which has been given on long term lease. The details and description of the said property has not been provided. 7. The Plant along with land and machinery and the Bungalow has been leased with effect from 04.05.2017 by way of registered lease deed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also made applicable to the fourth respondent before us (respondent No. 7 in the said writ petition). By another order dated 12th July, 2017 in W.P(C) No. 440/2017, the ninth respondent was directed to maintain status quo with regard to the factory, land, plant and machinery at Kanpur. By the order dated 21st August, 2017, the stay restraining transfer, alienation and/ or creation of third party rights was extended to M/s Kurnia Real Estate Private Limited, respondent No. 10 in the present writ petition. 11. Writ Petition (C) No. 440/2017 filed by the Union was disposed of vide order dated 6th December, 2017, which reads as under:- J.K. Jute Mills Mazdoor Ekta Union has invoked writ jurisdiction of this Court under Article 226 of the Constitution of India, challenging Section 4(b) of the Sick Industrial Companies (Special Provision) Repeal Act, 2003 alleging inter alia that the provisions of the Insolvency Bankruptcy Code, 2016 ( Code for short) do not provide for an efficacious remedy for implementing the directions of the Supreme Court in order dated 13th November, 2014 reported as Ghanshyam Sarda v. Shiv Shankar Trading Company (2015) 1 SCC (298) and order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntempt proceedings dated 18th November 2016, the Supreme Court had made observations. 6. This Court is of the opinion that the directions given by the Supreme Court could be examined and considered under Sections 47 and 49 of the Code, if other conditions for invoking these provisions are otherwise satisfied. Both these provisions are not, in any manner, restricted in their application by any limitation period of either one year or two years from the `insolvency commencement date . The directions as given in Ghanshyam Sarda (supra) can be examined and undertaken by the NCLT under the Code. 7. In view of our above observations and the consensus on the ambit and power of the NCLT under the Code, learned Senior counsel for the petitioner submits that the workmen would invoke the jurisdiction of the NCLT under Sections 6, 8 and 9 of the Code and would move applications under Sections 47 and 49 of the Code for appropriate relief and directions before the NCLT. It is obvious that the application so filed would be dealt with in accordance with the provisions of the Code. 8. It will be open to the workmen to allege and assert that there has been a violation of the orders pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operation for a further period of 2 months from today so as to enable the workmen to approach the NCLT. It will be, thereafter, for the NCLT to decide whether or not to continue with the said interim orders and/or to modify, amend or vacate the same. 14. Similarly in case there is violation of the directions given in the order dated 26th May, 2017, by which it was directed that the Company would keep ₹ 2.5 crores in reserve, it will be open to the petitioner to invoke contempt jurisdiction and also for the workmen to highlight the said fact before the NCLT. 15. With the aforesaid observations, the writ petition and all pending applications are disposed of without any order as to costs. 12. Immediately after the order dated 6th December, 2017 was passed relegating the workers to proceed in terms of the IBC, the third respondent instituted two civil suits on 12th December, 2017 and 15th December, 2017 before the Civil Judge, Kanpur against about 3000 workmen and ex-workmen. The prayer in the first suit against the workers was to injunct them from representing their dues in various forums till the suit is decided; declare any document submitted in the DRS before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Code, albeit application was rejected vide order dated 9.4.2018. Petitioner submits that that he cannot be left remediless, as the grievance or lis must be examined, either by the NCLT or Court in a writ petition as proceedings under Sick Industrial Companies (Special Provisions) Act, 1985 have abated. The petitioner also submits that interim order passed by this High Court in WP(C) No.440/2017, which was extended vide order dated 6.12.2017 for a period of two months, to enable the workmen to approach the NCLT, is no longer in operation. Issue notice. We clarify that issue of notice would not, in any manner, be treated as an expression of opinion or finding with regard to the proceedings pending before the NCLT, in which order has been reserved. On the question of stay, learned counsel for the petitioner has submitted that the interim order passed in WP(C) No.440/2017 should be extended till the next date of hearing. Learned counsel appearing for respondent No.3, M/s J.K. Jute Mills Company Ltd., now known as Geo Jute Ltd., has submitted that the Supreme Court has passed a restraint order in an appeal against the order passed by the NCLT. She states that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s registered as Civil Appeal No. 20978/2017. In this appeal the Supreme Court has by order dated 5th January, 2018 has directed the third respondent to maintain status quo as to the assets of the said company. This order does not operate against the subsidiaries. 16. Two more aspects are highlighted by the petitioner and the Union -M/s J.K. Jute Mills Mazdoor Ekta Union, the eighth respondent before us. The lease deed between the third respondent and the ninth respondent regarding the property at Kanpur, it is submitted, is in fact and virtually a sale deed, as it transfers 5 acres of land alongwith factory sheds and godowns for the lease period from 4th May, 2017 to 3rd May, 2044 on average annual rent of ₹ 9,93,000/-. Further, there is a stipulation in the registered lease deed that the respondent No. 9 can at any time during the pendency of the agreement but not later on expiry of ten years from the date of commencement of the agreement, exercise option to buy the demised premises for ₹ 11 crores. The second aspect highlighted by the petitioner and the Union is that the third respondent and its subsidiary have not accounted for the sale consideration received on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and operations had transferred its assets. The sale/transfer would be valid in the absence of any restraint order. 18. During the course of hearing before us, counsel for the third and tenth respondents have stated at the Bar that the sale consideration for the Gulab Bagh property has to be paid to the subsidiary and not to the third respondent. 19. In rejoinder-affidavit filed by the petitioner, he asserts and states that he has accepted the order dated 9th April, 2018 passed by the NCLT. In fact, the third respondent has opposed the petition preferred by the petitioner and hence the third respondent has taken contrary plea in the short counter-affidavit. 20. Contesting the submissions of the third and fourth respondents predicated on the order of the Supreme Court dated 18th November, 2016 it was submitted by the petitioner and the Union that the order was passed in contempt proceedings gave benefit of doubt to the fourth respondent, while the third respondent was held to be guilty. Issue raised and subject matter of enquiry in terms of paragraph 38 of the order dated 13th November, 2014 stands and has to be examined. Cancellation of sale deed for violation of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleaded as respondent Nos.11 to 15. No cash consideration has been paid by the subsidiaries for the transfers, albeit shares in the subsidiary have been allotted to the third respondent. Land and property which originally belonged to the third respondent at Gulab Bagh has been sold and transferred to M/s Kurina Real Estate Private Limited, the tenth respondent. As per the petitioner and the eighth respondent, JK Jute Mill Mazdoor Ekta Union and eleven applicants seeking impleadment vide application CM No. 43730/2018, the transactions are dubious and details of the sale consideration received are not forthcoming. The third respondent, M/s JK Jute Mills Company Limited, has entered into a long lease agreement with ninth respondent M/s Skyscrappers Niwas Private Limited, with the said respondent s right to purchase the property. 23. Consequent to abatement of proceedings before the BIFR, the Union i.e. M/s. J.K. Jute Mills Mazdoor Ekta Union had filed W.P. (C) No.440/2017 in this Court wherein interim orders were passed restraining the third respondent and its subsidiaries from transferring, alienating, encumbering or creating any third party rights in any of the assets without le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity and ₹ 3.97 crores was payable on account of deposits. The wages etc. had not been quantified. The counter-affidavit filed by the third respondent on the question of dues of workmen is silent. On being questioned, counsel for the third respondent had stated that the aforesaid amounts were mentioned in DRS filed by a third person and not by the present management of the third respondent, who had submitted another DRS. However, counsel for the third respondent was not forthcoming and had stated that she was not in a position to answer and state whether in the DRS submitted by the present management, they had admitted and accepted the amounts due to the workmen. 25. The core controversy, which is required to be resolved and settled, relates to the claim of the workmen and ex-workmen of the third respondent. The aspect and issue of affect of the order dated 18th November, 2016 on the order dated 13th November, 2014 and on merits would possibly arise and survive for consideration if the primary or core issue - whether and if any amount is due and payable by the third respondent to the workmen/ex-workmen is examined and decided. Another aspect would relate to the forum/court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equire consideration of the findings recorded in the contempt proceedings vide order dated 18th November, 2016. 27. Thus, even if the ex-workmen/workmen or the Labour Union initiate proceedings under the Industrial Disputes Act, interim protection may be required and necessary against sale, transfer and creation of third party interest in respect of the capital assets and immoveable properties. The Supreme Court has already granted stay of alienation and creation of third party interest of capital assets belonging to and owned by the third respondent. However, the third respondent has already transferred most of its assets to its subsidiaries and hence, protection and restraint orders are required against the subsidiaries. 28. The statute, be it the Companies Act or the IBC, does give primacy to the claims of ex-workmen/workmen. There is urgency and need for determining and deciding the claim and issues raised by ex-workmen/workmen given the fact that the third respondent has transferred and alienated capital assets and immoveable properties to third persons and subsidiary companies, which in turn have again transferred their assets to third persons. There are allegations tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner and Union submit that multiplicity of proceedings as there is lack of clarity on the forum that can adjudicate is being used as ground to delay and complicate matters. In the process properties of the third respondent have been transferred and alienated. The workers/ex-workers would be left without remedy and would not be able to enforce their claims and recover the amounts due. 30. Given the aforesaid position, learned Senior Advocate appearing for the petitioner on instructions had stated that the petitioner may be permitted to withdraw the present writ petition so as to approach the Supreme Court. However, the interim order passed by this Court should be continued and extended for a period of three weeks to enable the petitioner and others to seek appropriate orders. Counsel for the eighth respondent i.e. the Union has stated that they would examine and take appropriate action as may be required and necessary to protect the interest of the workmen/ex-workers including approaching the Supreme Court in Civil Appeal No.20978/2017. 31. One of the reasons why we have narrated the aforesaid facts and given the background is that the learned Senior counsel appearing fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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