9911796707
TMI Blog1995 (11) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No. 3. Since the respondent No. 3 failed to pay the amount of gratuity, respondent No. 2 moved the Controlling Authority under the Payment of Gratuity Act seeking for the recovery of the said amount of ₹ 16,730/-. On October 18, 1983, the President of India promulgated the Textile Undertakings (Taking Over of Management) Ordinance, 1983 whereby the management of the Cotton Textile undertaking of respondent No. 3 was taken over by the Central Government. The said Ordinance was subsequently replaced by the Act which was brought into force with effect from October 18, 1983. The Central Government vested the management of the textile undertaking of respondent No. 3 with the NTC with effect from October 18, 1983. NTC was impleaded as a party to the proceedings before the Controlling Authority. Respondent No. 3 did not appear to contest the petition before the Controlling Authority but the NTC appeared and contested its liability for the payment of gratuity to respondent No.2. By order dated October 31, 1984, the Controlling Authority upheld the objection raised by NTC regarding its liability for the gratuity amount payable to respondent no. 2 and held that the said gratuity a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said textile undertaking and all property, movable and immovable, including lands, buildings, workshops, projects, stores, spares, instruments, machinery, equipment automobiles and other vehicles, and goods under production or in transit, cash balances, reserve fund, investments and booklets and all other rights and interests in or arising out of such property as were, immediately before the appointed day, in the ownership, possession, power or control of the textile company whether within or outside India and all books of account, registers and all other documents of whatever nature relating thereto. (3) Any contract, whether express or implied, or other arrangement, in so far as it relates to the management of the business and affairs of the textile undertakings and in force immediately before the appointed day, or any order made by any court in so far as it relates to the management of the business and affairs of the textile undertaking and in force immediately before the appointed day shall be deemed to have terminated on the appointed day. (4) All persons in charge of the management, including persons holding offices as directors, managers or any other managerial personne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for termination on the appointed day of any contract, whether express or implied, or other arrangement in so far as it relates to the management of the business and affairs of the textile undertakings which was in force immediately before the appointed day, as well as any order made by any court in so far as it relates to the management of the business and affairs of the textile undertaking which was in force immediately before the appointed day. Sub-section (4) provides that all persons in charge of the management, including persons holdings office as directors, managers or any other managerial personnel, of the textile company in relation to the textile undertaking immediately before the appointed day, shall be deemed to have vacated their offices as such on the appointed day. Sub-section (5) lays down that no person in respect of whom any contract of management or other arrangement is terminated by reason of the provisions contained in sub-section (3), or who ceases to hold any office by reason of the provisions contained in sub-section (4), shall be entitled to claim any compensation for the premature termination of the contract of management or other arrangement or for the los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to Section 6 of the Act which deals with the power of the Central Government to make certain declarations in relation to certain textile undertakings. In Sub-section (1) of Section 6 it is provided : "6. Power of the Central Government to make certain declarations in relation to certain textile undertakings - (1) The Central Government may, if satisfied, in relation to any of the textile undertakings or any part thereof, the management of which has vested in it under this Act, that it is necessary so to do in the interests of the general public with a view to preventing any fall in the volume of production of such undertaking, by notification, declare that - (a) all or any of the enactments specified in the Second Schedule shall not apply or shall apply with such adaptations, whether by way of modification, addition or omission (which does not, however, affect the policy of the said enactments) to such undertaking as may be specific in such notification, or (b) the operation of all or any of the contracts, assurances of property, agreement, settlements, awards, standing orders or other instruments in force (to which such textile undertaking or the textile company own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said provisions do not apply to liabilities that had accrued prior to the taking over of management. We are, therefore, unable to construe the provisions contained in sub-section (1) of Section 6 as having the effect of curtailing the applicability of clause (7) of Section 3 referred to above so as to exclude the liability arising under the Payment of Gratuity Act from its ambit. The learned counsel for the appellant has submitted that the Sub-section (7) of Section 3 should be construed in the light of the Preamble to the Act wherein it is stated : "AND WHEREAS further investment of very large sums of money is necessary for reorganising and rehabilitating the said undertakings and thereby to protect the interests of the workmen employed therein and to augment the production and distribution at fair prices of different varieties of cloth and yarn so as to subserve the interests of the general public." The submission is that since the Act has been enacted to protect the interests of the workmen employed in the textile undertakings whose management has been taken over, Sub- section (7) of Section 3 should be construed in a manner that the interests of the workmen are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod prior to the taking over of the management of the textile undertaking are not taken over by the NTC is also borne out by the Textile Undertakings (Nationalisation) Ordinance, No.6 of 1995 promulgated by the President on June 27, 1995. The said Ordinance provides for the acquisition and transfer of the textile undertakings specified in the First Schedule of the said Ordinance. Respondent No. 3 is one of the textile undertakings referred to in the said Ordinance. Under Section 3 of the said Ordinance, the right, title and interest of the owner in relation to every textile undertaking mentioned in the First Schedule to the Act stands transferred and vests absolutely in the Central Government on the appointed day, i.e. April 1, 1994. Under Section 5 of the said Ordinance, every liability, other than the liability specified in Sub-section (2), of the owner of a textile undertaking, in relation to the textile undertakings in respect of any period prior to the appointed day shall be the liability of such owner and shall be enforceable against him and not against the Central Government or the NTC. Clause (c) of Sub-section (2) of Section 5 refers to liability arising in respect of wag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amounts due to the employees in relation to the pre-take over period, was challenged before this Court. The said challenge was negatived by the Court and it was observed :-
"The distinction made between the liabilities of the post-takeover management period and the pre-takeover management period is prima facie sound as the former liabilities are those incurred pursuant to the public management of the undertaking under the statute, while the latter liabilities are those incurred in the course of the private management by the owner of the undertaking."
The provisions of the Ordinance No. 6 of 1995 also show that the liabilities for the period prior to the take over of the management are to be discharged from the amount payable to the owner of the textile undertaking for the acquisition of the undertaking and not by the NTC. It is, therefore, not possible to uphold the contention urged on behalf of the appellant that NTC is liable in respect of the gratuity amount payable under the Payment of Gratuity Act to Respondent No.2.
The appeal accordingly fails and is hereby dismissed. But in the circumstances, there will be no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X
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