IN THE HIGH COURT OF GUJARAT AT AHMEDABAD COMPANY APPLICATION No. 304 of 2010 In COMPANY APPLICATION No. 476 of 2007 In COMPANY PETITION No. 205 of 1996 For Approval and Signature:
HONOURABLE MR.JUSTICE J.B.PARDIWALA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= MADHUSUDAN CHHOTALAL GANDHI - Applicant(s) Versus O.L. OF SUBH LAXMI MILLS LTD. (A UNIT OF GUJARAT STATE TEXTI & 1 - Respondent(s) ========================================================= Appearance :
MR TR MISHRA for Applicant(s) : 1, MR JS YADAV for Respondent(s) : 1, MR MG NAGARKAR for Respondent(s) : 2, ========================================================= CORAM : HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 11/05/2012 CAV JUDGMENT
1) The present Judge’s Summons is taken out with the following prayers :
“A) That Your Lordships be pleased to direct the respondent to pay the amount of gratuity and retrenchment compensation as per the Settlement between Mills Company and Textile Labour Association;
B) Direct the respondent to pay the amount of gratuity as per the settlement between the mills company and the Textile Labour Association;
C) To grant such other and further relief as deemed fit in the interest of justice.”
2) Facts leading to the filing of this application may be summed up thus :
The applicant appears to be one of the employees of M/s.Shubh Laxmi Mills, a unit of GSEC Ltd., which has gone under liquidation. It appears that the dispute in question is with regard to payment of retrenchment compensation. In the first round of litigation the Hon’ble Company Judge (Coram: Mr.Jayant Patel, J.) looked into this issue so far as the claim for retrenchment compensation is concerned. The Hon’ble Company Judge directed the Official Liquidator to calculate the amount, if required with the help of the Chartered Accountant, of retrenchment compensation on the basis of total length of service of the applicant with the Mill - company and directed that 50% of such amount shall be made admissible to the applicant towards his claim and the payment shall be made at par with the other employees for the purpose of disbursement and distribution. The Hon’ble Company Judge also directed that the exercise shall be completed within 8 weeks. It will be expedient to quote the order passed by the Hon’ble Company Judge dated 29/6/2009 in Company Application No.476/2007.
“1. The applicant has preferred the present application to direct the respondent to pay the amount as per the direction issued by the Labour Court, amounting to Rs.3,01,926/- and it is also prayed by the applicant to direct the respondent to pay the amount of gratuity and retrenchment compensation which is paid to all other employees.
2. Heard Mr. Mishra for the applicant, Mr. Jani for Official Liquidator and Mr. Nagarkar for opponent No.2.
3. It appears that the award of the Labour Court dated 13.10.2003 is confirmed by the Industrial Tribunal and therefore the existence of the award is not in dispute and also the direction given by the Labour Court. As per the award of the Labour Court it appears that the Labour Court has interfered with on the aspect of penalty and has modified the penalty of termination by reinstatement with 50% back wages. However, as the mill was closed from March 20, 1997, the actual reinstatement has not been ordered. Therefore, the Labour Court in the operative portion, directed for payment of 50% of the salary and other rights given to the other employees at the time of closure of the mill. It is not in dispute that back wages is considered as admissible to the extent of 50% and further the amount of gratuity is also paid of 36 years of service of the applicant.
4. The learned counsel for the applicant contended that the employer, at the time of closure, had introduced the scheme of VRS and therefore the applicant would be entitled to the amount as per VRS or in alternative it was submitted that the applicant would be entitled to retrenchment compensation on the basis of 36 years of service with the mill company. It was also submitted that in addition thereto the applicant would be entitled to the benefit of leave encashment, encashment of privilege leave etc. As the said amount has not been considered by the Chartered Accountant as admissible, the direction may be issued for payment of such amount at par with the other employees.
5. The report of the Chartered Accountant shows that he has denied the claim for retrenchment compensation on the ground that actual reinstatement is not ordered and he has also denied the claim of VRS on the ground that the applicant was not on the pay roll of the company in liquidation.
6. It appears that as per the award of the Labour Court, notional reinstatement has been ordered but the actual reinstatement has not been ordered. Therefore, in the operative portion the Labour Court has exercised the discretion and awarded 50% of the back wages and other benefits. Under these circumstances, it cannot be said that there is no reinstatement whatsoever on the basis of which the applicant would not be entitled to any benefits as paid to the other employees. It is true that if the person concerned was not on the pay roll, he may not be entitled for the benefit of VRS scheme, because it is by way of voluntary action of the employee concerned to opt for VRS, he may get the amount of VRS scheme. But, if the employee has not opted for VRS and the mill is closed, the employee would be entitled to the retrenchment compensation in accordance with law but as the Labour Court has awarded 50% of the amount, the applicant accordingly would be entitled to 50% of the amount of retrenchment compensation. The other benefits as of privilege leave etc. as claimed by the applicant cannot be made admissible since there is no order passed by the Labour Court for such purpose.
7. Hence, Official Liquidator to calculate the amount, if required with the help of the Chartered Accountant, of retrenchment compensation on the basis of total length of service of the applicant with the mill company and 50% of such amount shall be made admissible to the applicant towards his claim and the payment shall be made at par with the other employees for the purpose of disbursement and distribution. The aforesaid exercise shall be completed within eight weeks from the receipt of the order of this Court.
8. Application allowed to the aforesaid extent.”
3) It appears thereafter that the Official Liquidator referred the matter to M/s.Suketu Trivedi & Co., Chartered Accountant, for this purpose. The firm of Chartered Accountants appears to have prepared a report in this regard and vide letter dated July 15, 2009 informed the Official Liquidator that the dues with regard to gratuity and arrears of wages are calculated at Rs.93,008/- of which the amount of gratuity comes to Rs.79,442/-. The Chartered accountant also came to the conclusion that the full amount of retrenchment compensation for 36 years of service will be Rs.79,442/- @ 15 days per year of service. The firm in terms of order of Hon’ble Company Judge dated 29/6/2009 worked out the retrenchment compensation @ 50% for 36 years of service to the tune of Rs.39,721/- @ 15 days per year of service.
4) As per the report filed by the Official Liquidator the Chartered Accountant has submitted that no further amount is payable to the applicant herein.
5) The learned counsel Mr.T.R.Mishra appearing for the applicant submitted that while calculating the amount of gratuity at Rs.79,442/- the Chartered Accountant has ignored the settlement entered into between the Textile Labour Association and the Chief Manager (P & L) Incharge, Gujarat State Textile Corporation Ltd. and the Deputy Secretary (Textile), Gujarat State, Secretary, Industry Department. According to the learned counsel the grievance of the applicant is that the retrenchment compensation payable to the applicant as per the settlement entered into between the Government and Textile Labour Association should be @ 35 days for every completed years of service till the workman attains the retirement age or Rs.25,000/- or wages @ 35 days per year whichever is higher but not in any case less than Rs.25,000/-. According to Mr.Mishra so far as the retrenchment compensation is concerned, it is required to be calculated @ 35 days and not 15 days wages as calculated by the Chartered Accountant. He submitted that the settlement has not been taken into consideration by the Chartered Accountant and the Official Liquidator has without applying his mind acted as a Postman transferring the papers of the Chartered Accountant to the applicant. Mr.Mishra submitted that the only grievance is with regard to retrenchment compensation and not any other dues. He submitted that dues like back-wages etc. have been paid to the applicant. According to him, if the wages @ 35 days per year of services is calculated, it will come to Rs.2,14,968/- and 50% of the said amount comes to Rs.1,07,484/-. Thus, according to the learned counsel the total amount of retrenchment compensation which is required to be paid is Rs.1,07,484/- out of which an amount of Rs.39,721/- is paid. According to Mr.Mishra the applicant is entitled to an amount of Rs.67,763/- after adjusting the amount of Rs.39,721/- which is already paid.
6) I have heard the learned counsel Mr.T.R.Mishra for the applicant and the learned advocate Mr.J.S.Yadav for respondent no.1 – Official Liquidator. I have also perused the materials on record including the Official Liquidator’s report dated 23/12/2010.
7) It appears that pursuant to the order passed by the Hon’ble Company Judge dated 29/6/2009 the entire issue was referred by the Official Liquidator to the firm of Chartered Accountants for the purpose of calculating the retrenchment compensation. The Chartered Accountants have calculated the dues with regard to gratuity and arrears of wages at Rs.93,008/- of which the amount towards gratuity was calculated to the tune of Rs.79,442/-. However, it appears that the Chartered Accountants calculated the same @ 15 days per year of service. I find substance in the contention of the learned counsel Mr.Mishra that while undertaking this exercise, it appears that the settlement which is on record does not appear to have been taken into consideration.
8) No affidavit-in-reply has been filed in this regard as to whether the settlement was taken into consideration or not and as to whether the settlement is applicable in the case of the present application or not. The Official Liquidator’s report is also conspicuously silent in this regard.
9) In this view of the matter I am of the opinion that the Official Liquidator should once again forward the papers of the applicant herein to M/s.Suketu Trivedi & Co., Chartered Accountants along with the entire settlement arrived at between the Textile Labour Association and the State Government which is annexed as Annexure- D to this application. I am constrained to ask the Official Liquidator this exercise because there is no assistance at the end of the learned counsel appearing for the Official Liquidator in this regard. It is not made clear that during the course of hearing as to whether the settlement is to be considered or not and whether the same will apply in the case of the present applicant.
10) I, therefore, direct the respondent no.2 the Official Liquidator of Shree Shub Laxmi Mills Ltd., (under liquidation), to once again forward all papers. M/s.Suketu Trivedi & Co., Chartered Accountants, more particularly along with the entire copy of the settlement arrived at between the association and the State Government and ask the Chartered Accountants to calculate the amount of retrenchment compensation as per the settlement. This exercise shall be undertaken by the Official Liquidator within a period of 15 days from the date of receipt of the writ of this order requesting the Chartered Accountants to recalculate the amount in light of the settlement and submit its report within four weeks thereafter.
The Application is accordingly disposed of in the above terms.
/moin (J.B.Pardiwala, J.)