IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 17627 of 2003 With CIVIL APPLICATION NO. 8523 of 2005 In SPECIAL CIVIL APPLICATION NO. 17627 of 2003 With CIVIL APPLICATION NO. 8529 of 2005 In SPECIAL CIVIL APPLICATION NO. 674 of 2004 With CIVIL APPLICATION NO. 8432 of 2012 In SPECIAL CIVIL APPLICATION NO. 2192 of 2004 With SPECIAL CIVIL APPLICATION NO. 674 of 2004 With SPECIAL CIVIL APPLICATION NO. 2192 of 2004 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.D. SHAH ================================================================
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 ? ================================================================ NATIONAL DAIRY DEVELOPMENT BOARD Petitioner(s) Versus MILL MAZDOOR SABHA & 4 Respondent(s) ================================================================ Appearances:
Special Civil Application No.17627 of 2003 MR DC DAVE, SR.ADV. WITH MR JIGAR M PATEL for petitioner-NDDB MR KR KOSHTI for respondent No.1 MR KM PATEL, SR.ADV. WITH MR. VARUN K PATEL for respondent No.2-GDDC MR PP BANAJI, AGP for respondent No.4 Special Civil Application No.674 of 2004 MR KR KOSHTI for petitioner-Union MR KM PATEL, SR.ADV. WITH MR. VARUN K PATEL for respondent No.1-GDDC MR PP BANAJI, AGP for respondent No.2 MR DC DAVE, SR.ADV. WITH MR JIGAR M PATEL for respondent No.3-NDDB Special Civil Application No.2192 of 2004 MR MB GANDHI WITH MR CHINMAY GANDHI for petitioners MR KM PATEL, SR.ADV. WITH MR. VARUN K PATEL for respondent No.1-GDDC MR DC DAVE, SR.ADV. WITH MR JIGAR M PATEL for respondent No.2-NDDB Civil Application No.8432 of 2012 in SCA 2192 of 2004 Party-in-person for petitioner MR KM PATEL, SR.ADV. WITH MR. VARUN K PATEL for respondent No.1 MR DC DAVE, SR.ADV. WITH MR JIGAR M PATEL for respondent No.2 Civil Application No.8523 of 2005 in SCA 17627 of 2003 MS SEJAL V SUTARIA for applicant MR KR KOSHTI for respondent No.3 MR PP BANAJI, AGP for respondent No.5 Civil Application No.8529 of 2005 in SCA 674 of 2004 MS SEJAL V SUTARIA for applicant MR KR KOSHTI for respondent No.3 MR PP BANAJI, AGP for respondent-State CORAM: HONOURABLE MR.JUSTICE M.D. SHAH Date : 11/12/2012 COMMON ORAL JUDGEMENT
1. Special Civil Application No.17627 of 2003 challenges award dated 30-10-2003 passed by the Labour Court, Surendranagar, in Reference (LCB) No.5 of 2003 whereby the petitioner-National Dairy Development Board (hereinafter referred to as ‘NDDB’ for short) has been directed to absorb all the seven employees mentioned in the operative portion of the award with continuity in service by holding it to be successor in the interest of Gujarat Dairy Development Corporation Ltd. (hereinafter referred to as ‘GDDC’ for short) and Surendranagar Dairy.
2. Special Civil Application No.674 of 2004 challenges the award passed by the Labour Court, Surendranagar in Reference (LCD) No.5 of 2003 to the extent of refusal to give direction for absorption in the Board or Corporation owned by the Government or any other Government Department and further to direct the respondent No.2- State to absorb the services of the members of petitioner-Mill Mazdoor Union in any Board or Corporation owned by the Government.
3. Special Civil Application No.2192 of 2004 challenges termination of services of petitioners-seven employees by the respondent-GDDC by order of termination dated 11-2-2004.
4. As common facts and law are involved in all these petitions, they were heard together and are being decided by this common judgment.
5. Short facts are that the workmen, who were directed to be absorbed in the NDDB by the Labour Court, were in the employment of Surendranagar Dairy, a unit of GDDC. NDDB, which was one of the major creditors of GDDC, could not repay the loan advanced by NDDB due to its poor financial position and, therefore, GDDC including Surendranagar Dairy became almost non- functional. On being applied, GDDC was declared as sick unit in terms of Sec.3(1)(h) of Sick Industrial Companies (Special Provisions) Act, 1985 by the Board for Industrial and Financial Reconstruction(hereinafter referred to as ‘BIFR’ for short). Punjab National Bank was appointed as operating agency by BIFR and asked to submit a report. GDDC offered voluntary retirement scheme(VRS) as per the suggestion in the proceedings before BIFR. Except 12, all other employees opted for VRS and availed the benefits. A Scheme was framed by BIFR with the consent of creditors of GDDC for settling the dues of creditors whereby some of the assets of GDDC was contemplated to be transferred to NDDB. The scheme, however, does not cast any duty on the NDDB to absorb employees of erstwhile GDDC. The scheme sanctioned became final. A reference being Reference (LCS) No.5 of 2003 was made by the petitioner-Mill Mazdoor Sabha before the Labour Court, Surendranagar for absorption with NDDB. Labour Court, Surendranagar, allowed Reference No.5 of 2003 directing NDDB to absorb seven workmen with continuity of service. Said award was challenged by the NDDB by way of Special Civil Application No.17627 of 2003. The petitioner-Mill Mazdoor Sabha has filed Special Civil Application No.674 of 2004 against the award for refusing to absorb them in the Board or Corporation owned by the Government or any other Government Department. Special Civil Application No. 2192 of 2004 has been filed by the employees, who did not opt for VRS, against the termination of their services by the GDDC.
6. Heard learned Senior Advocate, Mr.D.C.Dave with learned advocate, Mr.Jigar M.Patel for the NDDB, learned advocate, Mr.K.R.Koshti for Mill Mazdoor Sabha, learned Senior Advocate, Mr.K.M.Patel with learned advocate, Mr.Varun K.Patel for GDDC, learned advocate, Mr.M.B.Gandhi with learned advocate, Mr.Chinmay Gandhi for the employees of the GDDC, learned AGP, Mr.P.P.Banaji for the State and learned advocate, Mr.Sejal V.Sutaria for the applicants in Civil Application Nos.8523 of 2005 and 8529 of 2005.
7. Learned Senior Advocate, Mr.D.C.Dave for NDDB submitted that there was no relationship of employer and employee between the NDDB and the concerned workmen, who made reference to the Labour Court. He further submitted that the directions issued by the Labour Court run counter to the Scheme framed by the BIFR. According to him, as there was no provision in the Scheme framed by BIFR requiring the NDDB to absorb those employees of GDDC, who did not opt for voluntary retirement scheme, there is no question of absorbing the employees of GDDC in NDDB and, therefore, such a direction ought not to have been issued by the Labour Court. He further submitted that although the scheme was framed by BIFR to settle the dues of secured creditors of GDDC, the Labour Court held that NDDB is the successor in interest of GDDC which is a complete misreading of the scheme and contrary to the mandate flowing from Section 25-FF of Industrial Disputes Act, 1947. He further submitted that clause 7 of the Memorandum of Understanding dated 28-4-2003 executed by and between the NDDB and GDDC and the State of Gujarat in pursuance of the scheme framed by BIFR mentioned that “all liabilities payable by GIDC in respect of such units on the date of possession shall be born by GIDC or State Government”. He further submitted that Clause 10 states that “NDDB/GCMMF will employ their own officers and staff. However, the discretion for granting preferences to ex-employees of GDDC shall vest with NDDB or its nominees and there shall not be any binding. According to him, these clauses clearly show that NDDB was not under any obligation to employ the ex-employees of GDDC. He further submitted that if the directions given by the Labour Court are to be given effect, it would be violating the rules and regulations framed by it in the matter of appointment and violating the mandate flowing from Article 14 of the Constitution of India. He further submitted that as such, there is no prayer against the NDDB and, therefore, no directions ought to have been given against it. He, therefore, requested to allow Special Civil Application No.17627 of 2003 by quashing and setting aside the award passed by the Labour Court. In this connection, he has relied on the following reported decisions:
i) AIR 1963 Supreme Court page 1489 in the case of Anakapalle Co-operative Agricultural and Industrial Society Ltd., Vs. Workmen and others;
ii)(2005)2 Supreme Court Cases 638 in the case of Maruti Udyog Ltd. Vs. Ram Lal and Others and iii)2012(2) GLH page 489 in the case of Charutar Arogya Mandal Vs. Parents Association for the Medical/Dental Students and Ors.
8. Learned Senior Advocate, Mr.K.M.Patel, for GDDC submitted that petitioners of Special Civil Application No.2192 of 2004, who are the erstwhile employees of GDDC, were terminated in accordance with law as the financial condition of the Dairy was deteriorating and as there was no work in Surendranagar Dairy where they were working. He further submitted that along with the order of termination, the Corporation had sent cheques towards their legal dues, however, they were returned with the endorsement of ‘refusal’ except in case of one petitioner and hence, no infirmity could be pointed in the order of termination. He further submitted that before issuing the order of termination, employees were offered voluntary retirement scheme, however, seven employees did not opt for said scheme and they raised a dispute for absorption in NDDB or GCMMF or its nominee in pursuance of draft rehabilitation scheme whereby assets of Surendranagar Dairy without liability of employees were proposed to be transferred. He further submitted that the draft scheme envisaged termination of services of employees of GDDC, who did not opt for VRS, during the course of proceedings before BIFR and as the employees filed reference demanding absorption in NDDB, they cannot challenge their order of termination and, therefore, the petition is barred by the principles of waiver, estoppel and acquiescence. He further submitted that as the order of termination was issued after following due process of law like issuing notice and issuing cheques amounts towards legal dues and as valid and justified reasons have been assigned, employees were not entitled to any benefit.
9. Learned advocate, Mr.M.B.Gandhi, who is representing the petitioners of Special Civil Application No.2192 of 2004, submitted that it was specifically stated in the appointment order itself that terms and conditions of the appointment would be governed by Gujarat Dairy Development Ltd. Service Rules, 1975. It was further stated in the appointment order that employee will have to be absorbed in the service of the District Milk Union or any other Organization if and when any activity of GDDC is transferred to District Milk Union or Organization. He therefore submitted that as per the sanctioned Scheme, when NDDB has taken over Surendranagar Dairy, employees could have been reinstated but they were terminated and, therefore, it is requested that orders of termination be quashed and set aside. He further submitted that as per the provisions of Section 18 of the Act, the award passed by the Labour Court is binding on the respondent and, therefore also, termination of services of the petitioners is viod-ab-
initio. He further submitted that permission as required under Sec.33(1)(a) of the Act was not obtained since Reference No.129 of 1997 is pending before the Industrial Court at Rajkot. He further submitted that as per the Scheme sanctioned by BIFR, all the liabilities of the sick unit are accepted by NDDB and as NDDB is able to provide work to the petitioners, they are duty bound to re-employ them in any unit of NDDB.
10. This Court has considered the rival submissions advanced by the learned advocates appearing on behalf of the respective parties.
11. As far as sanctioned Scheme is concerned, it is pertinent to note that as Surendranagar Dairy has suffered huge financial loss and as there was no work, they were not able to run the unit and it became non-functional land hence, it was taken over by NDDB. It is further pertinent to note that Dairy is taken over by NDDB only for the purpose of infrastructure and financial aspect concerning settlements of dues of its secured creditors. There is no provision made in the Scheme framed by the BIFR requiring the NDDB to absorb the employees of GDDC, who did not opt for voluntary retirement scheme. There was nothing in the papers to show that any liability was passed on to NDDB to give employment to the petitioners or to absorb them in any unit run by NDDB. As far as other employees are concerned, they have accepted the voluntary retirement scheme which was offered to them and legal and permissible dues of those employees were paid to them. As the Dairy was not able to run the unit due to heavy financial crisis, the Dairy approached the concerned authority for declaring it as a sick unit and the unit was declared as a sick and closure order was passed. In view of the above, question does not arise to reinstate the employees, who did not opt for VRS. It may further be noted that no relief was prayed against NDDB. It was therefore incumbent upon the aggrieved party to approach the appellate authority rather than approaching the Labour Court. When Labour Court was wrongly approached, no direction should have been issued for absorption of employees of GDDC in NDDB especially when the sanctioned scheme framed by BIFR does not impose any burden on NDDB in regard to their reemployment or absorption. Issuance of such a direction to absorb the employees would tantamount to travelling beyond the scheme framed by BIFR and is contrary to Section 25FF of Industrial Disputes Act, 1947. Sec.25FF reads as under:
“[25FF. Compensation to workmen in case of transfer of undertakings.- Where the ownership of management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who has been in continuous service of not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched: Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if -
(a) the service of the workman has not been interrupted by such transfer;
(b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and
(c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.]”
Aforesaid section makes it abundantly clear that when a case of transfer of employer comes, the employees would be entitled to compensation as prescribed under Sec.25F from the transferor and, therefore, there is no question of absorption of employees of GDDC by NDDB. Thus, the findings of the Labour Court that the NDDB is the successor of GDDC is misconceived and misconstrued. In view of the above, the impugned award passed by the Labour Court requires to be quashed and the petitions filed by NDDB and Mill Mazdoor Sabha require to be allowed and the petition filed by employees of GDDC require to be rejected.
12. Thus, Special Civil Application 17627 of 2003 is allowed. Impugned award dated 30-10-2003 passed by the Labour Court, Surendranagar in Reference (LCB) No.5 of 2003 is quashed and set aside. Rule is made absolute.
13. Special Civil Application No.674 of 2004 and Special Civil Application No.2192 of 2004 are however rejected. Rule is discharged.
14. In view of the disposal of the main Special Civil Applications, Civil Applications do not survive and are disposed of.
15. Office is directed to place a copy of this judgment in each matter.
(M.D.SHAH, J.) RADHAN