JUDGMENT Aloke Chakrabarti, J.
1. A recovery certificate dated 22.5.1996 under Section 3(1) of U.P. Industrial Peace (Timely Payment of Wages) Act, 1978 (hereinafter referred to as Act of 1978) was issued and in pursuance of such recovery certificate and removal of goods from the petitioner's factory premises were challenged by this writ petition. By an application for amendment filed by the petitioner addition of three prayers were made for preparation of inventory of the goods and machines already removed and still remaining in the Factory premises of the petitioner, to open the Factory premises as and when required by the petitioner company and for preparation of an inventory of goods and machines removed from the factory premises and kept at and lying in the premises of certain named parties and for restoration of the said goods.
2. The relevant factual background of this case is that the petitioner applied for rehabilitation of the Company as a sick industry before the Board for Industrial and Financial Reconstruction (hereinafter referred to as B.I.F.R.) under Section 15 of the Sick Industrial Companies (Special Provision) Act, 1985 (hereinafter referred to as "Act of 1985"). It is also stated that the petitioner closed manufacturing activities in the factory premises of the petitioner at Ghaziabad and assets lying therein were being looked after by the Security Guards only as manufacturing activities had been closed. In the meantime on 26.10.1993 the B.I.F.R. passed order under Section 17 of the Act of 1985 declaring the petitioner-company as sick. Draft Scheme of rehabilitation was prepared and was under consideration. Recovery certificate for Rs. 15,58,087.92/- for wages of the employees had been issued and auction was held on 18.11.1995 and such auction was cancelled on 18.12.1995 as the balance amount required to be deposited for such auction had not been deposited within time. The auction purchaser filed writ petition No. 470 of 1996 which was ultimately allowed on 22.7.1996 holding that the payment of balance amount was made within time. The petitioner received a letter dated 13.8.1996 from the Tehsildar, the respondent No. 2 and the gave a reply thereto on 16.8.1996. The Tehsildar by letter dated 24.8.1996 asked the petitioner to file his objection and the petitioner filed his objection. It is stated that on 12.9.1996 goods were being lifted and when the petitioner came to know about this, he moved a writ petition on 13.9.1996 and obtained stay order.
3. The Collector, Ghaziabad and Tehsildar, Sadar Tahsil, Ghaziabad, being respondent Nos. 1 and 2 filed a joint counter affidavit and separate counter affidavits were filed by the respondent No. 3, Additional Labour Commissioner, Ghaziabad, respondent No. 4, Engineering Karamchari Trade Union and the respondent no. 5 M/s. Shriram Trading Company. The petitioner filed rejoinder affidavit.
4. Heard the learned Counsel for the petitioner and the learned Counsel representing the respondent Nos. 3, 4 and 5 respectively as also the learned Standing Counsel.
5. Learned Counsel for the petitioner in support of writ petition claiming reliefs urged three contentions. The first contention of the learned Counsel for the petitioner is that in view of the provision of Section 22 of the Act of 1985 the proceeding for recovery could not be held. The second contention of the learned Counsel is that the said Act of 1978 is not available as the claim itself is disputed and Company having closed its manufacturing activities, is not liable to pay wages to the workmen. The third contention of the learned Counsel is that holding of auction and removal of goods of the petitioner-company without notice to the petitioner, was result of malafide and as such are liable to be set-aside.
6. With regard to the first contention, the learned Counsel for the petitioner first placed reliance on various provisions of the said Act of 1985, including Section 22 thereof The relevant portion of the said Section 22 is set-out herein below:-
"(1) Where in respect of an industrial company, an inquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956, or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.
(2) ** ** ** (3) During the period of consideration of any scheme under Section 18 or where any such schema is sanctioned thereunder, for due implementation of the scheme, the Board may by order declare with respect to the sick industrial company concerned that the operation of all or any of the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments in force, to which such sick industrial company is a party or which may be applicable to such sick industrial company immediately before the date of such order, shall remain suspended or that ail or any of the rights, privileges, obligations and liabilities accruing or arising thereunder before the said date, shall remain-suspended or shall be enforceable with such adaptations and in such manner as may be specified by the Board :
Provided that such declaration shall not be made for a period exceeding two years which may be extended one year at a time so, however, that the total period shall not exceed seven years in the aggregate.
(4) Any declaration made under sub-section (3) with respect to a sick industrial company shall have effect notwithstanding anything contained in the Companies Act, 1956 or any other law, the memorandum and articles of association of the company or any instrument having effect under the said Act or other law or any agreement or any decree or order of a Court, tribunal, officer or other authority or of any submission settlement or standing order and accordingly-
(a) any remedy for the enforcement of any right, privilege, obligation and liability suspended or modified by such declaration, and all proceedings relating thereto pending before any Court, tribunal, officer or other authority shall remain stayed or be continued subject to such declaration and
(b) on the declaration ceasing to have effect-
(i) any right, privilege, obligation or liability so remaining suspended or modified, shall become revived and enforceable as" if the declaration had never been made; and (ii) any proceeding so remaining stayed shall be proceeded with subject to the provisions of any law which may then be in force, from the stage which had been reached when the proceedings became stayed."
7. Relying on the provision of said Section 22 it has been contended that as the scheme referred to under Section 17 of the said Act of 1985 is under preparation and under consideration, no proceeding against any of the properties of the petitioner-company can proceed except with the consent of the Board and as such the auction held for such recovery on the basis of a recovery certificate without any approval of the Board is null and void. In support of such contention reliance has been placed on the law decided in the case of Maharashtra Tubes Limited v. State Industrial and Investment Corporation, reported in J.T. 1993 (1) SC 310 and Gram Panchayat v. Shree Vallabh Glass Works Ltd., reported in AIR 1990 SC 1017. In respect of the right of the petitioner-company to close the business in view of the loss being sustained as a fundamental right, reference was made to the judgment in the case of Jay Shree Tea Limited v. Industrial Tribunal (1), Allahabad, reported in 1990 (60) F.L.R. 608.
8. With regard to the second contention in respect of applicability of Act of 1978 as payability of the wages is disputed, the learned Counsel for the petitioner referred to various provisions of the said Act of 1978 including Section 2(d) and Sections 3(i) and (ii) as also the Rules framed under the said Act of 1985 and in particular the Rule 4 thereof. It has been stated that the said Act of 1978 does not apply in respect of the sick unit nor it is applicable wherein claim is disputed contending that the proceeding under the said Act is a summary proceeding. In support of such contention law has been referred to as decided in the case of Modi Industries v. State of U.P., reported in J.T. 1993 (6) S.C. 103, holding that when payability of the wages is disputed, such dispute is not to be adjudicated under Section 3 of the Act of 1978 and the matter requires to be referred for adjudication of the dispute under the relevant Industrial Dispute Act. With regard to the third contention of the learned Counsel for the petitioner as regards malafide, the statements made in the writ petition and in the affidavits filed in support of the amendment application have been referred to for contending that the auction was held and removal of goods took place under such Act without any notice to the petitioner as a result of malafide and as such the same is bad.
9. Mr. K.P. Agarwal, learned Counsel for the respondent No. 4 Engineering Karamchari Trade Union referred to provisions of the said Act of 1985 and in particular of Section 22 thereof and contended that the liability of the employer is there for payment of wages to the workmen when the workmen actually discharged duties or when the workmen are prevented from discharging duties at the instance of the employer there being no formal termination of relationship of master and servant. It is said that the petitioner in this writ petition did not even claim that any termination of relationship of master and servant between the petitioner-company and its workmen was ever there. The contention has been made in the writ petition that the manufacturing activities have been stopped. Reference was also made to the provision of Sub-sections (n), (o) and (s) of Section 2 of the U.P. Industrial Dispute Act, 1947 and corresponding Sections of the Central Act stating that no claim of lay-off lock-out, retrenchment or closure has at all been made. In this connection reference was also made to Article 23 of the Constitution of India in support of the claim of the workmen for payment of wages. Law has been referred to as decided in the case of People's Union for Democratic Rights v. Union of India, reported in AIR 1982 SC 1473, Central Inland Water Transport Corporation Ltd. v. Brojo Nath, reported in AIR 1986 SC 1582, Workmen v. Bharat Cooking Coal Ltd., reported in AIR 1978 S.C. 979, Basti Sugar Mills v. State of U.P., reported in 1978 (37) F.L.R. 265 (equivalent to AIR 1979 SC 26), M/s. Shree Chamundi Mopeds Ltd. v. Church of S.I.T. Association, reported in AIR 1992 SC 1439.
10. Learned Counsel for the workman also referred to the judgments relied upon by the learned Counsel for the petitioner and contained that the law down in the aforesaid judgments leads to one conclusion that the proceeding for recovery of the amount towards wages of the employees was not a proceeding within the meaning of Section 22 of the said Act of 1985 and as such the recovery certificate and the auction held in terms thereof and removal of goods on the basis of such auction was valid and proper.
11. Learned Counsel for the workmen further referred to various provisions of the Act of 1978 as also the law decided in case of Modi Industries Ltd. v. Additional Labour Commissioner and Ors., reported in 1994 (1) LLJ 482 and the case of M/s. Rainbow Steel Ltd. v. M/s. Essar Gujrat Ltd., in Civil Misc. Application No. 36735 of 1995, decided on 9.8.1995. Referring to the aforesaid law as also the law referred to by the learned Counsel for. the petitioner it has been contended on behalf of the workmen that there was no dispute to be adjustificated under the U.P. Industrial Dispute Act. Recovery certificate has been validity issued under Section 3 of. the said Act of 1978 which protects payment of wages for any period the workmen actually worked or when the workmen could not discharge duties at the instance of the petition-company so long relationship of master and servant continues.
12. Mr. K.P. Agarwal, learned Counsel for the workmen also referred to the facts as have been disclosed in various counter affidavits and contended that the petitioner was* having complete notice before holding, of auction, at the time of holding of auction and after the said auction and it waited only for its own convenience and as such there is no case of mala fide nor the auction was held without notice or knowledge of the petitioner Special reference was made to the statements made in the rejoinder affidavit to show that the petitioner even did not deny the notice or knowledge and only mild contention was made that the notice was not sufficient notice.
13. Mr. Navin Sinha, learned Counsel for the respondent No. 5 contended that the said provision of Section 22 of the Act of 1985, though mandatory, but its requirement can be waived for the benefit of protecting those whose interest it protects. It has been stated in the facts of the present case such waiver is essential. Various provisions of the said Act of 1985 have been referred to on behalf of the respondent No. 5 in support of his contention. It is also stated that the said Act of 1985 has no provision equivalent to Sections 531, 531A and 537 of the Companies Act. Learned Counsel made reference to the case of Krishna Lal v. State of Jammu and Kashmir, reported in JT 1994' (2) SC 619, Chinnammal v. P. Arumugham, reported in AIR 1990 SC 1828 and the case of State of Punjab v. Gurmit Singh, reported in J.T. .1996 (1) SC 298, as also some provisions of Civil Procedure Code in support of his contention.
14. Learned Standing Counsel referred to the pleadings and supported the action of the respondent Nos. 1 and 2.
15. Miss Bharti Sapru, learned Counsel appeared on behalf of the Financial Corporation of India who filed an application for its impleadment.
16. After considering the respective contentions of the parties, I find that with regard to scope of Section 22 of the Act of 1985, the law is settled that in respect of the proceedings within the meaning of Section 22 of the Act of 1985 those can not continue untill consent is obtained from B.I.F.R. so long the circumstances specified in the said Section continues to prevail.
17. In the facts of the present case the scheme referred to under Section 17 of the said Act of 1985 is under preparation or consideration in respect of the petitioner's Company and to that extent Section 22 is applicable herein. The term 'proceeding' used in the said Section has been interpreted in the case of Maharashtra Tubes Ltd. (supra) and Gram Panchayat (supra). The judgment in the case of M/s. Shri Chamundi Mopeds Ltd. (supra), shows that the eviction proceedings are not recovered by Section 22. The claim in respect of which recovery was proceeded in the case of Maharashtra Tubes Limited (supra), was the money advanced by the financial institution and in respect of the case of Gram Panchyat. But on the claim of landlord for eviction on the ground of tenant-company's inability to pay rent on consideration in the case of Shri Chamundi Mopeds Ltd. (supra), the Apex Court held that the such proceeding is not covered by Section 22 as otherwise the landlord of the premises held by such company, will be required to continue to suffer a loss and such an intention can not be imputed to Parliament.
18. In the present case, the recovery related to claim for wages by the workmen. Admittedly, the petitioner-company has not terminated the relationship of Master and servant between the company and its workmen. No case has been made out of lay-off or lock out or retrenchment or closure. Therefore, so long relationship of master and servant between the company and its workmen continues, the employer is bound to pay wages to the workmen even if the employer for some reason does not feel inclined to get actually the work done by the workmen. In respect of such payment the employer can not dispute its liability because of the sickness of the Unit of pendency of the scheme for rehabilitation. Therefore, I am of the opinion that the proceeding for recovery of such wages is not covered by Section 22 of the said Act of 1985. Relying on the principle laid down in the case of Shri Chamundi Mopeds Limited (supra), I find that in case of such proceeding no consent from the B.I.F.R. is required. Contrary Interpretation of law will result In compelling the present workmen to continue to discharge duties without any payment of wages and this also can not be the intention of the Legislature. If the purpose of said Act of 1985 is to rehabilitate the Company itself, the same can not mean that the workmen are to be compelled to continue without payment of wages as workmen are important constituent of the industrial unit. The said Act can not be interpreted to mean that it saves only the employer and not the employees. Such an interpretation will not only leave the workmen to starve but also will lead to slavery. In the aforesaid circumstances, I hold that the recovery certificate, auction and removal of goods on the aforesaid ground do not become illegal. With respect to the contention regarding 1978 Act, I hold that the present claim of workmen in respect of wages is not a disputed claim in view of the findings, herein arrived, as regards such wages. True, when there is a dispute regarding adjudication of disputed facts relating to some claim of wages, a reference under Section 4 of the U.P. Industrial Dispute Act is required. But, this does not mean that in every case whenever employer refuses to pay, claim has to be described as disputed claim.
19. In the present facts, admittedly, the relationship of master and servant continues between the petitioner-company and its workmen and petitioner-company could not show any reason for withholding payment of wages of workmen so long such relationship continues. Therefore, I am of the opinion that the law as decided in the case of Modi Industries Ltd. v. Addl. Labour Commissioner and Ors. (supra), is applicable herein. Following the said law I am of the view that the recovery certificate, auction and removal of goods in pursuance thereof are not illegal.
20. With regard to the contention of the petitioner as regards malafide and notice of auction, I find that the facts have been disclosed in the counter affidavit filed by the respondent Nos. 2, 3 and 5 which indicates that there was proper advertisements both before and after the auction. Moreover, a prior notice was admittedly served on the security guard of the petitioner company who was present at the factory premises. In the facts of the case, I find that such security guards are agents of the petitioner-company and, therefore, such notice has to be accepted as proper notice. Auction washed in the factory premises itself on 18.11.1995 and there is no explanation as to why the petitioner could not know the same when said premises was admittedly under the control of the security guards appointed by the petitioner-company. The petitioner has failed to show any reason for not challenging the said "auction within reasonable time after the auction itself.
21. With regard to in-sufficiency of notice as contended by the learned Counsel for the petitioner relaying on the statement made in the rejoinder affidavit, I find that the said contention can not be accepted as when the goods were being lifted on 12.9.1996, even according to the petitioner, the intimation relating to the same could be given by the security guards to the petitioner-company within such time that the petitioner could move the writ petition on the very next date. Therefore, such notices are sufficient notices and the petitioner has failed to explain any reason of not challenging the same at any earlier point of time. Moreover, the notice having been served at the proper time, can not be termed as insufficient notice. In view of the aforesaid facts I do not find that the case of malafide is made out.
22. In view of the aforesaid facts and circumstances, I do not find any ground for interference on the present writ petition and accordingly the same is dismissed. There will be no order as to costs.