Appeal No 447 of 1957
Appeal by special leave from the judgment and order dated the 1st August 1956 of the Labour Appellate Tribunal of India Culcutta in Appeal No Cal 107 of 1956
D N Mukherjee for the appellants
Y Kumar for the respondent
May 6
The Judgment of the Court was delivered by SINHA J
This appeal by special leave is directed against the order of the Labour Appellate Tribunal dated August 1 1956 dismissing in limine the appeal 15 against the Award of the Third Industrial
Tribunal dated March 8 1956
The Great Indian Motor Works Ltd now in liquidation hereinafter referred to as the Company  represented by one of the Managing Directors K D Nundy is the first appellant
The said K D Nundy in his capacity as the creditor of the Company andor as the auction purchaser of the Company is the second appellant
One hundred and forty two employees of the Company represented by the Bus Workers  Union are collectively the first respondent
The second and third respondents C D Nundy and D L Dutt are the Official Liquidators of the Company appointed by the High Court as such
The relevant facts are these The Company was incorporated and registered under the Indian Companies Act 1913 in 1926 as a private limited company with its registered office at Calcutta
Its business was mainly that of carrying on public transport on Route No 14 in the City of Calcutta as also of dealers in and repairers of motor vehicles
It had an authorized capital of six lacs of rupees divided into 600 shares of Rs 1000 each out of which shares worth Rs 400000 only had been subscribed and paid up
The registered share holders of the Company were Kristo Das Nundy the second appellant having 246 shares Chandy Das Nundy respondent No 2 having 142 shares and Kumar Kartick Charan Mullick holding 12 shares each of the face value of Rs 1000
On account of financial difficulties and disputes between its share holders an application for compulsory winding up of the Company was made by the said respondent No 2 on the Original Side in the High Court at Calcutta
On July 23 1951 an order for winding up the Company was made and the Official Receiver was appointed the Official Liquidator of the Company
An appeal against the order aforesaid was dismissed on December 5 1951 and the order for winding up the Company stood confirmed
By an order dated December 11 1951 the Official Receiver was discharged and the respondents 2 and 3 aforesaid were appointed Joint official liquidators in his place with 16 power to sell the business of the Company as a going concern
In April 1953 the list of the creditors of the Company was settled by the Court and the second appellant aforesaid was included in the list as a creditor for the largest amount namely Rs 235818
It may be added that the discharged employees of the Company were not included in the list of creditors thus settled by the Court After several infructuous attempts for selling the property by auction on May 4 1954 the Court ordered the sale of the Company s business free from all encumbrances out goings and liabilities to the highest bidder subject to confirmation by the Court
The second appellant bid for the purchase of the business with the leave of the Court and he was declared the highest bidder and purchaser of the business for Rs 142500 at the sale held on June 12
The said sale was confirmed by the Calcutta High Court on July 5 1954
On July 23 1954 the Official Liquidators issued a notice terminating the services of all the employees of the Company with effect from July 24 1954 except one Assistant and one clerk whose services were retained until the winding up proceedings were completed
On July 24 the Official Liquidators put the appellant No 2 the auction purchaser in possession of the business of the Company which is now being carried on by the second appellant as the sole proprietor
AS a result of the termination of the services of the one hundred and forty two employees of the Company as aforesaid an industrial dispute was raised at the instance of the said employees whose list is attached to the order of Reference dated August 26 1954 which is in these terms  Whereas an Industrial dispute exists between 1 Messrs Great Indian Motor Works Ltd 33 Rowland Road Calcutta represented by their Managing Directors Sri C D Nundy and Sri K D Nundy 2 Official Liquidators of the Company Sri D L Dutta and Sri C D Nundy 33 Rowland Road Calcutta and 3 Sri K D Nundy Auction Purchaser of the Company 33 Rowland Road Calcutta and their 142 employees given in the enclosed list represented by 17 the Bus Workers  Union 249 Bowbazar Street Calcutta regarding the matters specified in the schedule  And whereas it is expedient that the said dispute should be referred to an Industrial Tribunal constituted under section 7 of the Industrial Disputes Act 1947 XIV of 1947 Now therefore in exercise of the powers conferred by section 10 of the said Act the Governor is pleased hereby to refer the said dispute to the Third Industrial Tribunal constituted under Notification No 592 DisD12L 512 dated the 23rd February 1953 for adjudication
The said Third Industrial Tribunal shall meet at such places and on such dates as it may direct
SCHEDULE 1Whether the notice dated 23rd July 1954 of termination of services of 142 employees with effect from 24 7 54 issued by the Joint Official Liquidatorswas justified  2Whether the refusal of the auction purchaser to continue the employment of the 142 employees was justified  3
What reliefs are the employees entitled to By order of the Governor
 The employees of the Company had moved the High Court for directions to the Liquidators for the payment of their dues from the Company
The Court by its order dated September 8 1954 directed the Liquidators to pay within a week the arrears of salary of all the workmen and also within a week from receiving sale proceeds of the auction sale aforesaid to pay the workers in lieu of notice one week s wages to weekly paid workmen two weeks  wages to fortnightly paid workmen and one month s wages to monthly paid workmen
The Directors were to hold the balance of the sale proceeds till further orders of the Court
It will be noticed from the order of reference quoted above that besides the Official Liquidators the second appellant was also impleaded as a party to the Reference in his capacity as the auction purchaser of the Company
In his written statement before the Third 18 Industrial Tribunal of West Bengal which was in seizin of the case the auction purchaser now the second appellant after reciting the facts and circumstances leading up to his auction purchase as aforesaid contended that as an auction purchaser he was not in any event liable for any compensation or dues as claimed by the workmen that he was not bound to reinstate the old employees of the Company  that having purchased the business free from any encum brances he was not liable for the dues of the workmen as claimed that be  had unnecessarily been made a party and dragged here before the Tribunal He added that he admitted that he was one of the Managing Directors of the Company before its liquidation but with the order for liquidation he ceased to function as such
After hearing the parties the Tribunal made its Award dated March 8 1955
The Tribunal awarded inter alia compensation under section 25Fb of the  and directed the Company to pay compensation within two months from the date the award became enforceable to such of the workmen as had been found entitled to the same
It may be noted here that the proceedings before the Industrial Tribunal had commenced without the necessary sanction of the High Court in the liquidation proceedings but during the pendency of the proceedings the High Court by its order dated December 20 1955 granted leave to the workmen to proceed with and continue the proceedings against the Official Liquidators of the Company
The Industrial Tribunal therefore further directed that so far as the Liquidators were concerned the compensation awarded to the workmen  shall be recoverable only out of the assets in their hands according to law
So far as the auction purchaser was concerned the award proceeded to make further directions in these terms  The auction purchaser it has already been noted purchased the different sections of the business with the name  The Great Indian Motor Works  free from encumbrances and all outgoings and liabilities Vide Exts
D and E and the said purchase was 19 confirmed on 5th July 1954
After the sale was confirmed and before possession was taken by the auction purchaser the Liquidators terminated the employment of all the employees save and except the Accountant and one Clerk by a notice dated 23rd July 1954 with effect from 24th July 1954
After such termination of employment the auction purchaser obtained possession on 24th July 1954
At that time no relationship of employer and employees subsisted
In the circumstances the dispute with the auctionpurchaser cannot be considered to be industrial dis pute  as no relationship of employer and employee existed between the auction purchaser and the old staff who had been discharged earlier
Hence I agree with the learned Advocate of the auction purchaser that the reference so far as
the auction purchaser is concerned is incompetent
Apart from that when the auction purchaser purchased the business free from encumbrances and all outgoings and liabilities and when there is nothing to show that the auction purchaser undertook at any time to maintain the old staff in his service it cannot be said that his refusal to continue the employment of 142 employees was unjustified
Only when one purchases with all assets and liabilities as a going concern he is bound to continue the old employees in service and not otherwise
I award accordingly
 Against the said Award which in terms was made only against the Liquidators and not against the auction purchaser aforesaid only one of the two Liquidators namely Debendra Lall Dutt made ail application to the High Court for necessary directions regarding preferring an appeal
The other Liquidator Chandy Das Nundy opposed the said application for leave to appeal
The High Court thereupon made an order on April 30 1956 refusing leave to the Liquidators to prefer an appeal from the said Award It was in those circumstances that the appellants namely Messrs Great Indian Motor Works Ltd represented by the Managing Director KD Nundy as the first appellant and KD Nundy in his capacity as creditor andor contributory of the said Great Indian Motor 20 Works Ltd under liquidation andor as auctionpurchaser of the Company as appellant No 2 filed an appeal before the Labour Appellate Tribunal of India on May 3 1956 impleading the one hundred and forty two employees through the Bus Workers  Union as the principal respondents CD Nundy and D L Dutt the Official Liquidators of the Company as proforma respondents
As a counter blast the aforesaid workmen of the Company filed their appeal on May 17 1956 impleading the Company represented by their Managing Directors C D Nundy and K D Nundy as the first respondent the Official Liquidators of the Company DL Dutt and CD Nundy as respondents second party KD Nundy the auction purchaser as respondent third party and the workmen not represented by the Bus Workers Union as respondents fourth party
It is not necessary to set out the grounds of appeal in either of the two appeals in view of our decision on the preliminary question of the maintainability of the appeal in this Court as will presently appear
The Labour Appellate Tribunal disposed of the two appeals by its order dated August 1 1956
The appellants  appeal was dismissed as incompetent in view of the provisions of section 179 of Indian Companies Act 1913 reenacted as section 457 of the 
The dismissal of the appeal on the ground of the appeal not being competent was based on the order of the Calcutta High Court dated April 301956 aforesaid refusing leave to the Liquidators to prefer an appeal
It is noteworthy that the appeal before the Appellate Tribunal was not by the Liquidators but by KD Nundy as Managing Director of the Company as also by him in his capacity as the creditor or contributory or as the auction purchaser of the Company
This aspect of the case has not been dealt with by the Tribunal which held that the appeal was not maintainable as it was not authorised by the High Court
The employees  appeal also was dismissed as it was not pressed in view of the fact that the appeal by the Company stood dismissed as unauthorized
It was against the aforesaid order of the Appellate 21 Tribunal dismissing the appeal in limine that the appellants aforesaid moved this Court and obtained special leave to appeal and the main ground of attack naturally was that the Labour Appellate Tribunal was in error in dismissing the appeal as unauthorised or as not maintainable
It is manifest that we are called upon in the first instance to decide whether the Labour Appellate Tribunal had rightly dismissed the appeal in limine on the ground that the Liquidators had failed to obtain the necessary sanction of the Calcutta High Court to prefer an appeal from the Award of the Industrial Tribunal
If that order of the Appellate Tribunal is correct and if we find that the appellants could not have any locus standi to prefer an appeal of their own as distinct from that on behalf of the Company no other question would arise for determination in this case
If on the other hand we come to the conclusion that order was erroneous at least in respect of the appellants  appeal then the appeal will have to be remanded to be re heard by the Appellate Tribunal
It has been urged on behalf of the appellants that in view of the provisions of section 12 read with section 3 of the Industrial Disputes Appellate Tribunal Act 48 of 1950 which was repealed by Act 36 of 1956 which governed the making of appeals before the Appellate Tribunal the appeal to that Tribunal was competent and should have been beard and determined on merits
The provisions of sections 3 and 12 which we have to construe in this case are in these terms  3
The provisions of this Act and of the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any such law
  12
An appeal under this Act against any award or decision of an industrial tribunal may be presented to the Appellate Tribunal by iany party which is aggrieved by the award or decision  or 22 iithe appropriate Government or the Central Government where it is not the appropriate Government whether or not such Government is a party to the dispute
 We have first to determine whether there is anything in the Indian  with particular reference to section 179 of the Indian Companies Act 1913 reenacted as section 457 of the  that is inconsistent with the provisions of the Industrial Disputes Appellate Tribunal Act 1950 which hereinafter will be referred to as the Act
If there is anything in those provisions of the  inconsistent with the provisions of the Act the latter shall prevail
Hence we have to construe the provisions of section 12 which specifically deals with appeals
That section permits an appeal to be presented to the Appellate Tribunal by any party which is aggrieved by the award omitting the words not necessary for our present purpose
It is the usual statutory provision for an appeal which otherwise would not lie
It does not say either in express terms or by necessary implication that those specific provisions of the  are abrogated or modified
It does not do away with the necessity of the requisite sanction of the Court so far as a Liquidator is concerned
Under the provisions of the Indian  the affairs of the company under liquidation are placed in charge of the Official Liquidator and under section 457 it is only the Liquidator who is authorized with the sanction of the Court to institute any suit or other legal proceedings in the name and on behalf of the company
Thus there is no inconsistency between the aforesaid provisions of the Act and the  which only laid down a condition precedent to the filing of an appeal if it has to be by a Liquidator of a company in the process of winding up
It concerns a very special case and has no bearing on the general right of appeal
As in the instant case the Court refused the necessary sanction to the Liquidators to prefer the appeal no appeal could have been filed on behalf of the Company
Hence in so far as the appeal purported to be on behalf of the Company through the Managing 23 Director aforesaid it was wholly incompetent
But the appeal was not only by the Company as such but also by the said KD Nundy as the creditor or contributory or auction purchaser  of the Company
So far as this part of the appeal is concerned it is clear that only a party
to the Reference aggrieved by the Award could be a party to the appeal
KD Nundy was not a party in his capacity as creditor or as contributory
He was impleaded as already indicated as a party to the Reference in his capacity as the auction purchaser of the business of the Company
So far as that capacity is concerned it is clear from the order of the Tribunal that no award was made against him as such
He could not therefore be said to be a party aggrieved by the award having been exonerated from its terms
The Tribunal put this on three main grounds 1 that the auction purchaser had purchased the business of the Company free from all encumbrances out goings and liabilities 2 that the employment of the workmen
had been terminated by the Liquidators before possession of the business was delivered to the auctionpurchaser and 3 that there was no relationship of employer and employees between the auction purchaser and the workmen whose services were so terminated
The Tribunal in that view of the matter declared the Reference to be incompetent in so far as the auction purchaser was concerned
This order the Tribunal passed at the instance of the auctionpurchaser himself
The auction purchaser therefore succeeded in obtaining the order which the Tribunal passed holding that the Reference so far as he was concerned was incompetent
In view of these facts it must be held that so far as the auction purchaser is concerned he was not aggrieved by the Award made by the Industrial Tribunal
That being so the provisions of section 12 of the Act are not attracted to the appeal purported to have been filed by the auction purchaser
It is a little difficult to appreciate why the auctionpurchaser having succeeded in obtaining the order set out above in his favour changed his mind and preferred an appeal which in the events that had happened was not maintainable
24 In our opinion therefore the Labour Appellate Tribunal was not in error in dismissing the appeal by the Company and by the auction purchaser as incompetent
It follows therefore that we are not concerned with the merits of the appeal
In view of the fact that we have not expressed any opinion on the merits of the controversy raised in the abortive appeal this dismissal shall be without prejudice to the appellants  rights if any
The appeal is accordingly dismissed but the parties here are directed to bear their own costs in view of the fact that we have not gone into the merits of the controversy
Appeal dismissed


Summary:
Two workmen Das and another were arrested by the police on the complaint of the appellant company for an alleged theft
The manager held an enquiry and dismissed Das from service for gross misconduct
At the enquiry Das stated that he had nothing to say and knew nothing about the theft
Certain persons whose statements had been recorded by the manager at the investigation stage in the absence of Das were present at the said enquiry
Das was told to ask those persons what they had to say though he was neither supplied with the copies of the statements made by them nor the statements were read over to him at the time of the enquiry
Das replied that he would not put any
questions to them
Thereupon these witnesses were asked whether the evidence they had given before the manager was correct and if not they were at liberty to amend it to which they replied that the evidence they had given was correct
Some time later the Magistrate on the final report of the police discharged Das
Thereafter the Union had the matter referred to the Tribunal
Before the Tribunal the company produced only the statements of the witnesses but did not produce the witnesses themselves
The Tribunal found in favour of the workman
The company came up in appeal by special leave to the Supreme Court where for the first time it raised the question of the qualification and competency of the one member Tribunal under section 7 Of the Act
Held that the question whether the Tribunal was a competent one under section 7 of the  prior to the amending Act 36 of 956 must be raised before the Tribunal itself as it was a matter of investigation and could not be raised for the first time before the Supreme Court
Held further that the basic principle of natural justice in an enquiry was that the opponent must be given the opportunity of questioning the witnesses after knowing in full what they had to state against him
The witnesses on whom the party relied should generally be examined in the presence of the opponent and he must also be informed about the material sought to be used against him and given an opportunity to explain it 33 Union of India vs T R Varma 1958 SCR 499 followed
New Prakash Transport Co Ltd vs New Suwvarna Transport Co Ltd  referred to
Held further that if there was defect in the conduct of the enquiry by the employer it could be cured if all the relevant evidence including the witnesses who were not examined in the presence of the workman were produced before the Tribunal thereby giving the party an opportunity to cross examine them and leaving it to the Tribunal to consider the evidence and decide the case on merits
Sasa Musa Sugar Works P Ltd vs Shobrati Khan CAs
746  747 Of 1957 decided on 29 4 1959 followed