IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Writ Petition No. 78 of 2006 (S/B) M.C. Nailwal & others. .……… Petitioners Versus State of Uttarakhand & others. .………. Respondents. Mr. T.A. Khan, Advocate for the petitioners. Mr. Pulak Raj Mullick, Advocate for respondent No. 2. JUDGMENT Coram: Hon’ble J.S. Khehar, C.J. Hon’ble Sudhanshu Dhulia, J. J.S. KHEHAR, C. J. (Oral) The petitioners were employees of a Spinning Mill under the Uttar Pradesh State Textile Corporation (hereinafter referred to as the “UPSTC”) located at Jaspur. The financial viability of a number of the units of the UPSTC being in distress, an application was moved by the UPSTC for closure of five units. The units, in respect of which closure was sought, were located at Jhansi, Sandila, Meerut, Kashipur and Jaspur. The application for closure was made on 15.12.2000, under the provision of Section 6-W of the Uttar Pradesh Industrial Disputes Act, 1947. 2. It would be relevant to mention here, that the composite State of Uttar Pradesh was reorganized with effect from 09.11.2000, whereupon two States were carved out, namely, the successor State of Uttarakhand and the successor State of Uttar Pradesh. 3. The Uttar Pradesh Government, by an order dated 28.03.2001, accepted the closure of three of the units, namely the units located at Jhansi, Sandila and Meerut. This acceptance was based on the fact, that these units were located in the successor State of Uttar Pradesh. No orders were passed in respect of the units at Jaspur and Kashipur, apparently on account of the fact, that the State of Uttar Pradesh could not have passed any orders in respect of the aforesaid two units, after the reorganization of the composite State of Uttar Pradesh w.e.f. 09.11.2000. 2 4. It is not a matter of dispute, that proceedings were pending against the units under reference, under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the “SICA”). A reference in this behalf was pending, under Section 15, before the Board for Industrial and Financial Reconstruction (hereinafter referred to as the “BIFR”). During the pendency of the aforesaid proceedings, on 25.02.2003, the BIFR recorded a finding, that the Government of Uttarakhand would hold meetings with the workmen and arrive at a mutual consensus, that the deemed date of closure of the mills (under reference) would be 31.03.2001. The aforesaid order dated 25.02.2003 also expressly recorded, that all statutory dues would be payable to the workmen, including dues payable under the voluntary retirement scheme, based on the aforesaid cut-off date, i.e. 31.03.2001. It would also be relevant to mention, that the Katai Mills Mazdoor Union, Jaspur, which admittedly is the Union of which the petitioners were members, was duly represented before the BIFR, when it passed its aforesaid order dated 25.02.2003. 5. In compliance with the directions issued by the BIFR on 25.02.2003, all concerned including the State of Uttarakhand accepted the cut-off date as 31.03.2001. Thereafter, the Uttarakhand Government introduced the voluntary retirement scheme for erstwhile employees of the mills at Jaspur and Kashipur on 06.12.2004. Based on the decision rendered by the BIFR dated 25.02.2003, the scheme envisaged the cut-off date as 31.03.2001. 6. The solitary prayer of the petitioners, in the instant writ petition, is that the cut-off date should not be 31.03.2001, but it should be 06.12.2004, i.e. the date on which the voluntary retirement scheme was introduced by the State of Uttarakhand. 7. While considering the petitioners’ claim, it would be relevant to mention, that it was acknowledged by the learned counsel for the petitioners, that the petitioners drew salary, while working for the mill at Jaspur, till 31.03.2001. It is, therefore, apparent that none of the petitioners were employed with the mill under reference beyond 31.03.2001. It is also not a matter of dispute, that the petitioners did not assail their retrenchment from the employment of the mill in question (after 31.03.2001), by raising a claim 3 before a court of competent jurisdiction. In fact, it is acknowledged by the learned counsel for the petitioners, that none of the petitioners raised any dispute in any court, assailing their allegedly forced retrenchment resulting out of the closure of the mill. It is, therefore, apparent that none of the petitioners sought any benefit, including any financial benefit, after the closure of the mill on 31.03.2001. Although the Union, of which the petitioners were members, had represented the petitioners before the BIFR when the order dated 25.02.2003 was passed (directing all concerned parties to arrive at a mutual consensus that the deemed date of closure would be 31.03.2001), it is the contention of the learned counsel for the petitioners that the Union, of which they were members, had not obtained their express consent before acceding to the cut-off date as 31.03.2001. Although the instant submission seems to be attractive on first blush, in our view, it has no legal sanctity at all, inasmuch as, none of the petitioners have ever thereafter assailed the order passed by the BIFR on 25.02.2003. In fact, the aforesaid order is not subject matter of challenge even in the instant writ petition. As such, we are satisfied, that all the petitioners and all concerned parties, which were before the BIFR on 25.02.2003, were bound by the order passed by the BIFR, directing the parties, that the cut-off date for release of all statutory dues, to the workmen of the closed mills, would be 31.03.2001. 8. Based on the factual position noticed herein above, we are satisfied, that the petitioners have no legs to stand, insofar as the claim raised by them before this Court is concerned. Not only did they not remain the employees of the concerned mills after 31.03.2001, they also did not claim any monetary or other benefits from their employer post 31.03.2001. Their employment must, therefore, be deemed to have been severed with the mills under reference after 31.03.2001. Claim of any monetary benefit from a date beyond 31.03.2001 is, therefore, clearly unacceptable in law and is totally unjustified. That apart, the order of the BIFR dated 25.02.2003 is clearly binding on the petitioners. By the aforesaid order, the petitioners were bound to accept all statutory and other benefits, due to them as a consequence of the closure of the mill, with reference to 31.03.2001. The voluntary retirement scheme, introduced by the State of Uttarakhand on 06.12.2004 mentioning that the cut-off date would be 31.03.2001, can therefore not be faltered with. 4 9. Despite our conclusion (recorded herein above), learned counsel for the petitioners contends, that the petitioners would also be entitled to benefits flowing to them under Section 25-O of the Industrial Disputes Act, 1947. Insofar as the instant claim is concerned, the same is based on sub-section (8) thereof. Section 25-O is being extracted hereunder: “25-O. Procedure for closing down an undertaking. – (1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner: Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work. (2) Where an application for permission has been made under sub-section (1) the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen. (3) Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days. (4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub- section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order. (5) The appropriate Government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a tribunal for adjudication: Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference. (6) Where no application for permission under sub-section (1) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled 5 to all the benefits under any law for the time being in force as if the undertaking had not been closed down. (7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order. (8) Where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is deemed to be granted under sub-section (3), every workman who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to fifteen days’ average pay for every completed year of continuous service or any part thereof in excess of six months.” 10. We have given our thoughtful consideration to the submission advanced by the learned counsel for the petitioners. The benefits flowing to the petitioners under Section 25-O (extracted above), can be availed of only by such employees who are retrenched as a consequence of closure. The petitioners, having accepted the voluntary retirement scheme introduced by the State of Uttarakhand on 06.12.2004 with cut-off date as 31.03.2001, and having drawn all monetary benefits due to them thereunder, cannot be deemed to have suffered retrenchment as a consequence of closure. All the petitioners accepted voluntary retirement w.e.f. 31.03.2001. As such, we are satisfied, that the claim of the petitioners under Section 25-O (8) is clearly unacceptable in law. 11. It is also relevant to notice another submission advanced by the learned counsel for the petitioners. Based on the factual position noticed herein above, it is the contention of the learned counsel for the petitioners, that the three mills in Jhansi, Sandila and Meerut were closed on the basis of the acceptance of the application, moved by the Uttar Pradesh Textile Corporation under Section 6- W of the Uttar Pradesh Industrial Disputes Act, 1947 on 15.12.2000, vide order dated 28.03.2001. It is the submission of the learned counsel for the petitioners, that no express orders of closure of the units at Jaspur and Kashipur were passed, and as such, the mills at Jaspur and Kashipur cannot be deemed to have been legally closed. Insofar as the instant issue is concerned, learned counsel for the petitioners has invited our attention to the procedure envisaged 6 under Section 25-O(6) of the Industrial Disputes Act, 1947, as also analogous provision contained in Section 6-W(6) of the Uttar Pradesh Industrial Disputes Act, 1947. Since the aforesaid procedure had never been adopted for closure of the mill at Jaspur (in which all the petitioners were engaged) the contention of the learned counsel for the petitioners is, that the aforesaid mill can never be deemed to have been closed. 12. We have considered the last contention advanced by the learned counsel for the petitioners. We, however, find no merit therein. Orders passed under the SICA, especially those under Section 22 thereof, have an overriding effect on all proceedings in the nature of suits. Insofar as the instant aspect of the matter is concerned, reference may be made to the decision rendered by the Supreme Court in Paramjeet Singh Patheja Vs. ICDS Ltd. (Civil Appeal No. 4130 of 2006, decided on 31.10.2006). While examining the effect of orders passed under Section 22 of the SICA, the Apex Court inter alia held as under: “(vii) It is a well established rule that a provision must be construed in a manner which would give effect to its purpose and to cure the mischief in the light of which it was enacted. The object of Section 22, in protecting guarantors from legal proceedings pending a reference to BIFR of the principal debtor, is to ensure that a scheme for rehabilitation would not be defeated by isolated proceedings adopted against the guarantors of a sick company. To achieve that purpose, it is imperative that the expression “suit” in Section 22 be given its plain meaning, namely any proceedings adopted for realization of a right vested in a party by law. This would clearly include arbitration proceedings.” In its determination, it is apparent, that the Supreme Court arrived at the conclusion that it was imperative that the expression “suit” contained in Section 22 of the SICA be given its plain meaning, so as to be applicable to all “proceedings adopted for realization of a right vested in a party by law”. Needless to mention, that the proceedings envisaged under Section 25-O(6) of the Industrial Disputes Act, 1947, as also under Section 6-W(6) of the Uttar Pradesh Industrial Disputes Act, 1947, would be of the nature envisaged in the judgment rendered by the Supreme Court in Paramjeet Singh Patheja’s case (supra). Thus viewed, we find no merit in the instant contention advanced by the learned counsel for the petitioners, especially in the background of the order passed by the BIFR under Section 22 of the SICA (dated 25.02.2003). Besides the reasons indicated herein above, for a separate and distinct reason, we are of the view that the instant contention of the learned counsel for 7 the petitioners is not sustainable at the hands of the petitioners. The submission of the petitioners is, that there is no deemed closure of the mill, under which the petitioners were engaged. This submission, in our view, is wholly irrelevant after the petitioners accepted the voluntary retirement scheme and obtained benefits thereunder. Thereafter, it was not open to the petitioners to assail the validity or otherwise of the closure of the mill, in which they were engaged. 13. For the reasons recorded herein above, we find no merit in this writ petition and the same is accordingly hereby dismissed. (Sudhanshu Dhulia, J.) (J.S. Khehar, C. J.) 28.04.2010 28.04.2010 G