bsb IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL CIVIL CIVIL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION WRIT WRIT WRIT PETITION NO. 4991 OF 2008 PETITION NO. 4991 OF 2008 PETITION NO. 4991 OF 2008 1. Ananda Maruti Majgaonkar & 14 ors. ... Petitioners (in both petitions) v/s Central Iron Works, through its partners - 1. Shri Mukund Vishnupant Utkur 2. Smt. Prabha Gajanan Kelkar 3. Shri Anil Vishnupant Utkur ... Respondents (in both petitions) Shri Anil Borkar for the petitioners in both petitions. Shri Sudhir Talsania i/by Shri S.S.Pakale for the respondents. CORAM: CORAM: CORAM: SMT.NISHITA MHATRE, J. SMT.NISHITA MHATRE, J. SMT.NISHITA MHATRE, J. DATED: DATED: DATED: 18TH NOVEMBER, 2008 18TH NOVEMBER, 2008 18TH NOVEMBER, 2008 P.C. P.C. P.C.: 1. By consent of the parties both these petitions are being decided finally at the stage of admission itself. Since the facts involved in both the petitions are common, both the matters have been heard together. 2. Central Iron Works is a partnership firm in which the petitioners in both the petitions were employed. (For the purposes of convenience the petitioners will be referred to as "the workmen" and Central Iron Works will 2 be referred to as "the firm"). 3. A notice dated 20.3.1985 was issued by the firm declaring a lock out w.e.f. 4.4.1985. Soon thereafter by a subsequent notice dated 25.5.1985 the firm declared a closure of the establishment without seeking permission from the State Government. The Mechanical & Engineering Kamgar Sangh (hereinafter referred to as "the Union"), which represented the workmen, filed Complaint (ULP) No.2 of 1989 on 16.3.1989 in which the firm and respondent No.3 herein were impleaded as respondents. This complaint was filed under Items 9 and 10 of Schedule IV of the M.R.T.U. & P.U.L.P. Act, 1971 (hereinafter referred to as "the Act"). It was contended that the closure of the establishment was illegal as permission was not sought by the firm to close down the undertaking although 130 workers were employed by it in the year 1985. It was therefore pleaded that the firm had indulged in an unfair labour practice from 4.4.1985. A written statement was filed by the firm which was verified by Anil Vishnupant Utkur i.e. respondent No.3 herein for himself and the firm as its partner. It was contended in the written statement that the firm had not been closed down permanently but a lock out was declared due to financial difficulties and acute labour problems. The Industrial Court, by its 3 order dated 15.4.1994 held that the notice of lock out was in fact a notice of closure and that the closure was illegal. The respondents to the complaint were directed to pay the wages to the employees from 4.4.1985 till the date of reopening of the firm as they had committed an unfair labour practice under Item 9 of Schedule IV of the Act. 4. Despite this order of the Industrial Court no amount was paid to the workmen. They therefore filed an application under Section 33C(2) of the Industrial Disputes Act through the union representing them, namely, the Mechanical & Engineering Kamgar Sangh. This application being (IDA) No.159 of 1995 was allowed on 4.1.1997. The firm and respondent No.3 herein were arraigned as the opponents in the application. The Labour Court while allowing the application directed the opponents to pay an amount of Rs.2,92,08,434/- to the employees whose names were listed in Annexure-B to the application within a period of one month from the date of the order. While allowing the application, the Court recorded the fact that the opponent No.1 i.e. the firm was not served as the factory was closed. However, the opponent No.2 i.e. the respondent No.3 herein, despite being granted time to file his written statement by an order dated 1.2.1996, failed to submit the same. The 4 Labour Court, therefore, proceeded ex-parte as per its order dated 21.5.1996. The claim was allowed by the order dated 4.1.1997. 5. An application was filed by the firm and respondent No.3 on 7.2.1997 for setting aside the order dated 4.1.1997 passed in Application (IDA) No.159 of 1995. This application was accompanied by an affidavit sworn by respondent No.3. The application was dismissed for default on 24.2.1999. No application was made before the Labour Court for setting aside the order nor was any writ filed before this Court to challenge the orders of 4.1.1997 or 24.2.1999. Instead, a fresh application for setting aside the order dated 4.1.1997 was filed by respondent Nos.1 and 2 on 31.1.2006, being Misc.(IDA) Application No.1 of 2006. There was no disclosure of the fact that an earlier application, i.e. Misc. Application No.3 of 1997, had been filed by the firm and that it had been dismissed seven years earlier. The application was allowed on 1.2.2006. Aggrieved by this order, the petitioners preferred a writ petition in this Court being Writ Petition No.7920 of 2006. This Court directed the respondents to deposit the decretal amount as condition precedent for setting aside the ex-parte order. The firm and its partners challenged that order by preferring a S.L.P. No.13913 of 2007. The Supreme 5 Court directed the petitioners before it to deposit Rs.50 lacs in the Labour Court within two months from the date of the order. Accordingly, the amount has been deposited in the Labour Court. 6. An application was filed on 3.3.2006 by respondent Nos.1 and 2 herein for setting aside the ex-parte order passed in Complaint (ULP) No.2 of 1989. Various contentions were raised in the application, namely, (i) that the firm was not served; (ii) that all the partners of the firm were not served; (iii) that respondent No.3 herein did not have cordial relations with respondent Nos.1 and 2 and, therefore, respondent Nos.1 and 2 were not aware of the ex-parte order passed in the complaint; (iv) that, the respondent No.3 was neither a working partner nor the manager nor the controller of the firm and, therefore, was not authorised to represent the firm or any of its partners including respondent Nos.1 and 2; (v) that a civil suit had been filed against them by a third party in respect of the land bearing No.R.S.No.23-A/3 in which interim orders were obtained by the lessees against respondent Nos.1 and 2. After filing Misc. Application (ULP) No.5 of 2006, an amendment was sought and granted on 11.10.2007. By this amendment, the respondent Nos.1 and 2 contended that the union had no authority to represent 6 the workmen since its registration had been cancelled in 1987. By the amendment, individual workers, who are the petitioners herein, were added as respondents to the miscellaneous application. The workmen opposed the application for setting aside the order. Evidence was led by the respondents 1 and 2 in the present petition in Misc. Application No.5 of 2006 in support of their contention that the order dated 15.4.1994 allowing Complaint (ULP) No.2 of 1989 be set aside. 7. By an order dated 10.6.2008, the Industrial Court set aside its order in Complaint (ULP) No.2 of 1989. The Industrial Court has held that the workmen did not prove that the application was barred by limitation and, therefore, not tenable. It further held that the workmen had not proved that the miscellaneous application filed was not maintainable. The Industrial Court was of the view that the applicant i.e. the firm through its partners Mukund Vishnupant Utkure and Smt.Prabha Gajanan Kelkar i.e. respondent Nos.1 and 2 herein, had proved that there was just and good reasons to restore the matter to file by setting aside the earlier order. The Industrial Court observed that since the applicants had no knowledge of the order having been passed in Complaint (ULP) No.2 of 1989, the same was not binding on them. The Industrial Court held that the 7 miscellaneous application was not barred by limitation and therefore was maintainable. Complaint (ULP) No.2 of 1989 was thus restored to file by the Industrial Court. 8. By a strange piece of logic the Industrial Court reasoned that since the copy of the judgment in the complaint was applied for on 2.2.2006 and it was ready on 14.2.2006, the miscellaneous application filed on 3.3.2006 was preferred within time. The Court observed, "For the purpose of deciding the issue as to whether the application is time barred or not, the application for certified copy supplied and application filed on the material facts, by now it is a very much settled law that the application for restoration is to be filed within one month from the receipt of the copy and if that aspect is considered, the present application appears to be filed within time." This reasoning to state the least is peculiar. 9. An order was passed against the firm on 15.4.1994. One partner, namely, Anil i.e. respondent No.3 herein, was arraigned as a party respondent alongwith the firm. However, this cannot be construed, as has been done by the Industrial Court, that the partners of the firm were not bound by any order passed against the firm. 8 10. Under section 25 of the Partnership Act, any order passed against a firm, is equally binding on all the partners of the firm. In the case of Ashutosh v/s Ashutosh v/s Ashutosh v/s State State State of Rajasthan & ors., reported in (2005) 7 SCC 308, of Rajasthan & ors., reported in (2005) 7 SCC 308, of Rajasthan & ors., reported in (2005) 7 SCC 308, the Supreme Court, while analysing the liability of partners of a firm has held thus - "10. "10. "10. Both the contentions raised by the learned counsel appearing for the appellant have absolutely no merit. It is not in dispute that the decree was passed against the firm in which Smt.Dhanwant Devi was also a partner. Under the provisions of the Partnership Act, one partner is the agent of the other. The partner is always liable for partnership debt unless there is implied or express restriction. In the instant case, notice was duly served on Smt.Dhanwanti Devik and her husband at House No.80, B-Block, Sri Ganganagar. Sections 24 and 25 of the Partnership Act, 1932 can be usefully referred to in the present context which are reproduced hereunder: . "24. Effect of notice to acting partner.- "24. Effect of notice to acting partner.- "24. Effect of notice to acting partner.- Notice to a partner who habitually acts in the business of the firm of any matter relating to the affairs of the firm operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of the partner. . 25. Liability of a partner for acts of the 25. Liability of a partner for acts of the 25. Liability of a partner for acts of the firm.- firm.- firm.- Every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done while he is a partner." 11. Section 24 deals with the effect of notice to a partner. Such notice may be binding if the following conditions are satisfied: 9 (a) the notice must be given to a partner; (b) the notice must be of any matter relating to the affairs of the firm; (c) fraud should not have been committed with the consent of such partner on the firm. 12. Section 24 is based on the principle that as a partner stands as an agent in relation to the firm, a notice to the agent is tantamount to the principles and vice versa. As a general rule, notice to a principal is notice to all his agents; and notice to an agent of matters connected with his agency is notice to his principal. 13. Under Section 25, the liability of the partners is joint and several. It is open to a creditor of the firm to recover the debt from any one or more of the partners. Each partner shall be liable as if the debt of the firm has been incurred on his personal liability." Thus, every partner is liable jointly and severally with all the other partners for all the acts of the firm while he is a partner. The debt of the firm is a personal liability of each partner. The contention of the respondents that they had no notice of the complaint having been filed cannot be accepted. Undisputedly the firm had received notice and was served with a copy of the complaint. Therefore it must be deemed that Respondent Nos.1 and 2 were aware of the complaint having been filed. Respondent No.3 had acted on their behalf as he has filed the written statement for himself and on behalf of the firm. The order of the Industrial Court in Complaint (ULP) No.2 of 1989, therefore, was 10 not a ex-parte order, a written statement having been filed. 11. The contention of the respondents that the respondent No.3 was not a working partner or a managing partner and that he had no authority to represent them is also unacceptable in view of the aforesaid provisions of the Act. The learned advocate for the workmen has rightly pointed out that respondent Nos.1 and 2 have tried to blow hot and cold inasmuch as although they had contended that they did not have cordial relations with respondent No.3, all the respondents were the appellants in the aforesaid S.L.P. The lease deed which was executed on 25.1.2005 in respect of the land bearing No.R.S.No.23-A/3 is also signed by Mukund and Anil i.e. respondent Nos.1 and 3 herein. If indeed the cordial relations did not exist as made out, then the question of both the parties signing the lease agreement also would not arise. A letter has been issued by the respondents 1 and 3 to the Commissioner of Labour which was received by that office on 23.3.2005 indicating that they had accepted that they were liable to pay Rs.2,94,04,663/- towards the workers’ wages from 1985 to 1997. This letter was issued after the recovery certificate was issued by the office of the Commissioner of Labour. A letter was sent to the Deputy Chief 11 Minister signed by both the respondents i.e. respondent Nos.1 and 3. Therefore, in my opinion, the respondents had ample knowledge about the complaint having been filed. Instead of filing the proceedings to challenge the order passed in a complaint, the respondents have adopted dilatory tactics in order to avoid the liability for making any payment to the workmen by filing the Misc. Application No.5 of 2006. There is no material at all on record to indicate as to why respondent Nos.1 and 2 could not file an application for setting aside the order in Complaint (ULP) No.2 of 1989 soon after the order was passed and why they had to wait for twelve years before filing the Miscellaneous Application No.5 of 2006. The partners cannot shirk the responsibility and liability of making good the payment on the ground that they were not individually served with a copy of the complaint. There is no doubt that the firm was served. There is also no doubt that Anil had filed a written statement for himself and on behalf of the firm which was a party respondent to the complaint. Therefore, all the partners of the firm are bound by whatever order is passed against the firm. Significantly, the miscellaneous application for setting aside the order passed under Section 33C(2) was filed by Respondent No.3 on 31.1.2006. 12 12. A contention has been raised on behalf of the respondents that the complaint itself was barred by limitation. Although the closure was allegedly effected on 25.5.1985, the complaint was filed in March, 1989, points out the learned counsel for the Respondents. This contention was raised in the written statement filed by Respondent No.3 on behalf of the firm and for himself. The Industrial Court, while deciding Complaint (ULP) No.2 of 1989, has not dealt with this issue specifically. However, the complaint was allowed. Therefore, if the firm had any grievance about the order, it could have challenged the same in this Court. For reasons best known to the Respondents, they chose not to do so. The Respondents therefore cannot raise this issue now after a lapse of more than twelve years. 13. It is submitted that the union could not have represented the workmen since its registration had been cancelled in the year 1987 itself. Therefore it could not have filed the complaint on behalf of the workmen. This, according to the learned counsel for the respondents, was a deliberate deception on the part of the workmen and not a mere procedural irregularity. Reliance is placed on the judgments in the case of S.P.Chengalvaraya S.P.Chengalvaraya S.P.Chengalvaraya Naidu v/s Jagannath & ors., reported Naidu v/s Jagannath & ors., reported Naidu v/s Jagannath & ors., reported in in in (1994) 1 SCC 1; State of Orissa & ors. v/s (1994) 1 SCC 1; State of Orissa & ors. v/s (1994) 1 SCC 1; State of Orissa & ors. v/s 13 Brundaban Brundaban Brundaban Sharma & anr., reported in 1995 Supp.(3) SCC Sharma & anr., reported in 1995 Supp.(3) SCC Sharma & anr., reported in 1995 Supp.(3) SCC 249; 249; 249; Balwant N. Viswamitra & ors., v/s Yadav Sadashiv Balwant N. Viswamitra & ors., v/s Yadav Sadashiv Balwant N. Viswamitra & ors., v/s Yadav Sadashiv Mule Mule Mule & ors., reported in (2004) 8 SCC 706; Retd. Armed & ors., reported in (2004) 8 SCC 706; Retd. Armed & ors., reported in (2004) 8 SCC 706; Retd. Armed Forces Forces Forces Medical Association & ors. v/s Union of India & Medical Association & ors. v/s Union of India & Medical Association & ors. v/s Union of India & ors., ors., ors., reported in (2006) 11 SCC 731 (1), reported in (2006) 11 SCC 731 (1), reported in (2006) 11 SCC 731 (1), in support of the contentions that an order obtained by a party by playing a fraud on the Court was a nullity. In S.P.Chengalvaraya S.P.Chengalvaraya S.P.Chengalvaraya Naidu Naidu Naidu (supra), the Supreme Court observed that the principle of "finality of litigation" cannot be pressed to the extent that it becomes "an engine of fraud in the hands of dishonest litigants". The Supreme Court has held that a fraud is a deliberate deception with the design of securing something by taking unfair advantage of another. If such a party withholds a vital document in order to gain advantage on the other side, then he would be guilty of playing fraud on the Court as well as on the opposite party. It is contended that the order passed in respect of a complaint filed by the union which had lost its recognition is a nullity and must be set aside. Reliance is placed on Order 30 Rule 6 of the Civil Procedure Code to contend that if an order passed is a nullity, it can always be set aside at any stage of the proceeding. 14. It is trite that the union merely represents the 14 workmen. The complaint which was filed under Items 9 and 10 of Schedule IV of the M.R.T.U. & P.U.L.P. Act, could have been filed by all the workmen themselves. Individual complaints could also have been filed by the workmen. Therefore, in my opinion, merely because the complaint was filed by a union whose registration was cancelled, it would not amount to deception or fraud as contended on behalf of the respondents as no unfair advantage has been taken over the firm and its partners. 15. Apart from this, the Respondents have not explained under what provision of law they have filed the application for setting aside the order of 15.4.1994 in Complaint (ULP) No.2 of 1989. Under Section 31(2) of the M.R.T.U. & P.U.L.P. Act, an application for setting aside an ex-parte can be made within 30 days of the receipt of a copy of the order. There is no doubt that the firm had received the order. The partners were aware that the order was passed soon thereafter as seen from the material on record. In any event, Respondent No.1 was aware that the order was passed in March, 2005 when he signed a representation addressed to the Deputy Chief Minister, alongwith Respondent No.3. The Respondents are merely trying to evade their liability in making payment of the dues of the wormmen for the past 14 years when the Industrial Court held that the 15 workmen were entitled to wages in view of the illegal closure in 1985. 16. The order of the Industrial Court is, therefore, set aside. Writ petition No.4991 of 2008 deserves to be allowed.