IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 29-06-2010 CORAM: THE HONOURABLE MR. JUSTICE V. RAMASUBRAMANIAN W.P.No.11881 of 2010 And M.P.No.1 of 2010 M/s.New Horizon Sugar Mills Ltd., Ariyur, Kandamangalam P.O., Pondicherry 605 102, Represented by its Director, V.Kannan .. Petitioner vs. 1.The Commissioner of Labour, Government of Puducherry, Vazhudavoor Salai, Puducherry-605 009. 2.Ariyur Sugar Mills Staff Welfare Union, Represented by its Secretary, 84, Mariamman Koil Street, Ariyur, Kandamangalam P.O., Puducherry. 3.Puduvai Pradesa Sarkarai Aalai Thozhilalar Sangam, Represented by its Vice President, Ariyur, Kandamangalam Post, Puducherry. 4.Ariyur Sarkarai Alai Thozhilalar Nala Sangam, *Represented by its President, Ariyur, Kandamangalam Post, Puducherry. .. Respondents *Amended as per order of this Court dated 22.07.2010 in MP.No.2/10 in WP.11881/10. Writ petition filed under Article 226 of the Constitution of India, praying for the issue of a Writ of Certiorarified Mandamus, to call for the records and quash the order bearing Ref.9917/ LAB/ AIL/ SOs/ NHSM/2010 dated 18.3.2010 on the file of the first respondent, Labour Commissioner, Pondicherry and consequently forbear the first respondent from computing or disbursing any dues including retrenchment compensation, gratuity, arrears of wages and other statutory benefits for the period subsequent to 31.12.2004. For Petitioner : Mr.Ravi For Respondent-1 : Mr.D.Srinivasan, Government Pleader (Pondicherry) For Respondent-4 : Mr.B.Ravi https://hcservices.ecourts.gov.in/hcservices/ O R D E R The petitioner has come up with the present writ petition challenging the proceedings of the Labour Commissioner, the first respondent herein, for the determination of the dues payable to the workmen of the petitioner-company. 2. I have heard Mr.Ravi, learned counsel appearing for the petitioner, Mr.D.Srinivasan, learned Government Pleader (Pondicherry) for the first respondent and Mr.B.Ravi, learned counsel appearing for the fourth respondent. 3. The petitioner-company availed credit facilities from the Indian Bank and committed default in making repayment. Therefore the Bank initiated proceedings under the SARFAESI Act, 2002, by issuing a notice under Section 13(2) on 25.9.2004. It was followed by a possession notice dated 1.1.2005 under Section 13(4) of the Act. A notice of tender was issued on 18.3.2005 by the Bank for the sale of the secured assets, both movable and immovable. The auction was held on 24.3.2005 and a company by name EID Parry India Limited emerged as the successful bidder. They also remitted a sum of Rs.12.5 crores on the same day towards part payment of the bid amount. 4. However, further proceedings pursuant to the auction held on 24.3.2005 got stalled due to a batch of writ petitions in W.P.Nos.9834, 10060, 10077, 11715, 13593 and 15303 of 2005 by various persons for various reliefs on the file of this Court. The details of the same are filed in the form of a tabular statement for easy appreciation, as follows:- W.P.No. Petitioner Status Prayer W.P.No.9834 of 2005 PNL Depositors' Welfare Association The petitioner is an Association of persons who had deposits with a company by name PNL Nidhi Ltd. According to the petitioner, PNL Nidhi Ltd., was a group company and controlled by New Horizon Sugar Mills Ltd. (petitioner herein) and that the deposits made by its members were actually lying with New Horizon and that therefore, the deposit amounts are recoverable from the assets of New Horizon. For a direction to the respondents 1 to 4 therein to initiate necessary action to safeguard the interest of the depositors of the sixth respondent, namely, PNL Nidhi Ltd, Pondicherry by taking appropriate action under the provisions of law. https://hcservices.ecourts.gov.in/hcservices/ W.P.No. Petitioner Status Prayer W.P.No.10060 of 2005 Puduvai Pradesa Sarkarai Aalai Thozhilalar Sangam Trade Union of workmen of New Horizon Sugar Mills Ltd., To quash the tender notification issued by the Indian Bank and to direct the Indian Bank and others, to resort to action under Section 13 (4)(c) and 13(4) (b) of the SARFAESI Act, instead of straight away initiating action under Section 13(4)(a) of the SARFAESI Act. W.P.No.10077 of 2005 Indian Bank Secured creditor of the writ petitioner herein Challenging the proceedings of the Deputy Collector, Government of Pondicherry dated 21.3.2005 by which the Deputy Collector restrained the Bank from proceeding with the tender for the sale of molasses and immovable properties. W.P.No.11715 of 2005 Pondicherry State Cooperative Bank Another creditor of the writ petitioner herein To set apart a sum of Rs.1,88,56,704/- as due and payable to the petitioner out of the auction proceeds realised by the Indian Bank. https://hcservices.ecourts.gov.in/hcservices/ W.P.No. Petitioner Status Prayer W.P.No.13593 of 2005 Bank of Baroda, Pondicherry Another creditor of the writ petitioner herein For a direction to the Indian Bank to safeguard the interests of the petitioner-bank for appropriating its claim in a sum of Rs.75,73,873/- W.P.No.15303 of 2005 Greata Enterprises & Developers (P) Ltd One of the bidders who participated in the auction conducted on 24.3.2005 by Indian Bank. Challenging the rejection of their bid and for a direction to accept their bid. 5. By a final order dated 12.7.2005 {reported as PNL Depositors' Welfare Association vs. Union of India 2005 (4) CTC 469}, F.M.Ibrahim Kalifulla, J., (i) dismissed W.P.No.9834 of 2005 on the ground of availability of alternative remedy (ii) dismissed W.P.No.10060 of 2005 (iii) disposed of W.P.No.10077 of 2005 in the light of the observations made in paragraphs 16 to 18 of the judgment (iv) dismissed W.P.No.11715 of 2005 on the ground of availability of alternative remedy (v) dismissed W.P.No.13593 of 2005 on the ground of availability of alternative remedy and (vi) dismissed W.P.No.15303 of 2005 on the ground that there were no merits. 6. Since we are not concerned in this writ petition with most of the issues that arose for consideration in the above batch of cases, I do not wish to dwell in detail on them. However, one of the issues that arose for consideration in the above batch of writ petitions, was about the rights of the workmen under Section 25-FF of the Industrial Disputes Act, 1947. Even while rejecting the prayer of the trade union for the sale of the petitioner company as a going concern (in W.P.No.10060 of 2005), the learned Judge made an observation in paragraph 41, to the effect that "all the workmen will be entitled to the benefits available under Section 25-FF of the Industrial Disputes Act, 1947, as against the third and fourth respondents, by virtue of the prescriptions made under Section 13(6) of the SARFAESI Act, 2002". The third and fourth respondents indicated in para-41 of the said judgment, are the petitioner herein and the successful bidder. 7. After the disposal of the above writ petitions, a Sale Certificate was issued in respect of the movable assets, on 10.8.2005, in favour of the successful bidder. However, it appears that the Sale Certificate in respect of the immovable properties could not be registered, in view of certain orders of attachment passed by the competent authority under the Pondicherry Protection of Interests of Depositors in Financial Establishments Act, 2004. https://hcservices.ecourts.gov.in/hcservices/ 8. In the meantime, three fresh writ petitions came to be filed, in W.P. Nos.24834, 30532 and 36900 of 2005. The details of these petitions are as follows:- W.P.No. Petitioner Prayer W.P.No.24834 of 2005 Puduvai Pradesa Sarkarai Aalai Thozhilalar Sangam For a direction to Indian Bank to deposit with the Commissioner of Labour, a sum of Rs.6 crores from out of the sale proceeds, so that the Commissioner may compute and disburse the amounts due to the workers, within one month. W.P.No.30532 of 2005 The Authorised Officer, Indian Bank For a direction to the Union of India to invoke Section 14 of the SARFAESI Act, within a time frame and take control of the securities and hand over vacant possession of land and building, plant and machinery of New Horizon Sugar Mills. W.P.No.36900 of 2005 Ariyur Sugar Mills Staff Welfare Union For a direction to the Indian Bank to deposit with the Commissioner of Labour, a sum of Rs.9,70,00,000/- from out of the sale proceeds, so that the Commissioner may compute and disburse the amounts due to the workers, from June 2004 onwards and to deposit the remaining amount with LIC against Group Gratuity Scheme. 9. When the above 3 writ petitions came up for hearing, an interim order was passed on 7.12.2005 by A.Kulasekaran, J. It was to the following effect:- (a) Instead of entrusting the work of computation of the dues of the workmen and the disbursement of amounts to the Commissioner of Labour, Mr.Justice K.P.Sivasubramaniam (retired) was appointed by consent of parties, for receiving the claims from the workmen and processing the same and for submitting a report to the Court; https://hcservices.ecourts.gov.in/hcservices/ (b) The Indian Bank was directed to deposit an initial amount of Rs.6 crores in a no-lien Account, for the purpose of eventual disbursement to the workmen, after the computation was made. In accordance with the said order, the Bank appears to have deposited the amount in a no lien account. 10. In the meantime, another batch of writ petitions came to be filed on the file of this Court. While some of them challenged the vires of Pondicherry Protection of Interests of Depositors in Financial Establishments Act, 2004, the others challenged the orders of attachment passed by the competent authority under that Act. The batch of writ petitions were disposed of by Elipe Dharma Rao, J., by an order dated 23.8.2006. By the said order, the validity of the Act was upheld, but the orders of attachment were lifted. Therefore, a Sale Certificate in respect of the immovable properties was also executed and registered on 24.8.2006. 11. The final orders passed by F.M.Ibrahim Kalifulla, J., in the batch of 6 cases in W.P.Nos.9834 of 2005 etc., the interim orders passed by A.Kulasekaran, J., in the batch of 3 cases W.P.Nos.24834 of 2005 etc., and the final orders passed by Elipe Dharma Rao, J., in W.P.No.1897 of 2006 batch of cases, all became the subject matter of a batch of writ appeals in W.A.Nos.1788 and 1919 of 2005, 1142 to 1144, 1209, 1342 to 1345 of 2006 and 293 of 2007. These writ appeals were taken up along with 3 writ petitions, one filed by the successful bidder and the other two filed by the employees and workmen. 12. The writ appeals and the connected writ petitions were disposed of by a Division Bench, by a common order dated 27.3.2007. In paragraph 18 of the said common order, the Division Bench arrived at the following conclusions, with regard to the claims of the workers:- "We are in entire agreement with the reasonings and findings rendered by F.M.Ibrahim Kalifulla, J., particularly in respect of the conclusion arrived at regarding the claim of the workers with reference to Section 25-FF of the Act." "As far as the claims of the workers and their unions as well as Sacrur Society, in modification of the order of A.Kulasekaran, J., in directing the parties/workers to go before the Commissioner appointed by the Court (K.P. Sivasubramaniam, J.), we allow them to approach the Labour Commissioner, Puducherry, who shall go into the identity/veracity/eligibility/computation/distrib ution of their claims-amounts. As observed earlier, the Labour Commissioner shall along with the materials available before him, take the Memo filed by Justice K.P. Sivasubramaniam (Retd. Judge) as a supplement/extra material while deciding the claims. After decision, the Commissioner is at liberty to draw and disburse the amount lying with the Bank and if the https://hcservices.ecourts.gov.in/hcservices/ Commissioner finds the amount available insufficient/deficit for the purpose of settling the claims or finds the amount in excess after settlement, in either case, he shall approach this Court for appropriate direction to the Bank." 13. As against the common order passed by the Division Bench in W.A. Nos.1788 of 2005 batch of cases on 27.3.2007, two appeals came to be filed on the file of the Supreme Court in C.A.Nos.6381 and 6382 of 2009 (arising out of SLP (Civil) Nos.8387 and 13569 of 2007). The first appeal was by the petitioner herein (New Horizon Sugar Mills) against the order in W.A.No. 1209 of 2006, arising out of the interim order passed by A.Kulasekaran, J., directing the Indian Bank to deposit Rs.6 crores and permitting the adjudication of the claims of the workmen. The other appeal was by the successful bidder EID Parry India Ltd., against the order in W.A No.1788 of 2005 arising out of the final order dated 12.7.2005 passed by F.M.Ibrahim Kalifulla, J., in the first batch of 6 writ petitions, holding the erstwhile employer and the purchaser as liable for the workers' dues under Section 25-FF of the Industrial Disputes Act, 1947. 14. Both the appeals C.A.Nos.6381 and 6382 of 2009 were disposed of by the Supreme Court by an order dated 31.8.2009. It is seen from paragraph 6 of the said order that the question taken up for consideration by the Apex Court was as to who should be made liable to pay compensation to the workmen under Section 25-FF of the Industrial Disputes Act, 1947. 15. However, it was conceded before the Supreme Court on behalf of the petitioner herein that in view of the law well settled by several decisions of the Apex Court starting from Anakapalle Cooperative Agricultural and Industrial Society Ltd. vs. Workmen {1962 (2) LLJ 629}, the liability under Section 25-FF was that of the petitioner herein. Therefore, the Supreme Court held in para-7 of its order that the amount due to the workers will have to be paid from out of the sale proceeds lying with the Indian Bank and that the purchaser EID Parry will have no liability. 16. Ultimately, the Apex Court issued certain directions, which are found in paras-8 and 9 of its order. They are reproduced herein, for easy reference:- "8. However, having regard to the fact that the quantification of the workmen's dues would involve verification of records/claims, it will be convenient and appropriate, if the management of New Horizon is associated with the process of verification, quantification and payment to its workmen. Therefore, the Commissioner of Labour will hear New Horizon in regard to each claim before passing appropriate orders in favour of workmen. 9. The Indian Bank will now transfer the sum of Rs.6 crores as directed by the High Court, from the sale proceeds, without prejudice to its contentions to a no lien account in its https://hcservices.ecourts.gov.in/hcservices/ Pondicherry Main Branch which shall be operated by the Commissioner, who shall endeavour to complete the exercise of verification, quantification and payment of the employees' dues within three months. The balance, if any, remaining in the no lien account after such settlement of workers' dues, shall be paid to the New Horizon without prejudice to the contentions of the Bank. If the amount of Rs.6 crores is found to be insufficient by the Commissioner, the Commissioner may apply to Madras High Court for release of further funds from the amount in deposit with it." 17. After the disposal of the appeals by the Supreme Court as aforesaid, the petitioner sent a communication dated 15.10.2009 to the Commissioner of Labour, enclosing a calculation sheet, containing the names of workmen, the date of joining duty, their basic pay, the allowances paid, the compensation payable etc. But when the Commissioner of Labour took up the exercise of computation of the dues of the workmen, a doubt arose as to whether such computation should be confined only to the amount payable under Section 25-FF or could extend even to other dues. Therefore, a clarification was sought for, from the Apex Court. 18. By an order dated 11.12.2009, the Supreme Court clarified that with a view to avoid the retrenched workmen and other employees being driven to various fora, for the purpose of getting their various dues, it was necessary that the exercise of computation should be in respect of all the amounts due to the workmen. The Court also recorded the fact that New Horizon had become the ex-employer of the workmen and the purchaser EID Parry did not want their services. After clarifying this position, the Court also issued certain additional directions, which are as follows:- "(a) The sum of Rs.6 crores and interest accrued thereon referred to in paragraph 9 of our order shall be used for the purpose of settling the dues of workmen/employees. (b) If the said amount (Rs.6 crores and interest thereon) is insufficient, as already directed, the Commissioner should apply to the Madras High Court for release of further fund from the amount in deposit with it. This direction means that until the Commissioner completes the assessment of the amount due to be paid to the employees/workman, the Madras High Court shall not release the amounts deposited with it to anyone else as it should be first used for settling the dues of employees/workmen. (c) In paragraph 10 of this Court's order, this Court had directed that Rs.2 crores deposited by the EID Parry should be refunded to EID Parry. The question whether EID Parry is liable for any of the employees/workmen's dues other than Section 25-FF or whether it should be paid to the New Horizon itself is an issue https://hcservices.ecourts.gov.in/hcservices/ pending in Writ Petition No.24834 of 2005 or any other proceeding pending between them. Until that is done, the sum ofRs.2 crores deposited by the EID Parry shall continue to be in deposit and EID Parry shall not withdraw the said amount or interest thereon. After the issue of liability is ultimately decided, consequential orders may be passed by the High Court in regard to the said sum of Rs.2 crores. (d) In the proceedings for determination of the employees/workmen's dues before the Labour Commissioner, both New Horizon and EID Parry may participate. As New Horizon contends that the entire records have been taken over by the Indian Bank, the said Bank shall make available the records to New Horizon. (e) In view of the fact that the workers' dues are being fully settled, the employees/workmen shall not claim employment under EID Parry nor obstruct reopening or functioning of the unit by EID Parry. (f) The period of three months mentioned in the order dated 31.8.2009 to enable the Labour Commissioner to complete the quantification process is extended by another six months from today." 19. After the Supreme Court issued clarifications and additional directions, the petitioner-management submitted another letter dated 21.1.2010 to the Commissioner of Labour along with a consolidated statement of all the alleged dues payable to the retrenched workmen upto 31.12.2004. The workers/employees also submitted their claim applications indicating the gratuity, retrenchment compensation, wage arrears, bonus and other dues such as LIC, PF contributions etc., calculated upto October 2006. 20. Thereafter the Commissioner of Labour convened a meeting and provided an opportunity of hearing to the petitioner-management. In the meeting, the petitioner consented for the computation of dues calculated for the period upto 31.12.2004. But the petitioner- management protested the calculation of dues for the period beyond 31.12.2004 upto October 2006. 21. Therefore, the Commissioner of Labour appears to have examined the records and analysed the claims and came to the conclusion that the workers should be deemed to have been in service upto October 2006 and that therefore, the workmen are entitled to have all their claim amounts except credit society, settled upto the period of October 2006. Recording the said finding, the Labour Commissioner passed an order dated 18.3.2010, proposing to proceed further with the disbursement of all dues to the workmen. 22. Aggrieved by the decision taken by the Labour Commissioner, as reflected in his order dated 18.3.2010, to the effect that the workmen are entitled to settlement of dues upto October 2006, the petitioner-management has come up with the present writ petition. The https://hcservices.ecourts.gov.in/hcservices/ relevant portion of the order of the Labour Commissioner dated 18.3.2010, as against which the present writ petition arises, reads as follows:- "Whereas the NHSM in the said meeting has consented for disbursement of all dues to be calculated and paid upto 31.12.2004, but not ready to certify any dues that may be paid to the workers, after the period 31.12.2004. Whereas the undersigned in compliance with the orders of the Hon'ble Supreme Court and in the context of stand exhibited by the NHSM has made a thorough examination and objective analysis of the veracity of the claims raised upto 10/2006, and arrived at a reasoned decision that during the period of possession and the auction of the New Horizon Sugar Mills by the Indian Bank and the EID Parry have been the successful auction purchaser, came into occupation of the said Mill in November 2006, the workers as per the records available, were continuously been in the service of the Mill without been issued with any appropriate Notice/for their Retrenchment till 10/2006, by the Management of NHSM, Ltd., And further having noted from the other documents available that some of the employees, having been admitted into retirement by the NHSM, vide its own communication dated 31.1.2006, that the workers irrespective of the various developments taken place, were remained in service of the NHSM, and carrying out the maintenance works upto 10/2006, and therefore are entitled to have all their claim amounts, except credit Society, settled upto the period of October 2006." 23. Assailing the impugned order, Mr.Ravi, learned counsel for the petitioner contended that all dues payable to the workmen, including the amounts payable under Section 25-FF of the Industrial Disputes Act, 1947, should be calculated only upto 31.12.2004, since the possession notice under Section 13(4) of the SARFAESI Act, 2002 was issued by the Indian Bank on 1.1.2005. Consequently, even Justice K.P. Sivasubramaniam (Retd.), appointed by this Court to compute the claims of workmen, carried out the exercise, keeping in mind 31.12.2004 as the date for determination of all dues. According to the learned counsel, the Commissioner of Labour already disbursed compensation to 46 workmen calculated only upto 31.12.2004 as seen from the communication dated 31.3.2010. Since possession was taken over by the Authorised Officer of the Bank on 1.1.2005 in terms of Section 13(4) of the SARFAESI Act, 2002, the petitioner contends that the finding of the Labour Commissioner in the impugned order as though the workmen continued in service till October 2006, was fallacious. According to the petitioner, the delay in holding the auction and the delay in the issue of Sale Certificates, on account of various interim orders of this Court in various proceedings, cannot enure to the benefit of the workmen, in postponing the date with reference to which the benefits under Section 25-FF of the https://hcservices.ecourts.gov.in/hcservices/ Industrial Disputes Act, 1947 are to be calculated. According to the petitioner, the date on which possession was taken, will be the date of termination of the services of the workmen and it is at that moment that the provisions of Section 25-FF will get attracted. Moreover, the petitioner contends that the very benefit available to the workmen under Section 25-FF of the Industrial Disputes Act, 1947, became one of the issues agitated in the first round of writ petitions decided by F.M. Ibrahim Kalifulla, J., in his order dated 12.7.2005. Therefore, it is a misconception, according to the petitioner, to postpone the date to 31.10.2006, as it would virtually mean that even on the date of the said order viz., 12.7.2005, the workmen continued in service. The learned counsel also drew my attention to the sale notices issued and the terms and conditions incorporated therein, in support of his contentions. 24. In response, Mr.B.Ravi, learned counsel appearing for the workmen contended that in terms of the express provisions of Section 25-FF of the Industrial Disputes Act, 1947, the liability to pay compensation and other dues to the workmen, arises "on the date of transfer". It is only when a Sale Certificate is issued by the Authorised Officer that a transfer actually takes place. In the case on hand, though a Sale Certificate was issued on 10.8.2005 in respect of movables, a Sale Certificate in respect of immovables was issued only on 24.8.2006. Therefore, according to the learned counsel for the workmen, the crucial date can never be before 24.8.2006. The learned counsel for the workmen also filed a set of documents,