LPA/1130/2008 1/12 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD LETTERS PATENT APPEAL No. 1130 of 2008 In SPECIAL CIVIL APPLICATION No. 3081 of 2008 With CIVIL APPLICATION No. 11679 of 2008 In LETTERS PATENT APPEAL No. 1130 of 2008 With LETTERS PATENT APPEAL No. 313 of 2008 In SPECIAL CIVIL APPLICATION No. 21747 of 2006 With CIVIL APPLICATION No. 4065 of 2008 In LETTERS PATENT APPEAL No. 313 of 2008 With LETTERS PATENT APPEAL No. 324 of 2008 In SPECIAL CIVIL APPLICATION No. 21748 of 2006 With CIVIL APPLICATION No. 4258 of 2008 In LETTERS PATENT APPEAL No. 324 of 2008 With CIVIL APPLICATION No. 11601 of 2008 In LETTERS PATENT APPEAL No. 324 of 2008 With LETTERS PATENT APPEAL No. 325 of 2008 In SPECIAL CIVIL APPLICATION No. 22285 of 2006 With CIVIL APPLICATION No. 11602 of 2008 In LETTERS PATENT APPEAL No. 325 of 2008 With CIVIL APPLICATION No. 4262 of 2008 In LETTERS PATENT APPEAL No. 325 of 2008 With LETTERS PATENT APPEAL No. 374 of 2008 In SPECIAL CIVIL APPLICATION No. 21191 of 2006 With CIVIL APPLICATION No. 4529 of 2008 In LETTERS PATENT APPEAL No. 374 of 2008 With LETTERS PATENT APPEAL No. 484 of 2008 In SPECIAL CIVIL APPLICATION No. 22623 of 2006 With CIVIL APPLICATION No. 5042 of 2008 In LETTERS PATENT APPEAL No. 484 of 2008 With LETTERS PATENT APPEAL No. 493 of 2008 LPA/1130/2008 2/12 JUDGMENT In SPECIAL CIVIL APPLICATION No. 22626 of 2006 With CIVIL APPLICATION No. 5200 of 2008 In LETTERS PATENT APPEAL No. 493 of 2008 With LETTERS PATENT APPEAL No. 494 of 2008 In SPECIAL CIVIL APPLICATION No. 21173 of 2006 With CIVIL APPLICATION No. 5204 of 2008 In LETTERS PATENT APPEAL No. 494 of 2008 With LETTERS PATENT APPEAL No. 1030 of 2008 In SPECIAL CIVIL APPLICATION No. 22286 of 2006 With CIVIL APPLICATION No. 11900 of 2008 In LETTERS PATENT APPEAL No. 1030 of 2008 With LETTERS PATENT APPEAL No. 1031 of 2008 In SPECIAL CIVIL APPLICATION No. 22268 of 2006 With CIVIL APPLICATION No. 11379 of 2008 In LETTERS PATENT APPEAL No. 1031 of 2008 With LETTERS PATENT APPEAL No. 1032 of 2008 In SPECIAL CIVIL APPLICATION No. 22266 of 2006 With CIVIL APPLICATION No. 11382 of 2008 In LETTERS PATENT APPEAL No. 1032 of 2008 With LETTERS PATENT APPEAL No. 1033 of 2008 In SPECIAL CIVIL APPLICATION No. 21751 of 2006 With CIVIL APPLICATION No. 11383 of 2008 In LETTERS PATENT APPEAL No. 1033 of 2008 With LETTERS PATENT APPEAL No. 1034 of 2008 In SPECIAL CIVIL APPLICATION No. 22267 of 2006 With LETTERS PATENT APPEAL No. 1035 of 2008 In SPECIAL CIVIL APPLICATION No. 22284 of 2006 With CIVIL APPLICATION No. 11388 of 2008 In LETTERS PATENT APPEAL No. 1035 of 2008 With LPA/1130/2008 3/12 JUDGMENT LETTERS PATENT APPEAL No. 1036 of 2008 In SPECIAL CIVIL APPLICATION No. 22625 of 2006 With CIVIL APPLICATION No. 11391 of 2008 In LETTERS PATENT APPEAL No. 1036 of 2008 With LETTERS PATENT APPEAL No. 1037 of 2008 In SPECIAL CIVIL APPLICATION No. 22841 of 2006 With CIVIL APPLICATION No. 11393 of 2008 In LETTERS PATENT APPEAL No. 1037 of 2008 With LETTERS PATENT APPEAL No. 1038 of 2008 In SPECIAL CIVIL APPLICATION No. 22269 of 2006 With CIVIL APPLICATION No. 11395 of 2008 In LETTERS PATENT APPEAL No. 1038 of 2008 With LETTERS PATENT APPEAL No. 1039 of 2008 In SPECIAL CIVIL APPLICATION No. 22624 of 2006 With CIVIL APPLICATION No. 11396 of 2008 In LETTERS PATENT APPEAL No. 1039 of 2008 With LETTERS PATENT APPEAL No. 1040 of 2008 In SPECIAL CIVIL APPLICATION No. 22621 of 2006 With CIVIL APPLICATION No. 11397 of 2008 In LETTERS PATENT APPEAL No. 1040 of 2008 With LETTERS PATENT APPEAL No. 1148 of 2008 In SPECIAL CIVIL APPLICATION No. 3082 of 2008 With CIVIL APPLICATION No. 11886 of 2008 In LETTERS PATENT APPEAL No. 1148 of 2008 With LETTERS PATENT APPEAL No. 1190 of 2008 In SPECIAL CIVIL APPLICATION No. 7539 of 2006 With LETTERS PATENT APPEAL No. 1191 of 2008 In SPECIAL CIVIL APPLICATION No. 10050 of 2006 With LETTERS PATENT APPEAL No. 1192 of 2008 In SPECIAL CIVIL APPLICATION No. 22622 of 2006 LPA/1130/2008 4/12 JUDGMENT With LETTERS PATENT APPEAL No. 1193 of 2008 In SPECIAL CIVIL APPLICATION No. 21750 of 2006 With LETTERS PATENT APPEAL No. 1194 of 2008 In SPECIAL CIVIL APPLICATION No. 21749 of 2006 With LETTERS PATENT APPEAL No. 1195 of 2008 In SPECIAL CIVIL APPLICATION No. 7159 of 2001 For Approval and Signature: HONOURABLE MS. JUSTICE R.M. DOSHIT & HONOURABLE MR.JUSTICE K.M. THAKER ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ======================================================== C S HOTELS PVT LTD (HOTEL KARNAVATI) & 1 - Appellant(s) Versus RATANLAL KODARBHAI & 9 - Respondent(s) ========================================================= Appearance : MR MIHIR THAKORE, SR.ADVOCATE with MR SACHIN D VASAVADA for Appellant(s) : 1 - 2. MR TR MISHRA for Respondent(s) : 1 - 3,5 - 9. Respondent(s) : 4 :: DELETED MS TRUSHA PATEL & MS TANUJA KACHCHHI, AGPs for Respondent(s) : 9-10 LETTERS PATENT APPEAL No.1030 of 2008 MR PUNIT B JUNEJA for Respondent : 1. ========================================================= CORAM : HONOURABLE MS. JUSTICE R.M. DOSHIT and LPA/1130/2008 5/12 JUDGMENT HONOURABLE MR. JUSTICE K.M. THAKER 15th October, 2008 COMMON ORAL JUDGMENT (Per : HONOURABLE MS. JUSTICE R.M.DOSHIT) Leave to implead Mamlatdar, Alien Recovery, Ahmedabad as respondent in each Appeal. Learned AGP Ms. Trusha Patel/Ms. Tanuja Kachchhi appears for and waives service of notice on behalf of the Mamlatdar, Alien Recovery, Ahmedabad. This group of Appeals preferred under clause 15 of the Letters Patent arises from the judgments and orders dated 17th September, 2008 passed by the learned Single Judge in above Special Civil Application Nos. 3081/2008 and and 3082/2008 and the common judgment and order dated 24th September, 2008 passed by the learned Single Judge in the above Special Civil Applications. The appellant ran and managed a hotel situated at Ahmedabad. The workmen were employed in the said hotel. The subject matter of dispute is common i.e. the claim made by the workmen (58 in number) for reinstatement in service and for recovery of unpaid salaries uptodate. It is not in dispute that the hotel is closed for a long time. Reinstatement of any of the workmen in service is not possible. Both the learned advocates have agreed that the matters be finally settled in the present group of Appeals. LPA/1130/2008 6/12 JUDGMENT It is the claim of the appellant that the hotel has been closed since December, 1996. The appellant has admitted that though the hotel was closed in December, 1996, none of the workmen was given notice or pay in lieu of notice or retrenchment compensation as envisaged by Section 25F of the Industrial Disputes Act, 1947 (hereinafter referred to as, “the Act”). Nor did the appellant give sixty days' notice of its intention to close the hotel as envisaged by Section 25FFA of the Act. The complaints made by the workmen before the Labour Court were not contested and were decided in favour of the workmen ex-parte. The orders of the Labour Court issued in favour of the workmen time and again have not been complied with. The recovery applications made by the workmen were also not contested. It is submitted that in recovery proceedings initiated by the Mamlatdar, Alien Recovery, a sum of Rs. 86,20,000=00 has been deposited with the Mamlatdar, Alien Recovery. Certain amounts are also paid to some of the workmen under orders of the Courts in various proceedings. The dispute with three of the workmen, namely, S/Shri Jagprasad Mali; Nalingiri Nanugiri Goswami & Uttamsinh Chauhan, is settled out of the Court. Both the learned advocates agree that in respect of the closure of the hotel, the provisions contained in Section 25FFA, Section 25FFF and Section 25F are attracted. It is the grievance of the appellant that the complaints/the claims were made by the workmen against the Directors personally LPA/1130/2008 7/12 JUDGMENT and not against the employer, the appellant C.S. Hotels Private Limited. Orders made by the Labour Court are, therefore, null and void. The Directors cannot be held personally liable for the dues of the employer – C.S. Hotels Private Limited. None of the proceedings was taken against the appellant, the employer. Nonetheless, now the recovery is sought to be made against the appellant. In support of his submissions, Mr. Thakore has relied upon the judgment of the Bombay High Court in the matter of Lal Bavta Hotel Aur Bakery Mazdoor Union v/s. Ritz Private Ltd. and Another [2007 I CLR 907]; and the judgments of the Hon'ble Supreme Court in the matters of Divisional Controller, Gujarat SRTC v/s. Kadarbhai J. Suthar [ (2007) 10 SCC 561]; of Fazilka Co-op. Sugar Mills v/s. Jatinder Kumar Gupta and another [2007 III CLR 174 (SC) ]; of Management of Madurantakam Co-op. Sugar Mills Ltd. v/s. S.Viswanathan [2005 LAB I.C. 2271] and of Uttaranchal Development Corporation v/s. M.C.Joshi [2007 II LLJ 390]. Mr. Thakore has also submitted that over a period, some of the workmen have reached the age of superannuation, some have secured gainful employment and some are not even residing in Ahmedabad. The Appeals are contested by the learned advocate Mr. Mishra. He has submitted that the writ petitions filed by the appellant after an unduly long and unexplained delay were rightly rejected by the learned Single Judge. He has also submitted that an LPA/1130/2008 8/12 JUDGMENT equitable right has been created in favour of the workmen. The appellant – C.S. Hotels Private Limited had, on 20th July, 1994, entered into a memorandum of settlement with its workmen. Under the said settlement, the appellant had agreed, inter alia, that the said settlement would be operative for three years commencing from 1st March, 1994; the appellant agreed to give ad hoc rise at 7% over the basic wages and the special allowances that the workmen would be getting as on 28th February of the concerned year; the ad hoc rise in wages would be given on 1st March, 1994, 1st March, 1995 and 1st March, 1996; such ad hoc rise would be treated as wages for the purpose of other fringe benefits like provident fund, bonus, etc. Learned advocate Mr. Thakore has produced a statement of 58 workmen showing the salary received by each workman as on 1st December, 1996. As Mr. Mishra had some doubt about the correctness of the figures shown in the statement, he was given opportunity to submit his own figures. However, such figures have not come forth. We, therefore, treat the figures given by the learned advocate Mr. Thakore as true. As recorded hereinabove, according to the appellant the hotel has been closed since 1st December, 1996. However, learned advocate Mr. Mishra has dispute. He has submitted that as late as in the year 1998 the appellant had engaged some more workmen. LPA/1130/2008 9/12 JUDGMENT In view of the above referred undisputed facts and applicable law and in view of the dispute as to the date of the closure of the hotel, we hold that the hotel be deemed to have closed with effect from 1st January, 2000; Each of the 55 workmen (excluding the aforesaid 3 workmen with whom the dispute has been settled out of the Court) will be paid the outstanding dues as under:- Each workman [55 in number] will be paid the wages for the period from 1st December, 1996 to 31st December, 1999. For the purpose of calculation of the wages, the pay drawn as on 1st December, 1996 will be taken into consideration. Each workman will be entitled to 7% ad hoc rise as agreed under the settlement. Such rise shall be calculated as on 1st March, 1997, 1st March, 1998 and 1st March, 1999. The wages so calculated shall not be less than the minimum wages prevalent at the relevant time. In addition to the wages, each workman will be paid one months' pay in lieu of notice as envisaged by Sections 25F and two months' pay for failure to give notice of intention to close the hotel under section 25FFA of the Act. Each workman will be paid retrenchment compensation, minimum bonus, leave encashment and gratuity calculated on the basis of the wages as on 31st December, 1999 computed as above. LPA/1130/2008 10/12 JUDGMENT In addition to the aforesaid payments, each workman will be paid an ex gratia amount in lieu of reinstatement in service, interest and cost. Such ex gratia amount will be 75% of the outstanding amount of wages, notice pay, retrenchment compensation, minimum bonus, leave encashment and gratuity payable under this order. If any of the workmen has already been paid any amount earlier, such amount will be adjusted against the amount payable under this order. The appellant will make computation of the outstanding dues of the workmen payable under this order within four weeks from today. Copy of the computation made by the appellant will be furnished to the learned advocate Mr. T.R. Mishra appearing for the workmen and to the Mamlardar, Alien Recovery, Ahmedabad. The amount payable to each workman will be disbursed by the Mamlatdar, Alien Recovery out of the sum of Rs. 86,20,000=00 deposited with him, after proper identification of the workmen. Any deficit in the amount payable to the workmen will be made good by the appellant – C.S. Hotels Private Limited as early as possible but not later than 12th December, 2008. In the event, the appellant fails to deposit the deficit amount with the Mamlatdar, Alien Recovery, as directed, the appellant will be required to deposit the deficit amount with interest @ 1% for delay of every one month or LPA/1130/2008 11/12 JUDGMENT any part thereof till the date such deficit is deposited. Such amount of interest on the deficit, if any, will be passed over to the workmen [55 in number] in equal proportion. In view of this order, the impugned judgments and orders passed by the learned Single Judge are set-aside. The Special Civil Applications stand partly allowed. The awards/orders made by the Labour Court in respect of the respondents workmen will stand modified in the above terms. In view of the approaching Diwali festivals, the Mamlatdar, Alien Recovery, Ahmedabad is directed to make advance payment of a sum of Rs. 20,000/= to each workman, after proper identification. This amount will be adjusted against the amount payable to such workman under this Order. In case of the workmen whose claim is less than rupees twenty thousand, they will be paid 50% of their claim. We are informed that in compliance with the direction issued by the learned Single Judge, seven workmen have been paid 30% of their claim. The said seven workmen will not be entitled to receive advance payment under this Order. The Mamlatdar, Alien Recovery will make the advance payment as directed, as early as possible, but not later than 24th October, 2008. The Appeals and the Civil Applications are disposed of. The parties will bear their own cost. Registry will send the writ forthwith. {Miss R.M Doshit, J.} LPA/1130/2008 12/12 JUDGMENT {K.M Thaker, J.} Prakash*