Case: Inland Steam Navigation Works'Union &amp;Anr Vs. U.O.I.

It was also held that the transferee Corporation has no obligation whatsoever in relation to payment of compensation, etc. to the workmen as per the list attached and these workmen are not entitled to any relief whatsoever. This award was challenged before the High Court and the High Court held that the none of the reliefs could be granted to the appellant union and so far as claim made in respect of compensation under Section 25FFF of the ID Act, the High Court took the view that the appellant union can claim the same but the quantum of compensation can be determined by a Court in accordance with law in the presence of necessary parties. The writ petition was accordingly disposed of. Against this order, the present appeal is filed by special leave. 8. Before us it is contended that the Division Bench of the High Court while dealing with the appeal arising out of the company matter held that it was not within the scope of the scheme to find out first whether there was a closure of the company within the meaning of the ID Act and that claim of the workmen under the ID Act based on agreement dated 25.8.1965 was not within the jurisdiction and province of the application for sanction of the scheme and that the agreement will have to be enforced in a properly constituted proceedings. The stand of the appellant union is that in view of this statement made in the course of the order according sanction of the scheme for dissolution of the company it could be inferred that it was a case of reconstruction of the company, the properties and the assets are transferred to and vested in the Corporation by the members of the company. Liabilities in relation to creditors have nothing to do with the matter of employment in relation to River Transport Undertaking continued by Corporation after sanction of the scheme as employer as defined by Section 2(g) of the ID Act and in support of this proposition relied upon the decision in Central Bank of India Ltd. v. P.S. Rajagopalan, 1964(3) SCR 140. 9. The party in person emphasised that this Court in Central Inland Water Transport Corporation Ltd. (supra) observed that there is no actual change of employer by reason of the transfer nor do the three clauses of Section 25F of the ID Act apply. Therefore, prima facie the claim of the workmen would be either for work or for compensation under Section 25FF of the ID Act against the Corporation. It is also submitted that the workmen belonged to the under-privileged segments of the society and were exploited and dominated and that the scheme did not reveal discontinuity in service and that they had not impleaded Union of India as party in the proceedings initiated earlier. Therefore, it is contended that the appellant union are entitled to relief at any rate from the defunct company and in terms of the agreement the monetary compensation will have to be paid by the Union of India, wherever the workmen of the erstwhile company are not absorbed in service of the Corporation. 10. This Court in Central Indland Water Transport Corporation Ltd. (supra) took the view that the liability of the Corporation would not arise in the case because the question as to whether the transferee of an undertaking is a successor or not involves several factors. So far as the claim against the Corporation is concerned this Court made if clear that the workers who were taken over by the Corporation were given fresh appointments from June 5, 1967 with different conditions of service and there was break in the condition of service. Even assuming that on such investigation, conclusion could be drawn that the Corporation is a successor the matter will not be settled because, the transferee even as a successor would be liable neither to pay compensation nor to re-employ the workmen whose employment stood automatically terminated on the transfer. Where by operation of law the employment of workmen stands terminated, it may be difficult to sustain it on the basis of a term in a settlement prohibiting retrenchment, though statutorily binding on the transferee as a successor. Therefore, the view taken by the Tribunal that the Corporation is not liable to pay either compensation or to absorb the workmen in question is unexceptionable. As rightly held by the High Court, the workmen in question are entitled to compensation in case of closing down of an undertaking. Here there has been no transfer of the undertaking from the company to the Corporation as found by the Tribunal and upheld by the High Court because by order made by the company court the scheme of arrangement was to close down the company and what was taken over by the Corporation was a separate arrangement. Therefore, in the eye of law what is to be held is that the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer and every workman who has been in service for more than ten years in that undertaking immediately before such closure shall be entitled to notice and compensation in accordance with the provision of Section 25F as if the workman has been retrenched. In case where an undertaking is closed down by reason of financial difficulties as was the position in the present case it cannot be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer. Therefore, if an application is made by the workmen or by the union on their behalf before a Labour Court under Section 33C(2) of the ID Act it will be proper for the Labour Court to examine the claims under Section 25FFF of the ID Act, of each of these workmen and award compensation accordingly which shall be payable by the Union of India and to those proceedings the erstwhile company and the Union of India shall be parties.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. This Court in Central Indland Water Transport Corporation Ltd. (supra) took the view that the liability of the Corporation would not arise in the case because the question as to whether the transferee of an undertaking is a successor or not involves several factors. So far as the claim against the Corporation is concerned this Court made if clear that the workers who were taken over by the Corporation were given fresh appointments from June 5, 1967 with different conditions of service and there was break in the condition of service. Even assuming that on such investigation, conclusion could be drawn that the Corporation is a successor the matter will not be settled because, the transferee even as a successor would be liable neither to pay compensation nor to re-employ the workmen whose employment stood automatically terminated on the transfer. Where by operation of law the employment of workmen stands terminated, it may be difficult to sustain it on the basis of a term in a settlement prohibiting retrenchment, though statutorily binding on the transferee as a successor. Therefore, the view taken by the Tribunal that the Corporation is not liable to pay either compensation or to absorb the workmen in question is unexceptionable. As rightly held by the High Court, the workmen in question are entitled to compensation in case of closing down of an undertaking. Here there has been no transfer of the undertaking from the company to the Corporation as found by the Tribunal and upheld by the High Court because by order made by the company court the scheme of arrangement was to close down the company and what was taken over by the Corporation was a separate arrangement. Therefore, in the eye of law what is to be held is that the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer and every workman who has been in service for more than ten years in that undertaking immediately before such closure shall be entitled to notice and compensation in accordance with the provision of Section 25F as if the workman has been retrenched. In case where an undertaking is closed down by reason of financial difficulties as was the position in the present case it cannot be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer. Therefore, if an application is made by the workmen or by the union on their behalf before a Labour Court under Section 33C(2) of the ID Act it will be proper for the Labour Court to examine the claims under Section 25FFF of the ID Act, of each of these workmen and award compensation accordingly which shall be payable by the Union of India and to those proceedings the erstwhile company and the Union of India shall be parties.