Case: Rashtriya Mill Mazdoor Sangh Vs. National Textile Corporation Ltd.

2. Mohan Sambhaji Parab, respondent No. 2 herein, was in the employment of M/s. Finlay Mills Ltd.-respondent No. 3 from January 1, 1954 till March 22, 1983 when he resigned. He made a claim of Rs. 16,730/- towards gratuity payable underthe Payment of Gratuity Act, 1972 and submitted an application in Form I with respondent No. 3. Since the respondent No. 3 failed to pay the amount of gratuity, respondent No. 2 moved the Controlling Authority under the Payment of Gratuity Act seeking for the recovery of the said amount of Rs. 16,730/-. On October 18, 1983, the President of India promulgated the Textile Undertakings (Taking Over of Management) Ordinance, 1983 whereby the management of the Cotton Textile undertaking of respondent No. 3 was taken over by the Central Government. The said Ordinance was subsequently replaced by the Act which was brought into force with effect from October 18, 1983. The Central Government vested the management of the textile undertaking of respondent No. 3 with the NTC with effect from October 18, 1983. NTC was impleaded as a party to the proceedings before the Controlling Authority. Respondent No. 3 did not appear to contest the petition before the Controlling Authority but the NTC appeared and contested its liability for the payment of gratuity to respondent No. 2. By order dated October 31, 1984, the Controlling Authority upheld the objection raised by NTC regarding its liability for the gratuity amount payable to respondent No. 2 and held that the said gratuity amount was payable by respondent No. 3. The Controlling Authority, therefore, directed respondent No. 3 to deposit the amount of Rs. 16,730/- towards gratuity in the Court of the Controlling Authority within one month from the date of the said order. Respondent No. 2 filed an appeal before the Industrial Court, Maharashtra against the said order of the Controlling Authority dated 31st October, 1984 wherein he claimed that NTC was liable to pay the gratuity amount to him. The said claim of the respondent No. 2 was upheld by the Industrial Court and, allowing the appeal, the Industrial Court, by order dated August 7, 1985, directed that in the event of respondent No. 2 failing to deposit the gratuity in the Court, the same shall also be recovered from NTC to the extent of the assets and other properties of the textile undertaking of respondent No. 2 taken over by NTC. Feeling aggrieved by the said order of the Industrial Court, NTC filed a writ petition (Writ Petition No. 8 of 1986) in the Bombay High Court. The said writ petition was dismissed by the High Court by the impugned judgment dated October 4, 1990. The High Court has held that the liability to pay gratuity to respondent No. 2 arose prior to taking over of the management of the textile undertaking of respondent No. 3 on October 18, 1983 and the liability for the said gratuity was that of respondent No. 3 and in view of Section 3(7) of the Act, NTC was not liable for the same. Since the appellant, namely, Rashtriya Mill Mazdoor Sangh, had been impleaded as a party in the proceedings, the appellant has filed this appeal, by special leave, against the said decision of the Bombay High Court.

Reasoning:
7. We are in agreement with the said view of the High Court because under Section 4 of Payment of Gratuity Act, gratuity becomes payable to an employee on the termination of his employment, on his retirement or resignation and since the respondent No. 2 had resigned on March 22, 1983, gratuity under the Act become payable to him on March 23, 1983 i.e. before the taking over the management of the textile undertaking of respondent No. 3 on October 18,find it difficult to accept this contention. It is one of the cardinal principles of the statutory construction that where the language of an Act is clear, the Preamble cannot be invoked to curtail or restrict the scope of the enactment and only where the object or meaning of an enactment is not clear that Preamble may be resorted to explain it. See : Burrakur Coal Co. Ltd. v. Union of India, 1962 I SCR 44 at page 49 and M/s. Motipur Zamindary Co. (P) Ltd. v. The State of Bihar, 1962 Supp. (1) SCR 498 at page 504. Here we find that the language of sub-section (7) of section 3 is clear and unambiguous inasmuch as in the said provision it has been declared that any liability incurred to by the textile company in relation to the textile undertaking before the appointed day shall be enforceable against the concerned textile company and not against the Central Government or the Custodian. The words ``any liability in sub-section (7) of said Section 3 are of wide amplitude to cover every liability that was incurred by the textile company in relation to the textile undertaking before the appointed day. Moreover, the statement in the Preamble on which reliance has been placed by the learned counsel for the appellant, regarding giving protection to the interests of the workmen employed therein, also indicates that what was intended was to reorganise and rehabilitate the textile undertakings whose management was being taken over with a view to prevent the closure of such undertakings and consequent unemployment of workmen and thereby protect the interests of the workmen who were employed in the textile undertaking at the time of the taking over of the management of the said undertaking. The said statement in the Preamble does not refer to persons who had ceased to be in employment of the textile undertaking on the date of such taking over of the management. We are, therefore, unable to hold that sub-section (7) of section 3, must be so construed as to exclude its applicability in respect of liability for payment of gratuity under the Payment of Gratuity Act.11. That the liabilities in respect of the period prior to the taking over of the management of the textile undertaking are not taken over by the NTC is also borne out by the Textile Undertakings (Nationalisation) Ordinance No. 6 of 1995 promulgated by the President on June 27, 1995. The said Ordinance provides for the acquisition and transfer of the textile undertakings specified in the First Schedule of the said Ordinance. Respondent No. 3 is one of the textile undertakings referred to in the said Ordinance. Under Section 3 of the said Ordinance, the right, title and interest of the owner in relation to every textile undertaking mentioned in the First Schedule to the Act, stands transferred and vests absolutely in the Central Government on the appointed day, i.e. April 1, 1994. Under Section 5 of the said Ordinance, every liability, other than the liability specified in Sub-section (2), of the owner of a textile undertaking, in relation to the textile undertakings in respect of any period prior to the appointed day shall be the liability of such owner and shall be enforceable against him and not against the Central Government or the NTC. Clause (c) of Sub-section (2) of Section 5 refers to liability arising in respect of wages, salaries and other dues of the employees of the textile undertaking in respect of any period after the management of such undertaking had been taken over by the Central Government. Clause (a) of Sub-section (3) of Section 5 of the said Ordinance is similar to that contained in Sub-section (7) of Section 3 of the Act and declares that as expressly provided in the said Section or any other section of the said Ordinance, on liability other than the liability as specified in sub-section (2) in relation to a textile undertaking in respect of any period prior to the appointed day shall be enforceable against the Central Government or the NTC. Section 8 of the said Ordinance provides that the owner of every textile undertaking shall be given by the Central Government, in cash and in the manner as specified in Chapter VI, for the transfer to and vesting in it, under sub-section (1) of section 3, of such textile undertaking and the right, title and interest of the owner in relation to such textile undertaking, an amount equal to the amount specified against it in the corresponding entry in column (4) of the First Schedule. Section 20 of the said Ordinance requires every person having a claim against the owner of a textile undertaking to prefer such claim before the Commissioner and Section 21 prescribes the principles regarding priority of claims arising out of the matters specified in the Second Schedule. In the said Ordinance the liabilities in respect of the textile undertakings are divided in two parts; Part A deals with post-take over management period and contains categories I and II; and Part B relates to pre-take over management period and contains categories III to IV. Category III relates to arrears in relation to provident fund, salaries and wages and other amounts due to the employee. By Clause (a) of Section 21 categories I and II have been given precedence over category III which means that the liabilities for the post- take over management period have priority over the arrears in relation to provident fund, salaries and wages and other amounts due to the employee in relation to the pre-take over management period. These provisions are similar to those contained in Section 21 ofthe Sick Textile Undertakings (Nationalisation) Act, 1974. In M. Asghar v. Union of India, 1986(4) SCC 283, the said provisions giving lower priority to the amounts due to the employees in relation to the pre-take over period, was challenged before this Court. The said challenge was negatived by the Court and it wasdistinction made between the liabilities of the post-take over management period and the pre-take over management period is prima facie sound as the former liabilities are those incurred pursuant to the public management of the undertaking under the statute, while the latter liabilities are those incurred in the course of the private management by the owner of theprovisions of the Ordinance No. 6 of 1995 also show that the liabilities for the period prior to the take over of the management are to be discharged from the amount payable to the owner of the textile undertaking for the acquisition of the undertaking and not by the NTC. It is, therefore, not possible to uphold the contention urged on behalf of the appellant that NTC is liable in respect of the gratuity amount payable under the Payment of Gratuity Act to Respondent No. 2.