State Of U.P. & Anr vs U.P. Rajya Khanij Vikas Nigam S.S. & Ors

2. The present appeal is directed against the judgment and final order dated July 14, 2006 passed by the High Court of judicature at Allahabad, (Lucknow Bench) in Writ Petition No. 338 (S/B) of 1997. By the said order, the writ petition filed by Uttar Pradesh Rajya Khanij Vikas Nigam Sangharsh Samiti ('Samiti' for short) and Others against the U.P. State Mineral Development Corporation Ltd. and the State of U.P. was allowed and a writ of mandamus was issued to the respondents to absorb the employees of the Corporation in various organizations of State Government/ Public Sector Undertakings and to pay compensation in accordance with law.

4. On March 23, 1974, U.P. State Mineral Development Corporation Ltd. ('Corporation' for short) was incorporated as a Government Company under Section 617 of the Companies Act, 1956. The Corporation was established with a view to provide acceleration in the field of mining and other incidental activities. Initially, the Corporation was floated with authorized share capital of Rs.20 crores which was subsequently increased to Rs.60 crores. It was a Government Company wherein 100% paid up share capital was by the State. It was thus completely owned by the Government. It was under the direct control and supervision of the State Government. The Corporation was thus an 'instrumentality' of the State. In the beginning, the Corporation showed profits. Subsequently, however, the financial status was deteriorated and it started incurring losses. The Board of Directors, therefore, on December 19, 1996 decided to retrench 460 employees. The Board was required to pay retrenchment compensation to those employees. Accordingly, a request was made to the State Government to advance loan of Rs.5 crores to enable the Corporation to pay retrenchment compensation to the employees. A resolution to that effect was also passed by the Board of Directors. In the resolution, reasons were indicated which impelled the Corporation to take a decision to retrench more than 50% of its staff. There were 838 employees out of which 744 were regular employees and 94 were on consolidated salary.

6. It was the allegation of the Samiti in the writ petition that loss has been sustained by the Corporation because of various wrong policy decisions taken by the U.P. Government and the Corporation. Several employees of the Corporation were not paid their salary and they were facing great hardship. Their family members had also suffered a lot and they were on the verge of starvation.

7. A counter-affidavit was filed on behalf of the Corporation through its Managing Director. By way of preliminary objections, it was contended that the petition was premature inasmuch as no action of retrenchment was taken by the Corporation. Moreover, alternative and efficacious remedy under the U.P. Industrial Disputes Act was available to the petitioners. On merits, it was contended that in view of shrinkage in the activities of the Corporation and also increase of wage bill because of huge surplus manpower, the Board of Directors of the Corporation took a decision on December 19, 1996 to retrench excess employees in accordance with law. According to the deponent, the Corporation was in acute financial crisis and totally dependant on grant-in-aid from the U.P. Government. The Corporation had closed down its mining activities in Lambidhar Mines at Mussorie as per the direction issued by the Supreme Court (this Court). Even at other places, it had to face competition from private sector. Because of drastic change in global industrialization and liberalized economic policy introduced by the Government, non- resident Indians (NRIs) were attracted and several industrial entrepreneurs in the State entered into the business of mining. Various projects had been developed in joint sector as well as in private sector which had also adversely affected the Corporation. The Corporation was not able to pay salary to its employees in its various Units at Dehradun, Chopan, Allahabad, Lalitpur etc. It was stated that an Undertaking cannot be forced to run its business on continuous loss and be directed to carry on huge surplus manpower and work force without work. It was, therefore, submitted that the writ petition filed by the Samiti was liable to be dismissed.

16. The above order was passed on January 5, 2001.

22. On March 19, 2005, the appellants moved an application before the Senior Judge of the High Court (Lucknow Bench) for listing the writ petition before an appropriate Bench for final disposal; since there was no final decision on the writ petition except opinions of three Hon'ble Judges. The application moved by the Corporation was registered as Civil Miscellaneous Application No. 12153 of 2005. The Senior Judge of the Lucknow Bench passed the following order on March 30, 2005;

29. Notice was issued on December 11, 2006. The respondents appeared, accepted the notice and prayed time to file counter affidavit. Meanwhile, operation of the judgment was stayed. The Registry was thereafter asked to place the matter for final hearing on a non- miscellaneous day and that is how the matter has come up before us.

21. Review petition was thus disposed of on July 13, 2001. In view of the above observations, the matter was not placed before a Division Bench and no order was passed by the Bench. Contempt proceedings were also initiated by the employees that the orders passed by the Court were not obeyed and not implemented.

28. It is this order which is challenged by the appellants in the present appeal.

(emphasis supplied)

48. To us, one of the considerations in such matters is whether an order passed or direction issued is susceptible of implementation and enforcement, and if it is not implemented whether appropriate proceedings including proceedings for willful disobedience of the order of the Court can be initiated against the opposite party. The direction issued by the High Court falls short of this test and on that ground also, the order is vulnerable.

50. In our considered view, however, all such actions could be examined by an appropriate Court/Tribunal under the Industrial Law and not by a writ Court exercising power of judicial review under Article 226 of the Constitution. If the impugned action of the Corporation of retrenchment of several employees is not in consonance with law, the employees are certainly entitled to relief from an appropriate authority. If any action is taken which is arbitrary, unreasonable or otherwise not in consonance with the provisions of law, such authority or Court/Tribunal is bound to consider it and legal and legitimate relief can always be granted keeping in view the evidence before it and considering statutory provisions in vogue. Unfortunately, the High Court did not consider all these aspects and issued a writ of mandamus which should not have been done. Hence, the order passed and directions issued by the High Court deserve to be set aside.

51. For the foregoing reasons, the appeal deserves to be allowed and the order passed by the High Court is liable to be set aside and is accordingly set aside.

52. Since we are of the view that one of the Hon'ble Judges of the Division Bench of the High Court which decided the matter at the initial stage was right in relegating the petitioners to avail of alternative remedy under the Industrial Law and as we hold that the High Court should not have entertained the petition and decided the matter on merits, we clarify that though the writ petition filed by the petitioners stands dismissed, it is open to the employees to approach an appropriate Court/Tribunal in accordance with law and to raise all contentions available to them. It is equally open to the Corporation and the State authorities to defend and support the action taken by them. As and when such a course is adopted by the employees, the Court/Tribunal will decide it strictly in accordance with law without being influenced by the fact that the writ petition filed by the writ petitioners is dismissed by this Court.

53. The appeal is allowed accordingly. Considering the facts and circumstances of the case, however, there shall be no order as to costs.