Cement Workers Karamchari Sangh vs M/S. Jaipur Udyog Limited & Ors

3. However, during the pendency of the proceeding before this Court certain developments took place that tend to somewhat shift the focus from the limited issue as indicated above. On August 26, 2006, while the Special Leave Petition giving rise to the appeal was pending before the Court, the appellant-workers' union entered into a bipartite agreement with respondent No.1, M/s.Jaipur Udyog Limited (JUL) in purported settlement of the dues of the workers/employees at Sawai Madhopur, Phallodi Quarries, Jaipur, Delhi and Chandigarh offices represented by the Sangh. A copy of the agreement was brought on record as Annexure 'A' to I.A.No.8 of 2006 filed in the Special Leave Petition on August 31, 2006. The settlement between the appellant- union and JUL gave rise to a chorus of protests by other sections of workers who alleged that the settlement was fraudulent, collusive and a sell out to the management of JUL. A number of impleadment applications were filed (vide I.A.Nos.9 & 10 of 2006, 12 of 2007) on behalf of different Unions claiming to represent the workmen of JUL at Jaipur and at Kanpur.

4. On December 4, 2006 when the Special Leave Petition was taken up the settlement was brought to the notice of the Court and a joint prayer was made by the appellant and JUL that the dispute between the employees and the employer may be permitted to be settled in terms of the agreement and the AAFIR be directed to monitor the implementation of this settlement in letter and spirit. The other Unions seeking impleadment in the proceedings before this Court raised strong objections to the settlement. The Court, however, permitted the agreement to be implemented in terms of prayer (b) in the application (I.A.No.8 of 2006) subject, of course, to the rights of those Unions who had filed applications for impleadment and/or had approached the Labour Commissioner (against the settlement in question). On April 10, 2007, it was represented before the Court that a large number of employees had received payments in terms of the settlement. The claim made on behalf of the appellant and respondent No.1 was disputed by others. Hence, the Court felt the need for some investigation on certain issues of facts and as agreed by the counsel for the parties, appointed Mr. Justice N.N.Mathur, a former Judge of the Rajasthan High Court, to make an enquiry on points indicated in the order as follows:

5. These developments taking place after the filing of the Special Leave Petition compel us to take note of certain facts and circumstances antecedent to the immediate cause that brought this matter to this Court.

6. All the controversies in the case, as may be gathered from the above, revolve around the attempts at the rehabilitation/revival, or conversely the winding up of M/s.Jaipur Udyog Limited (JUL). JUL was incorporated in May 1948 as a private limited company. It set up a cement factory at Sawai Madhopur for which the supply of raw material, i.e., limestone came from Phallodi Quarry at a distance of about 25 kms. In the year 1955, it was converted into a public limited company. In 1967, it acquired a jute mill in Kanpur with a view to manufacture cement bags for captive consumption in the cement unit at Sawai Madhopur. After going through many ups and downs over a period of about forty years the cement factory of the company came to be closed down in the year 1987. And finally JUL was declared a sick company by the order, dated August 26, 1987 passed by the BIFR that came to find and hold that the company was not in a position to make its net worth positive on its own within a reasonable time. At that time the company had on its hands, apart from a number of very onerous financial liabilities, large bodies of workmen both at Sawai Madopur and at Kanpur.

7. After some initial attempts at the revival/rehabilitation of JUL failed, another company M/s.Gannon Dunkerley Company Ltd. (GDCL) came on the scene. In 1991 a proposal for the revival of JUL came up before the BIFR. GDCL was the main party to the revival plan. The BIFR sanctioned the revival scheme by order, dated July 21, 1992 and it was called 'SS-92'. Under the sanctioned scheme GDCL was to take over JUL, for its revival, along with all assets and liabilities. The cut off date for the restructuring of capital and liabilities was fixed as March 31, 1992. The IRBI was appointed as the monitoring agency. The scheme stipulated that GDCL would take over of the management of JUL from its erstwhile promoters. The cost of the scheme (SS 92) was Rs.38.41 crores, out of which Rs.18.12 was to come from the promoters (GDCL) as contribution/unsecured loans, Rs.10 crores by sale of assets and the remaining Rs.10.29 crores by sales tax deferment. The liability of JUL was restructured and after substantial wavers the restructured liabilities of Rs.53.86 crores were rescheduled for payment. In order to meet the pressing liabilities, an amount of Rs.2.54 crores was marked for immediate disbursement. In the scheme (SS

Later on, in the proceedings both the BIFR and the AAIFR had the occasion to comment that in order to make the revival of JUL possible under SS-92 the employees had made great sacrifices and had settled for the much smaller amount of only Rs.3 crores (payable in three installments) in place of Rs.12.41 crores being their lawful dues. The workmen had given up three- fourth of their dues in the hope and trust that the new promoter (GDCL) would start the unit and they would be able to keep their jobs. Their hope was, however, completely belied and the workmen were left 'in a very pathetic situation.'

9. On January 9, 1996, GDCL commissioned the unit only to declare lock out seven months later on August 12, 1996. It was alleged that the commissioning was an eye wash and the promoters had no intent to run the unit on a sustained basis. No repairs were made in the plant lying idle for a long time; no raw materials were brought and no supervising, managerial or technical staffs were engaged. The lock out declared by the management was prohibited by the state government by order, dated May 25, 1999, issued under section 10(3) of the Industrial Disputes Act. On August 11, 1997 the management of GUL entered into a revised tripartite settlement with the representatives of the workers. But the revival of JUL remained as illusive as ever before.

12. Finally, the BIFR passed the order, dated November 24, 2000, giving direction for the winding up of JUL with a number of ancillary directions. Here, it would useful to extract paragraph 29 of the order that sums up the facts and circumstances that finally led the BIFR to pass the order of winding up of JUL:

13. Against the winding up order passed by the BIFR, JUL filed Appeal No.22 of 2001 before the AAIFR. On August 3, 2001, the AAIFR directed the appellant-JUL to deposit an amount of Rs.10 crores as the condition precedent for admission of the appeal. It would be useful to reproduce the order in full:

16. Having made the observations and come to the findings, as noted above, the AAIFR dismissed the appeal and granted permission to the creditors for initiating proceedings for recovery of their dues and for execution of the decrees already obtained by them.

(Emphasis added) The High Court accordingly set aside both the interim and final orders passed by the AAIFR dated August 3, 2001 and September 6, 2001 and remitted the matter for a fresh decision on merits after providing an opportunity of hearing to all the parties who were impleaded in appeal and who had sought impleadment in the writ petition.

Following the above statement, the prayer is made as follows:

within a period of two months; and

(b) Pass an order as this Hon'ble Court may deem fit and proper considering the facts and circumstances of the present case."

By filing this petition JUL/GDCL, of its own accord, opens up the claims of all the workmen and makes a positive gesture in an attempt to satisfy the court that it has no intent to run away with the lawful claims of the workmen.

36. But for all this we are unable to overlook that JUL/GDCL were practically denied the remedy of appeal against the winding up order passed by the BIFR. We recall here the hackneyed but very useful maxim: justice should not only be done but it should also appear to have been done. We are, therefore, of the view that at least one chance should be afforded to JUL/GDCL to place their case before the AAIFR.

37. We are further of the view that central to the issue of rehabilitation or winding of the company is the question of the workmen's dues. The dues of all other creditors are ascertainable without difficulty. But in case of the workmen's dues there is great divergence between the claim of the workmen and what is accepted by the company's management. It is, therefore necessary to get the workmen's dues authoritatively determined. Once the workmen's dues too are known precisely that can be factored into a realistic revival scheme or accounted for in the winding up process, in case the eventuality arises.

38. We accordingly make the following directions which we consider, in the totality of the facts and circumstances of the case, would meet the ends of justice:

IV. JUL/GDCL shall pay to Mr.Justice N.N.Mathur within one month from to day a sum of Rs.2 lakh as his honorarium and an additional sum of Rs.1.5 lakh to meet the salary of the staff and other incidental expenses, including traveling expenses. V. The Commissioner-cum-Secretary Industries (GR-I) Department, the Labour Commissioner, Government of Rajasthan, the Labour Commissioner Government of U.P. and the Collector(s) of the district(s) where the cement factory and Phallodi Quarry are situate and the Collector, Kanpur shall extend all help and assistance to Mr.Justice Mathur as may be required by him in connection with the proceedings.

39. The appeal is disposed of with the above observations and directions. No Costs.