Case: Central Inland Water Transport Corporation Ltd Vs. The Workmen &amp; Another

2. A few facts are necessary to be stated. There was a Limited Company known as the Rivers Steam Navigation Co. Ltd. (hereinafter called the Company) which used to operate a River service from West Bengal to Assam through what was formerly East Pakistan. It had employed for its business about 8,000 workmen, including clerical staff. Due to conflict with Pakistan in 1965 the Company came to grief and had to suspend a major part of its operations. Retrenchment was undertaken on a large scale because the Company had been incurring heavy losses for several years in spite of the Government of India acquiring a controlling interest in it to prevent its voluntary liquidation. In the course of conciliation proceedings the Management of the Company arrived at a settlement with the respondent Union on August 25, 1965 whereby it was agreed, inter alia, that the settlement was valid for 5 years till the end of 1969, that the retiring age of the workmen would be 57 years and that there would be no retrenchment for 5 years. The Companys fortunes did not improve, and, therefore, in 1966 owing to its indebtedness to various creditors, including the Union of India, the State Bank of India, the Chartered bank etc. to the tune of several crores of rupees, a winding up petition was filed in the Calcutta High Court. The Company, thereupon, made an application under Sections 391 to 394 of the Companies Act for sanctioning a scheme of arrangement and compromise between the Company and the appellant Corporation which was incorporated on February 22, 1967 as a wholly owned Central Government Company.3. The scheme was sanctioned by a learned Judge of the Calcutta High Court by his order dated May 3, 1967. It is to be noted that when the proceeding was before the learned Judge, the respondent union had appeared before the Court with a view to safeguard the interests of the workers. Aggrieved by the order which sanctioned the scheme, the Union went in appeal before a Division Bench of the High Court. The Division Bench by its judgment and order dated July 14, 1967 upheld the order of the single Judge sanctioning the scheme.4. It is not necessary to quote the scheme extensively. It is enough to point out that it provided, inter alia, that all the properties and assets but only some of the liabilities of the Company would vest in the appellant Corporation. It was further agreed that the Corporation would take over as many of the staff and labour of the Company as was possible under the circumstances, but as to how many would be employed by the Corporation was entirely left to the discretion of the Corporation. It was further agreed that those employees who were not taken over by the Corporation would be paid compensation by the Company out of funds the Government of India agreed to supply. It was further agreed that upon the approval of the scheme, the Company would be closed and on payment of all creditors it would stand dissolved without winding up. All these terms of the scheme were confirmed in appeal but with a view to safeguard the rights of workers, if any, the following observations weream of opinion, that the questions, first whether there is a closure of the company within the meaning of the Industrial Disputes Act, secondly, whether the agreement dated 25th August, 1965, is capable of enforcement, thirdly, whether the workers or workmen are entitled of prefer and assert their claims on the agreement dated 25th August 1965 and fourthly, whether the Rivers Navigator Company Limited and the new transferee company are entitled to assert that there has been a closure and further that the agreement is not capable of enforcement, should all be left open for the rival contentions to be pursued in the proper forum and on proper materials and in the proper jurisdiction. I am of opinion that if any claim be made in the proper jurisdiction it will be a matter for enforcement of that claim in properly constituted proceedings. It is needless to say that unless there is adjudication there cannot be any enforcement of the claim and such adjudication has to be made in a proper forum.The scheme, as already pointed out, was sanctioned by Order dated May 3, 1967 and, as envisaged in the scheme itself, the Company on that very day issued a notice of closure. Thereafter the Corporation issued fresh letters of appointment, and out of about 8,000 former employees of the Company, the Corporation employed about 5173.6. This left a large body of employees of the former Company unemployed. On September 12, 1968 the Government of West Bengal made two orders of reference purporting to be under S. 33C (2) of the Industrial Disputes Act. By the first order of reference it asked the Labour Court to compute the benefits covered by the settlement dated August 25, 1965 between the Union and the Company and by the second order of reference, it asked for the computation of retrenchment benefits under Section 25FF of the Industrial Disputes Act. The Corporation challenged those orders in a Writ Petition in the Calcutta High Court, principally, on the ground that the references had made several unjustified assumptions, which by the nature of the frame of the references had becomeIn a detailed judgment B. C. Mitra, J. held that the reference orders were misconceived and set them aside by his order dated July 15, 1969. The learned Judge, however,respondent No. 3 (State) will be at liberty to make fresh order or orders of reference in the light of the observations made in this judgment and in compliance with the directions in the judgment of the Appellate Court and in accordance withwas no appeal from that order.7. Thereafter on October, 27, 1969 the Government of West Bengal made the present consolidated reference to the Second Labour Court in the followingthe workmen mentioned in the attached list No. 1, represented by the Inland Steam Navigation Workers Union, 16/17 College Street,(hereinafter referred to as the said Union), have preferred claims that the they are entitled, in terms of the settlement dated the 25th August, 1965 (hereinafter referred to as the said settlement), to receive from Messrs Central Inland Water Transport Corporation Limited, 4, Fairlie Place,referred to as the said Company) benefits which are capable of being computed in terms of money;And whereas the Workmen mentioned in the attached list No. II represented by the said Union, have preferred claims that they are entitled to get from the said Company retrenchment benefits under Section 25 FF of the Industrial Disputes Act, (Act 14 of 1947), which are capable of being computed in terms of money;And whereas the workmen in lists Nos. I and II have requested the State Government to specify a Labour Court for determination of the amount to which such benefits should be computed;Now therefore in exercise of the power conferred by(2) of Section 33C ofthe Industrial Disputes Act, 1947 (Act 14 of 1947), the Governor is pleased to specify the Second Labour Court constituted by Notification No.8 dated the 28th April, 958 as the Labour Court to which the following issues are referred for adjudication.Issues:(1) Whether the undertaking or the business of M/s. Rivers Steam Navigation Company Limited has been transferred to Messrs Central Inland Water Transport Corporation Limited. If so, whether the settlement dated 25th August, 1965 is binding on Messrs Central Inland Water Transport Corporation Limited?(2) Whether the workmen mentioned, in list No. I, bound by the Settlement, dated the 25th August, 1965 are entitled to continue in employment under Messrs Central Inland Water Transport Corporation Limited? If so, what amount of money are they entitled to? Is that money recoverable from Messrs Central Inland Water Transport Corporation Limited?(3) Whether the workmen mentioned in List No. II are entitled to get retrenchment compensation under Section 25F, read with Section 25 FF ofthe Industrial Disputes Act, 1947? If so, what amount of money are they entitled to?(4) Whether the undertaking or the business of Messrs Rivers Steam Navigation Company Limited has been closed within the meaning and contemplation of Sectionof the Industrial Disputes Act,1947? If so, what amount of money as compensation are the workmen mentioned in Lists Nos. I and II entitledList No. I referred to above gives the names and addresses of 420 employees. List No. II contains the names of 92 employees. The employees raising the dispute are mentioned in two separate lists and in two separate issues because the employees in List No. I who were parties to the settlement dated August 25, 1965 were supposed to have rights other than which were claimed by employees mentioned in List No. II who were not parties to the settlement.9. It will be seen from the order of reference that four issues were referred to the Labour Court for adjudication. The first issue raises the question whether the undertaking of the Company had been transferred to the corporation and, if so, whether the settlement of August 25, 1965 between the Company and the Union was binding on the Corporation. By the second issue the question was raised whether the 420 employees who were parties to the settlement of August 25, 1965 were entitled to continue in the employment of the Corporation and, if so, to what amount they were entitled. The Labour Court was further asked to adjudicate whether the amount so computed was money recoverable from the Corporation. By the third issue the question was raised whether the 92 employees mentioned in list No. II who were not parties to the settlement referred to above were entitled to get compensation under section 25 FF of the Industrial Disputes Act and, if so, what was the amount to which they were entitled? By the fourth issue the Labour Court was invited to adjudicate whether the undertaking of the Company had been closed within the contemplation of Sectionof the Act and if so, what amount of compensation the workmen mentioned in both the lists were entitled to?10. The Corporation thereupon challenged this reference also by a Writ Petition under Art. 226 of the Constitution for setting it aside on the ground that the questions referred to the Labour Court did not fall within the jurisdiction of the Labour Court under Section 33C (2) of the Industrial Disputes Act. The learned single Judge, Ghose, J. struck down issue No. 4 as not entertainable by the Labour Court, but as regards the other 3 issues he was of the view that the Labour Court had jurisdiction. The Union did not file an appeal against the order by which issue No. 4 was struck down. But the Corporation went in appeal against the order of the learned Judge in so far as he had held that the Labour Court had jurisdiction to adjudicate upon issues 1, 2 and 3. The Court of appeal by its order dated December 14, 1972 dismissed the appeal. The Corporation asked for a certificate to appeal to this Court, but on its dismissal, this Court gave special leave and that is how the present appeal arises.

Court's reasoning:
12.It is now well-settled that a proceeding under Section 33C (2) is a proceeding, generally, in the nature of an execution proceeding wherein the Labour Court calculates the amount of money due to a workmen from his employer, or if the workman is entitled to any benefit which is capable of being computed in term of money, the Labour Court proceeds to compute the benefit in terms of money. This calculation or computation follows upon an existing right to the money or benefit, in view of its being previously adjudged, or, otherwise, duly provided for.In such cases, a determination as to whether the dismissal was unjustified would be the principal matter for adjudication, and computation of wages just consequential upon such adjudication. It would be wrong to consider the principal adjudication as incidental to the computation. Moreover, if we assume that the Labour Court had jurisdiction to make the investigation into the circumstances of the dismissal, a very anomalous situation would arise. The Labour Court after holding that the dismissal was wrongful would have no jurisdiction to direct reinstatement under Section 33C (2). And yet if its jurisdiction to compute the benefit is conceded it will be like conceding its authority to pass orders awarding wages as many times as the workman comes before it without being reinstated. Therefore, the Labour Court exercising jurisdiction under Section 33C (2) has got to be circumspect before it undertakes an investigation, reminding itself that any investigation it undertakes is, in a real sense, incidental to its computation of a benefit under an existing right, which is its principal concern.17. Bearing in mind these limitations of a Labour Court functioning under Section 33C (2) we have to approach the question before us.The old Company closed its business on May 3, 1967. The Corporation, in due course, appointed a large number of the Companys employees by fresh letters of appointments, but it could not absorb all of them. The reference was made on behalf of the employees mentioned in Lists I and II. They were in all 512. Out of these, it appears, 24 were re-employed by the Corporation later on. The rest of them virtually claimed reemployment or at least some benefits on the basis of their alleged right to be re-employed. In actual fact, however, the Corporation did not employ these workmen after the Companys undertaking was transferred to it.The scheme of transfer did not compel the Corporation to employ the workmen. Nor is there any term in the transfer agreement or the scheme which passed over to the Corporation any responsibility in respect of the workmen. Section 25 FF of the Industrial Disputes Act declares what are the rights of the workmen of an undertaking which is transferred. The right is to receive compensation as if the workmen are retrenched under Section 25F and is available only against the owners of the undertaking, that is to say, the transferor of the undertaking. The liability of the transferor to pay compensation does not arise only when (i) there has been a change of employers by reason of the transfer and (ii) the 3 sub-clauses (a) (b) and (c) of the proviso of that section come into play.Mr. Ray, appearing for the respondent Union, however, contended that whatever may be the position of the workers mentioned in List II, the case of the workers in List I stood on a different footing because these workers were parties to a settlement dated 25-8-1965 between the Company and its workers and under Section 18(3)(c) the settlement was binding not only on the Company but also its successor or assign - the present Corporation. Under the settlement, it was contended, the employees in List I were entitled to continue in uninterrupted service, without retrenchment, till at least December 31, 1969 and this stipulation, it was claimed, was binding on the Corporation which became the successor of the Company from the date of the transfer of the undertaking, that is to say. May 3, 1967. The further contention was that the Corporations refusal to continue the employees in service as the Corporations employees from that date was wrongful and hence it must be held, in law, that the employees continued in the service of the transferee Corporation and on that basis the Labour Court could compute the benefit under S. 33C(2).The several problems raised by the above contentions involve in effect a major industrial dispute, an investigation into which is quite outside the scope of Section 33C(2). Only on a detailed investigation would it be possible to determine whether the workmen had any right to a benefit and, if so, the Corporation was liable to satisfy the same. The other question which would be necessary to decide is whether the Corporation was a successor of the defunct Company. As pointed out in Anakapalla Cooperative case, 1963 Supp (1) SCR 730 = (AIR, 1963 SC 1489)   already referred to, the question whether a transferee of an undertaking is a successor or not involves consideration of several factors as set out at pages 737 to 738 of the report.Such an investigation would clearly be quite outside the speedy individual remedy contemplated by Section 33C(2). Assuming further that on such investigation, the court comes to the conclusion that the Corporation is a successor, that again will not settle the matter because, as pointed out in that case, in view of Section 25FF the transferee even as a successor would be liable neither to pay compensation to nor to re-employ the workmen whose employment stood automatically terminated on the transfer. Where by operation of the law viz., Section 25FF the employment of workmen stands terminated, it may be difficult to sustain it one the basis of a term in a settlement prohibiting retrenchment, though statutorily binding on the transferee as a successor. It is perfectly arguable that such an argument would not have been available even against the transferor of the undertaking in view of S. 25FF.In any event, the question is not one which the Labour Court could be expected to deal with in a proceeding under S. 33C(2) the principal business whereunder is just computation of a benefit demonstrably existing. In short, the problems raised are appropriate for determination in an Industrial Dispute on a reference under S. 10 of the Act and cannot be regarded as merely incidental to the computation under Section 33C(2).21. If the above disputes were referred to an Industrial Tribunal under S. 10, the Tribunal would necessarily go into a detailed investigation of the alleged right of the employees to be continued in service by the Corporation. After such investigation the Tribunal may have held that they had no such right. Or it may have come to the conclusion that the Corporation had wrongfully refused to absorb the employees, in which case the Tribunal could have given relief in several forms depending on the fact and circumstances of each case. It could direct re-employment by the Corporation with or without continuity of service. It could order re-employment from any particular date found just and fair, or it could direct payment of wages fully or partially. Now, none of these things can be done by the Labour Court under Section 33C(2). All it can do is to compute the benefit if there was already an adjudication in favour of the workmen as against the Corporation or the said benefit was otherwise provided for as payable by the Corporation. A moments reflection will show that it would be impossible for the Labour Court to compute any benefit unless the Court, after considering all the matters which an Industrial Tribunal has to consider, ultimately decides upon one or the other of the several alternative reliefs which the Industrial Tribunal alone has a right to determine. By saying that the Labour Court would determine the alternative reliefs as incidental to computation, one cannot conceal the fact that it is actually exercising the function of an Industrial Tribunal. The investigation is not incidental to computation, but the computation itself is consequential upon the main finding as to the nature of relief the workmen are entitled to in an industrial disputes. The situation is the same as when a workman who is discharged wants relief, as shown in (1964) 3 SCR 140   = (AIR 1964 SC 743  ) already referred to. The discharged workmen can obtain relief by way of Section 10 only and not by an application to the Labour Court under Section 33C(2) claiming computation of the benefit on the basis that the discharge being unlawful, his services must be deemed to be continuous and uninterrupted.