Case: Industrial Paper (Assam) Ltd. Emps. Un Vs. Mgmt., Assam Industrial Dev. Corpn. Ltd

Background facts in a nutshell are as follows:The appellant, being the registered Trade Union, looking after the welfare of its members employed by AIDC in its Extensible Sack Kraft. Paper Project (for sake, called as ESKPP) under IPAL, raised a dispute for non-payment of salaries of its members by AIDC after October 1998 on the plea that the members of the appellant were not the employees of AIDC but of the IPAL. Accordingly the appropriate Govt. vide notification dated 20.2.1999 referred the following issues to the Labour Court for adjudication. The issues are quotedWhether the management of Assam Industrial Development Corporation is justified to deny as owner of the Sack Kraft Paper Project of M/s Industrial Papers (Assam) Ltd. (IPAL), though they have signed an agreement with a contractor as owner of the Sack Kraft Paper Project, Dhing District-Nagaon, Assam.2. Whether the Assam Industrial Development Corporation AIDC is justified to deny to take the responsibility of the Industrial Papers (Assam) Ltd. employees, though the employees were appointed by the AIDC through the advertisement published in the News Paper.3. Whether The management of AIDC is justified by not absorbing or engaging the employees of the IPAL, in their other Promoted industries or give them salary regularly though they have failed to install or run the proposed Paper Mill in Dhing, Nagaon.4. If not, then the said affected employees are entitled for either regular monthly salary from the management or absorption in the other Industrial Units promoted by the Assam Industrial Development Corporation, Guwahati.5. And the AIOC should not recruit or appoint new employees to say other their Promoted Industries until and unless the employees of the Industrial paper are engaged or absorbed by the Management.The Labour Court issued notice dated 22.5.1999 to the respective parties to the alleged disputes. In pursuance of the notice, both the AIDC and the appellant filed their respective written statements and additional written statements. AIDC, in their written statement, raised preliminary objection, specifically with the issues under reference, inter-alia, questioning the maintainability of the reference stating that the purported dispute referred to by the Notification is not an industrial dispute within the meaning of Industrial Disputes Act, 1947 (hereinafter called as the Act) and the Notification issued by the Government cannot constitute an industrial dispute because AIDC was not a proper or necessary party and the members of the appellant, being employees of a separate company i.e. IPAL, cannot claim to be employees of AIDC which was only a Promoter Company.4. Apart from the preliminary objection so raised as mentioned above, AIDC gave its reply in respect of all other issues. Regarding issue No.1, it was stated that AIDC, being a promotional organization, had also promoted the IPAL by signing various documents and agreements with IPAL since it was in the nascent stage for the project for protection of ESKPP at Dhing. The role of AIDC was merely to assist IPAL as its promoter for setting up its project. AIDC claimed that under no circumstances AIDC could be called as owner of the project because IPAL was a separate Company registered under the Companies Act, 1956 with an independent Board of Directors having its separate Memorandum and Articles of Association. In support of its claim, AIDC mentioned that the Govt. of Assam vide Notification dated 23.2.88 re-constituted the Board of Directors of IPAL Insofar as issue No.2 is concerned, it was stated that since the ESKPP of IPAL was not owned by AIDC, the appellants were the employees of IPAL, and AIDC being a nodal agency of the State Government for implementation of various projects as promoter only, cannot be saddled with any responsibility of the employees of IPAL and the appellants members were not the employees of AIDC Besides IPAL, the AIDC promoted several other companies like Fertichem Ltd., Assam Syntex Ltd. Assam Petrochemical Ltd. etc. and those are managed by their independent Board of Directors. The employees who were claimed by the appellant to be the employees of AIDC, on being appointed in pursuance of the advertisement, were not the workmen as defined under the Act. According to them, none of 11 categories of posts advertised, mentioned in the reference itself, were workmen as defined under the Act arid the persons appointed against those posts had not raised dispute. Such dispute had only been raised by the IPAL Employees Union, the appellant, which did not represent the persons appointed as per the advertisement. As regards issue No.3, the contention of AIDC was that they were already overstaffed for which Voluntary Retirement Scheme had already been introduced to reduce excess manpower and as such absorption of employees of IPAL in AIDC did not arise. With regard to issue No.4, AIDC stated that AIDC as a promoter was not liable for payment of salaries to the employees of IPAL which was a separate and distinct Company. On issue No.5, the stand of AIDC was that due to the precarious financial position, the question of fresh recruitment did not come.5. The appellant in the written statement alleged that the ESKPP was owned by AIDC inasmuch as ESKPP, being established under the licence obtained from the Central Government under the Industries (Development and Regulation) Act, 1951 (for short, the IDR Act), AIDC cannot claim that they established the said project as a Promoter as they failed to show that the Industrial Licence obtained by it was either transferred or revoked at any stage. According to it, AIDC also admitted that ESKPP was never amalgamated with any other company under the Companies Act and as such, the AIDC remained the owner for the said project even under the Act itself and no further document or any evidence was necessary to prove the same from the appellants side. Accordingly it was pleaded that issue No.1 should be decided in favour of the appellant holding that AIDC was not justified in denying the ownership of the project. Regarding issue No.2, it was alleged that since AIDC was owner of the project, it could not deny its responsibilities to its employees who were appointed in the project. Insofar as issue No.3 and 4 are concerned, it was claimed that the AIDC, being the owner of the project, was liable to pay regular salaries to its workmen. As regards issue No.5, it was submitted that AIDC should be restrained from recruiting or appointing new employees until and unless the employee of IPAL were engaged or absorbed by AIDC.6. The Labour Court in its Award held as follows:(A) There was no material on record to show that AIDC had transferred Sack Kraft Paper Project Dhing to the IPAL at any point of time. It was observed that though both parties have approved the appointment of candidates at IPAL and AIDC none of them came within the categories of those post advertised(B) The Issue is redundant as members of the Union do not come within the categories of posts advertised.(C) It was not incumbent of AIDC to absorb members of the appellant union to any other AIDC industry.(D) IPAL could not be run it was incumbent for AIDC to terminate the services of the members of the appellant-Union giving them terminal benefits according to relevant industrial and labour laws.(E) Until that was done AIDC was obliged to give the members of the appellant union regular salaries.7. As noted above, both the appellant and AIDC filed writ petitions. While the writ petitions filed by the AIDC was allowed and one filed by the appellant was dismissed. Learned Single Judge held that since workmen were not employees of the AIDC, the question of giving them benefit as done by the Labour Court did not arise. The question of employer and employees (of AIDC) was not the subject matter of reference. Writ appeal was filed by appellant before the High Court. The High Court inter alia held while dismissing the writ appeal that AIDC is not the owner of the Extensible Sack Craft Paper Project of IPAL. Being a separate and independent company, the members of the appellant-union are not the employees of AIDC which could not be saddled with the responsibility of these employees. Therefore, AIDC was not liable for absorption or engagement of the employees of IPAL in any other AIDC promoted industry and to give them salaries regularly after the closure of the project.

Court's reasoning:
There is no claim that the members of appellant union were employees of AIDC. In the reference IPAL was not a party. It is evident from materials on record that IPAL was promoted by AIDC and was incorporated in 1974. It was not even subsidiary of AIDC.Learned Single Judge and the Division Bench have categorically found that IPAL was a separate, independent company and the members of the appellant union are not employees of AIDC. That being so the conclusions of learned Single Judge and the Division Bench that AIDC cannot be saddled with the responsibility of those employees is irreversible.