Case: M/S. Maruti Udyog Ltd Vs. Ram Lal

Background Facts:2. The respondents herein who are three in number were appointed by Maruti Limited as Electrician, Helper and Assistant Fitter with effect from 27.4.1974, 8.11.1973 and 8.4.1974 respectively. Their services stood terminated by the said company on or about 25/26.8.1977 as a result of closure of the factory. The said company came to be wound up in terms of an order dated 6.3.1978 passed by the High Court of Punjab and Haryana in Company Petition No. 126 of 1977 titled Delhi Automobiles P. Ltd. v. Maruti Ltd., whereupon an Official Liquidator was appointed to take charge of the assets thereof. A formal winding up order was also drawn up in terms of Form No. 52 of the Company (Court) Rules, 1959. The company was formally wound up on 6.3.1978 whereupon it ceased to have any business activity. It is borne out from records that the learned Company Judge in the said proceedings by an order dated 5.8.1977 directed the company that in view of the fact that the industrial establishment of the company, namely, Maruti Limited cannot continue with its production activity and the workmen employed therein cannot be given any job, all workmen should be retrenched in accordance with the provisions of the Industrial Disputes Act, 1947 (hereinafter referred to as ‘the 1947Pursuant to or in furtherance of the said direction, a settlement was arrived at by and between the Official Liquidator and its employees, in terms whereof the employees were retrenched on or about 25/26.8.1977 on payment of onesalary in lieu of notice. The employees agreed to forgo their right of threenotice. The termination took effect immediately upon signing of the settlement3. The Parliament thereafter enacted the said Act for acquisition and transfer of undertakings of the company which was preceded by an Ordinance for Acquisition and Transfer of Undertakings of the said company with effect from 13.10.1980, by reason whereof the assets of the said company vested in the Central Government. The Central Government, however, on or about 24.4.1981 issued a notification in exercise of its power conferred upon it under Section 6 thereof directing that its right, title and interest in relation to the undertakings of the company in stead and place of continuing to vest in the Central Government shall vest in the appellant company.Industrial Dispute:4. The erstwhile workmen of ‘thethereafter issued a notice of demand of re-employment upon the appellant herein. It is also not in dispute that M/s. R.K. Taneja and 72 others as workmen of the said establishment filed a writ petition before this Court, under Article 32 of the Constitution of India, inter alia, for a declaration that Section 13 of the said Act is unconstitutional. A direction was also sought for therein against the appellant herein to offer re-employment to the said petitioners. The said writ petition was dismissed in limine by an order dated 5.5.1983. The respondents herein, long thereafter raised an industrial dispute by serving demand notices seeking re-employment in the services of the appellant purported to be in terms of Section 25H of the 1947 Act.5. The State of Haryana in exercise of its power conferred upon it under Section 10(1)(c) of the 1947 Act issued a notification on 25.8.1988 referring the following disputes for adjudication before the Labour Court:(1) Whether Shri Ram Lal is entitled for re-employment, if yes, with what details?(2) Whether Shri Ghinak Prasad is entitled for re-employment, if yes, with what details?(3) Whether Shri Sampath Prasad is entitled for re-employment, if yes, with what details?6. In its Award dated 28.7.1993, the Labour Court upon holding that the appellant herein is the successor-in-interest of the said company opined that it was liable to re-employ the respondents with back-wages from the date of submitting their respective demand notices.

Court's reasoning:
14. The basic fact of the matter, as noticed hereinbefore, is not in dispute. It is also not in dispute that although the services of the three respondents were terminated by the company as a result of the closure of the factory, the formal retrenchment came into being in terms of the order of the learned Company Judge. It is furthermore not in dispute that a settlement had been arrived at by and between the Official Liquidator and the workmen as regard the amount of compensation payable to the workmen of the said company.15. The closure of the undertakings of the company, thus, stands admitted. It also finds mention in the Award passed by the Labour Court. In the aforementioned factual backdrop, we may notice the salient feature of the said Act.The aforementioned provisions clearly carve out a distinction that although identical amount of compensation would be required to be paid in all situations but the consequence following retrenchment under Section 25F of the 1947 Act would not extend further so as to envisage the benefit conferred upon a workman in a case falling under Sections 25FF or 25FFF thereof. The distinction is obvious inasmuch as whereas in the case of retrenchment simpliciter a person looses his job as he became surplus and, thus, in the case of revival of chance of employment, is given the preference in case new persons are proposed to be employed by the said undertaking; but in a case of transfer or closure of the undertaking the workman concerned is entitled to receive compensation only. It does not postulate a situation where a workman despite having received the amount of compensation would again have to be offered a job by a person reviving the industry.We have noticed hereinbefore that the consequences other than payment of compensation envisaged in Section 25F of the Act do not flow in case of transfer or closure of the undertaking. Section 25H of the 1947 Act cannot, thus, be invoked in favour of the respondents in view of the fact that they were not in the employment of the company on the appointed day i.e. on 13.10.1980.34. The submission of Mr. Das to the effect that the Parliament having used the words ‘everyin Section 25FFF, which would include dismissed workmen in view of its definition contained in Section 2(s) of the 1947 Act, should be widely interpreted so as to hold that even those workmen who had received compensation would be entitled to the benefit of Section 25H of the 1947 Act, cannot be accepted. Such a construction is not possible keeping in view the statutory scheme of the 1947 Act. Section 25F vis-a-vis Section 25B read with Section 2(oo) of the 1947 Act contemplates a situation where a workman is retrenched from services who had worked for a period of not less than one year on the one hand and those workmen who are covered by Section 25FF and Section 25FFF on the other keeping in view the fact that whereas in the case of the former, a retrenchment takes place, in the latter it does not. The Parliament amended the provisions of the 1947 Act by inserting Section 25FF and Section 25FFF therein by reason of the Industrial Disputes (Amendment Act), 1957 with effect from 28.11.1956, as it was found that having regard to the helpless condition to which workman would be thrown if his services are terminated without payment of compensation and presumably on the ground that if a reasonable compensation is awarded, he may be able to find out an alternative employment within a reasonable time. In the case of closure of an industrial undertaking the Act contemplates payment of compensation alone.The interpretation of Section 25J of the 1947 Act as propounded by Mr. Das also cannot be accepted inasmuch as in terms thereof only the provisions of the said Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law including the Standing Orders made under the Industrial Employment (Standing Orders) Act, but it will have no application in a case where something different is envisaged in terms of the statutory scheme. A beneficial statute, as is well known, may receive liberal construction but the same cannot be extended beyond the statutory scheme.In the instant case, we are not concerned with the liability of the erstwhile company. It stands accepted that the appellant has no monetary liability as regard the amount of compensation payable to the workmen in view of Section 5 of the said Act.