Case ID: 2280

Judgment:
Appeal No. 752 of 1966. Appeal by special leave from the Award dated February 18	 1965 of the Labour Court	 Assam in Reference No. 38 of 1962. H. R. Gokhale	 G. L. Sanghi and K. P. Gupta	 for the appellants. section V. Gupte	 Solicitor General and D. N. Mukherjee	 for respondent No. 1. M. M. Kshatriya	 G. section Chatterjee for P. K. Bose	 respondents Nos. 2 and 3. The Judgment of the Court was delivered by Vaidialingam	 J. This appeal	 by special leave	 by the workmen of Brahmputra Tea Estate	 is directed against the award	 dated February 18	 1965	 of the Labour Court	 Assam	 in Reference No. 38 of 1962	 holding that the Reference has become infructuous. The circumstances. under which the Reference was made	 by the Government of Assam	 may be stated. The Brahmputra Tea Estate (hereinafter called the Tea Company)	 comprised of three gardens	 viz.	 Negheritting	 Rangamati and Missamara Tea Estates	 with their outer gardens	 were owned and managed by Brahmputra Tea Co. (India) Ltd. The Tea Company had incurred very heavy liabilities; and hence	 on November 6	 1956	 it created an equitable mortgage	 by deposit of title deeds	 in favour of the Eastern Bank Ltd.	 (hereinafter called the Bank). The gardens	 mentioned above	 formed part of the security covered by the equitable mortgage. This memorandum of equitable mortgage was registered on November 26	 1956. As the Tea Company failed to make payment of the money due to the Bank	 the latter filed Suit No. 21 of 1957	 in the Court of the Subordinate Judge	 Upper Assam	 District Jorhat	 for enforcing its rights	 under the equitable mortgage. A preliminary decree was passed	 on February 21	 1958; this was followed	 by a final decree	 on September 19	 1960. L/J(N)76SCI 14(a) 628 In the meantime	 on September 16	 1958	 the Calcutta High Court had ordered the winding up of the Tea Company	 because of certain defaults made by it. Mr. D. A. Weatherson	 of the Bank	 who had been appointed	 by.the	Jorhat Court	 as Receiver of the Tea Gardens	 by his letter. dated December 30	 1958	 intimated the Superintendent of the Tea Gardens	 about the windingup order	 passed by the Calcutta High Court on September 16	 1958	 and stated that the winding up order operated as a statutory 'notice of discharge	 of all officers and employees of the Tea Company; nevertheless	 the Receiver stated that he desired to offer employment to all the members of the staff who were employed in tile Tea Gardens on November 18. 1958	 with the exception of fifteen employees	 mentioned by him. The Superintendent was requested to obtain the consent of the members of the staff	 regarding the offer made by the Receiver. It may be stated	 at this stage	 that the fifteen employees	 who were excluded in the letter of the Receiver	 were the persons	 whose claims were referred	 by the Government of Assam	 to; the Labour Court. in Reference No. 38 of 1962. The Superintendent	 in his turn	 sent communication	 dated January 19	 1959	 to the various workmen	 offering employment	 on behalf of the Receiver	 and requesting them to intimate acceptance; but	 so far as the fifteen workmen	 referred to above	 were concerned	 the Superintendent sent communication. to each of them on August 21	 1961	 terminating their services	 with one month 's notice. The workmen concerned were also promised to be paid the Provident Fund amounts that might stand to their credit. It was specifically stated	 by the Superintendent	 that the communication was being sent	 by him. on behalf of tile Receiver of the Tea Company and that the termination of the services of the workmen was because of their age. The Assam Chah Karmachari Sangha (hereinafter called the Karniachari Sangha) complained to the Conciliation Officer	 Assam	 stating that the termination of the services of the fifteen workmen	 concerned	 was illegal and arbitrary. Though tile Conciliation Officer appears to have taken some steps to effect conciliation	 he could not proceed further	 because the Superintendent of the Tea Gardens regretted his inability to participate in the conciliation proceedings	 as he had not been authorized to do so	 by the Receiver of the Tea gardens. Nevertheless	 the Conciliation Officer	 on September 18	 1961	 wrote to the Receiver	 direct	 suggesting payment of compensation to the workmen concerned; but that suggestion was riot accepted. by the Receiver. On February 18	 1961. the Bank assigned all its rights	 under the mortgage dated November 6	 1956 and the decree in Suit No. 21 of 1957	 in favour of M/s Shaw Wallace & Co. Ltd. The Registrar of Companies	 West Bengal	 Calcutta	 in or about 1960	 629 had filed a petition	 in the Calcutta High Court for the winding up of the Tea Company	 as it had failed to comply with certain statutory requirements. By order dated June 16	 1961	the Calcutta High Court ordered the winding up of the Tea Company. and appointed Shri H. K. Ganguli	 the Official Liquidator of the High Court	 as the Official Liquidator of the Tea Company. On September 19	 1961. the Calcutta High Court passed an order	 withdrawing to its file	 suit No. 21 of 1957	 from the Jorbat Court	 and the said suit was numbered as Transfer	 Company Suit No.	 7 of 1962. On October 5	 1961. the Calcutta High Court directed the substitution of the name of M/s Shaw Wallace & Co. Ltd.	 in (lie place of the Eastern Bank Ltd.	 in the suit; and it also appointed Shri K. C. Ganguli as Receiver of the Tea Gardens in the place of the Receiver appointed by the Jorhat Court. The new Receiver	 Shri K. C. Ganguli	 was also put in possession and management of the said properties. Therefore	 the position was that the Tea Company	 whose windingup had been ordered	 was with the Official Liquidator. and the Tea Gardens of the company	 were in the possession and management of tile Receiver	 appointed in the mortgage suit. On July 27	 1962	 the Government of Assam referred to the Labour Court	 Assam	 an industrial dispute between the management of Brahmaputra Tea Estate (Receiver in Possession) and their workmen	 represented by the Karamchari Sangh. The dispute that was referred	 related to the justification	 of the action of the management of the Tea Estate	 in terminating the services of the fifteen employees	 and	 as to whether. those fifteen workmen were entitled to reinstatement	 or any other relief	 in lieu thereof. The fifteen workmen	 referred to in this reference	 are the identical workers whose services had been terminated	 by the issue of the notice on August 21	 1961	 by the Superintendent of the Tea Gardens	 on behalf of the Receiver. This is the reference	 which had been numbered as Reference No. 38 of 1962. We shall advert	 later	 to the claims made by the workmen	 as well as the contest made	 by the first respondent	 before us. The Labour Court	 on receipt of this reference. issued the necessary notices	 on August 26	 1962. In the liquidation proceedings	 the Calcutta High Court	 on August 17	 1962	 permitted the Official Liquidator to sell the Tea Gardens	 which were the subject of mortgage	 and also certain other items of moveables. The Official Liquidator	 on the basis of this order	 conveyed	 by registered sale deed	 dated August 11. 1962	 in favour of Shri Ram Gopal Sahariya	 the first respondent herein	 the equity of redemption in the three Tea Gardens	 and also certain tractors	 lorries and other items of machinery	 for a total consideration of Rs. 5	20	000. This total consideration was made Lip of Rs. 2	20	000	 being the price of the moveables and 630 Rs. 3	00	000 stated to be the value of the equity of redemption. The sale	 in favour of the first respondent	 was specifically by the Official Liquidator	 acting on behalf of the Tea Company	 and what was conveyed in the Tea Gardens	 was the equity of redemption	 owned by the Tea Company	 and the sale was subject to the mortgage decree and the liabilities payable to M/s Shaw Wallace & Co.	 Ltd. On September 18	 1962	 the first respondent 's name was ordered	 by the Calcutta High Court	 to be included in Transfer Company Suit No. 7 of 1962. The Court further ' discharged Shri K. C. Ganguli	 from his Receivership in the suit	 and he was also directed to deliver possession of the three Tea Gardens belonging to the Tea Company	 to the first respondent. The first respondent	 on his own claim	 by virtue of the purchase from the Official Liquidator	 has become the sole proprietor of the Tea Gardens; he also got actual possession of the Tea Gardens	 on September 21	 1962. To resume the narrative	 regarding the proceedings in Refer ence No. 38 of 1962	 the Labour Court	 as we have stated earlier	 had issued notices to the parties concerned	 on August 26	 1962. The workmen filed a written statement	 on February 23	 1963. In that statement	 they had stated that the fifteen workmen	 concerned	 had completed service	 ranging from 8 to 47 years	 in the Tea Estates	 and that the termination of their services	 by the Superintendent of the Tea Gardens	 on behalf of the Receiver	 was absolutely illegal and arbitrary. They also referred to various other matters	 which it is not necessary to advert	 in this appeal. It is enough to note that the workmen required relief	 by way of reinstatement On June 27	 1963	 one K. A. Muddu	 as Superintendent of the Tea Estates	 filed a written statement	 on behalf of the management. He has stated therein. that the services of the fifteen employees were terminated on account of their age	 and also because some of them were too ill to be continued in service. He has adverted to the fact that two of the workmen had expressed a desire to retire voluntarily	 from service. It is further stated therein	 that	 as the employees concerned were 60 years or more	 of age	 it was not possible to continue them in service. Again	 the action of the Receiver	 who was in management of the Tea Gardens	 in terminating the services of the workmen	 was also be justified. The workmen filed an additional written statement	 on Sep tember 2	 1963	 controverting the allegation that they were either too ill or they had completed 60 years of age. They again reiterated that the stand	 taken by the management	 was absolutely illegal and the Receiver bad no right to authorize the termination of their services. 631 On July 18	 1964/September 10	 1964	 Shri R. G. Sahariya	 as sole proprietor of the Tea Estates	 filed an additional written statement	 before the Labour Court	 on behalf of the incoming management. He has referred therein to the fact that the Tea Estate was no longer in the hands of a Receiver	 and its management had vested in him as sole proprietor. He has further referred to the fact that there is no continuity between the present management of the Tea Company	 represented by him	 and that of the past	 when the Tea Gardens were owned by the Tea Company and were managed by the Receiver	 appointed by the Court. He then refers to the purchase made by him	 on August 18	 1962	 from the Official Liquidator of the Tea Company	 of the equity of redemption in the Tea Gardens. He has further stated that the services of the workmen concerned	 had been terminated by the Superintendent of the Tea Gardens	 acting on behalf of the Court Receiver	 as early as August 21	 1961	 long before the Tea Estates were purchased by him. Shri Sahariya has further stated that	 on July 27	 1962	 when the Government of Assam made the present Reference	 the incoming management was nowhere in the picture and it was not	 in any manner concerned with the claim of the workmen	 inasmuch as it had no liability	 whatsoever	 towards them. He averred that he had not purchased the Tea Estates with the goodwill of the Tea Company	 or	 as a running concern. Therefore	 on all those grounds	 he urged	 that he was	 in no manner	 bound to reinstate or to compensate for the loss of employment of the workmen	 concerned. In fact	 he has specifically prayed that an order may be passed	 by the Labour Court	 that the dispute	 referred to it	 by the Government of Assam	 has lapsed. The Labour Court	 in its order under attack	 has taken the view that the services of the workmen concerned	 have been terminated	 under instructions of the Receiver of the Tea Gardens	 appointed in the suit	 long before the first respondent became owner of the Tea Gardens. It is also of the view that "the Brahmputra Tea Estate (Receiver in possession)". is the only party impleaded	 and the new management	 viz.	 the first respondent	 has not been brought on record	 nor was it a party to the reference	 made by the State Government. The purchase of the Tea Gardens	 by the first respondent	 does not show that the latter has taken over any liabilities	 of the previous management	 with regard to the claims of the workmen	 and that there has been no purchase of the goodwill of the Tea Company. On these grounds	 the Labour Court held that no relief could be granted	 as against the first respondent	 and that the reference itself had become infructuous. Mr. Gokhale. learned counsel for the workmen appellants. raised two contentions before us: (i) that the view of the Labour Court	 that the first respondent is not liable for the claims of the 632 workmen	 is erroneous; and (ii) that even if it is held that the first respondent is not liable	 the Labour Court	 which had ample jurisdiction	 in this regard	 should have issued notice	 either to the Receiver	 appointed in the suit	 or the Official Liquidator	 to the both of them	 and proceeded to investigate and adjudicate upon the claims of the workmen. In this connection	 Mr. Gokhale pointed out that the document of purchase	 by the first respondent	 would clearly show that the Official Liquidator ha(1)realised a sum of Rs. 5	20	000	 as sale consideration	 and there might also be other assets of the company; if a proper adjudication	 in the presence of those parties	 had been made	 and relief granted to the workmen	 they would have been in a position to enforce their claims	 as against these amounts and assets of the company. The learned Solicitor General. appearing on behalf of the first respondent	 urged that his client was not	 in any manner	 answerable to the claims made	 by the workmen. The first respondent was not the successor in interest of the Tea Company 	 nor did he claim through the Receiver	 who wag one of the parties to the Reference	 before the Labour Court. Even if the Tea Company could be considered to be a party to the Reference. his client Could not be considered to be a successor in interest of the Tea Company	 because	 he had purchased only some of the assets belonging to the said company	 by virtue of the sale. The document of purchase	 by the first respondent. would clearly show that he has not taken over any other liabilities of the Tea Com pany	 in that regard . The learned Solicitor General further pointed out that the remedy. if any. of the appellant	 if so advised	 was only to proceed against the Receiver	 or the Official Liquidator; even if it be held that the ownership or management of the undertaking had been transferred in favour of the first respondent	 the rights of the workmen would have to be worked out	 as against the Receiver	 or the Official Liquidator	 under section 25FF	 of the (Act XIV of 1947) (hereinafter called the Act)	 inasmuch as there was nothing to show that the transfer	 in this case	 came within the proviso to that section. We are in agreement with the contentions of the learned Solicitor General that the view of the Labour Court	 that the first respondent is not liable to answer any of the claims of the workmen concerned	 is perfectly justified. From the various facts	 given above	 it will clearly be seen that the order terminating the services of the workmen	 was made on August 21	 1961	 by the Superintendent of the Tea Gardens	 under instructions from The Receiver appointed by the Jorhat Court	 in the mortgage suit. On October 5. 1961	 the High Court had appointed a Receiver	 for the Tea Gardens. as separate from the Tea Company	 in the suit	 Transfer Company Suit No. 7 of 1962. The order	 referring the dispute to the Labour Court was made	 by the Government	 on July 27	 1962	 The 1st respondent	 admittedly	 633 was not in the picture	 on these various dates. It cannot also be stated	 having due regard to the various recitals	 contained in the sale deed	 dated August 11	 1962	 and considered	 in the light of the principles	 laid down by this Court	 in Anakapalla Cooperative Agricultural & Industrial Society Ltd.	 vs Workmen(1)	 that the first respondent is the successor in interest of the Tea Company. What was purchased	 by the first respondent	 was only the equity of redemption in a part of the assets of the Tea Com pany	 in respect of which the Official Liquidator was still functioning. Therefore	 the learned Solicitor General is perfectly justified in his contention that the first respondent cannot be considered to be a successor in interest of the Tea Company nor can he be considered to claim through the Receiver	 or Liquidator. Even on the basis that the first respondent is considered to be a person	 to whom the ownership of the undertaking has been transferred	 it will be seen that the claims of the workmen will have to be considered. as against the Tea Company	 in accordance with section 25FF of the Act	 when its proviso cannot be invoked. Learned counsel	 for the appellant	 has not been able to satisfy us that the transfer	 in this case	 in favour of the respondent	 comes within the proviso to section 25FF. The appellants	 	is laid down by this Court	 under the circumstances	 in the decision referred to above	 will not be entitled to claim reinstatement	 as against the first respondent. Section 25FF was first introduced in the Act	 by the Industrial Disputes (Amendment) Act	 1956 (LXI of 1956)	 and	 in its present form	 it has been substituted	 by the Industrial Disputes (Amendment) Act	 1957 (Act XVIII of 1957). Section 25F was in force	 on August 21	 1961	 when the services of the workmen were terminated	 and s	 25FF had(1) come into effect long before the purchase	 by the first respondent of the Tea Gardens; and	 we have already shown	 that there is no liability	 so far as the first respondent is concerned. Therefore	 the first contention of Mr. Gokhale	 will have to be rejected. But we are impressed by the second contention of Mr. Gokhale	 that the Labour Court should have issued notices to the Receiver	 or Official Liquidator. or to both	 as it was entitled to. and proceeded to consider	 as to whether any reliefs Could be granted to the appellants. In this connection	 counsel pointed out that section 18 of the Act clearly visualizes parties being summoned '	 to appear	 by the Labour Court	 in proceedings	 as parties to the disputes	 in which case	 the award made	 will be binding on them also. In this appeal	 before us. the Tea Company	 in Liquidation	 and the Official Liquidator of the Tea Company	 figure as respondents Nos. 2 and 3	 respectively	 and are represented by same counsel. Learned counsel	 appearing for those parties	 pointed out that the Official Liquidator may have various defences	 (1) [1963] Supp. 1 S.C.R. 730. 634 available to him	 if any claim is sought to be enforced against the company	 in liquidation	 or the Official Liquidator. Those matters do not arise for consideration	 at this stage	 in this appeal	 because the claim of the appellants	 as against those persons	 remains yet to be considered by the Labour Court. We are satisfied that	 even after negativing the claims	 of the workmen	 as against the first respondent	 the Labour Court should not have merely closed the proceedings	 by holding that the reference has lapsed. On the other hand	 the Labour Court should have issued notices to the Receiver	 or the Liquidator. or to both	 and	 in their presence	 should have considered the question as to whether the workmen were entitled to claim any relief. In fact	 the order of reference also clearly shows that the Labour Court will have full jurisdiction to consider as to whether the termination	 of the services of the workmen concerned	 is justified and	 whether they are entitled to either reinstatement	 or any other relief	 in lieu thereof. When the proceedings are being dealt with	 afresh	 as against the parties indicated above	 the Tribunal will bear in mind the observations made above	 and consider the nature of the relief	 if any	 that may be granted to the workmen concerned . We make it clear	 that if and when either the Receiver	 or the Tea Company	 in liquidation	 or the Official Liquidator	 or all of them	 are brought before the Labour Court	 they will be entitled to raise any plea in defence of the claim of the workmen	 that may be available to them	 in law. In that adjudication	 the first respondent herein	 will be completely out of the picture	 as no relief can be claimed by the workmen	 against him. Further	 if the claim of the workmen	 is that their services have been dispensed with	 by way of retrenchment	 that claim will have to be adjudicated in accordance with section 25F	 of the Act. If	 on the other hand	 their claim is based	 on the event of a transfer having been effected	 that claim will have to be adjudicated	 under section 25FF of the Act. All these aspects will have to be properly considered	 and adjudicated upon	 by the Labour Court. In the result	 while confirming the findings of the Labour Court	 that the first respondent is not answerable for any of the claims of the workmen	 the award	 dated February 18	 1965	 is set aside and the Labour Court is directed to take up the Reference	 over again	 for being dealt with	 afresh	 in the light of the directions contained above. The appeal is allowed	 to the extent	 indicated above	 and in other respects	 will stand dismissed as against 1st respondent. Parties will bear their own costs	 in this appeal.

Summary:
On reference of an industrial dispute	 the Labour Court took	 the view that the services of the workmen concerned had been terminated	 under instructions of the Receiver of the Company appointed in a suit long before the first respondent became owner of the company; that the Receiver in possession was the only party impleaded and the new management	 viz.	 the first respondent had not been brought on record	 nor was it a party to the reference	 made by the State Government; that the purchase of the company	 by the first respondent	 did not show that the latter had taken over any liabilities of the previous management	 with regard to the claim of the workmen; and that there had been no purchase of the goodwill of the company. On these grounds	 the Labour Court held that no relief could be granted	 as against the first respondent	 and that the reference itself had become infructuous. In appeal to this Court	 the workmen appellants contended that (i) the view of the Labour Court that the first respondent was not liable for the claims of workmen was erroneous; and (ii) even if it be held that the first respondent was not liable	 the Labour Court	 which had ample jurisdiction	 in this regard	 should have issued notice	 either to the Receiver appointed in the suit	 or the Official Liquidator	 or to both of them an proceeded to investigate and adjudicate upon the claims of the work men. HELD: (i) The first respondent was not liable to answer any the claims of the workmen. He was not in the picture when the order terminating their service was made	 nor when the order referring the dispute to the Labour Court was made. Having due regard to the various recitals in the sale deed and considered in the light of the principles laid down by this Court	 in Anakapalla Cooperative Agricultural & Industrial Society Ltd. vs Workmen	 the first respondent was not the successor in interest of	 the Company. What was	 purchased	 by the first respondent	 was only the equity of redemption in a part of the assets of the Tea Company	 with respect to whit the Official Liquidator was still functioning. Even on the basis that the first respondent was considered to be a person	 to whom the ownership of the undertaking has been transferred	 the claims of the workmen had to be considered	 as against the Company	 in accordance with section 25 FF of the Industrial Disputes Act	 when its pro viso could not be invoked. Section 25F was in force when the se vices of the workmen were terminated and section 25FF had come in effect long before the purchase by the first respondent. [632G 633F] 627 Anakapalla Co operative Agricultural and Industrial Society Ltd. V. Its Workmen	 [1963] Supp. 1 S.C.R. 730	 followed. (ii) Even after negativing the claims of the workmen	 as against the first respondent	 the Labour Court should not have merely closed the proceedings	 by holding that the reference had lapsed. On the other hand	 the Labour Court should have issued notices to the Receiver	 or the Liquidator or to both	 and	 in their presence	 should have considered the question as to whether the workmen were en titled to claim relief. In fact	 the order of reference also clearly showed that the Labour Court had full jurisdiction to consider as to whether the termination of the services of the workmen	 was justified	 and whether they were entitled to either reinstatement	 or any other relief	 in lieu thereof. [634B D]