Judgment Case ID: 742

Judgment:
Appeal No. 447 of 1957. Appeal by special leave from the judgment and order dated the 1st August 1956 of the Labour Appellate Tribunal of India	 Culcutta in Appeal No. Cal. 107 of 1956. D. N. Mukherjee	 for the appellants. Y. Kumar	 for the respondent. May 6. The Judgment of the Court was delivered by SINHA J. This appeal by special leave	 is directed against the order of the Labour Appellate Tribunal	 dated August 1	 1956	 dismissing in limine the appeal 15 against the Award of the Third Industrial. Tribunal	 dated March 8	 1956. The Great Indian Motor Works Ltd.	 now in liquidation (hereinafter referred to as 'the Company ')	 represented by one of the Managing Directors	 K. D. Nundy	 is the first appellant. The said K. D. Nundy	 in his capacity as the creditor of the Company and/or as the auction purchaser of the Company	 is the second appellant. One hundred and forty two employees of the Company	 represented by the Bus Workers ' Union	 are collectively the first respondent. The second and third respondents	 C. D. Nundy and D. L. Dutt	 are the Official Liquidators of the Company	 appointed by the High Court as such. The relevant facts are these: The Company was incorporated and registered under the Indian Companies Act	 1913	 in 1926	 as a private limited company with its registered office at Calcutta. Its business was mainly that of carrying on public transport on Route No. 14 in the City of Calcutta	 as also of dealers in and repairers of motor vehicles. It had an authorized capital of six lacs of rupees divided into 600 shares of Rs. 1	000 each	 out of which	 shares worth Rs. 4	00	000 only had been subscribed and paid up. The registered 	share holders of the Company	 were Kristo Das Nundy	 the second appellant	 having 246 shares; Chandy Das Nundy	 respondent No. 2	 having 142 shares	 and Kumar Kartick Charan Mullick	 holding 12 shares	 each of the face value of Rs. 1	000. On account of financial difficulties and disputes between its share holders	 an application for compulsory winding up of the Company was made by the said respondent No. 2	 on the Original Side in the High Court at Calcutta. On July 23	 1951	 an order for winding up the Company was made	 and the Official Receiver was appointed the Official Liquidator of the Company. An appeal against the order aforesaid	 was dismissed on December 5	 1951	 and the order for winding up the Company	 stood confirmed. By an order dated December 11	 1951	 the Official Receiver was discharged and the respondents 2 and 3 aforesaid	 were appointed Joint official liquidators in his place	 with 16 power to sell the business of the Company as a going concern. In April	 1953	 the list of the creditors of the Company was settled by the Court	 and the second appellant aforesaid	 was included in the list as a creditor for the largest amount	 namely	 Rs. 2	35	818. It may be added that the discharged employees of the Company were not included in the list of creditors thus settled by the Court	 After several infructuous attempts for selling the property by auction	 on May 4	 1954	 the Court ordered the sale of the Company 's business free from all encumbrances	 out goings and liabilities	 to the highest bidder	 subject to confirmation by the Court. The second appellant bid for the purchase of the business with the leave of the Court	 and he was declared the highest bidder and purchaser of the business for Rs. 1	42	500 at the sale held on June 12. The said sale was confirmed by the Calcutta High Court on July 5	 1954. On July 23	 1954	 the Official Liquidators issued a notice terminating the services of all the employees of the Company with effect from July 24	 1954	 except one Assistant and one clerk	 whose services were retained until the winding up proceedings were completed. On July 24	 the Official Liquidators put the appellant No. 2	 the auction purchaser	 in possession of the business of the Company	 which is now being carried on by the second appellant as the sole proprietor. AS a result of the termination of the services of the one hundred and forty two employees of the Company	 as aforesaid	 an industrial dispute was raised at the instance of the said employees whose list is attached to the order of Reference	 dated August 26	 1954	 which is in these terms: " Whereas an Industrial dispute exists between (1) Messrs. Great Indian Motor Works Ltd.	 33	 Rowland Road	 Calcutta	 represented by their Managing Directors Sri C. D. Nundy and Sri K. D. Nundy	 (2) Official Liquidators of the Company	 Sri D. L. Dutta and Sri C. D. Nundy	 33	 Rowland Road	 Calcutta and (3) Sri K. D. Nundy	 Auction Purchaser of the Company	 33	 Rowland Road	 Calcutta	 and their 142	 employees	 given in the enclosed list	 represented by 17 the Bus Workers ' Union	 249	 Bowbazar Street	 Calcutta	 regarding the matters specified in the schedule ; And whereas it is expedient that the said dispute should be referred to an Industrial Tribunal constituted under section 7 of the Industrial Disputes Act	 1947 (XIV of 1947); Now	 therefore	 in exercise of the powers conferred by section 10 of the said Act	 the Governor is pleased hereby to refer the said dispute to the Third Industrial Tribunal constituted under Notification No. 592 Dis./D/12L 5/12 dated the 23rd February	 1953 for adjudication. The said Third Industrial Tribunal shall meet at such places and on such dates as it may direct. SCHEDULE 1.Whether the notice dated 23rd July	 1954	 of termination of services of 142 employees with effect from 24 7 54 issued by the Joint Official Liquidators	was justified ? 2.Whether the refusal of the auction purchaser to continue the employment of the 142 employees was justified ? 3. What reliefs are the employees entitled to By order of the Governor. " The employees of the Company had moved the High Court for directions to the Liquidators for the payment of their dues from the Company. The Court	 by its order dated September 8	 1954	 directed the Liquidators to pay within a week the arrears of salary of all the workmen	 and also within a week from receiving sale proceeds of the auction sale aforesaid	 to pay the workers	 in lieu of notice	 one week 's wages to weekly paid workmen	 two weeks ' wages to fortnightly paid workmen	 and one month 's wages to monthly paid workmen. The Directors were to hold the balance of the sale proceeds till further orders of the Court. It will be noticed from the order of reference	 quoted above	 that besides the Official Liquidators	 the second appellant was also impleaded as a party to the Reference	 in his capacity as the auction purchaser of the Company. In his written statement before the Third 18 Industrial Tribunal of West Bengal	 which was in seizin of the case	 the auction purchaser	 now the second appellant	 after reciting the facts and circumstances leading up to his auction purchase	 as aforesaid	 contended that as an auction purchaser	 he was not in any event liable for any compensation or dues	 as claimed by the workmen; that he was not bound to reinstate the old employees of the Company ; that having purchased the business free from any encum brances	 he was not liable for the dues of the workmen	 as claimed; that be " had unnecessarily been made a party and dragged here before the Tribunal." He added that he admitted that he was one of the Managing Directors of the Company before its liquidation	 but with the order for liquidation	 he ceased to function as such. After hearing the parties	 the Tribunal made its Award dated March 8	 1955. The Tribunal awarded	 inter alia	 compensation under section 25(F)(b) of the 	 and directed the Company to pay compensation	 within two months from the date the award became enforceable	 to such of the workmen as had been found entitled to the same. It may be noted here that the proceedings before the Industrial Tribunal had commenced without the necessary sanction of the High Court in the liquidation proceedings	 but during the pendency of the proceedings	 the High Court	 by its order dated December 20	 1955	 granted leave to the workmen to proceed with and continue the proceedings against the Official Liquidators of the Company. The Industrial Tribunal	 therefore	 further directed that so far as the Liquidators were concerned	 the compensation awarded to the workmen " shall be recoverable only out of the assets in their hands according to law". So far as the auction purchaser was concerned	 the award proceeded to make further directions in these terms: " The auction purchaser	 it has already been noted	 purchased the different sections of the business with the name " The Great Indian Motor Works " free from encumbrances and all outgoings and liabilities (Vide Exts. D and E)	 and the said purchase was 19 confirmed on 5th July	 1954. After the sale was confirmed and before possession was taken by the auction purchaser	 the Liquidators terminated the employment of all the employees (save and except the Accountant and one Clerk) by a notice dated 23rd July	 1954	 with effect from 24th July	 1954. After such termination of employment	 the auction purchaser obtained possession on 24th July	 1954. At that time no relationship of employer and employees subsisted. In the circumstances the dispute with the auctionpurchaser cannot be considered to be 'industrial dis pute ' as no relationship of employer and employee existed 'between the auction purchaser and the old staff who had been discharged earlier. Hence I agree with the learned Advocate of the auction purchaser that the reference so far as. the auction purchaser is concerned is incompetent. Apart from that	 when the auction purchaser purchased the business free from encumbrances and all outgoings and liabilities and when there is nothing to show that the auction purchaser undertook at any time to maintain the old staff in his service	 it cannot be said that his refusal to continue the employment of 142 employees was unjustified. Only when one purchases with all assets and liabilities as a going concern	 he is bound to continue the old employees in service and not otherwise. I award accordingly. " Against the said Award which	 in terms	 was made only against the Liquidators and not against the auction purchaser aforesaid	 only one of the two Liquidators	 namely	 Debendra Lall Dutt	 made ail application to the High Court for necessary directions regarding preferring an appeal. The other Liquidator	 Chandy Das Nundy	 opposed the said application for leave to appeal. The High Court	 thereupon	 made an order on April 30	 1956	 refusing leave to the Liquidators to prefer an appeal from the said Award	 It was in those circumstances that the appellants	 namely	 Messrs. Great Indian Motor Works Ltd.	 represented by the Managing Director	 K.D. Nundy	 as the first appellant	 and K.D. Nundy	 in his capacity as creditor and/or contributory of the said Great Indian Motor 20 Works Ltd. (under liquidation) and/or as auctionpurchaser of the Company	 as appellant No. 2	 filed an appeal before the Labour Appellate Tribunal of India	 on May 3	 1956	 impleading the one hundred and forty two employees through the Bus Workers ' Union	 as the principal respondents	 C.D. Nundy and D. L. Dutt	 the Official Liquidators of the Company	 as proforma respondents. As a counter blast	 the aforesaid workmen of the Company filed their appeal on May 17	 1956	 impleading the Company represented by their Managing Directors	 C. D. Nundy and K. D. Nundy	 as the first respondent	 the Official Liquidators of the Company	 D.L. Dutt and C.D. Nundy	 as respondents second party	 K.D. Nundy	 the auction purchaser	 as respondent third party and the workmen not represented by the Bus Workers? Union	 as respondents fourth party. It is not necessary to set out the grounds of appeal in either of the two appeals	 in view of our decision on the preliminary question of the maintainability of the appeal in this Court	 as will presently appear. The Labour Appellate Tribunal disposed of the two appeals by its order dated August 1	 1956. The appellants ' appeal was dismissed as incompetent in view of the provisions of section 179 of Indian Companies Act	 1913	 reenacted as section 457 of the . The dismissal of the appeal on the ground of the appeal not being competent	 was based on the order of the Calcutta High Court	 dated April 30	1956	 aforesaid	 refusing leave to the Liquidators to prefer an appeal. It is noteworthy that the appeal before the Appellate Tribunal	 was not by the Liquidators but by K.D. Nundy as Managing Director of the Company	 as also by him in his capacity as the creditor or contributory or as the auction purchaser of the Company. This aspect of the case has not been dealt with by the Tribunal which held that the appeal was not maintainable as it was not authorised by the High Court. The employees ' appeal also was dismissed as it was not pressed in view of the fact that the appeal by the Company stood dismissed as unauthorized. It was against the aforesaid order of the Appellate 21 Tribunal	 dismissing the appeal in limine	 that the appellants aforesaid moved this Court and obtained special leave to appeal	 and the main ground of attack	 naturally	 was that the Labour Appellate Tribunal was in error in dismissing the appeal as unauthorised or as not maintainable. It is manifest that we are called upon	 in the first instance	 to decide whether the Labour Appellate Tribunal had rightly dismissed the appeal in limine on the ground that the Liquidators had failed to obtain the necessary sanction of the Calcutta High Court to prefer an appeal from the Award of the Industrial Tribunal. If that order of the Appellate Tribunal is correct	 and if we find that the appellants could not have any locus standi to prefer an appeal of their own as distinct from that on behalf of the Company	 no other question would arise for determination in this case. If	 on the other hand	 we come to the conclusion that order was erroneous	 at least in respect of the appellants ' appeal	 then the appeal will have to be remanded to be re heard by the Appellate Tribunal. It has been urged on behalf of the appellants that in view of the provisions of section 12	 read with section 3	 of the Industrial Disputes (Appellate Tribunal) Act (48 of 1950) (which was repealed by Act 36 of 1956)	 which governed the making of appeals before the Appellate Tribunal	 the appeal to that Tribunal was competent	 and should have been beard and determined on merits. The provisions of sections 3 and 12	 which we have to construe in this case	 are in these terms: " 3. The provisions of this Act and of the rules and orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any such law. " " 12. An appeal under this Act against any award or decision of an industrial tribunal may be presented to the Appellate Tribunal by (i)any party which is aggrieved by the award or decision ; or 22 (ii)the appropriate Government or the Central Government	 where it is not the appropriate Government	 whether or not such Government is a party to the dispute. " We have first to determine whether there is anything in the Indian 	 with particular reference to section 179 of the Indian Companies Act	 1913	 (reenacted as section 457 of the )	 that is inconsistent with the provisions of the Industrial Disputes (Appellate Tribunal) Act	 1950 (which hereinafter will be referred 'to as "the Act"). If there is anything in those provisions of the 	 inconsistent with the provisions of the Act	 the latter shall prevail. Hence	 we have to construe the provisions of section 12 which specifically deals with appeals. That section permits an appeal to be presented to the Appellate Tribunal by any party which is aggrieved by the award (omitting the words not necessary for our present purpose). It is the usual statutory provision for an appeal	 which otherwise would not lie. It does not say either in express terms or by necessary implication	 that those specific provisions of the 	 are abrogated or modified. It does not do away with the necessity of the requisite sanction of the Court so far as a Liquidator is concerned. Under the provisions of the Indian 	 the affairs of the company under liquidation	 are placed in charge of the Official Liquidator	 and under section 457	 it is only the Liquidator who is authorized with the sanction of the Court	 to institute any suit or other legal proceedings in the name and on behalf of the company. Thus	 there is no inconsistency between the aforesaid provisions of the Act and the 	 which only laid down a condition precedent to the filing of an appeal	 if it has to be	 by a Liquidator of a company in the process of winding up. It concerns a very special case and has no bearing on the general right of appeal. As	 in the instant case	 the Court refused the necessary sanction to the Liquidators to prefer the appeal	 no appeal could have been filed on behalf of the Company. Hence	 in so far as the appeal purported to be on behalf of the Company	 through the Managing 23 Director aforesaid	 it was wholly incompetent. But the appeal was not only by the Company as such	 but also by the said K.D. Nundy as the creditor or contributory or auction purchaser ' of the Company. So far as this part of the appeal is concerned	 it is clear that only a party. to the Reference aggrieved by the Award could be a party to the appeal. K.D. Nundy was not a party in his capacity as creditor or as contributory. He was impleaded	 as already indicated as a party to the Reference in his capacity as the auction purchaser of the business of the Company. So far as that capacity is concerned	 it is clear from the order of the Tribunal	 that no award was made against him as such. He could not	 therefore	 be said to be a party aggrieved by the award	 having been exonerated from its terms. The Tribunal put this on three main grounds (1) that the auction purchaser had purchased the business of the Company free from all encumbrances	 out goings and liabilities	 (2) that the employment of the workmen. had been terminated by the Liquidators before possession of the business was delivered to the auctionpurchaser	 and (3) that there was no relationship of employer and employees between the auction purchaser and the workmen whose services were so terminated. The Tribunal	 in that view of the matter	 declared the Reference to be incompetent in so far as the auction purchaser was concerned. This order	 the Tribunal passed at the instance of the auctionpurchaser himself. The auction purchaser	 therefore	 succeeded in obtaining the order which the Tribunal passed	 holding that the Reference	 so far as he was concerned	 was incompetent. In view of these facts	 it must be held that so far as the auction purchaser is concerned	 he was not aggrieved by the Award made by the Industrial Tribunal. That being so	 the provisions of section 12 of the Act	 are not attracted to the appeal purported to have been filed by the auction purchaser. It is a little difficult to appreciate why the auctionpurchaser	 having succeeded in obtaining the order	 set out above	 in his favour	 changed his mind and preferred an appeal which	 in the events that had happened	 was not maintainable. 24 In our opinion	 therefore	 the Labour Appellate Tribunal was not in error in dismissing the appeal by the Company and by the auction purchaser	 as incompetent. It follows	 therefore	 that we are not concerned with the merits of the appeal. In view of the fact that we have not expressed any opinion on the merits of the controversy raised in the abortive appeal	 this dismissal shall be without prejudice to the appellants ' rights	 if any. The appeal is	 accordingly	 dismissed	 but the parties here are directed to bear their own costs	 in view of the fact that we have not gone into the merits of the controversy. Appeal dismissed.

Summary:
The discharged employees of the Company in liquidation raised an industrial dispute wherein the auction purchaser of the Company was also impleaded as a party. The Tribunal	 inter alia	 held that no relationship of employer and employee existed between the auction purchaser and the old staff who had been discharged prior to the purchase of the business	 and the reference so far as the auction purchaser was concerned was incompetent. The Tribunal directed the liquidators to pay compensation to the discharged employees. The liquidators were refused sanction to appeal from the said award by the High Court whereupon the auction purchaser who was also the managing director of the Company	 prior to its liquidation	 preferred an appeal in the name of the Company represented by himself as the managing director and also in his capacity as the auction purchaser of the Company. The Appellate Tribunal dismissed the appeal in limine as incompetent in view of the provisions Of section 457 Of the 	 on the ground that the appeal was not maintainable as it was not authorised by the High Court. Held	 that where a party to the Reference in an industrial dispute was exonerated from its terms	 and no Award was made against him	 he could not be said to be an aggrieved party	 thereby attracting the provisions of section 12 of the Industrial Disputes (Appellate Tribunal) Act 1950	 and any appeal by him from the said Award will be incompetent. 14 No person other than the Official Liquidator	 who is place in charge of the affairs of the Company in the process of winding up	 is authorised with the sanction of the Court to institute any suit	 prefer an appeal or other legal proceedings in the name and on behalf of the Company. Held	 further	 that there is no inconsistency between section 457 of the and section 12 Of the Industrial Disputes (Appellate Tribunal) Act 1950. But in construing the provisions Of section 12 Of the Industrial Disputes (Appellate Tribunal) Act 1950	 if there was anything in the 	 with particular reference to section 457 which was inconsistent with the provisions of Industrial Disputes (Appellate Tribunal) Act 1950	 the latter Act shall prevail. Section 457 of the 	 concerns a very special case	 it only lays down a condition precedent to the filing of a case if it has to be by the liquidator of a company in the process of winding up. Section 12 of the Industrial Disputes (Appellate Tribunal) Act 1950 is the usual statutory provision which permits an appeal to be presented to the Appellate Tribunal	 which otherwise would not lie	 by any party who is aggrieved by an award; it does not either in express terms or by necessary implication override	 abrogate or modify the provisions Of section 457 Of the 	 nor does it do away with the necessity for the requisite sanction of the court which is a condition precedent so far as the liquidator is concerned to institute any suit or proceedings in the name or on behalf of the company in liquidation. In the instant case the appeal purported to be filed on behalf of the Company in liquidation through its managing director was wholly incompetent ; and the second appellant	 the auctionpurchaser	 could not be said to the aggrieved party enabling him to invokes. 12 of the Act.