1. Industrial dispute reference — Factory in liquidation leased to third party — Applications under Section 33A, Industrial Disputes Act for unauthorized discharge of workmen. (Para 2 , 4 , 6 , 8 )
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1958 Supreme(SC) 145
SUPREME COURT OF INDIA
4th November, 1958.
S.R. DAS, C.J.I. AND N.H. BHAGWATI, B.P. SINHA, K. SUBBA RAO AND K.N. WANCHOO, JJ.
S. K. G. Sugar Ltd., Appellant
Versus
Sri Ali Hassan, Chairman, Industrial Tribunal, Bihar and others, Respondents.
Civil Appeal No. 793 of 1957.
Advocates Appeared
Mr. C. K. Daphtary, Solicitor-General of India (M/s. A. B. N. Sinha and B. P. Maheshwari. Advocates, with him), for Appellant; Mr. S. P. Varma, Advocate, for Respondents Nos. 1, 2, 6-8 & 10-23.
Advocates:
A.B.N.Sinha, B.P.MAHESHVARI, C.K.DAFTARY, S.P.Varma
A.B.N.Sinha, B.P.MAHESHVARI, C.K.DAFTARY, S.P.Varma
The "employer" under Sections 33 and 33A of the Industrial Disputes Act must be the identical employer involved in the original dispute at the time of reference, or their legal successor/assign. A subsequent lessee who was not the employer during the reference is not bound by Section 33.
Headnote:(A) Industrial Disputes Act, 1947 - Sections 33 and 33A - Definition of "employer" - The employer contemplated by Sections 33 and 33A must be the identical employer concerned in the industrial dispute which is the subject-matter of adjudication (Para 21) - It must be the employer with whom the workmen had a subsisting relationship of employer and employees at the commencement of the proceedings (Para 21) - Identity of the employer at the commencement of the reference with the employer who intends to take action must be established; if the latter has no concern with or relationship with the former, these sections do not come into operation (Para 21).
(B) Indian Companies Act - Section 171 - Legal proceedings against a company in liquidation - Where a reference is made against the "management" of a factory, and the company is mentioned only to identify the particular factory, the proceeding is not against the company in liquidation (Para 17).
Facts of the case:
A company in liquidation leased its factory to a lessee. Before the lease was executed, the State Government referred a dispute between the managements of certain factories and their workmen to an Industrial Tribunal. The lessee took possession of the factory after the reference date. Subsequently, the lessee discharged certain employees and altered service conditions. The affected employees filed complaints under Section 33A, alleging that the lessee violated Section 33 by acting without the express permission of the Tribunal.
Findings of Court:
The reference was directed at the "management" of the factory, not the company in liquidation. The appellant, having entered the lease after the reference, was not the employer involved in the original dispute and was not a party to the reference.
Issues: Whether the term "employer" in Sections 33 and 33A of the Industrial Disputes Act includes a subsequent lessee who was not the employer at the time the dispute was referred for adjudication.
Ratio Decidendi: The restrictions under Section 33 apply only to the employer concerned in the industrial dispute. Identity of the employer at the commencement of the reference and the employer taking action must be established. Such identity can only be established if the latter is a nominee, benamidar, heir, successor, or assign of the former. Since the appellant was not the employer at the date of reference and had no such legal identity with the previous management, the appellant was not bound to seek permission under Section 33.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether leave under Section 171, Companies Act was required for reference — Whether a subsequent lessee constitutes an employer under Sections 33 and 33A, Industrial Disputes Act. (Para 10 , 14 )
3. Reference targeted factory management, not the company in liquidation — Section 33 ban applies only to the employer party to the original industrial dispute. (Para 16 , 17 , 19 , 21 , 22 )
4. The employer under Sections 33 and 33A, Industrial Disputes Act must be the identical employer concerned in the industrial dispute subject to adjudication. (Para 21 )
5. Appeal allowed — Writ of certiorari issued quashing proceedings in miscellaneous cases under Section 33A, Industrial Disputes Act. (Para 26 )
6. Does a reference under Section 10(1) of the Industrial Disputes Act against a factory's management require leave from a winding-up court under Section 171 of the Companies Act?
No, if the reference is directed at the management of the factory rather than the company in liquidation itself, it is not a proceeding against the company, and leave under Section 171 is not required. (Para 16 , 17 )
7. Who is considered an employer under Sections 33 and 33A of the Industrial Disputes Act during the pendency of proceedings?
The employer must be the identical employer concerned in the industrial dispute subject to adjudication, or their heirs, successors, assigns, or nominees. A subsequent lessee without such a relationship is not bound by the Section 33 restrictions. (Para 19 , 21 )
8. Can an application under Section 33A be maintained against a party who took over management after the reference was made?
No, unless the new manager is a successor, assign, or nominee of the original employer. If there is no identity of employers at the commencement of the reference, the ban on altering service conditions does not apply. (Para 21 , 22 , 25 )
Judgement
N. H. BHAGWATI, J. : This appeal with special leave is directed against the judgment of the High Court of Judicature at Patna dismissing the writ application of the appellant seeking to quash the proceedings in Miscellaneous Cases Nos. 26 and 27 of 1955 before the Industrial Tribunal, Bihar, Patna.
2. Gaya Sugar. Mills Ltd., a Company incorporated in 1934 owned a Sugar Factory at Guraru, District Gaya. An order for the compulsory winding up of the Company was passed on 4th November 1951, and by a subsequent order dated 1st February 1952, one Dhansukh Lal Mehta was appointed liquidator of the Company. In order to preserve the aforesaid Sugar Mills at Guraru in proper running order and also for the beneficial winding up of the Company the liquidator obtained under S. 171 (b) of the Indian Companies Act sanction of the Court to lease out the said Mills with all the lands, factory and residential buildings and machineries, etc. The Guraru Cane Development and Cane Marketing Union Ltd., were the former lessees of the said mills but on the expiration of their lease, the liquidator obtained from the Court an order on 3rd December 1954, sanctioning the lease in favour of Shri Krishna Gyanoday Sugar Ltd., the appellant herein, for the period 5th December 1954 up to and inclusive of 14th November 1955. The liquidator executed in favour of the appellant a lease of the said Mills on 6th December 1954, and handed over possession of the same to the appellant the same day.
3. The terms and conditions of the lease, in so far as they are material for our purposes provided that the appellant would be put into possession of the leasehold properties in a proper working order and would work and run the factory without any interference or obstruction by or on behalf of the lessor and would appropriate the entire income and profit thereof and the lessor would have no concern with profit or loss made by the lessee in running the said factory and would not be entitled to any sum or amount over and above the rent therein reserved. The appellant was not to be any way liable or responsible for any of the liabilities of the Company or of the liquidator or of the out-going lessees incurred whether before or after the appellant enter into possession except those mentioned therein. The appellant was at its own cost entitled always to install any additional or other machinery or machineries and erect godowns or structures for the purposes of and in connection with the running of the said Mills after intimation to the lessor. The appellant was not bound to engage any or all of the employees of the lessor or of the outgoing lessees or any of the persons who had been working from before except the 18 employees who were mentioned in cl. 11 of the lease and the appellant also agreed not to retrench any staff already employed at that date in the Factory at Guraru. (Vide cl. 13 (v) of the lease). The properties demised by the said lease were deemed to be in the control of the Patna High Court and any dispute between the lessor and the appellant in respect of the said lease was to be placed before the said Court for decision and the decision made by the said Court was to be binding on all the parties.
4. It appears that on 2nd December 1954, i.e., 4 days before the execution of the said lease and delivery of possession of the said Mills by the liquidator to the appellant, the Government of Bihar issued a notification referring certain disputes between the Managements of the Sugar factories specified in Appendix I thereto and their workmen represented by the Unions specified in Appendix II for adjudication to an Industrial Tribunal of which Shri Ali Hasan, the respondent No. 1 herein, was to be the sole member.
5. The terms of the reference stated :
"whereas the State Government is of opinion that an Industrial dispute exists or is apprehended between the Management of the Sugar factories as specified in Appenix I and their workmen represented by the Unions as spe
