Judgment

PALEKAR, J.:- This is an appeal by special leave by the Central Inland Water Transport Corporation Limited, hereinafter called, the Corporation, from a judgment and order of the Calcutta High Court in Appeal No. 262 of 1971 disposed of on 14-12-1972. Respondent No. 1 is the Inland Steam Navigation Workers Union representing the Workmen, and respondent No. 2 is the State of West Bengal. A reference was made by the State of West Bengal to the Second Labour Court at Calcutta under S. 33C (2) of the Industrial Disputes Act, 1947, and the point in issue is whether that court had jurisdiction to entertain the reference.

2. A few facts are necessary to be stated. There was a Limited Company known as the Rivers Steam Navigation Co. Ltd. (hereinafter called the Company) which used to operate a River service from West Bengal to Assam through what was formerly East Pakistan. It had employed for its business about 8,000 workmen, including clerical staff. Due to conflict with Pakistan in 1965 the Company came to grief and had to suspend a major part of its operations. Retrenchment was undertaken on a large scale because the Company had been incurring heavy losses for several years in spite of the Government of India acquiring a controlling interest in it to prevent its voluntary liquidation. In the course of conciliation proceedings the Management of the Company arrived at a settlement with the respondent Union on August 25, 1965 whereby it was agreed, inter alia, that the settlement was valid for 5 years till the end of 1969, that the retiring age of the workmen would be 57 years and that there would be no retrenchment for 5 years. The Company s fortunes did not improve, and, therefore, in 1966 owing to its indebtedness to various creditors, including the Union of India, the State Bank of India, the Chartered bank etc. to the tune of several crores of rupees, a winding up petition was filed in the Calcutta High Court. The Company, thereupon, made an application under Sections 391 to 394 of the Companies Act for sanctioning a scheme of arrangement and compromise between the Company and the appellant Corporation which was incorporated on February 22, 1967 as a wholly owned Central Government Company.

3. The scheme was sanctioned by a learned Judge of the Calcutta High Court by his order dated May 3, 1967. It is to be noted that when the proceeding was before the learned Judge, the respondent union had appeared before the Court with a view to safeguard the interests of the workers. Aggrieved by the order which sanctioned the scheme, the Union went in appeal before a Division Bench of the High Court. The Division Bench by its judgment and order dated July 14, 1967 upheld the order of the single Judge sanctioning the scheme.

4. It is not necessary to quote the scheme extensively. It is enough to point out that it provided, inter alia, that all the properties and assets but only some of the liabilities of the Company would vest in the appellant Corporation. It was further agreed that the Corporation would take over as many of the staff and labour of the Company as was possible under the circumstances, but as to how many would be employed by the Corporation was entirely left to the discretion of the Corporation. It was further agreed that those employees who were not taken over by the Corporation would be paid compensation by the Company out of funds the Government of India agreed to supply. It was further agreed that upon the approval of the scheme, the Company would be closed and on payment of all creditors it would stand dissolved without winding up. All these terms of the scheme were confirmed in appeal but with a view to safeguard the rights of workers, if any, the following observations were made:

"I am of opinion, that the questions, first whether there is a closure of the company within the meaning of the Industrial Disputes Act, secondly, whether the agreement dated 25th August, 1965, is capable of enforcement, thirdly, whether the