2005 Supreme(SC) 141

2005(1) Supreme 721
Supreme Court of India
(From Punjab and Haryana High Court)
N. Santosh Hegde & S.B. Sinha, JJ.
M/s. Maruti Udyog Ltd. —Appellant
versus
Ram Lal and Ors. —Respondents
Civil Appeal No. 2846 of 2002
Decided on 25-1-2005
Counsel for the Parties :
For the Appellant : Anil B. Divan, Sr. Advocate, Bhargava V. Desai, Amit Bhasin, Sanjeev Kr. Singh and Pradeep Kr. Malik, Advocates.
For the Respondents : Anupal Lal Das and Ujjwal Jha, Advocates.

Important pointThe statutory scheme does not envisage that even in the case of closure of an undertaking, a workman who although had not been retrenched would be reemployed in case of revival thereof by another company.

Headnote:(i) Maruti Limited (Acquisition and Transfer of Undertakings) Act, 1980—Sections 6, 4(2), (4), 5, 6, 13, 7 and 8 —Industrial Disputes Act, 1947—Sections 25H, 25F, 25FF, 25FFF, 2(oo)—Retrenchment—Closure of the Company—Undertaking of the Company vested in appellant Company in terms of a notification issued u/s 6 of the Act of 1980—Respondents, three in number were appointed by the Company (Maruti Ltd.)—Their services stood terminated by the said Company in 1977 as a result of closure of the factory—Company came to be wound up in terms of an order passed by the High Court—Company ceased to have any business activity—However, on acquisition of undertaking of the Company, erstwhile workmen of the Company ­issued a notice of demand of reemploy­ment upon the appellant Company—Labour Court in its Award held that appellant being successor-in-interest of the company was liable to reemploy the respondent—Writ petition—Whether appellant Company became liable to offer reemployment to workmen— (No).

       Held : 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. The closure of the undertakings of the company, thus, stands admitted. It also finds mention in the Award passed by the Labour Court. (Paras 14 and 15)

       The Respondents could have claimed a legal right of employment in the Appellant provided they were employed in any of the undertakings of the company immediately before the appointed day. Section 13 of the Act postulates a situation where a workman would continue to be a workman despite the statutory transfer. A workman, who has ceased to be in employment of the Company before the appointed day, therefore, would not be entitled to the benefit thereof. The order of winding up, as noticed hereinbefore, was passed by the High Court of Punjab and Haryana by order dated 6.3.1978 and a ­direction for terminating the services of all the workmen had also been issued by the learned Company Judge on 5.8.1977, pursuant whereto and in furtherance whereof, a settlement was arrived at by and between the Official Liquidator and the workmen. (Para 19)

       How far and to what extent the provisions of Section 25F of the 1947 Act would apply in case of transfer of undertaking or closure thereof is the question involved in this appeal. A plain reading of the provisions contained in Section 25FF and Section 25FFF of the 1947 Act leaves no manner of doubt that Section 25F thereof is to apply only for the purpose of computation of compensation and for no other. The expression “as if” used in Section 25FF and Section 25FFF of the 1947 Act is of great significance. The said term merely envisages computation of compensation in terms of Section 25F of the 1947 Act and not the other consequences flowing therefrom. Both Section 25FF and Section 25FFF provide for payment of compensation only, in case of transfer or closure of the undertaking. Once a valid transfer or a valid closure comes into effect, the relationship of employer and employee takes effect. Compensation is required to be paid to the workman as a consequence thereof and for no other purpose. (Para 21)

       Once it is held that Section 25F will have no application in a case of transfer of an undertaking or closure thereof as contemplated in Section 25F and 25FFF of the 1947 Act, the logical corollary would be that in such an event Section 25H will have no application. 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. (Paras 25 and 26)

       The statutory scheme does not envisage that even in the case of closure of an undertaking, a workman who although had not been retrenched would be reemployed in case of revival thereof by another company. (Para 38)

       The right of the workmen to obtain compensation in terms of Section 25FFF has not been taken away under the said Act. The liability to pay compensation in the case of closure would be upon the employer which in this case would be the erstwhile company. By reason of the provisions of the said Act, only a special machinery has been carved out for payment of dues of all persons including workmen in terms of the provisions contained in Chapter VI of the said Act. If a workman contends that his lawful dues have not been paid, his remedy is to approach the Commissioner of Payments constituted under the provisions of the said Act and not to proceed against the Appellant herein, in view of Section 5 of the Act. (Para 44)

       (ii) Interpretation of Statutes—Legal Fiction—In construing a legal fiction the purpose for which it is created should be kept in mind and should not be extended beyond the scope thereof or beyond the language by which it is created—Deeming provision cannot be pushed too far so as to result in an anomalous or absurd position—A beneficial statute may receive liberal construction but the same cannot be extended beyond the statutory scheme. (Paras 35 and 39)

       (iii) Interpretation of Statutes—Non Obstante Clause—When both statutes containing non-obstante clauses are special statutes, an endeavour should be made to give effect to both of them—In case of conflict, the latter shall prevail. (Para 41)