important point
Rights of the workmen flow from the provisions of the Act, hence a writ court could not have issued any other direction.

Headnote:(a)Industrial Disputes Act, 1947 – Section 25-O – The relationship between the company and the respondents being employer and workmen is governed by the provisions of the Act – The Management of an industrial undertaking is entitled to take recourse to closure of its undertaking – In absence of any valid order of merger of two different entities, evidently the relationship of employer and employee between the respondents and the said company, as had been obtaining, continued – Furthermore, as soon as the closure of an undertaking becomes effective, it is trite that the said relationship ceases to exist – The right of the workmen, therefore, was only to receive the amount of compensation. (Para 17)
       (b)Constitution of India – Article 226 – Rights of the workmen flow from the provisions of the Act, hence a writ court could not have issued any other direction – Direction to continue their services could not be issued as the writ was not maintainable. (Paras 17 and 18)
       Facts of the case:
       1.The private-respondents herein were the workmen of Karnataka Pulpwood Ltd. (the company). It was a joint sector company of Karntaka Forest Development Corporation Ltd. and and Karntaka Harihar Polyfibres Ltd., the share capital was fixed in the ratio of 51:49. The company was running in loss.
       2.On account of resistance from loc al people, great difficulty was also experienced in the matter to of obtaining loans from banks for raising of maintenance of plantations.
       3.In the circumstances, the company was directed to be wound up. However, on or about 16.11.1993, the State accorded its approval for merger of the said company with the appellant herein in place of closure of the former. Finally, however, closure of company with VRS to the employees was decided.
       4.The High Court directed that the first respondent shall act upon the proposal of VRS. The petitioners those who are willing to opt for VRS can apply for VRS otherwise they can place the request for absorption in the services of the third respondent and closure compensation to be payable to the petitioners who are eligible for closure compensation in accordance with law and to be payable as on the date of closure. This order was set aside in appeal and the Court held the appellants to be entitled to be absorbed in the service of the Corporation.
       Findings of the Court:
       Writ petition was not maintainable.
       Result : Appeals allowed.

judgment

S.B. Sinha, J. —

1.Leave granted.

2.These appeals are directed against judgments and orders dated 22.6.20005 and 19.07.2006 passed by a Division Bench of the Karnataka High Court whereby and whereunder the judgment and order dated 7.2.2005 passed by a learned Single Judge of the said High Court dismissing writ Petition Nos. 1651-1685 of 2005 filed by the respondents herein claiming their absorption in the appellant-Corporation.

3.Indisputably the private-respondents herein were the workmen of Karnataka Pulpwood Ltd. (the company). It was a Government company. It was running at a loss. Karnataka Pulpwood Ltd. is a joint sector company of Karntaka Forest Development Corporation Ltd. and and Karntaka Harihar Polyfibres Ltd., the share capital was fixed in the ratio of 51:49.

4.The Government stood as a guarantor in respect of the loans to be raised by the joint sector company from the commercial banks. A lease was granted in favour of the said company. Karnataka Pulpwood Ltd. which is said to be a subsidiary of the appellant-Corporation faced hostility from the local people for various reasons. A public interest litigation was also filed before this Court against lease of forest lands, inter alia, on the ground that the same was violative of the provisions of the Forest (Conservation) Act, 1980. This Court granted an order of stay regarding possession of the said leasehold property. Protracted legal battle adversely affected the commercial viability of KPL project. Great difficulty was also experienced in the matter to of obtaining loans from banks for raising of maintenance of plantations.

A question, therefore, arose as to whether the said company should be wound up. By reason of a decision taken by the State of Karnataka on or about 24.10.1991, it was, inter alia, directed :

“(a)To wind-up Karnataka Pulpwood Ltd., a Joint Sector Company. The company is directed to take steps in this connection following prescribed procedure under Companies Act, 1956.

(b)That all the Assets and Liabilities of the Karnataka Pulpwood Ltd. and any guarantee given by the Government to Karnataka Pulpwood Ltd. for raising loans are transferred to Karnataka Forest Development Corporation Ltd.

(c)Karnataka Forest Development Corporation is directed to settle obligations contained in promoters an agreement amicably through the dialogue between the promoters or in terms of arbitration clause in case of any dispute between the parties.

(d)Karnataka Forest Development Corporation is directed to absorb the staff of Karnataka Pulpwood Ltd. in Karnataka Forest Development Corporation.

(e)To return the enquiry to M/s. Harihar Polyfibers Ltd. The question regarding payment of interest on equity has to be negotiated and settled between the promoters viz., Karnataka Forest Development Corporation and M/s. Harihar Polyfibers.”

5.An attempt was made to wind up the said industrial undertaking in terms of the provisions of the Companies Act. On or about 16.11.1993, the State accorded its approval for merger of the said company with the appellant herein in place of closure of the former. It is, however, not known as to whether formalities required to be complied with for merger of the said companies under the Companies Act were undertaken or not. Apparently, such an exercise was undertaken. A proposal was also mooted that a voluntary retirement scheme be floated in regard to the employees of the company and in its meeting held on 27.1.2003, it was resolved :

“The matter was also discussed in the meeting of the High Power Committee on Public Sector Undertakings under the chairmanship of the Chief Secretary on 20.01.2993. It was pointed out that in the HPC a decision has been taken to close the KPL revising the earlier decision of merger with KFDC.”

6.Yet again, a Government order was issued on 02.01.2004 directing :

“1.Close down KPL.

2.Extend financial help to KPL in order to extend VRS to all its employees. Those employees who do not opt for VRS should be terminated as

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2007 Supreme(SC) 1321

important pointRights of the workmen flow from the provisions of the Act, hence a writ court could not have issued any other direction.

important point
Rights of the workmen flow from the provisions of the Act, hence a writ court could not have issued any other direction.