IN THE HIGH COURT OF JUDICATURE AT BOMBAY
A.A.Sayed, M.S.Karnik, JJ.
Hanumanprasad Rameshwardas – Appellant
Versus
State of Maharashtra – Respondent
Writ Petition No. 972 of 2000
Decided On : 14-06-2022
Labour Dues Recovery - Liability of Directors under Mathadi Act - Sec. 13 of the Mathadi Act - Summary of Acts and Sections: Sec. 13 of the Mathadi Act empowers the Board to determine the moneys due from employers and workers. It makes the employer liable for the dues under the Mathadi Act or the scheme. The Act does not make Managing Director or Directors personally liable to pay the dues which the Board is empowered to recover from the employer. Key Legal Provisions: Sec. 13, Mathadi Act; Definitions of 'employer' and 'principal employer' under the Mathadi Act. The court's decision was influenced by the lack of provision in the Mathadi Act making Directors personally liable for the company's dues and the violation of principles of natural justice.
Fact of the Case:
The Petitioners, as Directors of a company, challenged notices demanding payment of workers' dues and the final order under sec. 13 of the Mathadi Act. The issue was whether the Directors are personally liable to pay the dues of the workers under the Mathadi Act.
Finding of the Court:
The court found that the Petitioners cannot be made personally liable to pay the dues of the workers. It noted the lack of provision in the Mathadi Act making Directors personally liable and the violation of principles of natural justice.
Issues: The issue was whether the Directors of the Company can be made personally liable to pay the dues of the workers under the Mathadi Act.
Ratio Decidendi: The court held that the Mathadi Act does not make Managing Director or Directors personally liable to pay the dues which the Board is empowered to recover from the employer. It also found a violation of principles of natural justice.
Final Decision: The Petition is allowed, and the impugned notices and orders relating to the Petitioners are set aside. The court clarified that it will be open for the Respondents to proceed against the Company or any person liable under the Mathadi Act or the Scheme to recover its dues in accordance with law.
JUDGMENT
M.S.KARNIK,J. - The Petitioners challenge the notices dtd. 6/1/2000 received by the Petitioners from the Tahasildar, Labour Dues Recovery, Mumbai demanding payment of Rs.9,38,153.00 towards dues of workers of Suvidha Warehousing Company (Private) Ltd., (hereinafter referred to as "the Company") and threatening the attachment and sale of the personal property of the Petitioners for recovery of dues as arrears of land revenue. The Petitioners have also challenged the fnal order dtd. 6/11/1999 under sec. 13 of Maharashtra Mathadi Hamal and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969 (hereinafter referred to as "the Mathadi Act") and the Recovery Certifcate dtd. 30/12/1999 issued by the Respondent No. 3-Kirana Bazar and Dukane Mandal i.e. Grocery Market & Shop Board (hereinafter referred to as "the Board").
2. The Petitioners were at all material times the Directors of the Company. Under the provisions of the Mathadi Act and the scheme framed thereunder, both the employees and the employers are required to be registered with the Respondent No. 3 - Board. The Company was the registered employer with the Respondent No. 3-Board. For loading and unloading of goods, a toli of workers was assigned by the Respondent No. 3-Board to the Company and their dues are required to be deposited by the Company with the Respondent No. 3-Board. On failure to pay the dues, the Respondent No. 3-Board is empowered to issue Recovery Certifcate and request the Collector to recover the dues of the employer as arrears of land revenue under sec. 267 of the Maharashtra Land Revenue Code.
3. The issue arising in the Writ Petition is whether the Petitioners who are the Directors of the Company are personally liable to pay the dues of the workers under the Mathadi Act.
4. On the issue whether the Directors of the Company can be made liable, learned Counsel for the Petitioners relied upon the following judgments:
a) Suresh Tulsidas Kilachand and Ors. vs. Collector of Bombay and Ors., (1984) LAB. I.C. 1614,
b) Kundan Singh vs. Moga Transport Co. (P.) Ltd. & Ors., (1987) 62 Comp. Cases 600 (Single Judge Bench of Punjab and Haryana High Court),
c) Tikam Chand Jain vs. State Government of Haryana and Anr. (1987) 62 Comp. Cases 601,
d) Employees' State Insurance Corporation vs. S.K. Aggarwal and Ors., (1998) II LLJ. 794,
e) Raghunath Bareja and Anr. vs. Punjab National Bank and Ors., (2007) 1 Comp L.J. 108 (SC),
f) Vimalkumar Ravji Shah vs. Employees' Provident Fund Organisation, Solapur and Ors., (2009) II CLR 577,
g) Tristar Consultants vs. V Customer Services India P. Ltd. and Anr. (2009) 149 Comp. Cases 714 (Delhi)
5. Learned Amicus Curiae on the other hand had relied upon the following judgments:
a) R. B. Shah vs. V. R. Savarkar and Others, KHW Ltd. (1952) High Court, Bombay by Division Bench
b) State of U.P. and Others vs. Renusagar Power Co. and Others, (1988) 4 SCC 59
c) J. K. Industries Ltd. and Others vs. Chief Inspector of Factories and Boilers and Others (1996) 6 SCC 665
d) Chandubhai Virjibhai Gokani and Ors. Vs. State of Gujarat and Another (2009) 149 Comp Cas 720 (Guj)
e) Bhuwalka Steeel Industries Limited vs. Bombay Iron and Steel Labour Board and Another (2010) 2 SCC 273,
f) Pepsico India Holding Private Limited vs. Grocery Market and Shops Board and Another, (2016) 4 SCC 493
6. We have heard learned Counsel for the Petitioners, the learned AGP and learned Senior Counsel who was appointed as Amicus Curiae. Having heard the learned Counsel for the Petitioners and having perused the materials on record, we are of the view that the Petitioners cannot be made personally liable to pay the dues of the workers for the following reasons.
7. It is an admitted position that the Company was "registered employer" with the Respondent No. 3-Board and is liable to pay the dues of the workers under the Mathadi Act.
8. According to the Petitioners they were not in day-today management of the Company and prior to issuing the impugned notices, no n
State of U.P. and Others Vs. Renusagar Power Co. and Others
J. K. Industries Ltd. and Others Vs. Chief Inspector of Factories and Boilers
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