Allahabad High Court
Kunwar Udai Raj Singh Gautam Son Of Sri ... vs Appellate Authority Payment Of ... on 17 May, 2007
Author: Sunil Ambwani
Bench: Sunil Ambwani
JUDGMENT Sunil Ambwani, J.
1. Heard Shri Saish Chturvedi for M/s Display Devices Limited, A-41, 42/1, Site-IV, Industrial Area, Sahibabad, District Ghaziabad and Shri Y.K. Sinha for the workmen.
2. The writ petition No. 43422 of 2006 arises out of an application filed by Kunwar Udai Raj Singh Gautam, the petitioner as Payment of Gratuity Act Case No. 47 of 2002 for payment of gratuity for M/s Uptron Colour Picture Tube Ltd. for the period prior to the date when lock out was declared in the factory and consequential termination of his services on 30.11.1994. He claimed Rs. 5,35,501/- towards gratuity for the period of service of 7 years 8 months on the last drawn wages of Rs. 7692/-. A written statement was filed by M/s BPL Display Devices Ltd. (former name M/s Uptron Colour Picture Tube Ltd.) with the objections that applicant was the employee of Uptron Colour Picture Tube Ltd., which was taken over by M/s BPL Display Devices Ltd. in terms of the rehabilitation scheme sanctioned by the Board of Industrial Finance and Reconstruction (BIFR) by its order dated 18.4.1996. The name of the company was changed in the meeting dated 29.9.1997. The Registrar of Companies, U.P. Kanpur changed the name of the company w.e.f. 23.3.1998. As per the terms of rehabilitation scheme, M/s BPL Display Devices Ltd. is not responsible for dues of the employees of the erswhile Uptron Colour Picture Tube Ltd. On merits it was stated in para 5 that the workmen was employed only upto 19.9.1994. There was lock out in the factory w.e.f. 10.9.1994, which was lifted on 20.6.1996 after a settlement with the Union, which became part of the award dated 24.9.1997 in Adjudication Case No. 171 of 1996 by Labour Court-I, Ghaziabad. As per the settlement the workers are not entitled to gratuity for the period earlier to the settlement.
3. Shri Pankaj Kumar, the Controlling Authority, Payment of Gratuity Act, 1972 by his order dated 19.9.2005 awarded gratuity of Rs. 31,064/- with 6% interest from the date it was due, with the finding that the claimant was workman upto the date of lock out and had worked for 7 years 5 months and 9 days. The liability of payment was fixed on M/s BPL Display Devices Ltd., which had taken over M/s Uptron Colour Picture Tube Ltd.
4. The appeal filed by M/s BPL Display Devices Ltd. was allowed by the appellate authority under Payment of Gratuity Act, 1972 on 9.5.2006 on the ground that the workman was not an employee of M/s BPL Display Devices Ltd. He did not apply under Para 4(6) of the Scheme dated 18.4.1996 for continuing in employment as core group employee and for payment of dues. According to the appellate authority M/s BPL Display Devices Ltd. was not liable to pay the dues, as it was not employer of the workman. Aggrieved the workman has filed the writ petition.
5. In writ petition No. 43430 of 2006 Shri Kishore Kumar Hazara filed Payment of Gratuity Act Case No. 68 of 2000 before the Controlling Authority for payment of gratuity of Rs. 23,415/- from M/s Uptron Colour Picture Tube Ltd. on the same fact and circumstances with service period of 7 years 5 months and 9 days, on the last drawn salary of Rs. 5798/- on the date of lock out on 10.9.1994 when his services were terminated. Shri Pankaj Kumar, the Controlling Authority awarded the gratuity by his order dated 31.1.2005 with 6% interest from the date is due. The appellate authority allowed the appeal No. 42 of 2005 filed by M/s BPL Display Devices Ltd. on the same reasoning as in the case of Kunwar Udai Raj Singh Gautam. Aggrieved the workman has filed the writ petition.
6. In writ petition No. 21710 of 2007 Dileep Kumar Bhola filed similar application for payment of gratuity form M/s Uptron Colour Picture Tube Ltd. of Rs. 30,389/- on completing 7 years of service on last drawn wages of Rs. 7525/- on the date when lock out was declared. The Controlling Authority allowed the application on 24.4.2006. The appellate authority has allowed the appeal No. 92 of 2006 on 8.2.2007 filed by M/s BPL Display Devices Ltd. on the same reasoning as in the case of Kunwar Udai Raj Singh Gautam. Aggrieved the petitioner has filed the writ petition.
7. The writ petition Nos. 21438 of 2007, 21711 of 2007, 21712 of 2007 and 21713 of 2007 have been filed by M/s BPL Display Devices Ltd. praying for setting aside the order passed by Shri Pankaj Kumar, Controlling Authority, Payment of Gratuity Act, 1972 by which he has rejected the application filed by M/s BPL Display Devices Ltd. for its impleadment as a party to the proceedings initiated by the workmen of M/s Uptron Colour Picture Tube Ltd. The applications were dismissed on the ground that the proceedings have been initiated against M/s Uptron Colour Picture Tube Ltd., which had terminated the petitioners' services. M/s BPL Display Devices Ltd. has not stated anywhere in their application that they have employed or had terminated the workmen's services and therefore there was no justification to implead it as party to the proceedings. All these cases were fixed for hearing on 08.5.2007.
8. The writ petition No. 22644 of 2007 has been filed by M/s BPL Display Devices Ltd. challenging the order passed by the Appellate Authority, Payment of Gratuity Act, 1972 dated 08.2.2007 in Appeal No. 93 of 2006 and the order of Controlling Authority, Payment of Gratuity Act. In the order dated 8.2.2007 the same Presiding Officer, Shri A.A. Khan, Appellate Authority, U.P. under Payment of Gratuity Act, 1972 recorded the finding that Shri Narendra Pal Gaur, was appointed by M/s Uptron Colour Picture Tube Ltd. on 12.10.1987. His services were terminated on 7.9.1996. The Appellate Authority found that services of workmen were terminated after M/s BPL Display Devices Ltd. had taken over M/s Uptron Colour Picture Tube Ltd. under the rehabilitation scheme. Since the services were terminated on 7.9.1996 when M/s BPL Display Devices Ltd. has taken over, he will be entitled to gratuity. In the same order the appellate authority found that the workman Shri Gaur has not worked for two years from 10.9.1994 to 07.9.1996 and thus he will not be entitled to gratuity for this period. Shri Khan has distinguished the case from the other cases on the ground that the services of Shri Narendra Pal Gaur was terminated on 7.9.1996. The employers were fully aware of this fact that Shri Gaur has handed over his resignation to the management.
9. The short question, which arises for consideration in all these writ petitions is that whether M/s BPL Display Devices Ltd. is separate and distinct legal entity, which is not liable to pay the dues of gratuity to be paid by M/s Uptron Colour Picture Tbue Ltd.
10. Shri Satish Chaturvedi, learned Counsel appearing for M/s BPL Display Devices Ltd. submits that M/s BPL Display Devices Ltd. is not liable to pay the workmen's dues of M/s Uptron Colour Picture Tube Ltd. M/s BPL Display Devices Ltd. has taken over the management of M/s Uptron Colour Picture Tube Ltd. under the rehabilitation scheme sanctioned by BIFR and thereafter the name of M/s Uptron Colour Picture Tube Ltd. was changed as M/s BPL Display Devices Ltd.
11. The records placed before the Court shows that M/s Uptron Colour Picture Tube Ltd. fell into losses and its et worth was fully eroded in 1992. In case No. 55 of 1993, the BIFR declared M/s Uptron Colour Picture Tube Ltd. as a sick industrial company. A draft rehabilitation scheme was prepared and was sanctioned by BIFR on 18.4.1996. The BIFR in its order dated 18.4.1996 observed that workers did not agree with the BPL's proposal. It was further observed that M/s BPL Display Devices Ltd. shall continue the employment of all "these employees" and settle their dues in consulation with the present management of Uptron Colour Picture Tube Ltd. to ensure that the employees do not suffer unnecessarily. When the matter was pending with the BIFR, the management of M/s Uptron Colour Picture Tube Ltd. had declared a lock out in the factory on 1.9.1994. In order to allow the chance of rehabilitation the workmen entered into settlement with M/s Uptron Colour Picture Tube Ltd. on 30.10.1995 under which the workmen agreed with the rehabilitation scheme with the conditions for which a clarification was made on 11.6.2006, that the lock out will be lifted w.e.f. 20.6.1996 and that since it will take about six months to start production initially only those workmen, who are named in Schedule B will be allowed to work and that subsequently all other workmen except those, who have been suspended will start work from 16.12.1996; domestic enquiries against the suspended workmen will be completed expeditiously; all the workmen affected by lock out will report within 30 days of the lifting of the lock-out at the factory gate and will give their joining report on Schedule C. Those, who are medically unfit were given another 15 days time to join on production of medical certificate. It was agreed that the wages will be freezed for a period of two years and that the third year's increment will be paid in the fourth year with the new pay structure. Para 7 of this agreement provided that workmen will get continuity in service and retiral benefits with gratuity.
12. The rehabiliation scheme sanctioned by BIFR provided in para 4.6 is as follows:
BPL shall continue the employment of the core group of employess in UCPTL and will settle their dues also in consulation with the present management of UCPTL.
13. The salient feature of the scheme, which was put into implementation and revived the company provided that the incoming promoters M/s BPL Ltd. and their associaties will contribute Rs. 7125 lacs, which works out to 31.2% of the total cost of scheme at Rs. 22823 lacs. The sacrifices made by the institutions and banks were worked out at Rs. 16823 lacs. The equity share capital of Rs. 4249 lacs was to be written down to the extent of 90% and thereafter the equity would be increased through contribution by BPL, VIL and Toshiba and also by conversion of some portion of the debt of institutions and banks as detailed in the scheme. The fresh equity was to be raised under the schemes as follows:
BPL would take 193.4 lakh shares at par by bringing in Rs. 19.34 crores.
VIL would take 75 lakh shares at par by bringing in Rs. 7.5 crores.
Toshiba would take 37.5 lakh shares at par by bringing in Rs. 3.75 crores.
Of the total outstanding debt of Institutions and Banks, Rs. 500 lakhs would be converted into equity shares at par.
Thus, the total share capital, after all of the above actions have been completed, would be Rs. 3983.90 lakhs.
BPL has further been allowed to convert part of its unsecured loans into equity at the beginning itself so as to make its shareholding in the company 51%.
Later on, a portion of the dues to institution and Banks is proposed to be converted into equity shares. At that stage, a portion of the unsecured loan of BPL would also be converted into equity to enable BPL to contine to hold equity in the company at the same percentage level.
14. With the sanction of the scheme BPL acquired controlling interest in the company and thereafter resolved by a special resolution dated 6.3.1998 under Section 21 of the Companies Act, 1956 to change the name of Uptron Colour Picture Tube Ltd. to BPL Display Devices Ltd. The Registrar of Companies issued under Section 23(1) of the Act certified on 23.3.1998 the name of Uptron Colour Picture Tube Ltd. to be BPL Display Devices Ltd.
15. The change of the name of the company by special resolution under Section 21 of the Companies Act, 1956 with the approval of the Central Government does not affect the entity of the company or its continuity as the same entity. It remains the same entity for all practical purposes with the same rights, privileges and liabilities as before. Any proceedings, which were commenced by the company or against the company in its former name can be continued under its new name, Sovex Oils and Fertilizers v. Bhandari Cross Fields (P) Ltd. (1978) 48 Com Cases 260 and Gur Narain Jagat Narain & Co. v. Motor & General Sales Ltd. 1980 All LJ 508. (All.).
16. Sub-section (3) of Section 23 of the Companies Act, 1956 provides that the change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it; and any legal proceedings which might have been continued or commenced by or against the company by its former name may be continued by or against the company by its new name.
17. The Pnningtion's Company Law, 72 (Fifth end. 1985): p. 75, 7th Edn., 1995 opines: "In civil proceedings the name of the defendant company must be amended when the plaintiff learns of the change of name, but it appears that he may make the amendment as of right, and in cases where leave of the court is necessary, leave will be given as of course. See Mitchell v. Harris Engineering Co. Ltd. (1967) 2 All ER 682 (CA).
18. M/s BPL Display Devices Ltd. is the changed name of M/s Uptron Colour Picture Tube Ltd., which was earlier promoted by U.P. Electric Corporation Ltd., a Government company owned and controlled by the Government of Uttar Pradesh. With the approvall of the special resolution and its regsitration the same entity namely M/s Uptron Colour Picture Tube Ltd. came to be known as M/s BPL Display Devices Ltd. Under the statutory scheme framed by BIFR under Section 19 of the Sick Industrial Companies (Special Provisions) Act, 1985, the rights and liabilities subject to the scheme were taken over by M/s BPL Ltd. Under para 4.6 of the scheme M/s BPL Ltd. took over majority shareholding of UCPTL and agreed to continue the employment of the core group of employees in UCPTL in consultation with the present management of UCPTL. The workmen were party to the proceedings and have not challenged the scheme. They had earlier entered into settlement with the management on 30.10.1995, which was modified on 11.6.2006 to allow all those workmen affected by the lock out to be taken back in phases. The workmen in Schedule B, which were not taken back in the agitation and were loyal to the management were allowed to work immediately on 20.6.1996 before the production could start, and that the other workmen except those, who were under suspension were allowed to report for joining within one month with further extension of 15 days to those, who are medically unfit.
19. M/s BPL Display Devices Ltd. is as such clearly bound by the agreement entered into by the erstwhile management with the workmen and the terms of the sanctioned rehabilitation scheme to which the workmen were party. There is nothing on record to show that the agreement with the workmen and the sanctioned scheme by BIFR was modified at any stage.
20. The Court is not called upon to decide whether the workmen other than the core group employees were entitled to be taken back in employment and were entitled to continue. In these writ petitions the Court is only concerned with the fact whether the employees, whose services were terminated with the lock out are entitled to payment of gratuity from M/s BPL Display Devices Ltd.
21. It is not denied by M/s BPL Display Devices Ltd. that the gratuity is not payable to these workmen under the Payment of Gratuity Act, 1972 as their services were terminated on account of lock out and that they were not taken back as core group employees except in the case of Shri Narendra Pal Gaur in writ Petition No. 22644 of 2007, who was taken back and had rendered resignation on 7.9.1996. The workmen involved in all these cases may not be core group employees, who were entitled to be taken back in employment, they are in any case entitled to gratuity on the last pay drawn for the period for which they had worked with M/s Uptron Colour Picture Tube Ltd. from M/s BPL Display Devices Ltd. The acquistion of shares by M/s BPL Display Devices Ltd. and the controlling inerest in Uptron Colour Picture Tube Ltd. will not be of any consequence as the same company with change name as BPL Display Devices Ltd. is in exdistence and has to take over all the rights and liabilities of Uptron Colour Picture Tube Ltd. subject to the reliefs, concessions and waivers in the sanctioned rehabilitation scheme. The liability of payment of gratuity was not waived and in any case such statutory liabilities could not be waived by the BIFR as it was not subject matter of negotiation or reliefs, concessions and waivers.
22. Having regard to the legal position explained as above, the writ petition Nos. 43422 of 2006, 43430 of 2006 and 21710 of 2007 by the workmen are allowed to the extent that the orders of the Appellate Authority, Payment of Wages Act are set aside and the order of the Controlling Authority, Payment of Wages Act are restored.
23. The writ petition Nos. 21711 of 2007, 21712 of 2007, 21713 of 2007 and 21438 of 2007 are also allowed. The order of the Controlling Authority, Payment of Wages Act, 1972 dated 25.3.2007 are set aside. The applications of M/s BPL Display Devices Ltd. for impleadment are allowed. The Controlling Authority, Payment of Wages Act will implead M/s BPL Display Devices Ltd. as party to the proceedings and allow it to contest the matter and then pass the final orders very expeditiously.
24. The writ petition No. 22644 of 2007 is dismissed. There shall be no order as to costs.