Gujarat High Court
Prasad Mills Kamdar Samiti vs Bhupendra Bhagwatprasad Patel & 2 on 22 September, 2015
Author: Abhilasha Kumari
Bench: Abhilasha Kumari
O/COMA/207/2014 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY APPLICATION NO. 207 of 2014
In COMPANY PETITION NO. 264 of 2008
In COMPANY APPLICATION NO. 427 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE SMT. JUSTICE ABHILASHA KUMARI
===============================================================
1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of India
or any order made thereunder ?
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PRASAD MILLS KAMDAR SAMITI....Applicant(s)
Versus
BHUPENDRA BHAGWATPRASAD PATEL & 2....Respondent(s)
================================================================
Appearance:
MR ANSHIN H DESAI FOR MR SIRAJ R GORI, ADVOCATE for Applicant(s) No. 1
MR SI NANAVATI, SENIOR ADVOCATE AND MR SN SOPARKAR, SENIOR
ADVOCATE WITH MR AS VAKIL, ADVOCATE for Respondent No. 1 - 1.2 , 2
MS AMEE YAJNIK, ADVOCATE for the Respondent(s) No. 3
MR ROSHAN DESAI, OFFICIAL LIQUIDATOR for the Respondent(s) No. 3
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CORAM: HONOURABLE SMT. JUSTICE ABHILASHA
KUMARI
Date : 22/09/2015
CAV JUDGMENT
1. The applicant herein has taken out these Judges Summons, seeking the permission of the Court to be joined as partyrespondent in Company Petition Page 1 of 51 HC-NIC Page 1 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT No.264/2008. The applicant describes itself as "Prakash Mills Kamdar Samiti", through its Convener Shri Shamsuddin Shaikh.
2. In order to appreciate the background in which the Judges Summons have been taken out, it would be necessary to briefly delineate the background of the matter, gathered from the material on record.
3. The Official Liquidator attached to this Court was appointed as the Liquidator of M/s.Prasad Mills Ltd.
(the company in liquidation, hereinafter referred to as "the Company") and the properties and assets of the Company came into his possession. In the year 1988, the movable properties of the Company, namely, the stock of goods, plant and machinery and the superstructure of the building, were put to sale by the Official Liquidator. It is stated that, as per the information available to the applicant, the movable assets were sold and the land admeasuring about 36971.25 sq.mtrs., is still available with the Official Liquidator.
Opponents Nos.1 and 2 have come out with a proposed Scheme of Compromise between the secured creditors, statutory creditors, workmen and equity shareholders.
It is the case of the applicant that during the Page 2 of 51 HC-NIC Page 2 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT proceedings leading up to the proposed Scheme, the said opponents, in collusion with the Textile Labour Association ("TLA", for short), which is the Representative Union under the Gujarat Industrial Relations Act, 1946 ("the GIR Act", for short) got the meeting dispensed with, by filing an affidavit dated 26.07.2008, deposed by one Shri Jagjivan Khimjibhai, giving consent to the Scheme. According to the applicant, the affidavit filed by the TLA was without the consent of the workers and had been filed with the intention of prejudicing their interest. It is alleged that the workers have not been taken into confidence about the Scheme and the authorized person of the TLA had agreed to the Scheme proposed by the said opponents, in order to gain undue advantage from opponents Nos.1 and 2. It is the case of the applicant that the compromise arrived at between the TLA and opponents Nos.1 and 2, is not in the interest of the workers, therefore, the applicant, which is a separate body, had to be formed in order to protect the interest of the workmen. For this reason, the applicant is desirous of being impleaded in the Company Petition.
4. Mr.Anshin H. Desai, learned advocate for the Page 3 of 51 HC-NIC Page 3 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT applicant has made elaborate submissions the gist of which is as follows :
4.1 That the applicant comprises of 521 workers of the Company. The list of members has been annexed at AnnexuresA and I to the affidavit. It is submitted that the present group of workmen is the majority of the total number of 1430 workmen. The impleadment in the Company Petition No.264/2008, which has been filed for sanction of Scheme of Compromise proposed by the present opponents Nos.1 and 2 (petitioners therein) with the creditors, workmen and shareholders of the Company, under the provisions of Section391 of the Companies Act, 1956 ("the Companies Act", for short), becomes necessary as the TLA did not take the workmen into confidence and dispensed with the meeting, supporting the Scheme. That, the effect is that all the secured creditors have been paid, though the substantial dues of the workmen, who have first priority as per Section529A of the Companies Act, and who are to be given overriding preferential payment, are still pending, having been left high and dry.
4.2 That the affidavit in support of the Scheme, deposed by Shri Jagjivan Khimjibhai on 26.07.2008, on Page 4 of 51 HC-NIC Page 4 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT behalf of the TLA does not take into consideration the interest of the workers. The affidavit has been filed against the interest of the workers, in order to derive an undue advantage from opponents Nos.1 and 2, with a malafide motive. It is submitted that it is, therefore, necessary to implead the applicant to protect the interest of the workmen and bring correct facts to light.
4.3 That, the Scheme proposed by opponents Nos.1 and 2 is not for the revival of the Company but to get the benefit of the steep rise in the market price of the land of the Company, which cannot be permitted at the cost of the interest of the workmen. The concerned opponents have never shown any efforts to revive the Company. Clause5.9 of the Scheme contains a condition that if the manufacturing of textiles is not viable by the Sponsor, the company shall diversify into such other business activities that may be found to be suitable, viable, permissible and in accordance with law. As per clause5.14, a condition has been imposed in the Scheme that if it is not sanctioned before 30.03.2009, the Scheme would stand revoked. That the Page 5 of 51 HC-NIC Page 5 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT said date has already elapsed and the Scheme has yet not been sanctioned. In this view of the matter, it would be in the interest of the workmen to raise objections regarding the viability of the Scheme, which they can do only if impleaded.
4.4 That due to the steep rise in the price of the land of the Company, it would be possible to satisfy the claims of all the workers upon its sale. There would be a balance amount available, which could be further distributed towards interest and other dues.
This can only be done if proper representation of the workmen is permitted. For this reason, as well, the applicant is required to be joined as party respondent in the Company Petition.
4.5 That, by an order dated 26.02.2014, the Deputy Registrar under the Trade Union Act, 1926, has cancelled the registration of the TLA. Though the said registration has been partially restored by the Industrial Tribunal vide its order dated 16.06.2014, however, the restoration is conditional and the TLA is prohibited from taking any policy decision without the permission of the Court. Hence, the TLA is not Page 6 of 51 HC-NIC Page 6 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT competent to defend the interest of the workmen as it cannot take a policy decision in their favour. For this reason as well, the impleadment of the applicant becomes necessary.
4.6 That, the opponents cannot object to the impleadment of the applicant, as it is undisputed that more than 95% of the workmen have received only a meagre amount so far. Neither the TLA nor opponents Nos.1 and 2 have locus standi to oppose the impleadment of the applicant. The workmen have no confidence in the TLA, which is not competent to take a decision. Besides, no prejudice would be caused to any party if the applicant is permitted to be impleaded.
4.7 The learned advocate for the applicant has relied upon a judgment of this Court (Coram: Hon'ble Mr.Justice K.M.Thaker) dated 16.06.2012, passed in Company Petition No.135/2005 and connected matters, especially paragraphs 10.9 to 11, wherein this Court has stated as below :
"10.9 Thus, unless it is established in appropriate proceedings before competent forum that the closure was effected after following Page 7 of 51 HC-NIC Page 7 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT prescribed procedure and the services of workers were determined in accordance with law and after completing all formalities, mere assertion without any supporting documents that the company had no workers on its pay roll at the relevant time particularly after 1.1.1992 would not be of any assistance to the company in claiming and in satisfying Court's anxiety that there is no claim from, or liability towards claim of, workmen.
It is one thing to say that there is no litigation pending from the side of workmen and another thing to prove that there are no claim by or liability towards claim of workmen and / or that the workmen do not have any claim against the company.
10.10 In ordinary course of liquidation proceedings the official liquidator would invite, after publishing appropriate advertisement, claims from all workmen and such claims would be verified in light of relevant provisions. However in present case the petitioner has, without placing on record any supporting material, claimed that there are no claims from workmen. On the other hand official liquidator has asserted that claim and dues in the sum of about Rs.2.54 crores are outstanding.
10.11 Duty is cast on the court to be extra cautious as regards claim of workmen and it is Page 8 of 51 HC-NIC Page 8 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT court's duty and obligation to ensure that all precautions and measures are taken to ascertain as to whether there are any unpaid dues or claims payable to the workmen, or not. The Court is the guardian for the workmen and their interests and claim, in the winding up proceedings and / or proceedings connected with winding - up process or arising therefrom.
When the petitioners claim one thing and the official liquidator assets another - particularly opposite and contrary to petitioner's claim, then court would prefer, in absence of any cogent evidence establishing petitioner's claim to accept and rely on liquidator's assertions.
10.12 If there are such claims then it would be permissible to the Court, rather an obligation on the Court, to direct the companyapplicant to make appropriate provision in the scheme and / or to provide appropriate and sufficient measures in the order and to prescribe proper and sufficient safeguards to protect the interest and claims of the workmen and in the event of petitioner's refusal or failure to comply, to decline the sanction and reject the scheme.
11. The company has attempted to claim that the respondent union has no locus to represent the worker since its recognition was cancelled in December 1992. A copy of order said to have been passed by the Registrar is placed on record. A Page 9 of 51 HC-NIC Page 9 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT glance at the said order clarifies that the Registrar has only cancelled the status of the union as the "representative union" under the provisions of B.I.R. Act. The registration of a union as an association / union (under Trade Unions Act, 1926) is a different matter and concept from the conferment of status of "representative union" under provisions of BIR Act. Cancellation of said status does not automatically result into cancellation of union's registration as an association / union under the provisions of Trade Unions Act. Besides this, it is Court's authority, jurisdiction, privilege and discretion to allow relevant and necessary material and details from other source and Court may, if the details are found satisfactory and reliable, take it into consideration."
On the strength of the above submissions, Mr.Anshin H. Desai, learned advocate for the applicant, has fervently urged that the prayer for impleadment be granted.
5. Mr.S.I.Nanavati, learned Senior Counsel with Mr.A.S.Vakil, learned advocate, appearing for respondents Nos.1, 1.1, 1.2 and 2, has strongly opposed the submissions advanced on behalf of the applicant, by submitting that as per Section14 of the Page 10 of 51 HC-NIC Page 10 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT Gujarat Industrial Relations Act, 1946 ("the GIR Act", for short), there can only be one Representative Union. The procedure for declaring the union as a Representative Union has been laid down in Sections13 and 14 of the said Act. There is a difference between a recognized union under the Industrial Disputes Act, 1947, and a Representative Union under the GIR Act. The intent and object of enacting the GIR Act is that, instead of individual bargaining, there should be collective bargaining; therefore, only the Representative Union is authorized to represent the workmen and no other recognized union or individual can do so. In the present case, as the TLA is the Representative Union, all the workmen, including those forming the applicant Committee, are represented by the TLA which has already given its consent to the Scheme. As the TLA is the only Representative Union, the applicant cannot claim to be the representative of the workmen. In fact, the applicant has no locus standi to file the application.
5.1 It is further submitted by the learned Senior Counsel that, it is not clear who, or what, the Page 11 of 51 HC-NIC Page 11 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT applicant is and when it was formed or incorporated. Neither is it clear under which law the applicant has been formed. Under the GIR Act, which is applicable in the present case, the law does not permit any other body except the Representative Union to represent the workmen.
5.2 It is pointed out that in the causetitle of the application, the applicant is described as "Prasad Mills Kamdar Samiti, through its Convener Shri Shamsuddin Shaikh". However, in the causetitle of the affidavit in support of the Judges Summons, at running Page4, Shri Shamsuddin Shaikh is described as its Secretary. Again, in the affidavit in support of the Judges Summons, Shri Shamsuddin Shaikh is described as its Convener. In the additional affidavit in support of the Judges Summons, affirmed on 09.03.2015, the deponent is Shamsuddin Shaikh, who describes himself as a member of the new representative Committee of the applicant. In the third affidavit, affirmed on 20.07.2015, Shri Shamsuddin Shaikh appears to have deposed in his individual capacity.
5.3 It is submitted that there is no consistent Page 12 of 51 HC-NIC Page 12 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT description of the proper designation of Shri Shamsuddin Shaikh, who sometimes describes himself as a Convener of the Committee, sometimes as the Secretary of the Committee, sometimes as a member of the new representative committee and sometimes deposes an affidavit in his individual capacity. It is contended that no Vakalatnama has been filed on behalf of 521 persons, who are supposed to be the members of the applicant Committee. Only Shri Shamsuddin Shaikh has signed the Vakalatnama in his individual capacity. It is submitted that it is very clear that the applicant is not a registered or recognized body and the person who has filed the Judges Summons and affidavits on its behalf does not have any consistent designation. The applicant, therefore, has no locus standi to approach this Court and pray for impleadment, especially when the Representative Union is already present.
5.4 Learned Senior Counsel would further submit that by the order dated 26.02.2014, the Deputy Registrar under the Trade Unions Act, 1926, has cancelled the registration of the TLA. However, this order has been Page 13 of 51 HC-NIC Page 13 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT stayed by the Industrial Tribunal, vide its order dated 16.06.2014. Though a condition has been imposed that the TLA shall not take any policy decision without the permission of the Court, however, the policy decision regarding the sanction of the proposed Scheme has already been taken by the TLA, as far back as on 26.07.2008, through its thethen officebearer, Shri Jagjivan Khimjibhai, since deceased. It is contended that the orders of the Deputy Registrar and the Industrial Tribunal cannot operate retrospectively or have any effect on an action already taken. In any event, the TLA, is still functioning, as the cancellation of its registration has been stayed. It cannot, therefore, be claimed by the applicant that it is the only body that can represent the workmen. 5.5 In support of the submissions that only the Representative Union can represent the workmen and take a binding decision on their behalf, the learned Senior Counsel has relied heavily upon the judgment of the Supreme Court in the case of Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills and others, reported in AIR 2009 SC 825.
Page 14 of 51 HC-NIC Page 14 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT 5.6 The relevant extracts of the said judgment are reproduced below :
"29. Again, who has approached this Court? Neither a secured nor an unsecured creditor. Nor a representative of a labour union. Nor even a person acting pro bono publico . As already adverted to earlier, PIL Writ Petition at the instance of the appellant was dismissed by the High Court and the said decision was never challenged by him. Here is an employee who is also one of the workers, who has been paid his dues. He accepted the amount of Rs.62,555/and issued 'No Objection Certificate' (No Dues Certificate) no doubt by putting an endorsement "Accepted under Protest". He has urged that the workmen have not been paid their dues and injustice had been done to them. To us, even there, the appellant is not right. A Representative Union has taken a decision which is binding on all employees. That aspect, however, we will deal with at a later stage.
30. ***** STATUS AND POSITION OF REPRESENTATIVE UNION
31. The learned counsel for the appellant contended that respondent No. 8 could not have agreed to accept a meagre amount of Rs. 22 crores when the outstanding dues were more than Rs. 130 crores. It was also stated that majority of workers are with the appellant and they are Page 15 of 51 HC-NIC Page 15 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT opposed to the settlement. Thousands of workers have so stated in writing and informed the appellant that the grievance raised by the appellant is wellfounded and they are entitled to much more amount than what had been paid under the settlement.
32. Even this contention has no force. The learned counsel for the Union, in our opinion, is right in submitting that under the Bombay Industrial Relations Act, 1946, it is the 'Representative Union' which has all powers to enter into a settlement on behalf of workers in the industry and it is only that Union which can take a decision under 1946 Act. The said decision would bind not only the members of the Union, but also to those workers who are not members of such Union.
33. The learned counsel, in this connection, invited our attention to various provisions of 1946 Act. As the Preamble of the Act declares, the Act has been enacted "to regulate the relations of employers and employees, to make provision for settlement of industrial disputes and to provide for certain other purposes". The Act contains elaborate provisions for registration of Unions and their powers.
34. Section 2 defines various terms. Chapter II deals with Authorities constituted or appointed Page 16 of 51 HC-NIC Page 16 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT under the Act. Chapter III provides for registration of Unions. Chapter IV relates to Approved Unions. Chapter V titles "Representatives of Employers and Employees, and appearance on their behalf.
35. Section 27 enables the State Government to recognize any combination of employers as Association of Employers in an industry in any local area and to represent an employer in any proceeding under the Act. Section 27A correspondingly provides for appearance on behalf of employees. It is, however, in negative terms and enacts that save as provided in certain cases (Sections 32 and 33), "no employee shall be allowed to appear or act in any proceeding under this Act except through the representative of employees". The section thus puts an embargo on appearance of any employee except through the representative of employees.
36. Section 14 empowers Registrar to register a 'Representative Union' for any 'Industry' in any 'Local Area'. *****
37. It is thus clear that Representative Union is having priority and 'preference' over other Unions to appear on behalf of employees of such industry in the area. *****
38. The aforesaid provisions came up for consideration before this Court in Girja Shankar Page 17 of 51 HC-NIC Page 17 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT Kashi Ram v. Gujarat Spinning and Weaving Co. Ltd., (1962) Supp 2 SCR 890. In that case, 'G' closed its business and sold its assets to 'T'. The old company discharged all its workmen when it closed the business. The new company re started the business and employed all the workmen of the old company. At the time of closure of 'G', a dispute was pending between the company and its workmen with respect to bonus. A 'Representative Union' of the Textile Workers in the city of Ahmedabad filed an application before the Labour Appellate Tribunal wherein the dispute was pending and the matter was subjudice. The matter was compromised and 'G' consented to pay agreed bonus. The Representative Union accepted the amount and gave an undertaking not to claim compensation in future. Later on, however, about 400 employees issued a notice and claimed compensation for closure. The Representative Union appeared before the Labour Court and contended that the application was liable to be dismissed in view of the compromise arrived at between the Mill Company and Representative Union. The Labour Court upheld the objection and dismissed the application. The order was confirmed by Industrial Court in appeal as well as by the High Court in a petition under Article
227. The employees approached this Court.
39. This Court considered the relevant provisions of the 1946 Act, the object underlying conferment Page 18 of 51 HC-NIC Page 18 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT of power on Representative Union and the action taken by it and held that when a Representative Union appears in any proceeding under the Act, none else can be allowed to appear not even the employee at whose instance proceedings might have been started under Section 42(4) of the Act. The Court held that if the Representative Union appears, the decision taken by that Union would be final and binding.
40. Explaining the scheme of the Act, the Court stated :
"It will be seen that S. 27A provides that no employee shall be allowed to appear or act in any proceeding under the Act, except through the representative of employees, the only exception to this being the provisions of Sections 32 and
33. Therefore, this section completely bans the appearance of an employee or of any one on his behalf in any proceeding after it has once commenced except through the representative of employees. The only exceptions to this complete ban are to be found in Sections 32 and 33; to which we shall presently refer. But it is clear that bona fides or mala fides of the representative of employees can have nothing to do with the ban placed by Section 27A on the appearance of any one else except the representative of employees as defined in Section 30 and that if anyone else can appear in any proceeding we must find a provisions in that Page 19 of 51 HC-NIC Page 19 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT behalf in either Section 32 or Section 33 which are the only exception to Section 27A. It may be noticed that there is no exception in Section 27A in favour of the employee, who might have made an application under Section 42(4), to appear on his own behalf and the ban which is placed by Section 27A will apply equally to such an employee. In order however to soften the rigour of the provisions of Section 27A, for it may well be that the representative of employees may not choose to appear in many proceedings started by an employee under S. 42(4), exceptions are provided in Ss. 32 and 33. The scheme of these three provisions clearly is that if the Representative Union appears, no one else can appear and carry on a proceeding, even if it be begun on an application under S. 42 (4) but where the Representative Union does not choose to appear there are provisions in Ss. 32 and 33 which permit others to appear in proceedings under the Act. *****
41. The Court also held that bona fides or mala fides of the representative Union has nothing to do with the complete ban imposed by the Act on the appearance of any one else except the representative of employees under Section 30 of the Act.
42. It was argued that if such interpretation is accepted, there would be tyranny of the Page 20 of 51 HC-NIC Page 20 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT Representative Union. This Court, however, negatived even that argument and observed that the socalled tyranny or motive of Representative Union cannot change the legal position and it has no relevance if the intention of the Legislature is clear and unambiguous.
43. *****
44. Again, in Textile Labour Association, Bhadra, Ahmedabad v. Ahmedabad Mill Owners Association, Ahmedabad, (1970) 3 SCC 890, this Court held that once Representative Union of Textile Industry in the local area of Ahmedabad entered into a compromise, such compromise would bind all the employees and those employees who are not members of the Representative Union cannot contend that they are against such compromise and are not bound by it.
45. In Santuram Khudai v. Kimatrai Printers and Processors Pvt. Ltd. and Ors., (1978) 1 SCC 162, a similar question arose. The Court reiterated the law laid down in Girja Shankar and held that once the Representative nion appears on behalf of the employees in a proceeding before a Labour Court under 1946 Act, individual workman has no locus standi. According to the Court, combined reading of Sections 27A, 30, 32, 33 and 80 of the Act make it clear that consistent with the avowed policy and prevention of exploitation of workmen Page 21 of 51 HC-NIC Page 21 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT and augmentation of their bargaining power, the Legislature has clothed the Representative Union with plenary power to appear or act on behalf of employees in any proceeding under the Act. Keeping in view the said object, it has deprived individual employees or workmen of the right to appear or act in any proceeding under the Act where the Representative Union enters appearance or acts as representative of the employees.
46. Following Girja Shankar, the Court observed that mala fides or bona fides of the Representative Union has no relevance in construing the relevant provisions of the Act. In case the employees find that the Representative Union is acting in a manner which is prejudicial to their interests, their remedy lies in invoking the aid of the Registrar under Chapter III of the Act requesting him to cancel the registration of the union."
(emphasis supplied) 5.7 The learned Senior Counsel has submitted that the Supreme Court has held in the above judgment that the malafide or bonafide of the representative union have no relevance in construing the relevant provisions of the Act. In the present case, the applicant has alleged malafides against the TLA and the deceased member/officebearer who has filed the affidavit Page 22 of 51 HC-NIC Page 22 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT consenting to the Scheme on 26.07.2008. The allegations of malafides by the deceased Jagjivan Khimjibhai, who expired in November, 2013, have not been made good by the applicant. The said allegations, therefore, cannot stand in face of the clear dictum of the Supreme Court.
5.8 In addition thereto, the learned Senior Counsel has relied upon the judgment dated 27.02.2013, passed by a Division Bench of this Court (Coram: Hon'ble Mr. Justice Ravi R. Tripathi and Hon'ble Mr.Justice R.D.Kothari) in Civil Application No.11829/2010 in Letters Patent Appeal No.110/2009 and connected matters, wherein it is held as below :
"4. Be that as it may, the question which falls for consideration of this Court is whether under Bombay Industrial Relations Act, any employee, an individual workman or group of workmen or for that reason any other Union, is having any locus standi to prosecute the proceedings.
5. Learned Senior Advocate Mr.S.I.Nanavati appearing for the respondent mill company invited attention of the Court to a decision of the Honble the Apex Court in the matter of Santuram Khudai Vs. Kimatrai Printers and Processors Pvt. Ltd. & Ors., reported in (1978) 1 SCC 162.Page 23 of 51
HC-NIC Page 23 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT Learned Senior Advocate for the mill company invited attention of the Court to para12 of the said decision. The same is reproduced for ready perusal: Now a combined reading of sections 80, 27A, 30, 32 and 33 of the Act leaves no room for doubt that consistent with its avowed policy of preventing the exploitation of the workers and augmenting their bargaining power, the Legislature has clothed the representative union with plenary power to appear or act on behalf of the employees in any proceedings under the Act,and has deprived the individual employees or workmen of the right to appear or act in any proceeding under the Act where the representative union enters appearance or acts as representative of employees. We are fortified in this view by a decision of this Court in Girja Shankar Kashi Ram v. The Gujarat Spinning & Weaving Co. Ltd.(1) where Wanchoo, J. (as he then was) speaking for the Court observed as follows:
"It will be seen that s. 27A provides that no employee shall be allowed to appear or act in any proceeding under the Act, except through the representative of employees, the only exception to this being the provisions Page 24 of 51 HC-NIC Page 24 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT of ss. 32 and 33. Therefore, this section completely bans the appearance of an employee or of any one on his behalf in any proceeding after it has once commenced except through the representative of employees. The only exceptions to this complete ban are to be found in sections 32 and 33.
(emphasis supplied) 5.1 The aforesaid decision lays down in no uncertain terms that the present applicants will have no right whatsoever to prosecute the proceedings in which they want to get themselves impleaded as party. Learned Senior Advocate for the mill company submitted that the law has remained the same till date and there is no change in the said position of law.
5.2 ***** 5.3 ***** 5.4 ***** 5.5 Learned Senior Advocate for the mill company submitted that this observation is required to be appreciated in light of the observations made by the Honble the Apex Court in the matter of Santuram Khudai (supra) in para17, where the Honble the Apex Court in no uncertain terms has observed that: It has to be remembered that malafides or bonafides of a representative union has no Page 25 of 51 HC-NIC Page 25 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT relevance while considering the provisions of section 27A and sections 32 and 33 of the Act which taken together impose an absolute ban on the appearance of any individual employee in any proceeding under the Act where the representative union chooses to appear act as representative of the employees 5.6 Learned Senior Advocate for the mill company submitted that only to satisfy the conscience of the Court, more particularly when the Court is examining the matter under its discretionary powers must be satisfied on the point that there is no injustice meted out to the workers who have come to this Court, it will be appropriate to put it on record that the mill company had more than 2500 workers, of which almost 2500 workers have taken benefit under the settlement arrived at between the Representative Union and the mill company. Earlier, the present applicants were in a group of about 800 workers, but later on, many of them having found that the settlement is in the interest of the workers, have taken the benefits following the terms and conditions of settlement and as on date, only 150 workers are left who have not agreed to take the benefit under the settlement.
5.7. ***** Page 26 of 51 HC-NIC Page 26 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT 5.8 *****
6. The Court has no hesitation in holding that the issue is well covered by the aforesaid decisions of the Honble the Apex Court and the present applicants have no locus standi and therefore, the present application seeking leave to appeal cannot be allowed. The same is accordingly rejected. Rule is discharged. No costs."
5.9 The learned Senior Counsel has further placed reliance upon an order dated 30.09.2014, passed by this Court (Coram:Hon'ble Mr.Justice Paresh Upadhyay), in Special Civil Application No.11550/2014 .
5.10 It is submitted by the learned Senior Counsel that the TLA gave its consent to the Scheme on 26.07.2008, by filing an affidavit. The present application has been taken out on 30.07.2014. In the affidavit in support of the Judges Summons, there is no mention of the delay or the reasons why such delay is required to be condoned. No explanation, whatsoever, emerges to explain the delay. The Scheme was advertised as per Section391 of the Companies Act on 14.10.2008. Nobody has come forward to object. The applicant has not uttered even a single word, though Page 27 of 51 HC-NIC Page 27 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT it is deemed to have full knowledge. The prayer of the applicant to join it as partyrespondent does not deserve to be granted, as it is not the Representative Union and cannot take the place of the TLA, which is capable of protecting the interest of the workmen. To grant the prayer of the applicant would be in violation of the provisions of the GIR Act. That, the Company Court, acting under Section391 of the Companies Act would not require the assistance of the applicant, as it has the power to sanction the Scheme, with or without, modifications. The implementation of the Scheme can be modified by the Company Court, if it considers it proper. In this view of the matter, the prayer of the applicant for joining is not justified. 5.11 It is further contended that it is not factually correct that the registration of the TLA as a Representative Union stands cancelled, in view of the stay order granted by the Industrial Tribunal. However, even if that had been the position, the applicant would have had no right to represent the workmen, in the absence of it being a Representative Union. When the TLA sanctioned the Scheme in the year 2008, its recognition as a Representative Union was Page 28 of 51 HC-NIC Page 28 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT intact. Such recognition is valid and cannot be assumed to be cancelled with retrospective effect. Even otherwise, Section18 of the GIR Act, which operates as a saving section, would not relieve the Representative Union of any liability incurred by it before the cancellation of its registration. From all angles, therefore, the prayer of the applicant for joining is misconceived.
5.12 Referring to Section529A of the Companies Act, it is submitted that this section comes into play when the Company Court is considering the consequences of winding up and distribution of the sale proceeds. In the present case, the Company Petition is for the revival of the Scheme, therefore, this section has no relevance.
5.13 That, though it is true that the secured creditors have been fully paid up, however, such payment has not been made from the Company's assets. They have been paid by the Sponsor, that is, opponent No.2 herein. The reliance of the applicant on the provisions of Section529A of the Companies Act is, therefore, misplaced.
Page 29 of 51 HC-NIC Page 29 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT 5.14 Learned Senior Counsel would further submit that the Sponsors are in oral understanding and discussion with the TLA to pay more dues to the workmen, owing to the depreciation of the value of the rupee. However, any final figure cannot be stated as of now, as it is not clear when the Scheme would be sanctioned. 5.15 Distinguishing the judgment dated 16.06.2012, passed in Company Petition No.135/2005 and connected matters, relied upon by the learned advocate for the applicant, it is submitted by the learned Senior Counsel that, in that case the question before the Court was if the registration is cancelled under the GIR Act, whether the representative union would lose its status or still continue as a recognized union. Paragraph11 of the judgment does not assist the contention raised by the applicant. The case before the Court was factually different from the present application. In the present case, as there is a Representative Union, only that union would be entitled to plead the case of the workmen and none else, not even a recognized union, which status the applicant does not have.
Page 30 of 51 HC-NIC Page 30 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT
6. Mr.S.N.Soparkar, learned Senior Advocate with Mr.A.S.Vakil, learned advocate for respondents Nos.1, 1.1, 1.2 and 2 has made additional submissions by referring to Rule34 of the Companies (Court) Rules, 1959 ("the Rules", for short), which provides for notice to be given by a person intending to appear at the hearing of the petition and prescribes a time limit for opposing the petition. It is submitted that the applicant has not filed any objections within the stipulated period of time, therefore, it cannot appear, except with the leave of the Court. In any case, there is no respondent to a petition of this nature. As per procedure, the objections are to be filed within the stipulated period of time and the objector to be heard. The prayer for impleadment is, therefore, misconceived. At the best, the only relief that can be sought as per Rule34 is for leave. However, for this relief as well, a reasonable cause has to be shown, with cogent reasons. In the present case, the applicant has failed to show any reasonable cause and no plausible reasons have been given in the application for approaching the Court so belatedly with a prayer for impleadment. Merely by stating that Page 31 of 51 HC-NIC Page 31 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT the applicant has no trust in the TLA cannot be considered to be a good reason for impleadment. In the absence of any reasonable cause or cogent reasons, the application of the applicant deserves to be rejected.
7. Mr.Roshan Desai, learned counsel for the Official Liquidator, has submitted that whether to join a partyrespondent to the petition, or not, is the prerogative of the Court. It is submitted that while winding up the Company, the TLA, which is the Representative Union, has submitted the claims of all the workers, including those of the applicant. The said claims were got verified by the Official Liquidator through a Chartered Accountant. Certain plants and machinery were sold. As per the ratio worked out by the Chartered Accountant, the workmen were paid. Thereafter, no amount has been paid to anybody, including the secured creditors. The Sponsor has paid the secured creditors from its own pocket and it cannot be said that the Official Liquidator has made any such payment.
8. In rejoinder, Mr.Anshin H. Desai, learned advocate for the applicant has attempted to Page 32 of 51 HC-NIC Page 32 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT distinguish the judgment of the Supreme Court in Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills and others (Supra.), by submitting that the said judgment was rendered on the facts of that case. He submits that in the case before the Supreme Court, everything was over when the Court was moved as the Scheme had been sanctioned, whereas the present is a case where there is no question of delay, as the Consortium which is objecting to the impleadment of the applicant has no locus standi. The Scheme is not yet sanctioned. In any case, the Scheme has outlived his life. The TLA has joined hands with the Sponsor of the Scheme, therefore, in the interest of the workmen, it would be necessary to join the applicant.
9. Learned advocate for the applicant has reiterated the submissions advanced earlier and has relied upon certain additional judgments, as below :
9.1 Forbes & Company Ltd. Vs. Official Liquidator of Bombay High Court, reported in (2013) 38 taxmann.com 299 (Bombay), wherein the High Court of Bombay had held as below :
"22. The judgment of the Supreme Court in Meghal Page 33 of 51 HC-NIC Page 33 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT Homes (supra) is sought to be distinguished by learned Senior Counsel appearing on behalf of the Appellant on the ground that in that case, there was a private arrangement between the promoters and developer under which the assets of the company in liquidation were sought to be sold to the developer whereas in the present case, there would be no transfer of the assets of the company and the assets would be used to carry on real estate business. We are unable to subscribe to the submission. In the present case, what has happened is that after the order of winding up was passed, there has been a transfer of the shares of the erstwhile company in liquidation as well as an assignment of debts in favour of the Second Applicant. But quite part from this, it is impermissible for this court to distinguish the judgment of the Supreme Court when as a matter of fact the principle which has been laid by the Supreme Court would apply to this case. First and foremost, the judgment of the Supreme Court clearly holds that the earlier decision of a Division Bench of this Court dated 4 April 1985 which had placed a considerable degree of importance on the reopening and the revival of the textile mill reflected the correct position of law. Secondly, the subsequent judgment of the Division Bench of this Court which had sought to distinguish the revival of the business activity from the revival of the corporate existence has been disapproved by the Supreme Court. Thirdly, Page 34 of 51 HC-NIC Page 34 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT as the observations of the Supreme Court would make it clear, it is the bounden duty of the company court while exercising its discretion under Section 466 to determine as to whether the exercise of discretion has been invoked bonafide and to ensure that what is put forward is not a ruse to dispose of the assets of the company in liquidation. It is with that perspective that the Court must have due regard to matters of public interest, commercial morality and to whether there exists a bonafide intention to revive the business of the company.
23. Applying the test which has been enunciated by the Supreme Court in Meghal Homes (supra), we are of the view that the exercise of the discretion by the learned Single Judge was correct and proper. The object and purpose of the Company application is not to revive the business of the Company. The whole purpose is to dispose of the assets by embarking upon real estate construction and development. The company application before the learned Single Judge has proceeded on the basis that what the Appellants would do is to diversify the business of the company into real estate by amending the objects clause of the Memorandum of Association of the company. Admittedly, the company had not carried on any real estate business in the past. Though a faint attempt was made during the course of the hearing, relying upon Clauses 4, 12, 16 and 26 of Page 35 of 51 HC-NIC Page 35 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT the Memorandum of Association to show that the objects clause permitted carrying on of real estate business, it is evident from the averments in the company application that the Appellants themselves proceeded on the basis that an amendment of the objects would be required in order to enable the company to enter upon real estate construction. Whether such an amendment would or would not be granted is something which may depend upon the decision of the competent authority in future but it is evident that presently, the carrying on of real estate construction would be ultravires the objects of the company. Besides, under Section 17 of the Companies Act, 1956, an amendment of the objects requires a special resolution which in view of the provision of Section 189 requires 3/4th majority of members present and voting. No circumstances have been placed before the Court to indicate as to whether the Appellants have the support of the requisite majority for a special resolution under Section 189.
24. *****
25. *****
26. *****
27. *****
28. Before we conclude, we may note that RMSS a registered union of the objecting workers has sought to allege that RMMS as a representative union is alone entitled to represent the textile mill workers. We make it clear that for the Page 36 of 51 HC-NIC Page 36 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT purposes of these proceedings, the legality and the validity of the MOU which was entered into by RMSS with the Appellants has not been been an issue which falls for consideration. Insofar as the locus of the workmen represented by Mr.Singhvi is concerned, we have no doubt in coming to the conclusion that they have a substantial standing in these proceedings. When the court has to consider whether a permanent stay should be granted in regard to the order of winding up, every creditor, and workmen in this case being preferential creditors, is entitled to be heard."
9.2 Another judgment relied upon by the learned advocate for the applicant is that of the Supreme Court in Textile Labour Association and another Vs. Official Liquidator and another, reported in (2004) 9 SCC 741, wherein the Supreme Court has held as below:
"8. The effect of Sections 529 and 529A is that the workmen of the company become secured creditors by operation of law to the extent of the workmen's dues provided there exists secured creditor by contract. If there is no secured creditor then the workmen of the company become unsecured preferential creditors under Section 529A to the extent of the workmen dues. The purpose of Section 529A is to ensure that the workmen should not be deprived of their Page 37 of 51 HC-NIC Page 37 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT legitimate claims in the event of the liquidation of the company and the assets of the company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors. There is no other statutory provision overriding the claim of the secured creditors except Section 529A. This Section overrides preferential claims under Section 530 also. Under Section 529A the dues of the workers and debts due to the secured creditors are to be treated pari passu and have to be treated as prior to all other dues."
9.3 The learned advocate for the applicant has further relied upon the judgment of the Supreme Court in Jitendra Nath Singh Vs. Official Liquidator and others, reported in (2013) 1 SCC 462, wherein the Supreme Court has held as below :
"The first limb of the proviso to Section 529(1) of the Companies Act creates a statutory charge over the security of every secured creditor to the extent of the workmen's portion. In other words, every property of asset of an insolvent company, which is being wound up and which has been offered as a security to a secured creditor is subject statutorily to a pari passu charge in favour of the workmen to the extent of the workmen's portion by virtue of the proviso to Section 529(1) of the Companies Act. Therefore, the first limb of Page 38 of 51 HC-NIC Page 38 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT the proviso to Section 529(1) does not create any pari passu charge in favour of secured creditor over property or asset of the company which has not been given as security by the company to the secured creditor. Rather, the language of the first limb of this proviso makes it crystal clear that the security of every secured creditor created dehors the proviso to Section 529(1) of the Companies Act is statutorily subjected to a pari passu charge in favour of the workmen by the first limb of the proviso to Section 529(1) of the Companies Act.
(Para 12)"
9.4 Yet another judgment relied upon by the learned advocate for the applicant is Bank of New York Mellon Vs. JCT Ltd., reported in (2015) 190 Comp Cas 396 (P & H).
9.5 On the basis of the above judgments, it is reiterated by Mr.Anshin H. Desai that if the applicant is not impleaded there would be nobody to point out the correct facts to the Court during the hearing of the Company Petition; therefore, being a proper and necessary party comprising of the majority of workmen, the application may be allowed.
10. This Court has heard learned counsel for the Page 39 of 51 HC-NIC Page 39 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT respective parties at length and thoughtfully considered the submissions advanced at the Bar as well as the judicial pronouncements relied upon by the learned counsel for the respective parties.
11. The applicant claims to be a Committee comprising of 521 workmen of the Company. What exactly is the official status of the applicant Committee, does not clearly emerge from either the causetitle of the application, the affidavit filed in support of the Judges Summons and the two additional affidavits, affirmed on 09.03.2015 and 20.07.2015. In none of these affidavits, has it been disclosed whether the applicant is an unofficial body of workmen or is a registered body of any kind. It is not disputed that the Company was governed by the GIR Act. In Section13 of the GIR Act, a procedure is laid down for the registration of a union which has a membership of not less than 25% of the total number of employees employed in any industry in any local area or as a Representative Union for such industry in such local area. Section14 is regarding the registration of the Representative Union after following the procedure Page 40 of 51 HC-NIC Page 40 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT envisaged therein. It is not disputed by the applicant that the TLA is the Representative Union under Section14 of the GIR Act. What is being canvassed by the applicant is that the registration of the TLA has been cancelled by an order dated 26.02.2014, passed by the Deputy Registrar under the Trade Unions Act, 1926. Though the order of cancellation has been stayed by the Industrial Tribunal vide its order dated 16.06.2014, it is the case of the applicant that the said stay order imposes certain conditions, such as, the TLA cannot take a policy decision without the permission of the Court. This is one of the grounds on which the applicant states that it ought to be joined as partyrespondent to the Company Petition.
12. Another ground taken by the applicant is the loss of faith and confidence in the TLA which, according to it, has not taken the majority of the workmen into confidence and has, in collusion with the Sponsor of the Scheme, given its sanction to the Scheme vide an affidavit dated 26.07.2008, deposed by Shri Jagjivan Khimjibhai, one of the officebearers of the TLA. According to the applicant, while doing so, the Representative Union has not taken the interest of the Page 41 of 51 HC-NIC Page 41 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT workmen into consideration. It is further alleged that the TLA is committing violation of its byelaws and indulging in illegal activities, therefore, the majority of the workmen, who are the members of the applicant Committee, have lost faith in it.
13. It has been submitted on behalf of the applicant that it is the only body of majority workmen which can effectively assist the Court by bringing out correct facts and pointing out the proper position, so as to protect the interest of the workmen, which is supreme and paramount. It is alleged that the workmen have been paid only a meagre amount, though the secured creditors have been fully paid. The main ground raised for impleadment is that the presence of the applicant is necessary to ensure that the interest of the workmen does not suffer.
14. The learned advocate for the applicant has placed reliance upon a judgment of the High Court of Bombay in Forbes & Company Ltd. Vs. Official Liquidator of Bombay High Court (Supra.), which is a judgment regarding the winding up of a company. In the view of Page 42 of 51 HC-NIC Page 42 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT this Court, this judgment would not be relevant in the factual and legal scenario of the present application.
15. Another judgment relied upon by the learned advocate for the applicant is that of the Supreme Court in Textile Labour Association and another Vs. Official Liquidator and another (Supra.). This judgment is regarding Sections529A and 529 of the Companies Act. The above provisions of law would come into play only at the time of the distribution of the assets of the company, which is not the case in the present application. This judgment, therefore, would not assist the applicant.
16. The judgment in Jitendra Nath Singh Vs. Official Liquidator and others (Supra.), is also regarding Sections529A and 529 of the Companies Act. In the view of this Court, it would not be applicable to the present case which is an application for impleadment as a partyrespondent.
17. The judgment of the High Court of Punjab and Haryana relied upon by the learned advocate for the applicant, namely, Bank of New York Mellon Vs. JCT Ltd. (Supra.), is also regarding the winding up of a Page 43 of 51 HC-NIC Page 43 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT company. For the same reasons as above, it would not be helpful to the applicant.
18. The law regarding the binding nature of a decision taken by the Representative Union has now been settled by the Supreme Court in Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills and others (Supra.). The Apex Court has laid down certain principles that squarely cover the issue in hand. The relevant paragraphs of the said judgment have already been reproduced hereinabove. This judgment has been rendered after taking into consideration various other judgments of the Supreme Court. The law with regard to a Representative Union is now settled and has been clearly stated by the Supreme Court, as below :
"32. Even this contention has no force. The learned counsel for the Union, in our opinion, is right in submitting that under the Bombay Industrial Relations Act, 1946, it is the 'Representative Union' which has all powers to enter into a settlement on behalf of workers in the industry and it is only that Union which can take a decision under 1946 Act. The said Page 44 of 51 HC-NIC Page 44 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT decision would bind not only the members of the Union, but also to those workers who are not members of such Union.
33. *****
34. *****
35. *****
36. *****
37. *****
38. *****
39. This Court considered the relevant provisions of the 1946 Act, the object underlying conferment of power on Representative Union and the action taken by it and held that when a Representative Union appears in any proceeding under the Act, none else can be allowed to appear not even the employee at whose instance proceedings might have been started under Section 42(4) of the Act. The Court held that if the Representative Union appears, the decision taken by that Union would be final and binding." (emphasis supplied)
19. Admittedly, the TLA is the Representative Union which has already taken a decision to accord its consent to the Scheme. When there is a Representative Union, duly recognized as such under the GIR Act, in the view of this Court, the applicant, which is purported to be a Committee formed by 521 workmen, would not have locus standi to appear in the matter. Page 45 of 51 HC-NIC Page 45 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT The decision to sanction the Scheme has already been taken by the representative union by filing an affidavit dated 26.07.2008.
20. The submission that the registration of the TLA, the Representative Union was cancelled vide order dated 26.02.2014, passed by the Deputy Registrar under the Trade Unions Act, therefore, the applicant should be impleaded, is without merit. It is clear from the documents on record, and not disputed by the learned counsel for the applicant, that the order of cancellation has been stayed by the Industrial Tribunal, though with certain conditions. One of the conditions is that the TLA will not take any policy decision without the permission of the Court. However, the policy decision to accord sanction to the Scheme has already been taken on 26.07.2008. The order of cancellation of the registration has been passed on 26.02.2014 and conditionally stayed by the Industrial Tribunal on 16.06.2014. The said cancellation and conditional restoration cannot relate back or be acted upon retrospectively. The above orders would not adversely affect a decision that has already been Page 46 of 51 HC-NIC Page 46 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT taken years ago. Moreover, it is not disputed that the TLA still retains the status of the Representative Union.
21. As, for all intents and purposes, the TLA is the Representative Union, in view of the principles of law enunciated by the Supreme Court in Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills and others (Supra.), this Court is unable to accept the submissions advanced on behalf of the applicant that its impleadment is necessary to represent the case of the workmen and protect their interest.
22. A contention has been raised that the majority of the workmen comprising the applicant Committee do not have faith in the TLA. Allegations of malafide have also been made regarding the act of sanction by the TLA, to the Scheme. In this regard, the Supreme Court has held, in Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills and others (Supra.), as below :
42. The Court also held that bona fides or mala fides of the representative Union has nothing to do with the complete ban imposed by the Act on Page 47 of 51 HC-NIC Page 47 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT the appearance of any one else except the representative of employees under Section 30 of the Act." (emphasis supplied)
23. In view of the above settled position of law enunciated by the Supreme Court, which squarely covers the legal issues arising in the present application, it follows that the applicant has no right to appear or act in the proceedings under the GIR Act, where the Representative Union has entered appearance and has acted as a representative of the employees.
24. The allegations of malafide and loss of confidence in the Representative Union, therefore, have no relevance in view of the dictum of the Supreme Court.
25. A submission has been advanced on behalf of the applicant that this Court may consider the present application as one for leave to appear at the hearing of the petition, under Rule34 of the Rules. The applicant had notice of the petition which, admittedly, was advertised. It, however, did not file any objections within the stipulated period of time. It has now appeared belatedly by the present Page 48 of 51 HC-NIC Page 48 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT application for joining. This Court is unable to accede to the submission regarding leave to appear, in view of the total lack of reasons why objections were not filed at the relevant point of time. Further, in view of the settled position of law, as the applicant is not the Representative Union or even a recognized one, but appears to be a loose body of workmen without any legal status, it is not possible to grant the prayer for impleadment.
26. The interest of the workmen can be protected by the Representative Union at the relevant point of time. For this purpose, the presence of the applicant is not necessary.
27. Mr.S.I.Nanavati, learned Senior Advocate has clarified that the secured creditors have been paid by the Sponsor of the Scheme and not through the funds of the Company. This aspect further reduces the relevance of the submissions made on behalf of the applicant.
28. For the aforestated reasons, this Court is of the considered view that the applicant, not being the Representative Union, has no locus standi to pray for impleadment as a partyrespondent in the Company Page 49 of 51 HC-NIC Page 49 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT Petition, especially as the Representative Union is already there.
29. The application, being devoid of merit, deserves to be rejected.
30. It is, accordingly, rejected.
(SMT. ABHILASHA KUMARI, J.)
31. After the pronouncement of the judgment, an unusual request has been made by Mr.Anshin H. Desai, learned advocate for the applicant that the hearing of the main matter, that is, Company Petition No.264/2008 be deferred in view of the rejection of the present application for impleadment. As the applicant has not been found to be a proper or necessary party in the main matter, the request cannot be acceded to, especially in view of the order dated 01.09.2015, passed by the Apex Court in Petition(s) for Special Leave to Appeal (C) No.2928229284/2008, wherein the Apex Court has held as below :
"We would also request the High Court not to grant adjournment to either of the parties and the parties are directed not to seek any Page 50 of 51 HC-NIC Page 50 of 51 Created On Thu Sep 24 01:08:47 IST 2015 O/COMA/207/2014 CAV JUDGMENT adjournment before the High Court."
(SMT. ABHILASHA KUMARI, J.) Gaurav+ Page 51 of 51 HC-NIC Page 51 of 51 Created On Thu Sep 24 01:08:47 IST 2015