Gujarat High Court
Maharashtra vs O.L on 30 October, 2007
Bench: Mohit S. Shah, K.A.Puj
OJA/231/2007 9/ 9 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD O.J.APPEAL No. 231 of 2007 In COMPANY APPLICATION No. 621 of 2006 In COMPANY PETITION No. 157 of 1995 with CIVIL APPLICATON No. 372 of 2007 ================================================= MAHARASHTRA GENERAL KAMGAR UNION - Appellant(s) Versus O.L. OF MANUFACTURING & CALICOPRINTING MILLS & CO. LTD. & 11 - Opponent(s) ================================================= Appearance : MR MOHAN PUNGLIYA with MR PRIMIT S PURANI and MR VIMAL M PATEL for Appellant(s) : 1, OFFICIAL LIQUIDATOR for Opponent(s) : 1, MR JS YADAV for Opponent(s) : 1, MR DJ GURJAR for MR KI SHAH for Opponent(s) : 2, RULE NOT RECD BACK for Opponent(s) : 3 - 8, 10, MR RAJESH P MANKAD for Opponent(s) : 9, M/S TRIVEDI & GUPTA for Opponent(s) : 11, MR DARSHAN M PARIKH for Opponent(s) : 12, ================================================= CORAM : HONOURABLE MR.JUSTICE M.S.SHAH and HONOURABLE MR.JUSTICE K.A.PUJ Date : 30/10/2007 ORAL ORDER
(Per : HONOURABLE MR.JUSTICE M.S.SHAH) The Appeal is already admitted. Today we have taken up the matter only for the limited purpose of considering the request made by the learned counsel for the appellant ý Union for disbursement of some adhoc amount as the workers of the ILAC, Mumbai unit of the Company in liquidation have not been paid any amount ever since lock out of the Company in the year 1985.
2. Mr. Darshan Parikh for Bank of India has opposed the request and submitted that since the learned Company Judge has held against the appellant, passing any such order as requested, would amount to allowing the Appeal and this cannot be done and that the Appeal cannot be allowed at this stage.
3. Mr. Kunal Naik for Trivedi and Gupta for ONGC has also opposed the application and submitted that no disbursement may be made as learned Company Judge has held against the appellant.
4. Before dealing with the rival submissions, we would like to refer to the facts as found by the learned Company Judge and recorded in para-16 of the order under Appeal:-
ýS16.The following factual aspects appears from the record:
Calico was the holding company and ILAC was its subsidiary.
ILAC was a Company formed long back prior to 1982.
In the year 1982, Bombay unit of Calico is transferred by Calico to ILAC. It appears from the annual report that the whole unit with the land and building including the workers and other properties of Calico's Bombay unit was to be transferred but on account of the procedure under the ULC Act and no permission by the competent authority under the ULC Act, land and building could not be transferred. As a consequence thereof, all other properties including the plant and machineries, workers, etc., are transferred by Calico to ILAC.
After such transfer in the year 1982, the workers who were transferred to ILAC are treated as the employees of ILAC and they have ceased to be the employees of Calico. The salary of such workers after such transfer was continued to be paid by ILAC until lockout was declared by ILAC.
At no point of time, any workers of ILAC or the recognised Union of ILAC raised the dispute for transfer of the undertaking either under Industrial Disputes Act or under the relevant provisions of law contending that such transfer is to adversely affect the rights of them as workers of Calico and being the workers of ILAC.
The period of limitation for raising the dispute or seeking declaration that workers of ILAC are workers of Calico as per the normal law is also over.
When the challenge was made before the High Court of Bombay against the lockout, declared by ILAC, it was not the contention of the applicant that the workmen of ILAC were the workmen of Calico, but it appears that the decision came to be rendered by the High Court of Bombay on the basis that the settlement by the former employer viz. Calico with the Union of the workers which was entered into under the Industrial Disputes Act was binding to ILAC and as the lockout was declared in contravention thereto, such lockout was declared illegal. While rendering such decision, incidentally observations were made by the High Court of Bombay that there was effort on the part of the Company right from the year 1981 to close down the operation on some pretext or another. Such observation may carry weightage to the extent of declaration of the lockout as lawful or otherwise.
ILAC has continued with the operations after receiving the Bombay Unit and it has also added investments to the plant and machinery, which is apparent from the balance-sheet of the Company, viz. of ILAC.
No consideration as shown has credited in favour of Calico so far as the land and buildings are concerned and the consideration reflected in the Books of Account was only to the extent of plant and machinery and other movable of the Bombay Unit belonging to Calico to ILAC.
10) Calico as well as ILAC both are ordered to be wound-up on 15.07.1998 and till then in any case, at any point of time, no dispute was raised by the applicant contending inter alia that they are the employees of Calico or that the transfer by the management of Calico to ILAC of the whole undertaking including the workmen is sham or bogus or with a view to frustrate the welfare legislation of the labour laws or to deprive them from their legitimate rights.ýý
5. In light of the above findings, the learned Company Judge has held that the workers represented by the appellant Union were employees of ILAC at Mumbai, that the ILAC had no ownership rights over the land and buildings at Mumbai where the workers represented by the appellant ý Union were admittedly working and that therefore the workers of ILAC have no right to claim any amount even out of the sale proceeds of the properties at Mumbai. There is no dispute about the fact that the Calico, which was the holding Company, had at the time of its winding up its manufacturing units at Ahmedabad and Baroda and ILAC had its manufacturing unit at Mumbai.
Now, we may note the figures of the sale proceeds realised upon sale of some of the properties as indicated by the learned counsel for the workers:-
Rs.239 crores received by the Official Liquidator upon sale of the land in Mumbai on which the manufacturing plant of ILAC was being run.
Rs.25.60 crores received by the Official Liquidator upon sale of building, plant and machineries of Calico at Ahmedabad.
Rs.21 crores received by the Official Liquidator upon sale of the plant, building, land and machinery of Calico at Baroda.
The value of the plant and machinery in the manufacturing unit at Mumbai was Rs.4.57 crores.
The land of Calico at Ahmedabad is yet to be sold and as per the valuation report and according to the workers union representing the workers of the Ahmedabad and Baroda unit of Calico, the Ahmedabad land is likely to fetch Rs.200 crores or higher amount.
6. The learned counsel for the appellant union submits that when the workers of the Ahmedabad and Baroda union have been paid adhoc amount at the rate of Rs.50,000/- each, the workers of ILAC, Mumbai also ought to be paid some adhoc amount especially when the substantial amount realised by the Official Liquidator are from the sale of land at Mumbai being Rs.239 crores.
7. We also find from Annexure-A to the Official Liquidator's Report dated 17.10.2007 in the present proceedings that Bank of India claims to be secured creditor. As against the claim of Bank of India, Rs.44 crores has been ordered to be kept separate as per the Company Court's order and Rs.1.20 crores has been paid to Bank of India. As far as IDBI Ltd., is concerned, it also claims to be a secured creditor and by the order of the Company Court a sum of Rs.12 crores has been ordered to be kept apart. So also IIBI claims to be a secured creditor and a sum of Rs.40 lacs has been paid to IIBI as per the order of the Company Court. The reason for withholding payments of Rs.44 crores to Bank of India and Rs.12 crores to IDBI is the dispute about the said banks' claims as secured creditors.
As far as ONGC is concerned, for supplying gas to Calico it claims certain amounts. We are not giving the particulars and we are not deciding the controversy about the secured creditors and the ONGC.
8. The workers of Ahmedabad unit have claimed of Rs.89.48 crores and they have already been paid Rs.28.23 crores. Workers of Baroda unit have claimed Rs.12.16 crores and they have already been paid Rs.12.30 crores. The learned counsel for appellant Union submits that as against the aforesaid amounts paid to the workers of Ahmedabad and Baroda unit of Calico and various amounts set apart for the benefit of the banks claiming to be secured creditors, the workers of ILAC unit at Mumbai are not paid a farthing against their claim of Rs.87.78 crores. Nothing is paid to them since 1985. He, therefore, submits that some adhoc amount may be ordered to be disbursed before Diwali.
9. We may now refer to the opposition made by Mr. Parikh for Bank of India and Mr. Kunal Naik for ONGC. According to them, learned Company Judge has already rejected the claim of the workers of ILAC unit and, therefore, granting them any payment would amount to allowing the Appeal at this stage. In support of this contention, reliance is placed on decision of the Apex Court in Bank of Maharashtra vs. Race Shipping & Transport Co. Pvt. Ltd., 1995(3) SCC 257.
10. Without going into any other controversy, we find from the factual aspects found by the learned Company Judge himself that Calico was holding Company and ILAC was its subsidiary. That Mumbai unit of Calico was transferred to ILAC in the year 1982 and that the annual report of Calico at the relevant time itself revealed that the lands, buildings and other properties of Calico, Mumbai unit as well as the workers at Mumbai were to be transferred to ILAC but only on account of the procedure under the Urban Land Ceiling Act and in absence of permission by the competent authority under the said Act the lands and buildings could not be transferred and, therefore, all other properties including plants and machinery were transferred by Calico to ILAC and workers were enblock transferred to ILAC. Even as per the case of the respondent, the manufacturing plant of ILAC was run by the management and workers of ILAC.
11. Apart from any other figures given above, the value of the plants and machinery in the manufacturing unit at Mumbai was Rs.4.57 crores. The allegation of the workers that the plants and machinery of manufacturing unit at Mumbai were allowed to be siphoned away is not the subject matter of present proceeding, at least not at this stage. But the fact remains that substantial amount realised by the Official Liquidator so far is received on account of sale of the land at Mumbai. Whether the land can be said to be of Calico exclusively or whether the Court is to lift the corporate veil ( which argument was urged by the appellant union but not accepted by the Company Judge) are all matters to be considered at the stage of final hearing. But in the facts and circumstances of the case, the appellant union has made out a strong prima facie case for which the Appeal is already admitted. Considering the question of balance of convenience, we are of the view that the interests of justice would be served, if 1494 workmen represented by the appellant union, who were working in the manufacturing unit at Mumbai are paid an adhoc amount of Rs.30,000/- each at this stage.
12. We accordingly direct the Official Liquidator to disburse an adhoc amount of Rs.30,000/- to each of the 1494 workmen represented by the appellant union, who were working in the manufacturing unit of ILAC at Mumbai. Such disbursement shall be made by the Official Liquidator after verification of the recipient and by an account payee cheque.
After making the above disbursement, the Official Liquidator shall also keep apart an equivalent amount separate for the benefit of the secured creditors and another equivalent amount for the benefit of ONGC, without making any actual disbursement in favour of secured creditors and ONGC.
14. It is clarified that this order is passed in view of the peculiar facts and circumstances of the case, particularly in view of the fact that the workers of the manufacturing unit at Mumbai were not paid any amount so far, and as stated by the learned counsel for the appellant union, some of the workers have even died during the pendency of the various proceedings and the judgment of the Mumbai High Court in the Industrial Dispute between the workers and Management of ILAC has been rendered recently in August, 2006.
It is further clarified that the direction given hereinabove and the observation made in this order are for the limited purpose of considering the workers' request for adhoc disbursement and we may not be treated to have expressed any opinion on the question whether the land and buildings at Mumbai were of the ownership of the ILAC Ltd., At the request of Mr. D.S. Vasavda for Textile Labour Association we also make it clear that this order shall not come in the way of the workers of the Ahmedabad and Baroda units and the secured creditors of Calico making any request before the Company Court for disbursement or any other appropriate order.
15. The Appeal and Civil Application shall be listed for hearing on 5.12.2007.
(M. S, SHAH, J.) (K. A. PUJ, J.) kks