Bombay High Court
Kohinoor Planet Constructions Ltd., A ... vs The State Of Maharashtra Through ... on 31 January, 2008
Equivalent citations: 2008(2)BOMCR705, 2008(3)MHLJ811
Author: J.P. Devadhar
Bench: Swatanter Kumar, J.P. Devadhar
JUDGMENT J.P. Devadhar, J.
1. Heard. Rule. Rule made returnable forthwith. By consent of the parties, the writ petition is taken up for final hearing.
2. This petition is filed to challenge the validity of the directive issued by the State Government on 27/9/2006 under Section 154 of the Maharashtra Regional and Town Planning Act, 1966 ('MRTP Act" for short) and also the notices dated 11/12/2006 and 22/12/2006 issued by respondent Nos.1 & 2 seeking to restrain development of the lands belonging to the petitioners situated at Kurla inter alia on the ground that Premier Ltd. from whom the petitioner No. 1 had purchased the immovable properties at Kurla, had not obtained No Objection Certificate (N.O.C.) from the State Government for development of the said lands.
3. The petitioner No. 1 is a company incorporated and registered under the Companies Act, 1956 and is engaged in the business of development of immovable properties in Mumbai and elsewhere. Petitioner No. 2 is a Director and shareholder of petitioner No. 1 and is also carrying on business as a developer in the name of M/s. Kohinoor Developers.
4. Premier Ltd. (previously known as Premier Automobile Ltd.) inter alia owned large piece of land at Kurla admeasuring in the aggregate 1,46,984.44 sq. mtrs. (1,05,999.44 sq.mtrs. in the residential zone and 40,985 sq.mtrs. in the Special Industrial Zone) together with the structures standing thereon.
5. By an Indenture of Conveyance dated 11/5/2005, Premier Ltd. sold to the petitioner No. 1 a portion of the aforesaid lands admeasuring 1,27,215.06 sq.mtrs. ('the said lands' for short) for valuable consideration. Out of the said lands an area of 86,230.06 sq.mtrs. fall in the residential zone and an area of 40,985 sq.mtrs. fall in the Special Industrial Zone. The petitioner No. 1 has paid full consideration to Premier Ltd. and the said deed of conveyance is duly registered. After getting the revised layout sanctioned from the Executive Engineer (Building) and getting the Intimation of Disapproval (IOD) and Commencement Certificate (CC), the petitioner No. 1 commenced development of the said lands. By a development agreement dated 16/9/2005 the petitioner No. 1 has entrusted the petitioner No. 2 further development of the said lands on the mutually agreed terms. According to the petitioners, the development of the said lands are at an advanced stage and third party rights have also been created by selling the flats by executing registered agreements.
6. In the last week of December, 2006 the petitioners claim to learn from Premier Ltd. that the Commissioner of Labour (Respondent No. 2) had addressed a letter to the Municipal Corporation (Respondent No. 4) to stop construction on the said lands. On receiving documents under the Right to Information Act, 2005, the petitioners came to know that in March, 2005, Premier Ltd. had applied for 'No pending labour dues certificate' from the respondent No. 2 and that initially the respondent No. 2 as well as the officers of the State Government were inclined to grant N.O.C. but now they were not inclined to grant permission because Premier Ltd. had not paid the dues payable to the employees of PAL Peugeot Ltd. ('PPL' for short). The petitioners came to know that the Urban Development Department of the State Government had issued a directive under Section 154 of the MRTP Act on 27/9/2006 to the effect that all the Planning Authorities in the State, before granting permission for development of the lands of the closed companies from industrial use to residential use, should obtain N.O.C. from the Labour Commissioner to the effect that the legal dues of all the workers of the said company has been fully paid. The petitioners further came to know that by a letter dated 11/12/2006, the Dy. Secretary of the Government had called upon the Labour Commissioner to intimate to the Municipal Corporation that the Premier Ltd. has illegally commenced construction work on the said lands without N.O.C. and to stop the construction work on the said lands immediately. Accordingly, the Labour Commissioner by his letter dated 22/12/2006 requested the Municipal Commissioner to stay the construction work on the said lands. Challenging the directive of the State Government dated 27/9/2006 as well as the aforesaid letters dated 11/12/2006 and 22/12/2006 the present petition is filed.
7. The directive issued by the State Government under Section 154 of the 1966 MRTP Act on 27th September, 2006 (translated) reads as under:
Development Control Regulations Directive under Section 154 of the Maharashtra Regional and Town Planning Act, 1966 GOVERNMENT OF MAHARASHTRA URBAN DEVELOPMENT DEPARTMENT MANTRALAYA, MUMBAI 400 032 DATE : 27TH SEPTEMBER, 2006 No. TPS-1206/ANI.119/NV-12 WHEREAS independent Development Schemes and Development Control Regulations of various Municipal Corporations / Nagarparishads / Special Planning Authorities etc. (hereinafter referred to as "the said Authority") in the State of Maharashtra have been sanctioned and have come into force.
AND WHEREAS in the Development Control Regulations while granting the Building Permission / Development Permission for the land of closed companies within their limits considering the interest of the workers of that company it is necessary for the said Authority to ensure that the legal dues of those workers are fully paid.
AND WHEREAS if there is no such provision in the Development Regulations of the said Authority in the opinion of the Government it is necessary to make such a provision in their Development Control Regulations.
AND WHEREAS considering the interests of the workers the Government is giving the following directive to the said Authority under Section 154 of the Maharashtra Regional and Town Planning Act, 1966.
DIRECTIVE
1) For including the under mentioned provision in the Development Control Regulation of all Planning Authorities, the Notice of the said Authority inviting suggestions and objections with respect to the modification be published within the prescribed period of 60 days in keeping with the provisions of Section 37 of the Maharashtra Regional Town Planning Act, 1966 and the said Authority should submit the proposal for modification to the Government for final sanction after complying with the provisions of the said Act.
Provision: All Planning Authorities in the State of Maharashtra before granting building permission on the land of closed companies within their limits from industrial use to residential use shall obtain from the Labour Commissioner, State of Maharashtra a Certificate that the legal dues of all the workers of the company on the subject land have been fully received.
2) The subject provision be implemented immediately from the date of the directive.
(N.R. Rane) Desk Officer.
8. Dr. Tulzapurkar, learned senior Advocate appearing on behalf of the petitioners submitted that under Section 154 of the MRTP Act direction can be given by the State Government to a Planning & Development Authority only for the purposes of and / or object of the said Act. The directive issued by the State Government on 27/9/2006 to ensure the payment of wages of the workers of an industrial establishment is beyond the scope, purpose and object of the MRTP Act and, therefore, the said directive is liable to be declared as ultra vires the MRTP Act. In this connection, he relied upon the decision of the Apex Court in the case of Bangalore Medical Trust v. B.S. Muddappa and Ors. .
9. Alternatively, Dr. Tulzapurkar submitted that the directive of the State Government dated 27th September, 2006 has no application to the said lands because, firstly, the petitioner No. 1 had purchased the said lands from Premier Ltd. under a deed of Conveyance dated 11/5/2005 and after obtaining requisite permission from the planning authorities had already commenced construction prior to the impugned directive dated 27-9-2006. Secondly, the impugned directive applies where an application for development is made by an Industrial Company itself and not to a bonafide transferee of the land like the petitioner for value before issuance of the directive. Thirdly, the impugned directive applies for development of the land belonging to a closed Company and assuming that Premier Ltd. is the owner of the said lands, Premier Ltd. is not a closed Company and, therefore, the said directive is not applicable to the said lands. Fourthly, assuming that Premier Ltd. is the owner of the said lands, there are no labour dues payable by Premier Ltd. to its employees. Fifthly, the language used in the directive dated 27/9/2006 clearly shows that the said directive is to operate prospectively and not retrospectively.
10. Elaborating his arguments, Dr. Tulzapurkar submitted that the petitioner No. 1 is a bonafide purchaser of the said lands from Premier Ltd. for valuable consideration and the development permission in respect of the said lands has already been granted and the construction work has been substantially carried out. Therefore, there was no question of granting development permission to the said lands after obtaining N.O.C. as contemplated under the impugned directive dated 27/9/2006. Consequently, no direction could be issued for stopping the construction which had commenced in accordance with law. As the said lands were legally transferred to the petitioner No. 1 under a registered deed of conveyance dated 11/5/2005, the State Government as well as the Labour Commissioner were in error in presuming that the said lands belonged to Premier Ltd. and seek to stay the development of the said lands commenced by the petitioners. Dr. Tulzapurkar relied upon an unreported Judgment of this Court dated 19th April, 2007 in Writ Petition No. 2882 of 2006 [Eupharma Kamgar Sangh v. Eupharma Laboratories Ltd. wherein this Court while construing similar letter dated 27/6/2005 issued by the State Government held that the letter applies to a company which owns the property and not to a third party who is a bonafide purchaser of the property in question.
11. Dr. Tulzapurkar further submitted that initially the Kalyan Unit was owned by Premier Ltd., however, the same was sold to PPL in the year 1995 and the fact that the Premier Ltd. held certain shares of PPL cannot be a ground to hold that Premier Ltd. is liable to pay the dues of the employees of PPL. If the contention of the State is accepted then the financial institutions and the general public who are also holding the shares of the PPL would be liable to pay the wages / legal dues payable by PPL to its workmen and such a contention is wholly untenable in law.
12. Dr. Tulzapurkar, finally submitted that assuming that Premier Ltd. is liable to pay the dues of the employees of PPL, both the PPL and the Premier Ltd. have sufficient assets to discharge the said legal dues and, therefore, there is no justification for staying the construction work carried on by the petitioners on the said lands in accordance with law. He submitted that neither any Competent Court has held that the Premier Ltd. is liable for the dues of the employees of PPL nor any proceedings are pending to that effect and, therefore, the question of holding Premier Ltd. liable for the dues of the workmen of PPL does not arise at all. Accordingly, Dr.Tulzapurkar submitted that the impugned letters are liable to be quashed and set aside.
13. Mr. Sathe, learned Senior Advocate appearing on behalf of Premier Ltd. while adopting the arguments advanced by the counsel for the petitioners submitted that the assumption on the part of the State Government that the Premier Ltd. is liable to make payment of legitimate dues of the employees of PPL is completely baseless, erroneous and legally untenable, because by a Slump Sale Agreement dated 6/1/1995 the business at Kalyan undertaking has been sold by Premier Ltd. to PPL effective from 29/9/1994. By the said Slump Sale Agreement, assets including plant and machinery, factory building, certain portion of industrial land appurtenant to plant and also the employees (workers, staff and officers) on its roll working at Kalyan Unit on the date of sale were transferred to PPL with continuity of service on the same terms and conditions of service and emoluments which they enjoyed prior to the sale. He submitted that from 29/9/1994 all employees of Kalyan plant received their salaries and wages from PPL and thus from 29/9/1994 employer and employee relationship between Premier Ltd. and the employees working in the Kalyan Unit got extinguished. Even the Union representing the transferred workers has accepted this fact and has filed Unfair Labour Practices complaint in the Industrial Court against PPL and not against Premier Ltd.
14. Mr. Sathe further submitted that by a Deed of Conveyance dated 27/5/1996 Premier Ltd. sold and conveyed to PPL land admeasuring 7,23,449 sq.mtrs. situated at Kalyan. The fact that the Premier Ltd. had entered into a Joint Venture Agreement with Automobiles Peugeot France ('AP' for short) and that the Premier Ltd. held 32% shares in PPL cannot be a ground to hold that Premier Ltd. is liable to pay the legal dues of the workers of PPL. He submitted that after the sale of Kalyan unit, Employees Provident Fund (P.F. A/c.) has been separated and independent code number has been given by the Regional Provident Fund Commissioner in respect of the employees of the PPL. Similarly, the amounts in the gratuity funds lying to the credit of the employees of PPL as on 29/9/1994 have also been transferred. All the dues of the workers of the Premier Ltd. have been settled and on verification the Labour Commissioner on 24/6/2005 had recommended issuance of NOC to Premier Ltd. Even the office note put up by the Industry / Energy and Labour Department of the State Government clearly shows that Premier Ltd. is not responsible for payment of due of the employees of the PPL. Accordingly, the counsel for Premier Ltd. submitted that the State Government is not justified in contending that Premier Ltd. is liable to discharge the legal dues of the employees of PPL.
15. Mr. Belosy, learned Government Pleader, on the other hand submitted that the State Government in the interest of poor workers had formulated a policy in the year 2003 to the effect that before giving permission to the industrial establishments to develop their land, they should first obtain N.O.C. from the labour department so as to ensure that the legal dues of the workers are paid before the lands belonging to industrial establishments are permitted to be developed. Accordingly, Premier Ltd. had made an application on 31/3/2005 seeking 'No dues certificate' from the labour department of the State Government. Even though N.O.C. has not been granted, development work on the said lands has commenced and, therefore, it became necessary to issue the stop work notice.
16. Mr. Belosay further submitted that under the Joint Venture Agreement, Premier Ltd. held 32% share in PPL. However, the A.P. on its withdrawal from the joint venture, had gifted its 32% share in PPL to Premier Ltd. Thus, Premier Ltd. holding 64% share in PPL was liable to pay the legal dues of the workers of PPL and till the said dues were discharged, the properties of Premier Ltd. could not be permitted to be developed. Mr.Belosay submitted that Premier Ltd. is the owner of both the units at Dombivli and Kurla is evident from the fact that there is common P.F. Account of both Premier Ltd. and PPL. Similarly, the gratuity account is also common and, therefore, it is obligatory upon Premier Ltd. to pay the legal dues of the workers of PPL.
17. Mr. Vashi, learned Counsel appearing on behalf of the intervenor Union representing the employees of the PPL, submitted that the development of said lands at Kurla commenced without paying the legitimate dues of the workmen of PPL which exceeds Rs. 200/- crores is nothing but total fraud practiced by Premier Ltd. against its employees. He submitted that nearly 1800 workers were employed by Premier Ltd. for their Kalyan Unit and irrespective of Premier Ltd. selling its Kalyan unit to PPL, the workers had not agreed for such transfer and there is nothing on record to suggest that the service conditions of the employees were altered and, therefore, Premier Ltd. cannot escape its liability to pay the dues of the workers employed at Kalyan Unit. In this context, he relied upon a decision of the Apex Court in the case of BCPP Mazdoor Sangh and Anr. v. N.T.P.C. and Ors. .
18. Mr. Vashi further submitted that even after the sale of Kalyan unit to PPL, the Directors of Premier Ltd. were in fact running the PPL. Even after AP withdrew from PPL, the bank accounts of PPL were operated by Premier Ltd. Being 64% shareholder of PPL (32% under J.V.C. and 32% gifted by AP) and in fact operating the business of PPL althrough, it is not open to the Premier Ltd. to back out of their obligation from paying the dues of its workers. Mr. Vashi submitted that the impugned notices have been issued with a view to protect the interests of the workers and if the Kurla property belonging to Premier Ltd. is allowed to be developed grave prejudice would be caused to the 1800 workers of the Kalyan unit whose legal dues are more than Rs. 200 crores.
19. We have carefully considered the rival submissions.
20. At the outset, instead of considering the validity of the Government directive dated 27/9/2006 issued by the State Government under Section 154 of the MRTP Act, we deem it proper to consider the alternative argument of the petitioners regarding the applicability of the said directive to the facts of the present case. In other words, at the outset we take up the issue as to whether the directive dated 27/9/2006 is applicable to the facts of the present case and whether the impugned letters dated 11/12/2006 and 22/12/2006 issued in implementation of the said directive are sustainable
21. By the impugned directive dated 27/9/2006 the State Government in exercise of powers conferred under Section 154 of the MRTP Act has directed that before granting building permission on the lands of the closed companies from industrial use to residential use, all the planning authorities in the State of Maharashtra shall obtain a certificate from the Labour Commissioner, State of Maharashtra to the effect that the legal dues of all the workers of the company have been fully paid. By the said directive the Government has called upon the concerned authorities to make a provision to the above effect in the Development Control Regulations, if not already made and in the meantime called upon compliance of the said directive immediately from the date of issuance of the directive i.e. from 27/9/2006.
22. Thus, the said directive applies to the development permission to be granted by the planning authorities on or after 27/9/2006 in respect of the lands belonging to the closed companies. The said directive is not intended to apply to cases where development permission has already been granted. In the present case, long before the issuance of the directive on 27/9/2006, revised layout in respect of the lands in question was sanctioned on 8/6/2005 and IOD was issued in June, 2005 and commencement certificate was issued in September, 2005 and accordingly the construction work has commenced and the construction has been substantially completed as per the sanctioned plan. It is nobody's case that the revised layout has been sanctioned and IOD and CC has been issued contrary to law or that the development permission has been obtained fraudulently or by misrepresentation. In fact, the Planning Authority namely the Municipal Corporation of Greater Mumbai in its affidavit in reply filed on 23/8/2007 has categorically stated that the sanction for the development of the said lands has been given in accordance with law. Once it is accepted that the development permission has been granted in accordance with law prior to the issuance of the directive dated 27/9/2006, it cannot be said that the impugned directive is applicable in the present case.
23. Moreover, the directive dated 27/9/2006 applies to cases relating to the development of the lands belonging to the closed companies. In the present case the lands in question have been legally transferred by Premier Limited to the petitioner No. 1 company under a duly registered Deed of Conveyance dated 11/5/2005. The petitioner No. 1 Company is not a closed company and, therefore, the said directive would not be applicable to the lands belonging to the petitioner No. 1 Company.
24. Apart from that, even Premier Ltd. from whom the petitioner No. 1 has purchased the said lands is neither a closed company nor does it owe any amount to its employees. In fact, in the impugned letter dated 11/12/2006 (see page 88) and in the letter dated 24/6/2005 (see page 125) it is accepted by the industries department of the State Government as well as the Labour Commissioner respectively that all the legal dues of its workers have been fully paid by Premier Ltd. and they recommended that N.O.C. be granted to Premier Limited. It is pertinent to note that Premier Ltd. had applied for N.O.C. on 31-3-2005, that is, prior to the sale of the said lands to the petitioner No. 1 on 11-5-2005. Thereafter, requisite permission for development of the said lands have been granted in respect of the said lands. Therefore, the Premier Ltd. being neither a closed company nor it owes any amount to its employees, the State Government is not justified in seeking to stay development of the said lands.
25. However, by the impugned letters dated 11/12/2006 and 22/12/2006 further construction on the said lands is sought to be stalled on the ground, firstly, that N.O.C. has not been granted to Premier Ltd. for development of the said lands and secondly, that the Premier Ltd. being a majority shareholder of PPL (in liquidation), it is the responsibility of Premier Ltd. to discharge the legitimate dues of 1800 workers of PPL and unless the said dues are paid by Premier Ltd. the development of the said lands cannot be permitted.
26. As noticed earlier, once the lands in question were sold by Premier Ltd. to the petitioner No. 1 under a registered deed of conveyance dated 11/5/2005, it could not be said that the said lands belong to Premier Ltd. Validity of the said sale in favour of the petitioner No. 1 is not disputed by any of the parties. The said lands are being developed by the petitioners in their own right and not for and on behalf of Premier Ltd. Therefore, the question of Premier Ltd. obtaining N.O.C. for development of the said lands did not arise at all.
27. In any event, it could not be said that the Premier Ltd. has not paid the dues of its workers especially when the Labour Commissioner on verification of facts by his letter dated 24/6/2005 has clearly stated that all the dues of the workers of Premier Ltd. have already been paid and that it would not be appropriate to hold that Premier Ltd. is responsible for payment of the dues of the workers of the PPL. Similarly, the office of the Industry / Energy / Labour Department of the State Government has also on verification of the documents had submitted a note (see page 419) to the effect that it will not be proper to hold that Premier Ltd. is responsible for payment of the dues of the employees of PPL. In spite of the above, the impugned notices have been issued without assigning any reason as to why the recommendation of the Labour Commissioner and the departmental note are not acceptable to the State Government. It is pertinent to note that neither any competent Court or authority has, on adjudication declared that Premier Ltd. is liable to discharge the legitimate dues of the workers of PPL, nor there are any proceedings pending to that effect.
28. On the contrary, the Union representing the workers of PPL had filed complaint (ULP) No. 680 of 1998 (see page 357) in the Industrial Court, Thane alleging unfair labour practice by PPL under M.R.T.U. & P.U.L.P. Act, 1971. Thus, the workers had accepted that PPL is their employer. The Industrial Court by its Judgment dated 30/4/2004 (see page 365) has held that PPL has engaged in unfair labour practice and directed PPL to pay wages to the workers named therein from July, 1998 to April, 2004 within two months. In these circumstances, the State Government could not held that the wages of the employees of the PPL are liable to be paid by Premier Ltd.
29. The argument that the Premier Ltd. holds majority shares of PPL and, therefore, Premier Ltd. is liable to pay the dues of the employees of PPL is without any merit because, in law the liability to pay wages to the workers is on the employer and not on the shareholder. PPL (now in liquidation) being a distinct legal entity having taken over the business of the Kalyan unit of Premier Ltd. was legally bound and liable to pay the wages of the employees in the Kalyan unit. The fact that the employees in the Kalyan Unit were initially employed by Premier Ltd. would make no difference, because, once the Kalyan unit was taken over by PPL, it was the obligation of PPL to pay the wages of the workers. In fact for some years PPL did pay wages to the workers and when PPL stopped wages, the employees initiated legal proceedings and obtained an order directing PPL to pay their wages. In the absence of any Competent Court holding that the wages of the employees of PPL were liable to be paid by Premier Ltd., the State Government could not have presumed that Premier Ltd. is liable to the dues of the employees of PPL.
30. The argument that the directors of Premier Ltd. were managing PPL and that the Provident Fund account and the gratuity account of both the companies were same and therefore, Premier Ltd. is liable for the dues of the employees of PPL cannot be accepted, because, under the joint venture agreement the directors of Premier Ltd. were required to assist PPL, but that does not mean the employees continued to be the employees of Premier Ltd. even after the sale of Kalyan Unit to PPL. As stated earlier, on transfer of the Kalyan Unit, separate P.F. account and gratuity account has been maintained. The argument of the Union, that the Premier Ltd. is liable for the legal dues of employees of PPL is contrary to their stand before the Industrial Court, wherein they have agitated and the Industrial Court has accepted their plea that PPL is liable to pay the wages of its workers. The decision of the Apex Court in the case of BCPP Mazdoor Sangh (supra) relied upon by the counsel for the intervenors has no application to the facts of the present case, because the Industrial Court has already ruled that PPL is liable to pay the dues of its workers.
31. For all the aforesaid reasons, we hold that the Government directive dated 27/9/2006 is not applicable to the facts of the present case. In view of the above finding it is not necessary to go into the question as to whether the said directive is legally valid or not. We further hold that the impugned notices dated 11/12/2006 and 22/12/2006 which purport to stop development of the said lands till the legal dues of the employees of PPL are paid by Premier Ltd., is illegal and contrary to law and accordingly, the said notices dated 11/12/2006 and 22/12/2006 are quashed and set aside.
32. Rule is made absolute in the above terms with no order as to costs.