Karnataka High Court
Psi Data Systems Ltd. vs Presiding Officer on 6 December, 1991
Equivalent citations: ILR1992KAR2163, 1991(3)KARLJ243, (1993)ILLJ73KANT
ORDER
1. In this writ petition, two important questions of law are for determination. They are :
(1) Whether the Tribunal without deciding the question that the purchaser of a closed industry is successor-in-interest, can pass an order to implead the purchaser as a necessary party in a dispute pending between his vendor and his workman ?
(2) Whether the Tribunal possesses a Power of Review under Section 11(1) and (3) of the Industrial Disputes Act, 1947 read with Section 151 of the Code of Civil procedure ?
2. This writ petition, which was posted for preliminary hearing was heard finally on the consent of the learned Advocates and the following order is made.
One M/s Rubber Products Pvt. Ltd., was running a factory at No. 38A, II Phase, Peenya Industrial Area, Bangalore. It has closed its undertaking on January 28, 1965. The workmen represented by the second respondent have raised an industrial dispute against the closure on the allegation it is a lock-out to victimize the workmen for their legitimate trade-union activities. The Government has referred the same for adjudication to the Additional Industrial Tribunal Bangalore and the same is pending in AID 18/86.
3. The petitioner, who was in need of an industrial area for manufacture of software/hardware for computers and some other allied products, had purchased the land and building belonged to M/s. Rubber Federation of Products, under a registered Sale Deed dated October 25, 1988, for a consideration of Rs. 31,24,000/- Before purchase, the petitioner had obtained permission form the various Government authorities as per Annexure 'F'. Annexure 'A' is the typed copy of the Sale deed.
4. The workmen of the second respondent Union have filed an application under Section 11 of the Industrial Disputes Act (in short 'the Act') read with order 1 Rule 10(2) of the Code of Civil Procedure to implead the petitioner as second party (a) in the dispute. The petitioner has opposed the application before the Tribunal on the ground that it has purchased only the land and building of the first respondent and not purchased the machinery and other assets and liabilities and therefore, it is not a necessary party to the dispute.
5. Tribunal has proceeded to implead the petitioner as one of the necessary party only on the ground that it has not produced the agreement of sale to show what exactly is its liability. In fact that in the absence of the said document, it is not possible to determine the said question and to make the adjudication effective and enforceable, the impleading of the petitioner is necessary.
6. After this order, the petitioner has filed an Application (I.A.II) under Section 11(1) and (3) of the Act read with Section 151 of the Code of Civil Procedure to review the order passed by the Tribunal. According to the petitioner, the sole ground for allowing I.A.I. was de to non-production of the sale-deed. The copy of the sale deed is also produced along with the Review Application. The Tribunal, placing reliance on a decision of this Court in State Bank of India v. D. R. Raju 1990 (1) KLJ 345 and Patel Nareshi Thakeresi v. Pradyumam Singhji Arjunsinghji has rejected the application on the ground that the Tribunal does not enjoy power to review its own order.
7. Sri. S. N. Murthy, learned Advocate for the petitioner, has assailed the order of the Tribunal on the ground that without giving a finding that the petitioner is a successor-in-interest, the order impleading the petitioner as one of the party is illegal and unsustainable. The further submission of the learned Advocate is that, the Tribunal though vested with power to review its own order passed on an Interlocurtory application has failed to exercise in reviewing its order when I.A.II is failed with better particulars.
8. Initially, Sr. V. Gopala Gowda, learned Counsel for the second respondent, questioned the the competency of the petitioner to file a writ petition placing reliance on D. P. Maheswari v. Delhi Administration (1983 - II - LLJ - 425). In this case, the petitioner had raised an industrial dispute challenging the order of termination. A contention was raised by the respondent that he was not a workmen. Within the meaning of section 2(s) of the Act. The question was tried as a preliminary issue by other Labour Court. After recording the evidence on this point, the Labour Court held this issue in favour of the petitioner. Against this order, the respondent-management has moved the high Court under Article 226 of the Constitution. A leaned Single Judge has allowed the writ petition and quashed the order of the Labour Court. A Division Bench of the High Court affirmed the decision of the learned Single Judge. The matter went to the Supreme Court after obtaining Special Leave to Appeal by the petitioner. In this context, the Supreme Court gave a rule of action to interfere with the orders on preliminary issue as it ultimately leads to dragging the proceeding for a number of year and making the workman to lose his resistance to withstand the legal battle.
9. In this writ petition the petitioner alleges that his right is infringed as he was impleaded to a dispute which is not concerned to him. Hence D. P. Maheswari's case (supra) is not applicable to this writ petitioner.
10. The order of the Tribunal discloses that only on the ground that the petitioner has not produced the sale deed, to prove that he has not purchased the assets and liabilities of the previous Company, hence the petitioner is liable to answer for any award passed in favour of its vendor and thereby allowed the application.
11. The Tribunal went to the extent of holding that the petitioner is at liberty to adduce evidence as final stage that any award passed on the dispute is not binding on it.
12. Section 11 which was invoked by the Tribunal to implead the petitioner vests the following power :
"Under sub-clause (3), the following powers are vested;
(3) Every Board, Court, (Labour Court, Tribunal and National Tribunal) shall have the same powers as are vested in a Civil Court under the Code of Civil Procedure 1908 (5 of 1908 ), when trying a suit in respect of the following matters, namely -
(a) enforcing the attendance of any person and examining him on oath :
(b) compelling the production of documents and material objects :
(c) issuing commissions for the examination of witnesses :
(d) in respect of such other matters as may be prescribed :
and every inquiry or investigation by a Board Court, (Labour Court, Tribunal or National Tribunal) shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code (45 of 1860)".
It does not stress any special power of impleading a person or firm as a necessary party in a pending adjudication. The second respondent has not shown any authority that Section 11(3)(d) empowered the Tribunal for impleading a third person.
13. Order 1 Rule 10(2) of the Code of Civil Procedure, reads as follows :
"O. 1.R-10(2) : Court may strike out or add parties :-
The Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court, effectually and completely, to adjudicate upon and settle all the questions involved in the suit, be added".
14. On a reading of sub-clause (2), it is clear that, to implead a person as one of the parties, the Court should satisfy that his presence is necessary to adjudicate effectually and completely, to settle all the questions involved in the dispute.
15. Section 18 of the Act imposes liabilities of an Award not only on an employer to industrial disputes but also their heirs, successors or assigns in respect of the establishment to which dispute relates. To enforce this liability against a transferee, he should be successor-in-interest. A person can be called as a successor-in-interest only of the prior business is taken over as going-concern with all assets and liabilities. Where the business is not so taken over, but only the land and building are purchased for starting altogether a new business and leaves plant and machinery to the vendor's disposal, the purchaser cannot be considered to be a successor or assign of the old business.
16. The petitioner has cited a Judgment of the Labour Appellate Tribunal, in Antony D'Souza and others v. Sri Motichand Silk Mills (1954 - I - LLJ - 793), to highlight that even a purchaser of plant and machinery and accessories, cannot be treated as a purchaser of going concern or its good-will to implead him as a party respondent in dispute between the mortgagor-company and the workman employed by it; the facts and the conclusion are as hereunder (p. 793-Head-Note) "The management of a silk mill hypothecated its machinery, plant, etc. A purchaser of the machinery plant and accessories at a private auction sale by the mortgagee, agreed to re-open the business and by employing certain persons who were in service under the mortgagor-company. The agreement inter alia provided that the business shall be treated as a new business and the purchaser should be treated as a purchaser of the machinery and plant only and not as purchaser of a going concern or its good-will. On a question as to whether such purchaser could be considered as a successor-in-interest of the mortgagor-company within the meaning of Section 114 of the Bombay Industrial Relations Act, it was held that it could not be so considered as the purchase was only of plant, machinery and accessories and not of a going concern or running business. So the period of service rendered to the mortgagor-company could not be treated as service rendered to the purchaser for the purpose of ascertaining the quantum of retrenchment compensation payable by the purchaser.
Where such purchaser was impleaded for the first time as a party respondent in an appeal before the Labour Appellate Tribunal between the mortgagor company and the workmen employed by it, it was held that the closure of some departments effected by the purchaser before it was so impleaded did not require the permission of the Tribunal under Section 22 of the Act as a perusal of Section 22 shows that the word "employer" used therein meant an employer who was a party to the proceeding in the Court below or his successor-in-interest or assign and not an employer who was for the first time impleaded before the Labour Appellate Tribunal. The Section clearly indicates that the ban is placed upon an employer who was a party below and not to one who was impleaded for the first time before the Labour Appellate Tribunal. No ban can be operative against an employer before his being impleaded. Even with regard to the closure of some department effected by such purchaser after it was impleaded it was held that no permission was necessary as the purchaser no knowledge of its having been impleaded."
17. Apparently, the Tribunal has overlooked the fact that before impleading a party in a dispute on the ground that he has purchased the property belonging to the vendor, who is a party in the dispute, it should give a finding that the person proposed to the impleaded should be a person who is held to be successor-in-interest : without such a finding the Tribunal cannot impleaded a person as necessary party under Order 1 Rule 10(2) of the Code of Civil Procedure.
18. Since the Tribunal has not given a finding to this effect, the matter requires to be remitted back to the Tribunal to decide this question by relying on the evidence, both oral and documentary.
19. With regard to the second point, the law is already well settled which if followed by the Tribunal. In State of Bank of India v. K. R. Raju and Another (supra) a learned Single Judge of this Court, and in P. N. Thakeresi v. Pradyumansinghji (supra) it is held that there is no statutory provision which specifically or by implication confers power on the Tribunal to review its own order.
20. However, Sri. S. N. Murthy contends that the Tribunal has got power to review it own order as held in Grindlays Bank Limited v. Central Government Industrial Tribunal and Others 1981 - I - LLJ - 327, a Judgment of the Supreme Court. In this Judgment, the power of the Tribunal to set aside the ex-parte award was highlighted and held (pp. 328-329) :
"It is true there is no express provision in the Act or rules giving the Tribunal jurisdiction to set aside an ex-parte award. But it is a well-known rule of statutory construction that a Tribunal or body should be considered to be endowed with such ancillary or incidental powers as are necessary to discharge its functions effectively for the purpose of doing justice between the parties.
In a case of this nature, the Tribunal should be considered as invested with such incidental or ancillary powers unless there is any indication in the statute to the contrary. There is no statutory prohibition. On the other hand, there are indications to the contrary."
21. However, this cannot be read to understand that such exercise of power empowers the Tribunal to review its own order. The term 'Review' is different from reopening a case to give opportunity to a party which was deprived earlier.
22. In the result, I make the following :
ORDER
23. This writ petition is allowed.
24. The order passed on I.A.I. dated January 7, 1991 by the Additional Industrial Tribunal, Bangalore, is hereby set aside. The case is remitted back to the Tribunal with a direction to decide the question of impleading the petitioner afresh in accordance with the observations made in this order.