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CASE NO.: Appeal (civil)  7990 of 2004

PETITIONER: Industrial Paper (Assam) Ltd. Emps. Union        

RESPONDENT: Management Assam Industrial Dev.Corpn. Ltd.

DATE OF JUDGMENT: 10/01/2007

BENCH: Dr. ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T

Dr. ARIJIT PASAYAT, J.

Appellant calls in question legality of the judgment  rendered by a Division Bench of the Guwahati High Court  dismissing the writ petition filed by the appellant. The writ  appeal was directed against the common judgment and order  dated 7.5.2002 passed by learned Single Judge wherein the  writ petition filed by the respondent No.2 i.e. Management of  Assam Industrial Development Corporation Ltd. (in short the  ’AIDC’) was allowed while dismissing the writ petition filed by  the appellant. Both the writ petitions were directed against the  Award of the Presiding Officer, Labour Court, Assam, at  Guwahati (hereinafter referred to as the ’Labour Court’).  The  appellant claims to be the Union of employees of M/s  Industrial Papers (Assam) Ltd. (in short the ’IPAL’). Learned  Single Judge held that there is a clear cut finding in the Award  to the effect that workmen were not employees of AIDC, and  therefore, the question of giving them benefit as was done by  the Labour Court did not arose and consequently that part of  the Award was quashed.

Background facts in a nutshell are as follows:

The appellant, being the registered Trade Union, looking  after the welfare of its members employed by AIDC in its  Extensible Sack Kraft. Paper Project (for sake, called as  ’ESKPP’) under IPAL, raised a dispute for non-payment of  salaries of its members by AIDC after October 1998 on the  plea that the members of the appellant were not the employees  of AIDC but of the IPAL.  Accordingly the appropriate Govt.  vide notification dated  20.2.1999 referred the following issues  to the Labour Court for adjudication. The issues are quoted  below:

"1. Whether the management of Assam  Industrial Development Corporation is justified  to deny as owner of the Sack Kraft Paper  Project of M/s Industrial Papers (Assam) Ltd.  (IPAL), though they have signed an agreement  with a contractor as ’owner’ of the Sack Kraft  Paper Project, Dhing District-Nagaon, Assam.

2. Whether the Assam Industrial  Development Corporation AIDC is justified to  deny to take the responsibility of the Industrial

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Papers (Assam) Ltd. employees, though the  employees were appointed by the AIDC  through the advertisement published in the  News Paper.

3. Whether The management of AIDC is  justified by not absorbing or engaging the  employees of the IPAL, in their other Promoted  industries or give them salary regularly though  they have failed to install or run the proposed  Paper Mill in Dhing, Nagaon.

4. If not, then the said affected employees  are entitled for either regular monthly salary  from the management or absorption in the  other Industrial Units promoted by the Assam  Industrial Development Corporation,  Guwahati.

5. And the AIOC should not recruit or  appoint new employees to say other their  Promoted Industries until and unless the  employees of the Industrial paper are engaged  or absorbed by the Management."

The Labour Court issued notice dated 22.5.1999 to the  respective parties to the alleged disputes. In pursuance of the  notice, both the AIDC and the appellant filed their respective  written statements and additional written statements. AIDC,  in their written statement, raised preliminary objection,  specifically with the issues under reference, inter-alia,  questioning the maintainability of the reference stating that  the purported dispute referred to by the Notification is not an  industrial dispute within the meaning of Industrial Disputes  Act, 1947 (hereinafter called as the Act’) and the Notification  issued by the Government cannot constitute an industrial  dispute because AIDC was not a proper or necessary party  and the members of the appellant, being employees of a  separate company i.e. IPAL, cannot claim to be employees of  AIDC which was only a Promoter Company.

Apart from the preliminary objection so raised as  mentioned above, AIDC gave its reply in respect of all other  issues. Regarding issue No.1, it was stated that AIDC, being a  promotional organization, had also promoted the IPAL by  signing various documents and agreements with IPAL since it  was in the nascent stage for the project for protection of  ESKPP at Dhing. The role of AIDC was merely to assist IPAL as  its promoter for setting up its project. AIDC claimed that  under no circumstances AIDC could be called as owner of the  project because IPAL was a separate Company registered  under the Companies Act, 1956 with an independent Board of  Directors having its separate Memorandum and Articles of  Association. In support of its claim, AIDC mentioned that the  Govt. of Assam vide Notification dated 23.2.88 re-constituted  the Board of Directors of IPAL Insofar as issue No.2 is  concerned, it was stated that since the ESKPP of IPAL was not  owned by AIDC, the appellants were the employees of IPAL,  and AIDC being a nodal agency of the State Government for  implementation of various projects as promoter only, cannot  be saddled with any responsibility of the employees of IPAL  and the appellant’s members were not the employees of AIDC  Besides IPAL, the AIDC promoted several other companies like  Fertichem Ltd., Assam Syntex Ltd. Assam Petrochemical Ltd.  etc. and those are managed by their independent Board of

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Directors. The employees who were claimed by the appellant to  be the employees of AIDC, on being appointed in pursuance of  the advertisement, were not the workmen as defined under the  Act. According to them, none of 11 categories of posts  advertised, mentioned in the reference itself, were workmen as  defined under the Act arid the persons appointed against  those posts had not raised dispute. Such dispute had only  been raised by the IPAL Employees Union, the appellant,  which did not represent the persons appointed as per the  advertisement. As regards issue No.3, the contention of AIDC  was that they were already overstaffed for which Voluntary  Retirement Scheme had already been introduced to reduce  excess manpower and as such absorption of employees of IPAL  in AIDC did not arise. With regard to issue No.4, AIDC stated  that AIDC as a promoter was not liable for payment of salaries  to the employees of IPAL which was a separate and distinct  Company. On issue No.5, the stand of AIDC was that due to  the precarious financial position, the question of fresh  recruitment did not come.

The appellant in the written statement alleged that the  ESKPP was owned by AIDC inasmuch as ESKPP, being  established under the licence obtained from the Central  Government under the Industries (Development and  Regulation) Act, 1951 (for short, the ’IDR Act’), AIDC cannot  claim that they established the said project as a ’Promoter’ as  they failed to show that the Industrial Licence obtained by it  was either transferred or revoked at any stage. According to it,  AIDC also admitted that ESKPP was never amalgamated with  any other company under the Companies Act and as such, the  AIDC remained the ’owner’ for the said project even under the  Act itself and no further document or any evidence was  necessary to prove the same from the appellant’s side.  Accordingly it was pleaded that issue No.1 should be decided  in favour of the appellant holding that AIDC was not justified  in denying the ownership of the project. Regarding issue No.2,  it was alleged that since AIDC was owner of the project, it  could not deny its responsibilities to its employees who were  appointed in the project. Insofar as issue No.3 and 4 are  concerned, it was claimed that the AIDC, being the owner of  the project, was liable to pay regular salaries to its workmen.  As regards issue No.5, it was submitted that AIDC should be  restrained from recruiting or appointing new employees until  and unless the employee of IPAL were engaged or absorbed by  AIDC.

The Labour Court in its Award held as follows:

(A)     There was no material on record to show that AIDC  had transferred Sack Kraft Paper Project Dhing to  the IPAL at any point of time.  It was observed that  though both parties have approved the appointment  of candidates at IPAL and AIDC none of them came  within the categories of those post advertised

(B)     The Issue is redundant as members of the Union do  not come within the categories of posts advertised.      (C)     It was not incumbent of AIDC to absorb members of  the appellant union to any other AIDC industry. (D)     IPAL could not be run it was incumbent for AIDC to  terminate the services of the members of the  appellant-Union giving them terminal benefits  according to relevant industrial and labour laws. (E)     Until that was done AIDC was obliged to give the  members of the appellant union regular salaries.

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As noted above, both the appellant and AIDC filed writ  petitions. While the writ petitions filed by the AIDC was  allowed and one filed by the appellant was dismissed.  Learned  Single Judge held that since workmen were not employees of  the AIDC, the question of giving them benefit as done by the  Labour Court did not arise. The question of employer and  employees (of AIDC) was not the subject matter of reference.   Writ appeal was filed by appellant before the High Court. The  High Court inter alia held while dismissing the writ appeal  that AIDC is not the owner of the Extensible Sack Craft Paper  Project of IPAL. Being a separate and independent company,  the members of the appellant-union are not the employees of  AIDC which could not be saddled with the responsibility of  these employees. Therefore, AIDC was not liable for absorption  or engagement of the employees of IPAL in any other AIDC  promoted industry and to give them salaries regularly after the  closure of the project.

       In support of the appeal learned counsel for the appellant  submitted that the Labour Court had taken a practical and  pragmatic view.  Learned Single Judge and the Division Bench   should not have interfered with the findings recorded.   

Learned counsel for the respondent AIDC on the other  hand submitted that in view of materials placed on record,  both learned Single Judge and Division Bench of the High  Court was justified in its conclusion and no interference is  called for. There is ample material on record to show that  employment was for a specific project and on an expiry of that  project the question of any claim to be appointed by IPAL  much less by AIDC does not arise. According to AIDC the  project was closed in 1991 whose assertion is denied by the  appellant.   

There is no claim that the members of appellant union  were employees of AIDC. In the reference IPAL was not a party.   It is evident from materials on record that IPAL was promoted  by AIDC and was incorporated in 1974. It was not even  subsidiary of AIDC.

Learned Single Judge and the Division Bench have  categorically found that IPAL was a separate, independent  company and the members of the appellant union are not  employees of AIDC. That being so the conclusions of learned  Single Judge and the Division Bench that AIDC cannot be  saddled with the responsibility of those employees is  irreversible.  

The Memorandum and Article of Association of both  AIDC and IPAL as well as the Certificate of Incorporation of  IPAL has been referred to by the Division Bench in the  impugned judgment.  It has, with reference to those come to  hold that they have separate independent existence having  independent Board of Directors.  The Notification dated  22.2.1988 by which Board of Directors of IAPL has also been  referred to for the purpose of coming to the conclusion that  both the companies have independent existence. AIDC was a  nodal agency of the Government of Assam and was acting only  as a promotional organization for promoting IPAL at the initial  stages. As is rightly pointed out by the AIDC cannot be  branded as a owner of the establishment.  The expression  "Owner" has been defined in Section 3(f) of the Act. It reads as  follows:

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"(f) "owner", in relation to an industrial  undertaking, means the person, who, or the  authority which, has the ultimate control over  the affairs of the undertaking, and, where the  said affairs are entrusted to a manager,  managing director or managing agent shall be  deemed to be the owner of the undertaking".

In Black’s Law Dictionary 6th Edition, the expression  "promoter" has been described as follows:

"One who promotes, urges on, encourage,  in cites, advances etc. one promoting a plan by  which it is hoped to insure the success of a  business, entertainment etc. venture.  The  person who, for themselves or others, take a  preliminary steps to the finding or organization  of a corporation or other venture. These person  who first associate themselves together for the  purpose of organizing the company, issuing its  prospectus, procuring subscriptions to the  stock, securing a charter etc. From an  ordinary reading of the meaning of ’promoter’,  it can be well deduced that ’promoter’ can not  be treated as owner."

In the written statement before the Labour Court, AIDC  has taken specific stand in the following manner:

"That when the employees were paid  regular salary by IPAL Project from its own  fund/account at that time no such demand  was raised by the employees of IPAL.  When  they found that the Project is virtually closed  and they are not getting salary from their own  Project, they demanded that they belong to  AIDC for the sake of getting salary from AIDC  without doing any job for AIDC.  In such  situation the employees of IPAL cannot be  treated as employees of AIDC. These employees  were appointed/recruited against the Project  against the Project as per the job specification  and as per requirement and sanctioned  strength of  IPAL while seeking requisition  from Employment Exchange the requisition  was  signed by General manager, Sack Kraft  Paper Project as the employer. All the  employees have been appointed on behalf of  the IPAL Project.  They are employees of IPAL  governed by all rules and regulations of  Industrial Papers Assam Ltd. Under these  circumstances stated above the management  of AIDC cannot take any responsibility for the  employees of IPAL."

Above being the position, the judgment of the Division  Bench affirming that of learned Single Judge cannot be faulted  and the appeal stands dismissed. Subject to what is stated  above, dismissal of the appeal shall not stand in the way of the  concerned employees or recognized Unions making claim for  arrears of salaries or claims to be due from IPAL.  

 It has been submitted by learned counsel for the  appellant that the committee has been appointed by the High

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Court in the matter of arrears of salary and on the question of  absorption of various sick public sector undertakings.  It  needs no emphasis that those are the aspects about which we  have not expressed any opinion.

The appeal is dismissed but without any orders as to  costs.