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CASE NO.: Appeal (civil) 9294 1995

PETITIONER: M/S.  BALLARPUR INDUSTRIES LTD.

       Vs.

RESPONDENT: STATE OF ORISSA & ORS.

DATE OF JUDGMENT:       28/11/2000

BENCH: S.R.Babu, S.N.Variava

JUDGMENT:

L.....I.........T.......T.......T.......T.......T.......T..J       J U D G M E N T

     S.  N.  VARIAVA, J.

     This  Appeal  is against a Judgment dated  7th  April, 1995,  by  which  the  Appellant has been  directed  to  pay arrears  of salary of the 4th Respondent for the period from 15.12.1981  to  2.8.1989.  Briefly stated the facts  are  as follows:   The 4th Respondent was working as a Chief Welfare Officer  under the 3rd Respondent Corporation.  His services were  terminated by an order dated 15th December, 1981.  The 4th  Respondent preferred an appeal to the State  Government invoking  its  jurisdiction under the third Proviso to  Rule 6(iv)  of  the  Orissa  Welfare  Officers  (Recruitment  and conditions  of Service) Rules, 1970.  After hearing  parties the  State Government set aside the order of termination and directed  reinstatement  of  Respondent  No.   4.   The  3rd Respondent  Corporation  then  insisted  that  reinstatement could  be  given effect to with effect from the date of  the appellate   order  and  not  from   the  date  of  order  of termination.   The 4th Respondent then filed a writ petition in  the High Court of Orissa.  The High Court directed  that the 4th Respondent was to be allowed to continue in the post of  Chief  Welfare Officer forthwith.  The  4th  Respondent, therefore, joined the service again on 26th July, 1989.  The 4th  Respondent was still not paid his arrears of salary  as the  3rd  Respondent  had  been   declared  sick  under  the provisions  of  the  Sick   Industrial  Companies   (Special Provisions)  Act, 1985.  Therefore, the arrears could not be paid until the BIFR took a decision in the matter.  The BIFR sanctioned  a  Scheme  on 21st December, 1990.   Under  this Scheme  Mill No.3 i.e.  the Mill where Respondent No.  4 was working,  was purchased by the State of Orissa.   Respondent No.   3 then intimated the 4th Respondent that the State  of Orissa,  after  the purchase of Mill No.  3, had sold it  to the  Appellants.   The 4th Respondent was informed that  all liabilities  would  now be met by the Appellants.  When  the 4th  Respondent approached the Appellants for payment of his dues,  the  Appellants claimed that they had not taken  over the liability to pay his dues and refused to pay the amount. The  4th Respondent, therefore, filed a Writ Petition before

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the  High Court at Orissa that the Appellant be directed  to pay his dues.  During the pendency of this Writ Petition the 4th  Respondent  attained the age of superannuation on  13th April,  1992.  Therefore, the only relief that was surviving was  payment of arrears from the date of termination on 15th December,  1981 till superannuation on 13th April, 1992.  In the  Writ  Petition the State of Orissa contended  that  the Appellants  having taken over all liabilities in terms of an MOU  dated  20th April, 1991 had to pay the dues of the  4th Respondent.   The  High Court by the impugned  judgment  has directed  the Appellant to pay dues as set out herein above. The  only question contended before us is that it is not the Appellants  but  the State of Orissa which is liable to  pay the dues of the 4th Respondent.  On the other hand on behalf of  the  State  of  Orissa it has been  contended  that  the Appellants  are  liable  to  pay the amount.   In  order  to determine  who is liable to pay the arrears of salary of the 4th Respondent one has to look at the Scheme, which has been sanctioned  by BIFR, and the correspondence and MOU  between the  Appellants  and the State of Orissa.  Under the  Scheme which has been sanctioned by BIFR on 21st December, 1990, it is provided as follows :  "Mill No.  3

     Mill  No.   3 would be sold to the Orissa  Government. There  are certain liabilities, which relate to mill no.   3 such  as  Rs.  240 lakhs as working capital advance and  Rs. 100  lakhs  as interest on the working capital advance,  and certain  State  and Central Government dues.  While all  the State  and  Central  Government dues would be  paid  by  the Orissa  State Government after the rehabilitation period and the interest on working capital advance is being written off as a part of the revival of TPM, the working capital advance of Rs.  240 lakhs and labour dues of Rs.  160 lakhs would be paid  by  the Orissa State Government.  An amount of Rs.   6 crores would be the sale price of Mill No.  3 payable within 30  days by the State Government to TPM for meeting the dues of labour being retrenched in respect of Mill No.  2.

     Pending  litigations  relating to Mill No.   3  before different  courts  and  authorities will be taken  over  and pursued  by  the State Government purchasing the Mill.   The Orissa Government will also take over all liabilities due to the  State Government and the Central Excise duty payable in respect of Mill No.  3.

     Corporate Offices/Branch and Sales Offices

     i.   Employees of Corporate, Branch and Sales  Offices who  have  been  on duty after 3.11.85 will  be  paid  their arrears dues upto the date of sanction of the scheme;

     ii.   Those  who  have  reached  superannuation  dates before  the  date of sanction of the scheme, will get  their normal retirement benefits for which they are entitled to;

     iii.   About 90 employees of these offices other  than those  who have reached superannuation will stand retrenched with  effect from the date of sanction of the scheme.   They will  be  entitled to due compensation, and funds have  been provided for this purpose."

     Thus  it  is  clear that under the Scheme it  was  the State  of Orissa who was to pay the arrears due to employees of  the Corporate Branch and Sales Offices upto the date  of sanction  of the Scheme i.e.  upto 21st December, 1990.  The

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correspondence  between  the  Appellants and  the  State  of Orissa  consists  of  letters dated 5th  March,  1991,  13th March,  1991 and 16th March, 1991.  Under the letters  dated 5th  March, 1991 and 13th March, 1991, the Appellants  offer to  purchase  Mill  No.   3  on  the  terms  and  conditions mentioned in the letters.  The State of Orissa by the letter dated  16th March, 1991 accepts those terms and  conditions. These  terms and conditions are then incorporated in an MOU, which  is  signed between the parties on 20th  April,  1991. The  relevant  clauses of the MOU are clauses (1),  (2)  and (3),  which  reads  as  follows  :   "1.   That  the   State Government  hereby  agrees to transfer the assets  of  TPM-3 situated  at  Choudwar, Distt.  Cuttack, State of Orissa  in favour  of  BILT  for  a total sum  of  Rs.   12,00,00,000/- (Rupees  twelve  crores only) alongwith  all  other/deferred liabilities as detailed in Clause 3 of this MOU hereinafter, so  as  to discharge the liability of TPM-3, Bank’s  working capital dues, workers’ dues as per the award of BIFR and the pending dues of the State and Central Government.

     i.   The BILT shall pay Rs.  6,00,00,000/- (Rupees six crores  only) within 7 (seven) days from the date of signing of this MOU as advance towards and being the part payment of total sum agreed as above.

     ii.   The BILT shall pay the balance amount of Rs.   6 Crores  after it receives the requisite permission under the MRTP  Act for the acquistion of the assets of the said TPM-3 from the concerned Authority duly constituted under the said Act  and  the State Government hereby assures that  it  will provide  its good offices to BILT and will endeavour so that BILT’s  application  to obtain requisite approval under  the MRTP  Act for acquiring the assets of TPM-3 is expeditiously granted.

     2.  That the award dated 21.12.1990 passed by the BIFR has provided that an amount of Rs.  1.6 Crores is to be paid to the workman of TPM-3 for the period till January 31, 1989 and    whereas    in     acocrdance    with    the    letter No.7956/I-IX-HI-28/91dated  the  21st March, 1991 issued  by the  State Government BILT has started the process of direct negotiations  with the workman of TPM-3 for a settlement  in respect  of  their  claims and wages for  the  period  after January  31, 1989, the parties hereto hereby declare that it is  their  intention  and  objective that a  just  and  fair settlement  should  be  reached  with  the  workmen  thereby covering  all  the  issues  pertaining   to  the  terms   of employment  of workmen for the period commencing on and from the  1st  February, 1989 till the date of revival of  TPM-3. It is also agreed by the State Government that it will issue appropriate  directions to the Labour Deptt.  To assist  and extend full cooperation to BILT enabling them to arrive at a peaceful and amicable settlement.

     3.   That  the award of the BIFR being Annexure -I  on pages  5  and  10  thereof  has  spelt  out  the  amount  of consideration  payable  for  the  assets  and  to  meet  the liabilities  of  TPM-3  and  in accordance  with  which  the parties hereto hereby mutually agree that the liabilities of the TPM have to be discharged as under :-

     Description  Amount a.  The sale price of TPM-3 Rs.  6@@                    IIIIII Crores  b.  Working capital advance being payable Rs.   2.40

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Crores to the banks.@@        JJJJJJJJJJJJJ

     c.   Dues payale to the State Government Rs.  7 Crores and  the  Central  Government.   This amount  has  not  been quantified  but  is estimated to be in the region of Rs.   7 Crores.

     d.   Dues  payable  to the workmen for the  Rs.   1.60 Crores period upto 31.1.1989.@@        JJJJJJJJJJJJJJJJJJJJJJ

     e.    Dues  payable  as  a  consequence   of   certain proceedings/litigations  relating  to TPM-3  pending  before different  Courts/Authorities.  This amount has Yet not been estimated.

     f.   To  reimburse the amount of Capital Gains Tax  if any arising as a result of sale of TPM-3.  In the absence of any  adjudication  order as may be passed hereafter  by  the concerned  Income  Tax Authority, the liability  under  this head  is  not capable of being quantified/estimated  and  as such is undertaken to be payable in toto in principle.

     However,  the dues in respect of the claims and  wages of  the  workmen  of  TPM-3 for  the  period  subsequent  to 31.1.1989 will be determined by direct negotiations with the workmen  and such liability is undertaken in principle to be paid  by BILT accordingly.  Further, in accordance with  the terms  of  the said award and the terms as contained in  the Letter  of Acceptance No.7006/I-IX-III-28/91 dated 16.3.1991 issued  by the State Government to BILT, BILT shall pay  the balance  dues  of  the  State Government, if  any,  free  of interest  to the State Government and Central Excise dues to the  Central Government free of interest after the expiry of 10  (ten) years from the date of commencement of  production by  BILT at the said TPM-3.  Further, it is made  absolutely clear  that  the  total  consideration  of  Rs.   12  Crores mentioned  in Clause No.  1 above, is included in the  break up  shown in clause No.  3 above, which represents the total estimated liability of BILT."

     Clause  10  is also relevant.  It reads as  follows  ; "That  the  State Government hereby clarifies that save  and except  the liabilities as are mentioned in the letter dated 5.3.91 (vide Annexure - IV) and letter dated 13.3.1991 (vide Annexure  - V) addressed by BILT to the State Government, no other liability shall accrue to BILT as a consequence of its purchasing the said TPM-3."

     Thus it is only the liabilities which are mentioned in the  letters dated 5th March, 1991 and 13th March, 1991  and the  liabilities  mentioned in clause (3), which are  to  be borne  by the Appellant.  All other liabilities remain to be discharged by the State of Orissa.  Liabilities mentioned in clause  (3)  of the MOU are those agreed to be taken by  the Appellants  in  the letters dated 5th March, 1991  and  13th March,  1991.  Reading of clauses (1) and (3) shows that the liability to make payment to the 4th Respondent has not been passed on to or taken over by the Appellants.  It was sought to be suggested that under the letter dated 5th March, 1991, the  Appellants  were  to pay all dues of the  workers  upto December  1998.   It  was submitted that the  term  "worker" would  also  include the 4th Respondent though he was not  a workman.   We are unable to accept this submission.  Even in

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the letter of 5th March, 1991, it is clarified that the dues of  the workmen are to the extent of Rs.  1.60 Crores.  This liability  of  Rs.  1.60 Crores is the same as had been  set out  in  the Scheme as being labour dues of Rs.  160  lakhs. This  liability is the same as that provided in clause 3(ii) of  the MOU.  It could not be disputed that Appellants  have paid this sum of Rs.  1.60 Crores to the Workmen.  The claim of  Respondent  No.  4 is in addition to and over and  above the  claim  of the Workmen in the sum of Rs.   1.60  crores. The  liability  of the arrears of salary payable to the  4th Respondent  was not taken over by the Appellants even though under  the  Scheme  the State of Orissa had taken  over  the liability  to pay all dues of the employees upto the date of the  sanction  of the Scheme.  Thus dues of  employees  upto December  1990  were payable by the State of  Orissa.   This would  include  arrears  of  salary   payable  to  the   4th Respondent.   In this view of the matter the High Court  was wrong  in  directing the Appellants to pay this amount.   To that  extent  the order of the High Court is required to  be and  is set aside.  It is clarified that the amounts due  to the  4th Respondent are payable by the State of Orissa.   At this  stage it must be mentioned that there was a dispute as to  whether  the 4th Respondent continued to  discharge  his duty  after  2nd  August,  1989.  As  this  was  a  disputed question  of  fact the High Court only directed  payment  of arrears  for  the period from 15.12.1981 till 2.8.1989.   We see  no  reason to vary that portion of the judgment of  the High  Court.  The arrears of salary which will be payable by the  State of Orissa to the 4th Respondent will only be  for the  period from 15.12.1981 till 2.8.1989.  The same must be paid  as  expeditiously  as  possible.   The  Appeal  stands disposed  of  accordingly.   There will be no  order  as  to costs.