http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9  

PETITIONER: BHAGWAN DASS CHOPRA

       Vs.

RESPONDENT: UNITED BANK OF INDIA & ORS.

DATE OF JUDGMENT17/11/1987

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) SINGH, K.N. (J)

CITATION:  1988 AIR  215            1988 SCR  (1)1088  1987 SCC  Supl.  536     JT 1987 (4)   373  1987 SCALE  (2)1107

ACT:      Industrial Disputes  Act, 1947: Section 18-Labour Court Industrial  Tribunal-Pending  Proceedings-Whether  party  to proceedings  entitled   to  re-open   proceedings  on  being impleaded in  place of  party whose  rights liabilities have been taken over.      Civil  Procedure   Code,  1908:   order  20   Rule  10- Applicability to  proceedings pending  before  Labour  Court Industrial Tribunal.

HEADNOTE: %      The appellant  joined the  service of a Commercial Bank on July  12, 1974  and was confirmed on October 1, 1974. His services were  terminated by  the Bank  on February 10, 1975 without assigning any reason. On an industrial dispute being raised, the  Central Government,  by its order dated July 9, 1975 referred  the dispute,  as  to  whether  the  Bank  was justified in  terminating his  services  and  if  not,  what relief  the   workman  was   entitled  to,  to  the  Central Government Industrial  Tribunal for  adjudication. The claim made by the appellant was disputed by the management. In the course of  the trial, the appellant examined himself and was cross-examined. His evidence was closed on 21.5.76.      On July  25, 1976  the Bank  entered into  an agreement with the  first respondent  Bank where  under all the assets and liabilities of the erstwhile Bank were taken over by the respondent Bank.  The employees of the erstwhile Bank became the employees  of the first respondent Bank by virtue of cl. 20 of  the said  agreement. On  August 1, 1976 the erstwhile Bank  totally   merged  with   the  first  respondent  Bank. Thereafter, on  behalf of  the former  Bank, five  witnesses were examined.      On  an   application  made   by  the  appellant,  first respondent Bank  was impleaded  as a  party, in  view of the merger  which   had  taken   place.  Thereafter,  the  first respondent Bank  examined its Personnel Officer and formally closed the evidence.      On October  3, 1978 the first respondent Bank submitted an  application  for  cross-examining  the  appellant  whose evidence had been

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9  

1089 closed  on   May  21,   1976.  The  Tribunal  dismissed  the application on  the ground  that since  no new plea had been taken there  was no  ground  to  recall  the  appellant  and subject him to further cross-examination.      The Tribunal made the award on January 30, 1981 holding that the termination of the service of the appellant was not justified and was bad, illegal and not enforceable.      The first  respondent Bank filed a writ petition before the High  Court. A  Single Judge  set aside the award on the ground that  when once  a person was impleaded as a party to the proceedings, principles of natural justice required that he should  be given  an opportunity  to  crossexamine  those witnesses whose evidence had been recorded earlier and since the Tribunal  had rejected first respondent Bank’s prayer to crossexamine the appellant whose evidence had been closed on May 21,  1976, the  award was  liable  to  be  quashed.  It, however, remanded  the case  to the  Industrial Tribunal  to decide the  case again  after giving  an opportunity  to the first respondent  Bank to  cross-examine the  appellant  and other witnesses.  The Letters  Patent Appeal  filed  by  the appellant was  dismissed by  the Division Bench holding that the first respondent Bank had the right to cross-examine the appellant on the sole ground that it had been impleaded as a party after  the merger of the erstwhile Bank with the first respondent Bank.      Allowing the appeal, ^      HELD:1.1 There  is no  express provision, corresponding to Rule  10 Order  22 of  the Code  of Civil Procedure, 1908 providing that  in  cases  of  an  assignment,  creation  or devolution of  any interest  during the  pendency of a suit, the suit  may, by  leave of  the court,  be continued  by or against the  person who  or upon whom such interest has come or devolved,  which is  applicable to the proceedings before the Industrial Tribunal. [1095B-C]      1.2 In  every case  of transfer,  merger,  takeover  or scheme of  amalgamation, the  rights and  liabilities of the transferee Company  or Corporation shall be the same as that of the  tansferor company or corporation, and subject to the terms and  conditions of the contract of transfer or merger, the scheme  of amalgamation  and the legal provisions as the case may  be under  which such  a transaction may have taken place, the  transferee company or corporation becomes liable to be impleaded or becomes entitled to be impleaded in place of or  in addition  to the transferor company or corporation in any action, suit or proceeding 1090 filed against or by the transferor company or corporation by or against  a third  party, and  that  whatever  steps  have already taken  place in  those proceedings  will continue to operate against and be binding on such parties in any of the ways mentioned  in Rule  10 Order  22 of  the Code  of Civil Procedure, 1908. [1095F-H, 1096A-B]      1.3 Generally  speaking, an  assignee cannot  set up  a case inconsistent  with the  one put forward by his assignor and it  is only  in exceptional cases that an assignee could be permitted  to raise  any new  plea and  that too only for avoiding multiplicity of the proceedings. [1097B]      In the  instant case, by reason of impleading the first respondent as  a party  there was no change in the character of  the   proceedings  pending   before  the  Tribunal.  The respondent Bank only stepped into the shoes of the erstwhile Bank and  all the proceedings that had gone on till the date on which  the respondent  Bank was so impleaded were binding

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9  

on the  respondent Bank.  It was  bound by  the  proceedings which had taken place till then and could not go back on the proceedings. [1096G-H; 1097A]      The Single  Judge was  in error in taking the view that the first  respondent Bank was appearing before the Tribunal in its  own right  and  was  entitled  to  protect  its  own interest. The  proceeding pending before the Tribunal on the date of  merger could  not be considered as a new proceeding instituted  against   the  respondent  Bank,  on  its  being impleaded. It  was the  same old  proceeding  to  which  the erstwhile Bank  was a party and the rights of the respondent Bank in  the conduct  of the proceedings could not be larger than the  rights which  the erstwhile Bank itself possessed. [1097D-E]      There were  no  such  exceptional  circumstances  which entitled the respondent Bank to put up a plea different from the pleas  which had  already been taken up by the erstwhile Bank and  there was  also no need to permit it to reopen the proceedings which  had gone  on till then. Therefore, in the absence of  any exceptional  circumstances which  would have entitled the party to a proceeding to recall a witness whose evidence had  already  been  completed  for  further  cross- examination, the first respondent Bank could not make such a claim at  all. The  Single Judge who set aside the award and the Division Bench, which merely affirmed the decision, have erred in overlooking the true legal position. [1097B,G] 1091      On the  facts and  in the circumstances of the case the respondent Bank  was, therefore,  not entitled to recall any of the  witnesses examined  on behalf  of the  appellant for further  cross-examination,   particularly  after  both  the parties  had   closed  their  respective  cases  before  the Tribunal. The  dismissal of  the  application  made  by  the respondent for  recalling the  appellant for  further cross- examination,   in    the   absence    of   any   exceptional circumstances, could  not be  considered  as  a  ground  for setting aside  the award.  The principles of natural justice had not, therefore, been violated by the Tribunal in passing the award. [1097H, 1098A-B]      The judgment  of the  Division Bench  as  also  of  the Single Judge  set aside. However, as the respondent Bank had some other grounds to urge before the Single Judge, the case is remanded  to the  Single  Judge  to  consider  any  other relevant ground that may be urged by the respondent Bank and to dispose of the writ petition. [1098B-C]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 2984 of 1987.      From the  Judgment and  Order dated  30.3.1987  of  the Delhi High Court in L.P.A. No.67 of 1987.      M.K.  Ramamurthi,   Mrs.   C.   Ramamurthi   and   M.A. Krishnamoorthy for the Appellant.      Dr. Y.S.  Chitale, Ms.  M. Roy, H.K. Puri and H.K. Dutt for the Respondents.      The Judgment of the Court was delivered by      VENKATARAMIAH,J. The  appellant joined  the service  of the Narang Bank of India Ltd., New Delhi on July 12, 1974 as a Clerk-cum-Typist  and was  confirmed  in  his  service  on October 1,  1974. The  Narang Bank  of India  Ltd., however, terminated  his   services  on  February  10,  1975  without assigning any  reason. On an industrial dispute being raised the Central  Government by  its order  dated  July  9,  1975

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9  

referred the  following dispute  to the  Central  Government Industrial Tribunal for adjudication:                "Whether the  action of the management of the           Narang Bank of India, New Delhi in terminating the 1092                services of  Shri Bhagwan  Dass Chopra w.e.f.           10.2.1975 is justified? If not, what relief is the           said workman entitled?      The claim  made by  the appellant  was disputed  by the management. On  the basis  of the  pleadings  filed  by  the parties the  Industrial Tribunal  framed issues and directed the parties to lead evidence. In the course of the trial the appellant examined  himself and he was cross-examined by the representative of  the Narang  Bank of India Ltd. Thereafter the evidence  of the  appellant was  closed on 21.5.1976. On July 25,  1976 the Narang Bank of India Ltd. entered into an agreement with  the United  Bank of  India, respondent No. 1 herein, whereunder  all the  assets and  liabilities of  the Narang Bank of India Ltd. were taken over by the United Bank of India,  respondent No.  1. The employees of the erstwhile Narang Bank of India Ltd. became the employees of the United Bank of  India, respondent  No. 1  by virtue of clause 20 of the said  agreement. The  relevant part  of clause  20  read thus:                "20. (a)  The Transferee  shall be  under  an           obligation to take over and absorb and retain with           effect from  1st August,  1976 in  its  employment           such staff,  employees and assistants (hereinafter           called "the  said employees") of the Transferor or           employed by  the Transferor  in relation  to or in           connection with the said banking business intended           to be  taken over or acquired by the Transferee as           aforesaid who  were  permanent  employees  of  the           Transferor on  the said date and on the same terms           and  conditions  including  the  remuneration  and           wages and/or  other lawful  claims as  were or are           applicable or  payable to  them on  the said  date           subject to  the terms  and conditions as contained           in the  Third Schedule hereto PROVIDED ALWAYS that           such taking  over or  absorption of  the staff and           employees of  the Transferor  by the Transferee on           the same  terms  and  conditions  as  hereinbefore           mentioned and/or  also referred  to  or  otherwise           mentioned in  the Third  Schedule hereto shall not           however be so construed as to include or extend to           their or each of their rank and status.                (b) The  Transferee shall  not,  however,  be           bound to  take over or absorb in their employment-           (i)  all  such  staff,  assistants  and  employees           against whom  any show  cause notice or any action           (penal or otherwise) or any enquiry or any actions           and/or proceedings whatsoever are pending on 1093           the said date by the Management or by any Tribunal           Court or otherwise and/or who are on the said date           involved  or   figuring  in  any  such  enquiries,           actions and/or  proceedings and  against whom  any           adverse or  suspension order  finding or  decision           has been passed or is likely to be passed prior or           subsequent to  the said  date. (ii) Any such staff           employees and  assistants of  the Transferor whose           services have been terminated by the Transferor on           or before  the said  date and/or  against whom any           adverse or  suspension order  finding or  decision           has been  passed by any person holding any enquiry

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9  

         and/or Management  of the Transferor and or by any           court, Tribunal  or otherwise  subsequent  to  the           said date  but prior  to the formal taking over of           the said  business or  assets or properties of the           Transferor by  the Transferee on the basis of this           Agreement.                PROVIDED NEVERTHELESS  the  Transferee  shall           take over  suspended  employee,  if  any,  of  the           Transferor relating  to  the  said  business  with           effect from  the said  date  and/or  condition  as           herein before  mentioned in  clause 20(a) above in           so far as the same shall be applicable if and only           if such  employee/employees is  or are finally and           ultimately absolved/exonerated  or acquitted  from           or of all the charges levelled against him/them.      On August  1, 1976  the Narang  Bank of  India Ltd. was totally merged  with the  United Bank of India. On August 2, 1976 three  witnesses gave  evidence on behalf of the former Narang Bank of India Ltd., two of whom were employees of the United Bank  of India  Ltd. by  virtue of  the agreement  of merger referred  to above.  On September  20, 1976  two more witnesses were  examined of  whom one  witness was  a former officer of  the Narang  Bank of  India Ltd. On that date the appellant made  an application for permission to implead the United Bank  of India  also as a party in view of the merger which had  taken place.  The United  Bank of India took time till November  5, 1976  to file its reply to the application made by  the appellant.  The evidence  of the Narang Bank of India Ltd.  was, however,  closed on  November 5,  1976. The United Bank  of India sought further time to file a reply to the  appellant’s   application.  That  reply  was  filed  on November  10,   1976.  After   hearing  arguments   on   the application the  Tribunal directed  that the  United Bank of India should  be impleaded  as a party and also gave time to the appellant  to file  an amended  statement of  claim. The term of the Presiding Officer having expired on December, 1094 1, 1976,  a new  Presiding Officer  was appointed  in  July, 1977. On December 1, 1977 the United Bank of India filed its written statement.  On January  25, 1978  the United Bank of India  offered   to  reinstate  the  appellant  but  without backwages and  the case  was adjourned for some time. But no compromise was  reached. On  August 23, 1978 the United Bank of India  examined its  Personnel Officer  Shri R.B. Ray and formally  closed  the  evidence.  The  case  was  thereafter adjourned to October 3, 1978 for arguments. On that date the United Bank  of India  submitted an application praying that the Bank  should be  allowed to  cross-examine the appellant whose evidence had been closed on May 21, 1976. By its order dated  October   17,  1978   the  Tribunal   dismissed   the application of  the United  Bank of India on the ground that since no  new plea  had been  taken there  was no  ground to recall the  appellant and  subject him  for  further  cross- examination. The  arguments were  heard by  the Tribunal  on November 2,  1978 and an award was given on January 30, 1981 holding  that   the  termination  of  the  services  of  the appellant was  not  justified  and  was  bad,  illegal,  and unenforceable. The  Tribunal also  held that  the  appellant should be  deemed to  be in continuous service of the Narang Bank of  India  Ltd.,  New  Delhi  on  and  after  the  10th February, 1975  and consequently of the United Bank of India on the  date of  the award.  The Tribunal  directed that the appellant should  be paid  his full back wages upto the date of his  reinstatement. It also awarded costs of Rs. 1,000 to the appellant.  Aggrieved by  the said award the United Bank

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9  

of India  filed a  writ petition  before the  High Court  of Delhi in  Civil Writ Petition No. 928 of 1981. That petition was heard and disposed of by the learned Single Judge of the High Court  on February  24, 1987.  The learned Single Judge set aside  the award made by the Tribunal on the ground that when  once  a  person  was  impleaded  as  a  party  to  the proceedings, principles  of natural justice required that he should  be  given  an  opportunity  to  cross-examine  those witnesses whose evidence had been recorded earlier and since the Tribunal  had declined to grant permission to the United Bank of  India to cross-examine the appellant whose evidence had been  closed on  May 21, 1976 the award was liable to be quashed. The  learned Single  Judge, however,  remanded  the case to  the Industrial  Tribunal to  decide the  case again after giving  an opportunity  to the United Bank of India to cross examine  the appellant  and other witnesses. Aggrieved by the  judgment of  the learned  Single Judge the appellant filed Letters  Patent Appeal  No.  67  of  1987  before  the Division Bench  of the High Court. That appeal was dismissed by the  Division Bench  of the  High Court  holding that the United Bank  of India  had the  right to  cross-examine  the appellant on the sole ground that it had been impleaded as a party after the merger of the 1095 Narang Bank  of India  Ltd. with  the United  Bank of India. Aggrieved by  the decision of the Division Bench of the High Court the appellant has filed this appeal by special leave.      The question  for consideration in this case is whether a party  who acquires  the rights and liabilities of a party to a  proceeding is entitled to reopen as a matter of course the proceedings  on being  impleaded as a party in the place of the party whose rights and liabilities he had taken over. No express  provision corresponding  to rule  10 order 22 of the Code  of Civil  Procedure, 1908,  which provides that in cases of  an  assignment,  creation  or  devolution  of  any interest during  the pendency  of a  suit other  than  those cases dealt  with earlier  in order  22 of the Code of Civil Procedure, 1908,  the suit  may by  leave of  the court,  be continued by  or against  the person  to or  upon whom  such interest  has   come  or   devolved  is  applicable  to  the proceedings before  the Industrial Tribunal has been brought to our  notice. Section  18 of  the Industrial Disputes Act, 1947, however,  provides that  an award  of a  Labour Court, Tribunal or  National Tribunal  which has become enforceable shall be  binding on  all parties to the industrial dispute; all other  parties summoned  to appear in the proceedings as parties to the dispute, unless the Labour Court, Tribunal or National Tribunal  as the  case may  be records  the opinion that they were so summoned without proper cause; and where a party  referred   to  above   is  an  employer,  his  heirs, successors or  assigns in  respect of  the establishment  to which the dispute relates.      It  is,  however,  necessary  to  evolve  a  reasonable procedure to  deal with cases where a devolution of interest takes place  during the  pendency of  a  proceeding  arising under  the   Industrial   Disputes   Act,   1947.   In   the circumstances it is reasonable to hold that in every case of transfer,  devolution,  merger,  takeover  or  a  scheme  of amalgamation under  which the  rights and liabilities of one company or  corporation stand transferred to or devolve upon another  company  or  corporation  either  under  a  private treaty, or  a judicial  order or  under a law the transferee company or  corporation as  a successor-in-interest  becomes subject to  all the liabilities of the transferor company or corporation and  becomes entitled  to all  the rights of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9  

transferor company  or corporation  subject to the terms and conditions of the contract of transfer or merger, the scheme of amalgamation  and the legal provisions as the case may be under which  such transfer,  devolution, merger, takeover or amalgamation as  the case  may be  may have  taken place. It follows that  subject to  such terms it becomes liable to be impleaded or  becomes entitled  to be impleaded in the place of or in 1096 addition to  the transferor  company or  corporation in  any action, suit  or proceeding  filed  against  the  transferor company or  corporation by  a third  party or  filed by  the transferor company  or corporation against a third party and that whatever  steps  have  already  taken  place  in  those proceedings will  continue to operate against and be binding on the  transferee company or corporation in the same way in which they operate against a person on whom any interest has devolved in any of the ways mentioned in rule 10 of order 22 of the  Code of  Civil Procedure,  1908 subject of course to any terms  in the  contract of transfer or merger, scheme of amalgamation or  other relevant  legal provisions  governing the  transaction  under  which  the  transferee  company  or corporation has  become  the  successor-in-interest  of  the transferor company or corporation.      In the  instant case  admittedly  all  the  rights  and liabilities of  the Narang Bank of India Ltd. in its banking business were  taken over  by the United Bank of India under the agreement  of merger  dated July  25, 1976. Clause 22 of the agreement of merger provides as follows:                "22. The  Transferee shall  be substituted in           place of the Transferor in respect of all Court or           Tribunal proceedings  cases, suits  and Government           and Municipal  and records  and shall apply to the           authorities,  court,  Tribunal  or  otherwise  for           being added as the parties hereto and the benefits           of all  orders, directions,  decrees and  award or           judgment if  and when  issued will  pass on to the           Transferee, who  shall be  bound or  abide by  the           same subject  to the liabilities not taken over by           the Transferee including those in respect of staff           assistants  and   employees   concerned   of   the           Transferor as  mentioned in  clause 20 hereof. All           legal   costs   for   such   substitution   and/or           prosectuion or  contesting  the  said  action  and           proceedings existing  or binding  on the said date           shall be borne by the Transferee."      In view  of the terms of the agreement of merger and in particular clause  22 thereof  the United  Bank of India was rightly impleaded  as a  party to the proceedings before the Tribunal in  the place  of the  Narang Bank of India Ltd. By reason of  impleading of the United Bank of India as a party there was  no change  in the  character of  the  proceedings pending before  the Tribunal.  The United Bank of India only stepped into  the shoes of the Narang Bank of India Ltd. and all proceedings  that had gone on till the date on which the United Bank  of India  was so  impleaded were binding on the United Bank of India. 1097 The proceedings  before the  Tribunal  could  thereafter  be continued against  the United Bank of India. The United Bank of  India   could  thereafter   take  part  in  the  further proceedings before  the Tribunal  in the  same  capacity  in which the  Narang Bank  of India  Ltd. was  appearing in the case. It  was bound by all proceedings which had taken place till  then.  It  could  not  go  back  on  the  proceedings.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9  

Generally  speaking   an  assignee  cannot  set  up  a  case inconsistent with the one put forward by his assignor and it is only  in exceptional cases an assignee could be permitted to raise  any new  plea  and  that  too  only  for  avoiding multiplicity of  the proceedings.  In the instant case there was no  such exceptional  circumstance  which  entitled  the United Bank  of India  to take  up a plea different from the pleas which  had already been taken up by the Narang Bank of India Ltd  and there was also no need to permit it to reopen the proceedings  which had gone on till then. The High Court has not  adverted to  any such exceptional circumstance. The learned Single  Judge has not set out any justifiable reason for  observing   that  the  principles  of  natural  justice demanded that  all those  witnesses whose  evidence had been recorded earlier  could be  recalled at  the instance of the United Bank  of India and opportunity afforded to the United Bank of  India to  cross-examine them.  The  learned  Single Judge was  in error  in observing  that the  United Bank  of India was appearing before the Tribunal in its own right and was  entitled  to  protect  its  own  interest.  As  already observed by us the proceeding pending before the Tribunal on the date  of  merger  could  not  be  considered  as  a  new proceeding instituted  against the  United Bank  of India on its being impleaded. It was the same old proceeding to which the Narang  Bank of India Ltd. was a party and the rights of the United  Bank of  India in the conduct of the proceedings could not be larger than the rights which the Narang Bank of India Ltd.  itself possessed.  If the  Narang Bank  of India Ltd. had  no right  to recall  the witnesses  who  had  been examined on behalf of the appellant for cross-examination on the date  on which the United Bank of India made such prayer before the Tribunal, the United Bank of India also could not be granted  permission to  do so.  In  the  absence  of  any exceptional circumstance  which would  have entitled  in the ordinary course  a party to a proceeding to recall a witness whose evidence had already been completed for further cross- examination the  United Bank  of India could not make such a claim at  all. The  learned Single  Judge who  set aside the award in  the first  instance and  the Division  Bench which merely affirmed  the decision  of the  learned Single  Judge have erred  in overlooking the true legal position explained above by  us. On  the facts  and in the circumstances of the case the United Bank of India was not entitled to recall any of the  witnesses examined  on behalf  of the  appellant for further 1098 cross-examination particularly  after both  the parties  had closed their  respective  cases  before  the  Tribunal.  The dismissal of  the application  made by  the United  Bank  of India  for   recalling  the  appellant  for  further  cross- examination, in the absence of any exceptional circumstance, could not  be considered  as a  ground for setting aside the award. The principles of natural justice had not, therefore, been violated  by the  Tribunal in  passing the  award.  We, therefore, set  aside the  judgment of the Division Bench of the High  Court and also of the learned Single Judge. It is, however, mentioned  before us  that the United Bank of India had some  other grounds  to urge  before the  learned Single Judge and  the case  may be  remanded to  the learned Single Judge for  considering those  grounds. We, therefore, remand this case  to the learned Single Judge to consider any other relevant ground  that may  be urged  by the  United Bank  of India and to dispose of the writ petition in accordance with law. This  appeal is accordingly allowed. The United Bank of India is directed to pay the costs of the appellant.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 9  

N.P.V.                                       Appeal allowed. 1099