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PETITIONER: GREAT INDIAN MOTOR WORKS LTD.,AND ANOTHER

       Vs.

RESPONDENT: THEIR EMPLOYEES AND OTHERS

DATE OF JUDGMENT: 06/05/1959

BENCH: SINHA, BHUVNESHWAR P. BENCH: SINHA, BHUVNESHWAR P. GAJENDRAGADKAR, P.B. WANCHOO, K.N.

CITATION:  1959 AIR 1186            1960 SCR  (1)  13

ACT: Industrial  Dispute-Award against company in  liquidations-- Appeal  by  managing  director  and  auction-purchaser   not aggrieved  by  the  award-Summary  dismissal  by   Appellate Tribunal--Validity--Right   of  appeal-Industrial   Disputes (Appellate Tribunal) Act, 1950(48 of 1950), S. 120-Companies Act 1956 (1 of 1956), s. 457.

HEADNOTE: The  discharged  employees  of the  Company  in  liquidation raised  an industrial dispute wherein the  auction-purchaser of the Company was also impleaded as a party.  The Tribunal, inter  alia,  held  that no  relationship  of  employer  and employee  existed between the auction-purchaser and the  old staff  who had been discharged prior to the purchase of  the business, and the reference so far as the  auction-purchaser was  concerned was incompetent.  The Tribunal  directed  the liquidators to pay compensation to the discharged employees. The  liquidators  were refused sanction to appeal  from  the said award by the High Court whereupon the auction-purchaser who was also the managing director of the Company, prior  to its  liquidation,  preferred an appeal in the  name  of  the Company represented by himself as the managing director  and also  in  his  capacity  as  the  auction-purchaser  of  the Company.   The  Appellate Tribunal dismissed the  appeal  in limine as incompetent in view of the provisions Of s. 457 Of the  Companies Act 1956, on the ground that the  appeal  was not maintainable as it was not authorised by the High Court. Held,  that where a party to the Reference in an  industrial dispute was exonerated from its terms, and no Award was made against him, he could not be said to be an aggrieved  party, thereby attracting the provisions of s. 12 of the Industrial Disputes  (Appellate Tribunal) Act 1950, and any  appeal  by him from the said Award will be incompetent. 14  No person other than the Official Liquidator, who is  place in  charge of the affairs of the Company in the  process  of winding up, is authorised with the sanction of the Court  to institute  any  suit,  prefer  an  appeal  or  other   legal proceedings in the name and on behalf of the Company. Held, further, that there is no inconsistency between s. 457

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of  the  Companies  Act 1956 and s.  12  Of  the  Industrial Disputes  (Appellate Tribunal) Act 1950.  But in  construing the   provisions  Of  S.  12  Of  the  Industrial   Disputes (Appellate Tribunal) Act 1950, if there was anything in  the Companies  Act,  1956, with particular reference to  S.  457 which  was  inconsistent with the provisions  of  Industrial Disputes (Appellate Tribunal) Act 1950, the latter Act shall prevail. Section  457  of  the Companies Act 1956,  concerns  a  very special case, it only lays down a condition precedent to the filing  of  a case if it -has to be by the liquidator  of  a company in the process of winding up. Section  12 of the Industrial Disputes (Appellate  Tribunal) Act  1950 is the usual statutory provision which permits  an appeal  to  be presented to the  Appellate  Tribunal,  which otherwise would not lie, by any party who is aggrieved by an award;  it does not either in express terms or by  necessary implication  override, abrogate or modify the provisions  Of s.  457 Of the Companies Act 1956, nor does it do away  with the necessity for the requisite sanction of the court  which is  a  condition  precedent  so far  as  the  liquidator  is concerned  to institute any suit or proceedings in the  name or on behalf of the company in liquidation. In  the  instant case the appeal purported to  be  filed  on behalf  of the Company in liquidation through  its  managing director was wholly incompetent ; and the second  appellant, the  auctionpurchaser,  could not be said to  the  aggrieved party enabling him to invokes. 12 of the Act.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 447 of 1957. Appeal  by special leave from the judgment -and order  dated the  1st  August 1956 of the Labour  Appellate  Tribunal  of India, Culcutta in Appeal No. Cal.-107 of 1956. D.   N. Mukherjee, for the appellants. Y.   Kumar, for the respondent. 1959.  May 6. The Judgment of the Court was delivered by SINHA  J.-This appeal by special leave, is directed  against the order of the Labour Appellate Tribunal, dated August  1, 1956, dismissing in limine the appeal                              15 against the Award of the Third Industrial.  Tribunal,  dated March  8, 1956.  The Great Indian Motor Works Ltd.,  now  in liquidation  (hereinafter  referred to  as  ’the  Company’), represented  by one of the Managing Directors, K. D.  Nundy, is  the  first  appellant.  The said K.  D.  Nundy,  in  his capacity  as  the  creditor of the  Company  and/or  as  the auction-purchaser  of the Company, is the second  appellant. One  hundred  and  forty  two  employees  of  the   Company, represented by the Bus Workers’ Union, are collectively  the first  respondent.  The second and third respondents, C.  D. Nundy  and D. L. Dutt, are the Official Liquidators  of  the Company, appointed by the High Court as such. The  relevant facts are these: The Company was  incorporated and  registered  under the Indian Companies  Act,  1913,  in 1926,  as  a  private limited company  with  its  registered office  at  Calcutta.   Its  business  was  mainly  that  of carrying on public transport on Route No. 14 in the City  of Calcutta,  as  also  of dealers in and  repairers  of  motor vehicles.   It  had  an authorized capital of  six  lacs  of rupees  divided  into 600 shares of Rs. 1,000 each,  out  of which,  shares worth Rs. 4,00,000 only had  been  subscribed and paid up.  The registered ,share-holders of the  Company,

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were  Kristo  Das Nundy, the second  appellant,  having  246 shares;  Chandy  Das  Nundy, respondent No.  2,  having  142 shares, and Kumar Kartick Charan Mullick, holding 12 shares, each  of  the  face  value of  Rs.  1,000.   On  account  of financial  difficulties  and  disputes  between  its  share- holders,  an  application for compulsory winding up  of  the Company  was  made  by the said respondent  No.  2,  on  the Original  Side in the High Court at Calcutta.  On  July  23, 1951, an order for winding up the Company was made, and  the Official  Receiver was appointed the Official Liquidator  of the  Company.   An appeal against the order  aforesaid,  was dismissed on December 5, 1951, and the order for winding  up the  Company, stood confirmed.  By an order  dated  December 11,  1951,  the  Official Receiver was  discharged  and  the respondents 2 and 3 aforesaid, were appointed Joint official liquidators in his place, with 16 power  to  sell  the  business of the  Company  as  a  going concern.   In April, 1953, the list of the creditors of  the Company  was settled by the Court, and the second  appellant aforesaid,  was included in the list as a creditor  for  the largest amount, namely, Rs. 2,35,818.  It may be added  that the discharged employees of the Company were not included in the  list  of  creditors thus settled by  the  Court,  After several  infructuous  attempts for selling the  property  by auction,  on May 4, 1954, the Court ordered the sale of  the Company’s  business free from all  encumbrances,  out-goings and   liabilities,  to  the  highest  bidder,   subject   to confirmation by the Court.  The second appellant bid for the purchase of the business with the leave of the Court, and he was  declared  the  highest  bidder  and  purchaser  of  the business for Rs. 1,42,500 at the sale held on June 12. 1954. The  said sale was confirmed by the Calcutta High  Court  on July  5, 1954.  On July 23, 1954, the  Official  Liquidators issued  a  notice  terminating  the  services  of  all   the employees  of  the Company with effect from July  24,  1954, except  one  Assistant and one clerk,  whose  services  were retained  until the winding up proceedings  were  completed. On  July 24, the Official Liquidators put the appellant  No. 2,  the auction-purchaser, in possession of the business  of the  Company,  which is now being carried on by  the  second appellant as the sole proprietor. AS  a result of the termination of the services of  the  one hundred   and  forty  two  employees  of  the  Company,   as aforesaid, an industrial dispute was raised at the  instance of the said employees whose list is attached to the order of Reference, dated August 26, 1954, which is in these terms:-  " Whereas an Industrial dispute exists between (1)  Messrs. Great  Indian Motor Works Ltd., 33, Rowland Road,  Calcutta, represented by their Managing Directors Sri C. D. Nundy  and Sri  K. D. Nundy, (2) Official Liquidators of  the  Company, Sri  D.  L.  Dutta and Sri C. D. Nundy,  33,  Rowland  Road, Calcutta  and (3) Sri K. D. Nundy, Auction Purchaser of  the Company,   33,  Rowland  Road,  Calcutta,  and  their   142, employees, given in the enclosed list, represented by 17 the  Bus  Workers’ Union, 249,  Bowbazar  Street,  Calcutta, regarding the matters specified in the schedule ;  And whereas it is expedient that the said dispute should be referred to an Industrial Tribunal constituted under section 7 of the Industrial--Disputes Act, 1947 (XIV of 1947); Now,  therefore,  in  exercise of the  powers  conferred  by section  10 of the said Act, the Governor is pleased  hereby to  refer the said dispute to the Third Industrial  Tribunal constituted under Notification No. 592 Dis./D/12L-5/12 dated

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the 23rd February, 1953 for adjudication. The said Third Industrial Tribunal shall meet at such places and on such dates as it may direct.                           SCHEDULE 1.Whether   the   notice  dated  23rd  July,   1954,   of termination  of services of 142 employees with  effect  from 24-7-54   issued  by  the  Joint  Official   Liquidators,was justified ? 2.Whether   the  refusal  of  the  auction-purchaser   to continue the employment of the 142 employees was justified ? 3.   What reliefs are the employees entitled to                                By  order of  the  Governor." The  employees of the Company had moved the High  Court  for directions to the Liquidators for the payment of their  dues from  the Company.  The Court, by its order dated  September 8,  1954, directed the Liquidators to pay within a week  the arrears of salary of all the workmen, and also within a week from receiving sale proceeds of the auction-sale  aforesaid, to  pay the workers, in lieu of notice, one week’s wages  to weekly  paid workmen, two weeks’ wages to  fortnightly  paid workmen, and one month’s wages to monthly paid workmen.  The Directors were to hold the balance of the sale proceeds till further orders of the Court. It  will  be  noticed from the order  of  reference,  quoted above,  that  besides the Official Liquidators,  the  second appellant was also impleaded as a party to the Reference, in his  capacity as the auction-purchaser of the  Company.   In his written statement before the Third 18 Industrial  Tribunal of West Bengal, which was in seizin  of the  case, the auction-purchaser, now the second  appellant, after reciting the facts and circumstances leading up to his auction-purchase,   as  aforesaid,  contended  that  as   an auction-purchaser,  he was not in any event liable  for  any compensation or dues, as claimed by the workmen; that he was not  bound to reinstate the old employees of the  Company  ; that  having  purchased the business free  from  any  encum- brances,  he was not liable for the dues of the workmen,  as claimed;  that be " had unnecessarily been made a party  and dragged here before the Tribunal." He added that he admitted that  he  was one of the Managing Directors of  the  Company before its liquidation, but with the order for  liquidation, he ceased to function as such. After hearing the parties, the Tribunal made its Award dated March   8,   1955.   The  Tribunal  awarded,   inter   alia, compensation  under  section  25(F)(b)  of  the   Industrial Disputes  Act,  1947,  and  directed  the  Company  to   pay compensation,  within  two months from the  date  the  award became enforceable, to such of the workmen as had been found entitled  to  the  same.   It may be  noted  here  that  the proceedings  before  the Industrial Tribunal  had  commenced without  the  necessary sanction of the High  Court  in  the liquidation  proceedings,  but during the  pendency  of  the proceedings, the High Court, by its order dated December 20, 1955,  granted  leave  to the workmen to  proceed  with  and continue the proceedings against the Official Liquidators of the  Company.  The Industrial Tribunal,  therefore,  further directed that so far as the Liquidators were concerned,  the compensation  awarded to the workmen " shall be  recoverable only out of the assets in their hands according to law".  So far  as  the  auction-purchaser  was  concerned,  the  award proceeded to make further directions in these terms:  "  The  auction-purchaser,  it  has  already  been   noted, purchased  the different sections of the business  with  the name " The Great Indian Motor Works " free from encumbrances

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and all outgoings and liabilities (Vide Exts.  D and E), and the said purchase was 19 confirmed  on 5th July, 1954.  After the sale was  confirmed and  before possession was taken by  the  auction-purchaser, the  Liquidators  terminated  the  employment  of  all   the employees (save and except the Accountant and one Clerk)  by -  a  notice dated 23rd July, 1954, with  effect  from  24th July,  1954.   After  such termination  of  employment,  the auction  purchaser obtained possession on 24th  July,  1954. At  that  time  no relationship of  employer  and  employees subsisted.   In  the  circumstances  the  dispute  with  the auctionpurchaser cannot be considered to be ’industrial dis- pute’  as no relationship of employer and  employee  existed ’between  the  auction purchaser and the old staff  who  had been  discharged  earlier.  Hence I agree with  the  learned Advocate of the auction-purchaser that the reference so  far as.  the  auction-purchaser  is  concerned  is  incompetent. Apart  from that, when the auction-purchaser  purchased  the business  free  from  encumbrances  and  all  outgoings  and liabilities  and  when  there is nothing to  show  that  the auction-purchaser undertook at any time to maintain the  old staff in his service, it cannot be said that his refusal  to continue  the employment of 142 employees  was  unjustified. Only when one purchases with all assets and liabilities as a going concern, he is bound to continue the old employees  in service and not otherwise. I award accordingly." Against  the  said  Award which, in  terms,  was  made  only against  the  Liquidators  and  not  against  the   auction- purchaser  aforesaid,  only  one  of  the  two  Liquidators, namely, Debendra Lall Dutt, made ail application to the High Court  for  necessary  directions  regarding  preferring  an appeal.  The other Liquidator, Chandy Das Nundy, opposed the said  application  for  leave to appeal.   The  High  Court, thereupon,  made an order on April 30, 1956, refusing  leave to the Liquidators to prefer an appeal from the said  Award, It  was in those circumstances that the appellants,  namely, Messrs.   Great Indian Motor Works Ltd., represented by  the Managing  Director, K.D. Nundy, as the first appellant,  and K.D. Nundy, in his capacity as creditor and/or  contributory of the said Great Indian Motor 20 Works Ltd. (under liquidation) and/or as auctionpurchaser of the Company, as appellant No. 2, filed an appeal before  the Labour  Appellate  Tribunal  of  India,  on  May  3,   1956, impleading  the one hundred and forty two employees  through the  Bus Workers’ Union, as the principal respondents,  C.D. Nundy  and  D.  L. Dutt, the  Official  Liquidators  of  the Company,  as proforma respondents.  As a counter-blast,  the aforesaid  workmen of the Company filed their appeal on  May 17,  1956,  impleading  the  Company  represented  by  their Managing  Directors,  C. D. Nundy and K. D.  Nundy,  as  the first  respondent, the Official Liquidators of the  Company, D.L. Dutt and C.D. Nundy, as respondents second party,  K.D. Nundy, the auction-purchaser, as respondent-third party  and the  workmen not represented by the Bus Workers?  Union,  as respondents  fourth party.  It is not necessary to  set  out the grounds of appeal in either of the two appeals, in  view of   our  decision  on  the  preliminary  question  of   the maintainability  of  the  appeal  in  this  Court,  as  will presently appear. The Labour Appellate Tribunal disposed of the two appeals by its order dated August 1, 1956.  The appellants’ appeal  was dismissed as incompetent in view of the provisions of s. 179

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of  Indian Companies Act, 1913, reenacted as s. 457  of  the Companies  Act,  1956.  The dismissal of the appeal  on  the ground  of the appeal not being competent, was based on  the order  of  the  Calcutta High Court,  dated  April  30,1956, aforesaid,  refusing leave to the Liquidators to  prefer  an appeal.   It  is  noteworthy  that  the  appeal  before  the Appellate  Tribunal, was not by the Liquidators but by  K.D. Nundy as Managing Director of the Company, as also by him in his  capacity  as  the creditor or contributory  or  as  the auction-purchaser  of the Company.  This aspect of the  case has not been dealt with by the Tribunal which held that  the appeal was not maintainable as it was not authorised by  the High Court.  The employees’ appeal also was dismissed as  it was  not pressed in view of the fact that the appeal by  the Company stood dismissed as unauthorized.  It was against the aforesaid order of the Appellate 21 Tribunal,   dismissing  the  appeal  in  limine,  that   the appellants  aforesaid moved this Court and obtained  special leave  to appeal, and the main ground of attack,  naturally, was  that  the  Labour Appellate Tribunal was  in  error  in dismissing   the   appeal   as  unauthorised   or   as   not maintainable. It  is  manifest  that  we are called  upon,  in  the  first instance,  to decide whether the Labour  Appellate  Tribunal had  rightly  dismissed the appeal in limine on  the  ground that  the  Liquidators had failed to  obtain  the  necessary sanction of the Calcutta High Court to prefer an appeal from the Award of the Industrial Tribunal.  If that order of  the Appellate  Tribunal  is  correct, and if we  find  that  the appellants  could  not have any locus standi  to  prefer  an appeal  of their own as distinct from that on behalf of  the Company, no other question would arise for determination  in this case.  If, on the other hand, we come to the conclusion that  order  was  erroneous,  at least  in  respect  of  the appellants’ appeal, then the appeal will have to be remanded to be re-heard by the Appellate Tribunal. It  has been urged on behalf of the appellants that in  view of  the  provisions  of  s.  12, read  with  s.  3,  of  the Industrial  Disputes (Appellate Tribunal) Act (48  of  1950) (which  was repealed by Act 36 of 1956), which governed  the making of appeals before the Appellate Tribunal, the  appeal to  that Tribunal was competent, and should have been  beard and  determined on merits.  The provisions of ss. 3 and  12, which we have to construe in this case, are in these terms:- " 3. The provisions of this Act and of the rules and  orders made  thereunder shall have effect notwithstanding  anything inconsistent  therewith contained in any other law  for  the time  being in force or in any instrument having  effect  by virtue of any such law." "  12.   An  appeal  under this Act  against  any  award  or decision  of an industrial tribunal may be presented to  the Appellate Tribunal by- (i)any party which is aggrieved by the award or decision ; or 22 (ii)the  appropriate Government or the Central  Government, where  it is not the appropriate Government, whether or  not such -Government is a party to the dispute." We have first to determine whether there is anything in  the Indian Companies Act, with particular reference to s. 179 of the Indian Companies Act, 1913, (reenacted as s. 457 of  the Companies   Act,  1956),  that  is  inconsistent  with   the provisions  of the Industrial Disputes (Appellate  Tribunal) Act,  1950 (which hereinafter will be referred ’to  as  "the

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Act").   If  there is anything in those  provisions  of  the Companies Act, inconsistent with the provisions of the  Act, the  latter shall prevail.  Hence, we have to  construe  the provisions  of s. 12 which specifically deals with  appeals. That  section  permits  an appeal to  be  presented  to  the Appellate  Tribunal by any party which is aggrieved  by  the award  (omitting  the words not necessary  for  our  present purpose).   It  is  the usual  statutory  provision  for  an appeal,  which  otherwise would not lie.  It  does  not  say either  in express terms or by necessary  implication,  that those   specific  provisions  of  the  Companies  Act,   are abrogated  or  modified.   It  does not  do  away  with  the necessity of the requisite sanction of the Court so far as a Liquidator is concerned.  Under the provisions of the Indian Companies Act, the affairs of the company under liquidation, are  placed in charge of the Official Liquidator, and  under s. 457, it is only the Liquidator who is authorized with the sanction of the Court, to institute any suit or other  legal proceedings in the name and on behalf of the company.  Thus, there  is no inconsistency between the aforesaid  provisions of  the  Act and the Companies Act, which only laid  down  a condition precedent to the filing of an appeal, if it has to be,  by a Liquidator of a company in the process of  winding up.   It concerns a very special case and has no bearing  on the  general right of appeal.  As, in the instant case,  the Court  refused the necessary sanction to the Liquidators  to prefer the appeal, no appeal could have been filed on behalf of the Company.  Hence, in so far as the appeal purported to be on behalf of the Company, through the Managing                              23 Director  aforesaid,  it was wholly  incompetent.   But  the appeal was not only by the Company as such, but also by  the said K.D. Nundy as the creditor or contributory or  auction- purchaser’  of  the  Company.  So far as this  part  of  the appeal  is concerned, it is clear that only a party. to  the Reference  aggrieved  by the Award could be a party  to  the appeal.   K.D.  Nundy  was not a party in  his  capacity  as creditor  or as contributory.  He was impleaded, as  already indicated as a party to the Reference in his capacity as the auction-purchaser of the business of the Company.  So far as that  capacity is concerned, it is clear from the  order  of the  Tribunal, that no award was made against him  as  such. He could not, therefore, be said to be a party aggrieved  by the  award,  having  been exonerated from  its  terms.   The Tribunal  put  this  on  three  main  grounds-(1)  that  the auction-purchaser had purchased the business of the  Company free from all encumbrances, out-goings and liabilities,  (2) that  the employment of the workmen. had been terminated  by the  Liquidators  before  possession  of  the  business  was delivered to the auctionpurchaser, and (3) that there was no relationship of employer and employees between the  auction- purchaser and the workmen whose services were so terminated. The  Tribunal,  in  that view of the  matter,  declared  the Reference  to  be  incompetent in so  far  as  the  auction- purchaser was concerned.  This order, the Tribunal passed at the instance of the auctionpurchaser himself.  The  auction- purchaser, therefore, succeeded in obtaining the order which the  Tribunal passed, holding that the Reference, so far  as he was concerned, was incompetent.  In view of these  facts, it  must  be held that so far as  the  auction-purchaser  is concerned,  he  was not aggrieved by the Award made  by  the Industrial Tribunal.  That being so, the provisions of s. 12 of  the  Act, are not attracted to the appeal  purported  to have  been filed by the auction-purchaser.  It is  a  little difficult  to  appreciate why the  auctionpurchaser,  having

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succeeded  in  obtaining the order, set out  above,  in  his favour,  changed his mind and preferred an appeal which,  in the events that had happened, was not maintainable. 24 In our opinion, therefore, the Labour Appellate Tribunal was not in error in dismissing the appeal by the Company and  by the   auction-purchaser,   as  incompetent.    It   follows, therefore, that we are not concerned with the merits of  the appeal.  In view of the fact that we have not expressed  any opinion  on  the  merits of the controversy  raised  in  the abortive  appeal, this dismissal shall be without  prejudice to   the  appellants’  rights,  if  any.   The  appeal   is, accordingly, dismissed, but the parties here are directed to bear  their own costs, in view of the fact that we have  not gone into the merits of the controversy. Appeal dismissed.