http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 13  

CASE NO.: Appeal (civil)  2846 of 2002

PETITIONER: M/s Maruti Udyog Ltd.                                            

RESPONDENT: Ram Lal & Ors.                                                   

DATE OF JUDGMENT: 25/01/2005

BENCH: N. Santosh Hegde & S.B. Sinha

JUDGMENT: J U D G M E N T

S.B. SINHA, J :

       Maruti Udyog Limited, the Appellant herein, is a Government   company within the meaning of Companies Act, 1956.  In terms of  a  notification issued under Section 6 of the Maruti Limited (Acquisition and  Transfer of Undertakings) Act, 1980 (hereinafter referred to as ’the said  Act’) the undertakings of the Maruti Limited (the Company) has vested in  the Appellant.  It is aggrieved by and dissatisfied with the judgment and  order passed by a Division Bench of the Punjab and Haryana High Court in  Letters Patent Appeal No.837 of 1995 whereby and whereunder a judgment  and order passed by a learned Single Judge dated 19.4.1995 passed in  C.W.P. No.15728 of 1993 questioning an Award dated 28.7.1993 passed by  the Labour Court in Reference Nos. 437, 438 and 166 of 1988, was set aside.   

BACKGROUND FACTS:

       The Respondents herein who are three in number were appointed by  Maruti Limited as Electrician, Helper and Assistant Fitter with effect from  27.4.1974, 8.11.1973 and 8.4.1974 respectively.  Their services stood  terminated by the said company on or about 25/26.8.1977 as a result of  closure of the factory.  The said company came to be wound up in terms of  an order dated 6.3.1978 passed by the High Court of Punjab and Haryana in  Company Petition No.126 of 1977 titled Delhi Automobiles P. Ltd. vs.  Maruti Ltd. whereupon an Official Liquidator was appointed to take charge  of the assets thereof.  A formal winding up order was also drawn up in terms  of  Form No.52 of the Company (Court) Rules, 1959.  The company was  formally wound up on 6.3.1978 whereupon it ceased to have any business  activity.  It is borne out from records that the learned Company Judge in the  said proceedings by an order dated 5.8.1977 directed the company that in  view of the fact that the industrial establishment of the company, namely,  Maruti Limited cannot continue with its production activity and the  workmen employed therein cannot be given any job, all workmen should be  retrenched in accordance with the provisions of the Industrial Disputes Act,  1947 (hereinafter referred to as ’the 1947 Act’).  Pursuant to or in  furtherance of the said direction, a settlement was arrived at by and between  the Official Liquidator and its employees, in terms whereof the employees  wee retrenched on or about 25/26.8.1977 on payment of one month’s salary  in lieu of notice.  The employees agreed to forgo their right of three months’  notice.  The termination took effect immediately upon signing of the  settlement.   

The Parliament thereafter enacted the said Act for acquisition and  transfer of undertakings of the Company which was preceded by an  Ordinance for Acquisition and Transfer of Undertakings of the said  company with effect from 13.10.1980, by reason whereof the assets of  the  said company vested in the Central Government. The Central Government,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 13  

however, on or about 24.4.1981 issued a notification in exercise of its power  conferred upon it under Section 6 thereof directing that its right, title and  interest in relation to the undertakings of the company in stead and place of  continuing to vest in the Central Government shall vest in the Appellant  Company.   

INDUSTRIAL DISPUTE:

The erstwhile workmen of ’the Company’ thereafter issued a notice of  demand of reemployment upon the Appellant herein.  It is also not in dispute  that M/s R.K. Taneja and 72 others as workmen of the said establishment  filed a writ petition before this Court, under Article 32 of the Constitution of  India, inter alia, for a declaration that Section 13 of  the said Act is  unconstitutional.  A direction was also sought for therein against the  Appellant herein to offer re-employment to the said petitioners.  The  said  writ petition was dismissed in limine by an order dated 5.5.1983. The  Respondents herein, long thereafter raised an industrial dispute by serving  demand notices seeking reemployment in the services of the Appellant   purported to be in terms of Section 25H of the 1947 Act.    

The State of  Haryana  in exercise of its power conferred upon it under  Section 10(1)(c) of the 1947 Act issued a notification on 25.8.1988 referring  the following disputes for adjudication before the Labour Court :

"(1)    Whether Shri Ram Lal is entitled for  reemployment, if yes, with what details ?

(2)  Whether Shri Ghinak Prasad is entitled for re- employmenbt,  if  yes, with what details, with what  details ?

(3)     Whether Shri Sampath Prasad is entitled for re-  employment, if yes, with what details ?"

In its Award dated 28.7.1993, the Labour Court upon holding that the  Appellant herein is the successor-in-interest of the said company opined that  it was liable to reemploy the Respondents with back-wages from the date of  submitting their respective demand notices.    

WRIT PROCEEDINGS:

The Appellant herein filed a writ petition before the Punjab &  Haryana High Court questioning the said Award and the same was allowed  by a learned Single Judge of the said court by a judgment and order dated  19.4.1995 holding  :

"(i) workmen-Respondents retrenched by the  company in August 1977 and did not challenge  retrenchment.  The company, thereafter, went into  liquidation and its undertakings came to vest in the  Petitioner under Acquisition Act, but liabilities of the  company were never taken over,.

(ii)    Petitioner cannot be said to be successor-in- interest of the company and become liable to offer  reemployment to the workmen in terms of Section 25H  of the Act.

(iii)   Under Section 25H,  a workman can claim  reemployment after retrenchment  only from that  employer who had retrenched him.  In the instant case,  the workmen had never been in the employment of the  Petitioner nor did the Petitioner retrench  them.  They

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 13  

were in the employment of the company and it is the  company   which retrenched them in August 1977.  Thus,  the claim for reemployment, if any, could be made  against the company only and not against the Petitioner.

(iv)    By virtue of Section 13 of the Acquisition  Act, only persons who were in the service on the date of  the take over, viz. 13.10.1980, could become the  employees of the Petitioner and since, on admitted  position, the Respondents were not employed in the  undertakings on the said date and had already been  retrenched in August 1977, they could, in no case,  become the employees of the Petitioner.

(v)     Judgment of this Hon’ble Court in the case  of Bharat Coking Coal Ltd., was distinguished on facts  since in this case, the retrenchment of the workmen had  become final and they had never challenged the same as  in the other case."

       Aggrieved by and dissatisfied with the said judgment a Letters Patent  Appeal came to be filed by the Respondents herein, which by reason of the  impugned judgment was allowed reversing the aforementioned findings of  the learned Single Judge.   

       Aggrieved, the Appellant is before us in this Appeal.

SUBMISSIONS:         Mr.Anil B. Divan, learned Senior Counsel appearing on behalf of the  Appellant,  had principally raised three contentions in support of the Appeal.   Firstly, it was argued that in view of the fact that from a perusal of the said  Act, it would appear that ’the company’ was wound up in a proceeding for  liquidation and as the undertakings of the company had not been functioning  necessitating the enactment thereof; the Division Bench of the High Court  committed a serious error in holding that the Appellant is the successor-in- interest of ’the company’ and, therefore, liable to reemploy the Respondents  herein.  Secondly, it was urged that in any event as the closure of the  undertakings of  Maruti Limited is admitted and having regard to the fact  that the Respondents herein had been paid the requisite amount of  compensation in terms of Section 25FFF of the 1947 Act,  Section 25H  thereof will have no application having regard to the definition of  ’retrenchment’ contained in Section 2(oo) thereof.

       Drawing our attention to the provisions of the said Act and in  particular Section 3, 4, 5, 13 and 25 thereof, the learned counsel would,  lastly, contend that the Act being a self-contained Code in terms whereof the  liability of the company had not been taken over and as the same contains a  non-obstante clause, the provisions thereof would prevail over the 1947 Act.

       Mr. Anupal Lal Das, learned counsel appearing on behalf of the  Respondents, on the other hand, would contend that in view of the decision  of this Court in Anakaplla Co-operative Agricultural and Industrial Society  Limited vs. Workmen [(1963) Supp. 1 SCR 730], the Appellant is the  successor-in-interest of the business of the said company.  The learned  counsel would submit that the concurrent findings of fact having been  arrived at in this regard by the Labour Court as well as the Division Bench  of the High Court, this court should not interfere therewith.   

       Placing reliance on the decision of this Court in Workmen represented  by Akhil Bhartiya Koyla Kamgar Union vs. Employers in relation to the  Management of Industry Colliery of Bharat Coking Coal Ltd. and Others.  [(2001) 4 SCC 55], Mr. Das would argue that reemployment of the workmen

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 13  

in terms of the provisions of the 1947 Act being not a liability under the said  Act and furthermore with a view to give effect to Section 13 thereof, the  termination of the employment of the Respondents by the company should  be held to be a retrenchment within the meaning of Section 25F of the 1947  Act.  Alternatively, it was submitted that in view of the fact that the term  ’workmen’ is used in Section 25F,  25FF and 25FFF of the 1947 Act would  include a retrenched workman, Section 25H should be held to be applicable  having regrard to the non-obstante clause contained in Section 25J thereof.

DISCUSSIONS:

       The basic fact of the matter, as noticed hereinbefore, is not in dispute.   It is also not in dispute that although the services of the three Respondents  were terminated by the company as a result of the closure of the factory, the  formal retrenchment came into being in terms of the order of the learned  Company Judge.  It is furthermore not in dispute that a settlement had been  arrived at by and between the Official Liquidator and the workmen as regard  the amount of compensation payable to the workmen of the said company.   

       The closure of the undertakings of the company, thus, stands  admitted.  It also finds mention in the Award passed by the Labour Court.  In  the aforementioned factual backdrop, we may notice the salient feature of  the said Act.   

THE SAID ACT:

       The said Act was enacted having regard to the liquidation proceeding  pending in the High Court of Punjab and Haryana following an order of  winding up of the said company, inter alia, for utilization of the production  facilities and equipment thereof as the company had not been functioning.   In terms of Section 3 of the said Act, the right, title and interest of the  company in relation to its undertakings vested in the Central Government.   General effect of such vesting is contained in Section 4 thereof; Sub-sections  (2) and (4) whereof reads as under :

       "(2)    All properties as aforesaid  which have  vested in the Central Government under  section 3 shall,  by force of such vesting, be freed and discharged from  any trust, obligation, mortgage charge, lien and all other  incumbrances affecting them, and any attachment,  injunction, decree or order of any Court restraining the  use of such properties in any manner shall be deemed to  have been withdrawn.

       (4)     For the removal of doubts, it is hereby  declared that the mortgagee of any property referred to in  sub-section (3) or any other person holding any charge,  lien or other interest in, or in relation to, any such  property shall be entitled to claim, in accordance with his  rights and interests, payment of the mortgage money or  other dues, in whole or in part, out of the amount  specified in section 7, but no such mortgage, charge, lien  or other interest shall be enforceable against any property  which has vested in the Central Government."  

       Section 5 provides that the Central Government or the Government  company, as the case may be, shall not be liable for prior liabilities of the  said company.  Section 6 envisages vesting of the undertakings in a  Government company if a notification in this behalf is issued by the Central  Government.  Chapter IV of the said Act provides for management of the  undertakings of the company.  Chapter V provides for provisions relating to  the employees of the company.  Section 13 which is relevant for our purpose  reads as under :

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 13  

       "13. Employment of certain employees to  continue.- (1) Every person who has been, immediately  before the appointed day, employed in any of the  undertakings of the Company shall become, -

(a)     on and from the appointed day an employee  of the Central Government; and

(b)     where the undertakings of the Company are  directed under sub-section (1) of section 6 to  vest in a Government company, an  employee of such Government company on  and from the date of such vesting,

and shall hold office or service under the Central  Government or the Government company, as the case  may be, with the same rights and privileges as to pension,  gratuity and other matters as would have been admissible  to him if there had been no such vesting  and shall  continue to do so unless and until his employment under  the Central Government or the Government company, as  the case may be, is duly terminated or until his  remuneration and other conditions of service are duly  altered by the Central Government or the Government  company, as the case may be.          (2)     Notwithstanding anything contained in the  Industrial Disputes Act, 1947, or in any other law for the  time being in force, the transfer of the services of any  officer or other person employed in any undertaking of  the Company to the Central Government or the  Government company shall not entitle such officer or  other employee to any compensation under this Act or  entitle such officer or other employee to any  compensation under this Act or under any other law for  the time being in force and no such claim shall be  entertained by any Court, tribunal or other authority.

       (3)     Where, under the terms of any contract of  service  or otherwise, any person, whose services become   transferred to the Central Government or the Government  company by reason of the provisions of this Act, is  entitled to any arrears of salary or wages or any payments  for any leave not availed of or any other payment, not  being payment by way of gratuity or pension, such  person may enforce his claim against the Company, but  not against the Central Government or the Government  company."

                                       (emphasis supplied)

       Chapter VI provides for appointment of the Commissioner of  Payments for the purpose disbursing the amounts payable to the company  under Sections 7 and 8 of the said Act and the procedure laid down therein.   Section 25 contains a non-obstante clause  stating that the provisions of the  said Act 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 law, other than the said Act, or in any decree  or order of any Court, tribunal or other authority.

APPLICATION OF THE ACT:

       The Respondents could have claimed a legal right of employment  in  the Appellant provided they were employed in any of the undertakings of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 13  

company immediately before the appointed day.  Section 13 of the Act  postulates a situation where a workman would continue to be a workman  despite the statutory transfer.  A workman, who has ceased to be in  employment of the Company before the appointed day, therefore, would not  be entitled to the benefit thereof.  The order of winding up, as noticed  hereinbefore,  was passed by the High Court of Punjab and Haryana by order  dated 6.3.1978 and a direction for terminating the services of all the  workmen had also been issued by the learned Company Judge on  5.8.1977,  pursuant whereto and in furtherance whereof , a settlement was arrived at by  and between the Official Liquidator and the workmen.

       Such settlement was arrived at indisputably having regard to the  provisions contained in Section 25FFF of the 1947 Act.  Section 25F  provides for entitlement of compensation to a workman who has been in  continuous service for not less than one year and who is  retrenched by the  employer, until the workman has been given one month’s notice in writing  indicating the reasons for retrenchment or the workman has been paid  one  month’s wages  in lieu thereof as well as compensation, the amount whereof  shall be equivalent to fifteen days’ average pay for every completed year of   service or any part thereof in excess of six months; and a notice in the  prescribed manner is served on the appropriate Government.  Section 25FF  envisages payments of compensation to a workman in case of transfer of  undertakings, the quantum whereof is to be determined in accordance with  the provisions contained in Section 25F, as if the workman had been  retrenched. A similar provision for payment of compensation to a workman  in case of closure of an undertaking is in Section 25FFF of the 1947 Act in  terms whereof also the concerned workman would be entitled to notice and  compensation in accordance with the provisions of Section 25F, as if he had  been retrenched.                       How far and to what extent the provisions of Section 25F of the 1947  Act would apply in case of transfer of undertaking or closure thereof is the  question involved in this appeal.  A plain reading of the provisions contained  in Section 25FF and Section 25FFF of the 1947 Act leaves no manner of  doubt that Section 25F thereof is to apply only for the purpose of  computation of compensation and for no other.  The expression "as if" used  in Section 25FF and Section 25FFF of the 1947 Act is of great significance.   The said term merely envisages computation of compensation in terms of  Section 25F of the 1947 Act and not the other consequences flowing  therefrom.  Both Section 25FF and Section 25FFF provide for payment of  compensation only, in case of transfer or closure of the undertaking.  Once a  valid transfer or a valid closure comes into effect, the relationship of  employer and employee takes effect.  Compensation is required to be paid to  the workman as a consequence thereof and for no other purpose.      

       A Constitution Bench of this Court in Hariprasad Shivshankar Shukla  vs. A.D. Divikar [(1957) SCR 121]  interpreted the word ’retrenchment’ as  contained in Section 2(oo) of the ID Act, holding :

       "For the reasons given above, we hold, contrary to  the view expressed by the Bombay High Court, that  retrenchment as defined in s.2 (oo) and as used in s.25F  has no wider meaning than the ordinary, accepted  connotation of the word : it means the discharge of  surplus labour or staff by the employer for any reason  whatsoever, otherwise than as  punishment inflicted by  way of disciplinary action, and it has no application  where the services of all workmen have been terminated  by the employer on a real and bona fide closure of  business as in the case of Shri Dinesh Mills Ltd. or where  the services of all workmen have been terminated by the  employer on the business or undertaking being taken  over by another employer in circumstances like those of  the Railway Company\005."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 13  

       The history of the legislation has been noticed by a Constitution  Bench of this Court in Anakapalla Co-operative Agricultural and Industrial  Society Ltd. (supra) and it, while holding that a company taking over the  management of a closed undertaking may in a given situation become  successor-in-interest but as regard the interpretation of the relevant  provisions of the 1947 Act following Hariprasad Shivshankar Shukla  (supra), opined :       

"\005The Legislature, however,  wanted to provide that  though such termination may not be retrenchment  technically so-called, as decided by this Court,  nevertheless the employees in question whose services  are terminated by the transfer of the undertaking  should  be entitled to compensation, and so, s. 25FF provides that  on such termination compensation would be paid to them  as if the said termination was retrenchment.  The words  "as if" bring out the legal distinction between  retrenchment defined by s. 2(oo) as it was interpreted by  this Court and termination of services consequent upon  transfer with which it deals.  In other words, the section  provides that though  termination of services on transfer  may not be  retrenchment, the workmen concerned are  entitled to compensation as if the said termination was  retrenchment.  This provision has been made for the  purpose  of calculating the amount of compensation  payable to such workmen; rather than provide for the  measure of compensation over again, s. 25FF makes a  reference to s. 25F for that limited purpose, and,  therefore, in all cases to which s.25FF applies, the only  claim which the employees of the transferred concern can  legitimately make is a claim for compensation against  their employers.  No claim can be made against the  transferee of the said concern."         

The said decision, therefore, is an authority for the proposition that the  expression ’as if’ has limited application and has been employed only for the  purpose of computation of quantum of compensation and takes within its  purview a case where retrenchment as contained in Section 2(oo) of the  1947 Act has taken place within the meaning of Section 25F and not in a  case falling under Sections 25FF or 25FFF thereof.

Once it is held that Section 25F will have no application in a case of  transfer of an undertaking or closure thereof as contemplated in Section 25F  and 25FFF of the 1947 Act, the logical corollary would be that in such an  event Section 25H will have no application.   

The aforementioned provisions clearly carve out a distinction that  although identical amount of compensation would be required to be paid in  all situations but the consequence following retrenchment under Section 25F  of the 1947 Act would not extend further so as to envisage the benefit  conferred upon a workman in a case falling under Sections 25FF or 25FFF  thereof.  The distinction is obvious inasmuch as whereas in the case of  retrenchment simpliciter a person looses his job as he became surplus and,  thus, in the case of revival of chance of employment, is given the preference  in case new persons are proposed to be employed by the said undertaking;  but in a case of transfer or closure of the undertaking the workman  concerned is entitled to receive compensation only.  It does not postulate a  situation where a workman despite having received the amount of  compensation would again have to be offered a job by a person reviving the  industry

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 13  

Applicability of Section 25H of the 1947 Act in the case of closure of  an undertaking came up also for consideration before this Court in Punjab  Land Development and Reclamation Corporation Ltd., Chandigarh etc. vs.  Presiding Officer, Labour Court, Chandigarh and Others etc.  [(1990) 3 SCC  682], wherein a Constitution Bench in no uncertain terms held :

"\005Very briefly stated Section 25FFF which has been  already discussed lays  that "where an undertaking is  closed down for any reason whatsoever, every workman  who has been in continuous service for not less than one  year in that undertaking  immediately before such closure  shall, subject to the provisions of sub-section (2), be  entitled to notice and compensation in accordance with  the provisions of Section 25F, as if the workman had  been retrenched" (emphasis supplied).  Section 25H  provides for reemployment of retrenched workmen.  In  brief, it provides that where any workmen are retrenched,  and the employer proposes to take into his employment  any person, he shall give an opportunity to the retrenched  workmen to offer themselves for re-employment as  provided in the section subject to the conditions as set out  in the section.  In our view, the principle  of harmonious  construction implies that in a case where there is a  genuine  transfer of an undertaking or genuine closure of  an undertaking as contemplated in the aforesaid sections,  it would be inconsistent to read into the provisions a right  given to workman "deemed to be retrenched"  a right to  claim reemployment as provided in Section 25H.  In such  cases, as specifically provided in the relevant sections the  workmen concerned would only be entitled to notice and  compensation in accordance with Section 25F.  It is  significant that in a case of transfer of an undertaking or  closure of an undertaking in accordance with the  aforesaid  provisions, the benefit specifically given to the  workmen is "as if the workmen had been retrenched"   and this benefit is restricted to notice and compensation  in accordance with the provisions of Section 25F."       

                                               (Emphasis supplied)

The said dicta was reiterated by a Bench of this Court in H.P. Mineral  & Industrial Development Corporation Employees’ Union vs. State of H.P.  and Others [(1996) 7 SCC 139], stating :

"\005Since Section 25-( O) was not available  on account  of the said provision having been struck down by this  Court the only protection that was available to the  workmen whose services were terminated as a result of  closure was that contained in Sections 25-FFA and 25- FFF of the Act.  It is not disputed that both these  provisions have been complied with in the present case."

DECISIONS RELIED UPON BY THE HIGH COURT:

The Division Bench of the High Court, however, proceeded on the  basis that the case of the Respondents herein is covered by the two decisions  of this Court, namely,  The Workmen vs. The Bharat Coking Coal Ltd. &  Others [AIR 1978 SC 979 : (1978) 2 SCC 175]  and  Workmen represented  by Akhil Bhartiy Koyla Kamgar Union (supra) rendered on interpretation of  provisions of Section 17 of  the Coking Coal Mines (Nationalization) Act,  1972 (hereinafter referred to as ’the 1972 Act’) .  It is no doubt true that the  provisions of Section 17 of the 1972 Act and Section 13 of the said Act are  in pari materia but before we proceed to deal with the said decisions, we

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 13  

may indicate that whereas in the present case, the said Act came into effect  on 27.12.1980,   the winding up order was passed on 6.3.1978 as a result  whereof  there had been no continuity of the business activity of the  undertakings of the said company.  The expression ’immediately before the  appointed day’ contained in Section 13 of the said Act vis-‘-vis Section 17  of the 1972 Act is of some importance.   The coking coal mines which stood  nationalized by reason of the 1972 Act were running concerns whereas  admittedly the undertaking of the company had not been functioning and the  enactment became necessary only having regard thereto and for the purpose  of  utilization of production facilities and the equipment thereof.

In  Bharat Coking Coal Ltd. (supra), a distinction was made between a  liability of the Central Government vis-‘-vis the Government company as  contained in Section 9 and Section 17 of the 1972 Act holding that the  liabilities of the owner, agent, manager, or managing contractor, as the case  may be, are liabilities which are referable to sub-section (2) thereof;   whereas Section 17 contains a special provision relating to workmen and  their continuance in service notwithstanding the transfer from private  ownership to the Central Government or the Government company, as the  case may be.  The court holding that the said provision confers a statutory  protection for the workmen and is express, explicit and mandatory and  referring to the definition of ’workman’ as contained in Section 2(s) of the  1947  Act, opined that even a workman who had been dismissed from his  service and  directed to be reinstated by an award of industrial adjudicator  would come within the purview thereof.  The said decision was rendered in  the fact situation obtaining therein as the services of the concerned workmen  therein were terminated by the erstwhile management of  the New  Dharmaband Colliery in October, 1969, whereupon an industrial dispute was  raised followed by a reference in October, 1970 and during the pendency  thereof, the  Colliery was nationalized with effect from 1.5.1972.  The  question which, therefore, came up for consideration before this Court was  as to whether an award of reinstatement can be enforced against the Bharat  Coking Coal Ltd., a Government company, in whose favour a notification of  vesting of the said Colliery was issued by the Central Government having  regard to the provisions contained in Section 9 vis-‘-vis Section 17 thereof.  An award of reinstatement postulates continuity of service, and the same  could be enforced against the company in which the undertakings vested in  terms of the provisions of a Parliamentary Act.  The said decision, therefore,  cannot be said to have any application in the fact of the present case.

In Workmen represented by Akhil Bhartiya Koyla Kamgar Union  (supra), the concerned workmen were retrenched by the management of  Industry Colliery of Bharat Coking Coal Ltd. on 9.6.1971 owing to  operational and financial problems and later on the management was taken  over by the Central Government under the Coking Coal Mines (Emergency  Provisions) Act, 1971 followed by the Coking Coal Mines (Nationalisation)  Act, 1972.  Before the said Bench, the decision in Anakapalla Cooperative  Agricultural and Industrial Society Ltd. (supra) was referred to but was  distinguished on the ground that whereas in Anakapalla Cooperative  Agricultural and Industrial Society Ltd. (supra) the provision of Section  25FF was attracted,  therein the provision of Section 25F was attracted,   stating :

       "9.  Shri Sinha submitted that as soon as transfer  had been effected under Section 25FF of the Act all the  employees became entitled to claim compensation and  thus those who had been paid such compensation will not  be entitled to claim reemployment under Section 25-H of  the Act as the same would result in double benefit in the  form of payment of compensation and immediate re- employment and, therefore, fair justice means that such  workmen will not be entitled to such conferment of  double benefit.  It is no doubt true that this argument  sounds good, but there has been no retrenchment as  contemplated under Section 25-FF of the Act in the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 13  

present case.  The workmen in question have been  retrenched  long before the Colliery was taken over the  respondents and, therefore, the principles stated in  Anakapalle Coop. Agricultural and Industrial Society  Ltd. (AIR 1963 SC 1489) in this regard cannot be applied  at all.  The workmen had been paid compensation only  under Section 25-F and not under Section 25-FF of the  Act on transfer of the Colliery to the present  management.  That case has not been pleaded or  established.  Hence, we do not think that the line upon  which the High Court has proceeded is correct.  The  order made by the High Court deserves to be set aside  and the award made by the Tribunal will have to be  restored."

The said decision, therefore, in stead of advancing the case of the  Respondents runs counter thereto inasmuch as in the said decision it has  been categorically held that Section 25H would come into play only when a  retrenchment in terms of Section 25F was made but the said provision would  not come into play in a case attracting Section 25FF of the 1947 Act.   Unfortunately, before the said Bench of this Court even the amended  provisions of Section 17 of the 1972 Act were not brought to its notice.       

THE 1947 ACT:

We have noticed hereinbefore that the consequences other than  payment of compensation envisaged in Section 25F of the Act do not flow in  case of transfer or closure of the undertaking.  Section 25H of the 1947 Act  cannot, thus, be invoked in favour of the Respondents in view of the fact that  they were not in the employment of the company on the appointed day i.e.  on 13.10.1980.

The submission of Mr. Das to the effect that the Parliament having  used the words ’every workman’ in Section 25FFF, which would include  dismissed workmen in view of its definition contained in Section 2(s) of the  1947 Act, should be widely interpreted so as to hold that even those  workmen who had received compensation would be entitled to the benefit of  Section 25H of the 1947 Act, cannot be accepted.    Such a construction is  not possible keeping in view the statutory scheme of the 1947 Act.  Section  25F vis-‘-vis Section 25B read with Section 2(oo) of the 1947 Act  contemplates a situation where a workman is retrenched from services who  had worked for a period of not less than one year on the one hand and those  workmen who are covered by Section 25FF and Section 25FFF on the other  keeping in view the fact that whereas in the case of the former, a  retrenchment takes place, in the latter it does not.  The Parliament amended  the provisions of the 1947 Act by inserting Section 25FF and Section 25FFF  therein by reason of  the Industrial Disputes (Amendment Act), 1957 with  effect from 28.11.1956, as it was found that having regard to the helpless  condition to which workman would be thrown if  his services are terminated  without payment of compensation and presumably on the ground that if a  reasonable compensation is awarded, he may be able to find out an  alternative employment within a reasonable time.  In the  case of closure of  an industrial undertaking the Act contemplates payment of compensation  alone.

In construing a legal fiction the purpose for which it is created should  be kept in mind and should not be extended beyond the scope thereof or  beyond the language by which it is created.  Furthermore, it is well-known  that a deeming provision cannot be pushed too far so as to result in an  anomalous or absurd position.  The Court must remind itself that the  expressions like "as if" is adopted in law for a limited purpose and there  cannot be any justification to extend the same beyond the purpose for which  the legislature adopted it.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 13  

       In a recent decision, the Constitution Bench of this Court in P.  Prabhakaran Vs. P. Jayarajan [JT 2005 (1) SC 173] opined:

"A legal fiction pre-supposes the existence of the  state of facts which may not exist and then works  out the consequences which flow from that state of  facts.  Such consequences have got to be worked  out only to their logical extent having due regard  to the purpose for which the legal fiction has been  created.  Stretching the consequences beyond what  logically flows amounts to an illegitimate  extension of the purpose of the legal fiction."

Furthermore, in a situation of this nature, the rule of purposive  construction should be applied.

The statutory scheme does not envisage that even in the case of  closure of an undertaking, a workman who although had not been retrenched  would be reemployed in case of revival thereof by another company.  If the  submission of Mr. Das is accepted, the same would not only run contrary to  the statutory scheme but would make the definition of retrenchment  contained in Section 2(oo) of the 1947 Act otiose.   

The interpretation of Section 25J of the 1947 Act as propounded by  Mr. Das also cannot also be accepted inasmuch as in terms thereof only the  provisions of the said Chapter shall have effect notwithstanding anything  inconsistent therewith contained in any other law including the Standing  Orders made under the Industrial Employment (Standing Orders) Act, but it  will have no application in a case where something different is envisaged in  terms of the Statutory Scheme.  A beneficial statute, as is well known, may  receive liberal construction but the same cannot be extended beyond the  statutory scheme.  [See Deepal Girishbhai Soni and Others Vs. United India  Insurance Co. Ltd. Baroda, (2004) 5 SCC 385].

In the instant case, we are not concerned with the liability of the  erstwhile company.  It stands accepted that the Appellant has no monetary  liability as regard the amount of compensation payable to the workmen in  view of Section 5 of the said Act.   

NON-OBSTANTE CLAUSE \026 EFFECT OF:

The said Act contains a non-obstante clause.  It is well-settled that  when both statutes containing non-obstante clauses are special statutes, an  endeavour should be made to give effect to both of them.  In case of conflict,  the latter shall prevail.  

In Solidaire India Ltd. Vs. Fairgrowth Financial Services Ltd. and  Others [(2001) 3 SCC 71], it is stated: "9. It is clear that both these Acts are special Acts.   This Court has laid down in no uncertain terms  that in such an event it is the later Act which must  prevail.  The decisions cited in the above context  are as follows: Maharashtra Tubes Ltd. v. State  Industrial & Investment Corpn. of Maharashtra  Ltd., Sarwan Singh v. Kasturi Lal; Allahabad Bank  v. Canara Bank and Ram Narain v. Simla Banking  & Industrial Co. Ltd.

10. We may notice that the Special Court had in  another case dealt with a similar contention.  In  Bhoruka Steel Ltd. v. Fairgrowth Financial  Services Ltd. it had been contended that recovery  proceedings under the Special Court Act should be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 13  

stayed in view of the provisions of the 1985 Act.   Rejecting this contention, the Special Court had  come to the conclusion that the Special Court Act  being a later enactment would prevail.  The  headnote which brings out succinctly the ratio of  the said decision is as follows:

"Where there are two special statutes which  contain non obstante clauses the later statute shall  prevail.  This is because at the time of enactment  of the later statute, the Legislature was aware of  the earlier legislation and its non obstante clause.   If the Legislature still confers the later enactment  with a non obstante clause it means that the  Legislature wanted that enactment to prevail.  If  the Legislature does not want the later enactment  to prevail then it could and would provide in the  later enactment that the provisions of the earlier  enactment would continue to apply."

       [See also Engineering Kamgar Union Vs. Electro Steels Castings Ltd.  and Another, (2004) 6 SCC 36]   

The right of the workmen to obtain compensation in terms of Section  25FFF has not been taken away under the said Act.  The liability to pay  compensation in the case of closure would be upon the employer which in  this case would be the erstwhile company.  By reason of the provisions of  the said Act, only a special machinery has been carved out for payment of  dues of all persons including workmen in terms of the provisions contained  in Chapter VI of the said Act.  If a workman contends that his lawful dues  have not been paid, his remedy is to approach the Commissioner of  Payments constituted under the provisions of the said Act and not to proceed  against the Appellant herein, in view of Section 5 of the Act.   

SYMPATHY:

While construing a statute, ’sympathy’ has no role to play.  This Court  cannot interpret the provisions of the said Act ignoring the binding decisions  of the Constitution Bench of this Court only by way of sympathy to the  concerned workmen.

In  A. Umarani vs. Registrar, Cooperative Societies and Others  [(2004) 7 SCC 112], this Court rejected a similar contention upon noticing  the following judgments  : "In a case of this nature this court should not even  exercise its jurisdiction under Article 142 of the  Constitution of India on misplaced sympathy.

In Teri Oat Estates (P) Ltd. Vs. U.T., Chandigarh  and Others [(2004) 2 SCC 130], it is stated:

"We have no doubt in our mind that sympathy or  sentiment by itself cannot be a ground for passing  an order in relation whereto the appellants  miserably fail to establish a legal right.  It is  further trite that despite an extra-ordinary  constitutional jurisdiction contained in Article 142  of the Constitution of India, this Court ordinarily  would not pass an order, which would be in  contravention of a statutory provision.   

As early as in 1911, Farewell L.J. in Latham  vs. Richard Johnson & Nephew Ltd. [1911-13 AER  reprint p.117] observed : "We must be careful not to allow our

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 13  

sympathy with the infant plaintiff to affect our  judgment. Sentiment is a dangerous Will O’  the Wisp to take as a guide in the search for  legal principles."

       Yet again recently in Ramakrishna Kamat & Ors.  Vs. State of Karnataka & Ors. [JT 2003 (2) SC 88], this  Court  rejected a similar plea for regularization of  services stating :   

"\005We repeatedly asked the learned counsel for  the appellants on what basis or foundation in law  the appellants made their claim for regularization  and under what rules their recruitment was made  so as to govern their service conditions.  They  were not in a position to answer except saying that  the appellants have been working for quite some  time in various schools started pursuant to  resolutions passed by zilla parishads in view of the  government orders and that their cases need to be  considered sympathetically.  It is clear from the  order of the learned single judge and looking to the  very directions given a very sympathetic view was  taken.  We do not find it either just or proper to  show any further sympathy in the given facts and  circumstances of the case.  While being  sympathetic to the persons who come before the  court the courts cannot at the same time be  unsympathetic to the large number of eligible  persons waiting for a long time in a long queue  seeking employment\005."    

CONCLUSION:

For the reasons aforementioned, the impugned judgment cannot be  sustained which is set aside accordingly.  The appeal is allowed.  No costs.