IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6381 OF 2009 (arising out of  SLP [C] No.8387 of 2007)

M/S. NEW HORIZON SUGAR MILLS LTD., ARIYUR    … APPELLANT

Vs.

ARIYUR SUGAR MILLS STAFF WELFARE  UNION & ORS. … RESPODNENTS

WITH

CIVIL APPEAL NO. 6382 OF 2009 (arising out of  SLP [C] No. 13569 of 2007)

EID PARRY INDIA LTD. …APPELLANT

VS.

PUDUVAI PRADESA SARKARAI AALI  THOZHILALAR SANGAM & ORS. … RESPODNENTS

O R D E R

Leave granted. Heard the learned counsel

2. The  assets  of  New  Horizon  Sugar  Mills  (for  short,  ‘New  

Horizon’) were seized and sold by auction under the provisions of  

SARFAESI Act, 2002 by Indian Bank, a secured creditor. EID Parry  

India Ltd. (for short ‘EID Parry’) was the auction purchaser.

3. While  dismissing  a  batch  of  writ  petitions  arising  

from/challenging  the  proceedings  initiated  by  Indian  Bank  under  

SARFAESI Act, a learned single Judge of the Madras High Court, by

order dated 12.7.2005 directed that the workmen of New Horizon will  

be entitled to the benefits under Section 25FF of the Industrial  

Disputes Act, 1947 as against the employer -  New Horizon and EID  

Parry.  Aggrieved  by  the  said  order,  EID  Parry  filed  W.A.  No.  

1788/2005.

4. By interim order dated 7.12.2005 passed in writ petitions  

filed by the two employees unions of New Horizon, another learned  

single Judge appointed a retired Judge of the High Court as the  

Special Authority to compute the claims of the workmen (instead of  

Commissioner of Labour, Pudhucherry) and submit a report to the  

Court. He also directed the Indian Bank which had the sale proceeds  

in  respect  of  sale  of  the  assets  of  New  Horizon to  deposit  

initially a sum of Rs. 6,00,00,000/- (Rupees six corers) for being  

disbursed to the workmen. The said amount was ordered to be placed  

in a no-lien account in the Pondicherry main branch of the said  

Bank. Feeling aggrieved by the said order  New Horizon  filed W.A.  

No. 1209/2006.

5. The said two writ appeals along with other writ petitions  

and writ appeals were disposed of by a Division Bench of the Madras  

High  Court  by  the  impugned  judgment  dated  27.3.2007.  The  said  

judgment  deals  with  several  aspects.  We  are  concerned  in  this  

appeal, with only one aspect of the said judgment, that is, the  

workers’ dues. By the said judgment, W.A. No. 1788/2005 filed by  

EID  Parry  and  W.A.  No.  1209/2006  filed  by  New  Horizon were

dismissed. The order of the learned single Judge dated 7.12.2005  

directing quantification of the amount due to the employees and  

further direction for earmarking Rs. six crores for meeting the  

employees dues was upheld. The Division Bench, however, directed  

that the quantification should be done by Commissioner of Labour,  

Puducherry  (instead  of  by  the  retired  Judge  appointed  by  the  

learned Single Judge.  

6. Feeling aggrieved by the dismissal of W.A. No.1209/2006, and  

W.A. No. 1788/2005,  New Horizon and EID Parry have filed these  

appeals by special leave. The common issue involved in these two  

appeals is who should be made liable to pay the compensation under  

Section 25FF of the Industrial Disputes Act, 1947, to the employees  

of New Horizon whose services were deem3dto have been terminated.

7. After the matter was argued for some time, Mr. S. Ganesh,  

learned senior counsel appearing for  New Horizon fairly conceded  

that having regard to the wording of Section 25FF of the said Act  

and  the  settled  legal  position  under  several  decisions  of  this  

Court  starting  from  Anakapalla  Co-operative  Agricultural  and  

Industrial  Society v.  Its  Workmen [1962  (2)  LLJ.  629],  the  

liability to pay its workmen would be on New Horizon. Therefore, it  

follows that the amount due to the workers will have to be paid  

from out of the sale proceeds which are lying with the Indian Bank.  

The purchaser – EID Parry, who has already paid the sale price,  

will have no liability.

8. However, having regard to the fact that the quantification  

of the workmen’s dues would involve verification of records/claims,  

it will be convenient and appropriate, if the management of  New  

Horizon is  associated  with  the  process  of  verification,  

quantification  and  payment  to  its  workmen.  Therefore,  the  

Commissioner of Labour will hear  New Horizon in regard to each  

claim before passing appropriate orders in favour of workmen.  

9. The Indian Bank will now transfer the sum of Rs. six crores  

as directed by the High Court, from the sale proceeds, without  

prejudice  to  its  contentions  to  a  no-lien  account  in  its  

Pondicherry  Main  Branch  which  shall  be  operated  by  the  

Commissioner,  who  shall  endeavour  to  complete  the  exercise  of  

verification,  quantification  and  payment  of  the  employees’  dues  

within three months. The balance, if any, remaining in the no-lien  

account after such settlement of workers’ dues, shall be paid to  

the New Horizon without prejudice to the contentions of the Bank.  

If the amount of Rs. 6 crores is found to be insufficient by the  

Commissioner, the Commissioner may apply to Madras High Court for  

release of further funds from the amount in deposit with it.

10. The  sum  of  Rs.  2  crores  (or  such  other  sum)  that  was  

deposited  by  the  EID  Parry  with  the  Commissioner  of  Labour,  

Pondicherry in pursuance of our interim order dated 19.3.2009 shall  

be refunded to EID Parry.

11. With  the  above  directions,  the  appeal  of  New  Horizon is  

dismissed and the appeal of EID Parry is allowed. The intervention  

applications of some workmen are dismissed as not calling for any  

orders.

12. As  a  consequence,  the  interim  direction  dated  19.3.2009  

directing EID Parry not to prevent the workmen from attending to  

their duties in the factory premises is vacated, without prejudice  

to the rights of the workers in accordance with law.

....................J.  (R. V. Raveendran)     

....................J.       (B. Sudershan Reddy)    

New Delhi;  August 31, 2009.