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PETITIONER: WORKMEN OF BRAHMPUTRA TEA ESTATE, REPRESENTED BY ASSAM  CHAH

       Vs.

RESPONDENT: THE INCOMING MANAGEMENT OF BRAUMPUTRA TEAESTATE & ORS.

DATE OF JUDGMENT: 25/09/1967

BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. HIDAYATULLAH, M. BHARGAVA, VISHISHTHA

CITATION:  1968 AIR  514            1968 SCR  (1) 626

ACT: Industrial  Disputes  Act  (14  of  1947),  ss.  18  and  25 F--Services  terminated  by  Receiver  appointed  by  court- Reference  of  dispute--Purchase of  Company--Purchaser  not party-Liability  of purchaser-Reference if  infructuous-Duty of Labour Court to issue notice.

HEADNOTE: On  reference  of an industrial dispute,  the  Labour  Court took,  the view that the services of the  workmen  concerned had  been terminated, under instructions of the Receiver  of the  Company  appointed  in a suit  long  before  the  first respondent became owner of the company; that the Receiver in possession  was  the  only  party  impleaded  and  the   new management, viz., the first respondent had not been  brought on record, nor was it a party to the reference, made by  the State  Government; that the purchase of the company, by  the first  respondent,  did not show that the latter  had  taken over any liabilities of the previous management, with regard to  the  claim of the workmen; and that there  had  been  no purchase of the goodwill of the company.  On these  grounds, the  Labour Court held that no relief could be  granted,  as against the first respondent, and that the reference  itself had  become  infructuous.   In appeal  to  this  Court,  the workmen-appellants contended that (i) the view of the Labour Court  that  the  first respondent was not  liable  for  the claims of workmen was erroneous; and (ii) even if it be held that the first respondent was not liable, the Labour  Court, which  had ample jurisdiction, in this regard,  should  have issued notice, either to the Receiver appointed in the suit, or the Official Liquidator, or to both of them an  proceeded to  investigate and adjudicate upon the claims of  the  work men. HELD:     (i) The first respondent was not liable to  answer any  the claims of the workmen.  He was not in  the  picture when the order terminating their service was made, nor  when the  order  referring the dispute to the  Labour  Court  was made.  Having due regard to the various recitals in the sale deed and considered in the light of the principles laid down by  this  Court, in Anakapalla  Cooperative  Agricultural  & Industrial Society Ltd. v. Workmen, the first respondent was

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not  the successor-in-interest of, the Company.   What  was, purchased,  by the first respondent, was only the equity  of redemption in a part of the assets of the Tea Company,  with respect   to   whit  the  Official  Liquidator   was   still functioning.   Even on the basis that the  first  respondent was considered to be a person, to whom the ownership of  the undertaking has been transferred, the claims of the  workmen had to be considered, as against the Company, in  accordance with s. 25 FF of the Industrial Disputes Act, when its  pro- viso  could not be invoked.  Section 25F was in  force  when the se vices of the workmen were terminated and s. 25FF  had come  in  effect  long  before the  purchase  by  the  first respondent. [632G-633F]                             627 Anakapalla Co-operative Agricultural and Industrial  Society Ltd. V.   Its Workmen, [1963] Supp. 1 S.C.R. 730, followed. (ii) Even  after  negativing the claims of the  workmen,  as against  the first respondent, the Labour Court  should  not have  merely  closed the proceedings, by  holding  that  the reference  had lapsed.  On the other hand, the Labour  Court should   have  issued  notices  to  the  Receiver,  or   the Liquidator  or to both, and, in their presence, should  have considered  the question as to whether the workmen were  en- titled  to  claim relief.  In fact, the order  of  reference also   clearly  showed  that  the  Labour  Court  had   full jurisdiction  to consider as to whether the  termination  of the services of the workmen, was justified, and whether they were entitled to either reinstatement, or any other  relief, in lieu thereof. [634B-D]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 752 of 1966. Appeal  by special leave from the Award dated  February  18, 1965 of the Labour Court, Assam in Reference No. 38 of 1962.  H.  R.  Gokhale,  G. L. Sanghi and K.  P.  Gupta,  for  the appellants. S.   V.  Gupte, Solicitor-General and D. N.  Mukherjee,  for respondent No. 1. M.   M.  Kshatriya,  G.  S.  Chatterjee  for  P.  K.   Bose, respondents Nos. 2 and 3. The Judgment of the Court was delivered by Vaidialingam,  J.  This  appeal, by special  leave,  by  the workmen  of Brahmputra Tea Estate, is directed  against  the award, dated February 18, 1965, of the Labour Court,  Assam, in Reference No. 38 of 1962, holding that the Reference  has become infructuous. The  circumstances. under which the Reference was  made,  by the Government of Assam, may be stated.  The Brahmputra  Tea Estate  (hereinafter called the Tea Company),  comprised  of three  gardens, viz., Negheritting, Rangamati and  Missamara Tea  Estates,  with  their  outer-gardens,  were  owned  and managed by Brahmputra Tea Co. (India) Ltd.  The Tea  Company had incurred very heavy liabilities; and hence, on  November 6,  1956,  it created an equitable mortgage, by  deposit  of title   deeds,   in  favour  of  the  Eastern   Bank   Ltd., (hereinafter  called  the  Bank).   The  gardens,  mentioned above, formed part of the security covered by the  equitable mortgage.    This  memorandum  of  equitable  mortgage   was registered on November 26, 1956.  As the Tea Company  failed to  make  payment of the money due to the Bank,  the  latter filed  Suit No. 21 of 1957, in the Court of the  Subordinate Judge,  Upper  Assam,  District Jorhat,  for  enforcing  its rights, under the equitable mortgage.  A preliminary  decree

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was  passed, on February 21, 1958; this was followed,  by  a final decree, on September 19, 1960. L/J(N)76SCI--14(a) 628 In  the meantime, on September 16, 1958, the  Calcutta  High Court had ordered the winding-up of the Tea Company, because of  certain defaults made by it.  Mr. D. A.  Weatherson,  of the  Bank, who had been appointed, by.the,Jorhat  Court,  as Receiver  of the Tea Gardens, by his letter. dated  December 30,  1958, intimated the Superintendent of the Tea  Gardens, about the windingup order, passed by the Calcutta High Court on September 16, 1958, and stated that the winding-up  order operated  as  a  statutory  ’notice  of  discharge,  of  all officers and employees of the Tea Company; nevertheless, the Receiver  stated that he desired to offer employment to  all the  members  of  the staff who were employed  in  tile  Tea Gardens on November 18. 1958, with the exception of  fifteen employees,   mentioned  by  him.   The  Superintendent   was requested to obtain the consent of the members of the staff, regarding the offer made by the Receiver. It may be stated, at this stage, that the fifteen employees, who  were excluded in the letter of the Receiver,  were  the persons,  whose claims were referred, by the  Government  of Assam,  to; the Labour Court. in Reference No. 38  of  1962. The  Superintendent, in his turn, sent communication,  dated January   19,  1959,  to  the  various   workmen,   offering employment,  on behalf of the Receiver, and requesting  them to intimate acceptance; but, so far as the fifteen  workmen, referred  to above, were concerned, the Superintendent  sent communication.   to  each  of  them  on  August  21,   1961, terminating  their services, with one month’s  notice.   The workmen  concerned  were  also  promised  to  be  paid   the Provident Fund amounts that might stand to their credit.  It was  specifically  stated, by the Superintendent,  that  the communication  was  being sent, by him. on  behalf  of  tile Receiver of the Tea Company and that the termination of  the services of the workmen was because of their age. The  Assam  Chah Karmachari Sangha (hereinafter  called  the Karniachari Sangha) complained to the Conciliation  Officer, Assam,  stating that the termination of the services of  the fifteen  workmen,  concerned,  was  illegal  and  arbitrary. Though tile Conciliation Officer appears to have taken  some steps to effect conciliation, he could not proceed  further, because the Superintendent of the Tea Gardens regretted  his inability to participate in the conciliation proceedings, as he had not been authorized to do so, by the Receiver of  the Tea  gardens.   Nevertheless, the Conciliation  Officer,  on September   18,  1961,  wrote  to  the   Receiver,   direct, suggesting payment of compensation to the workmen concerned; but that suggestion was riot accepted. by the Receiver. On  February  18, 1961. the Bank assigned  all  its  rights, under the mortgage dated November 6, 1956 and the decree  in Suit  No.  21 of 1957, in favour of M/s Shaw Wallace  &  Co. Ltd.  The Registrar of Companies, West Bengal, Calcutta,  in or about 1960, 629 had  filed  a petition, in the Calcutta High Court  for  the winding-up  of the Tea Company, as it had failed  to  comply with  certain statutory requirements.  By order  dated  June 16,  1961,the Calcutta High Court ordered the winding-up  of the  Tea  Company.  and appointed Shri H.  K.  Ganguli,  the Official  Liquidator  of  the High Court,  as  the  Official Liquidator  of the Tea Company.  On September 19, 1961.  the Calcutta  High  Court passed an order,  withdrawing  to  its file,  suit No. 21 of 1957, from the Jorbat Court,  and  the

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said  suit was numbered as Transfer, Company Suit No., 7  of 1962.  On October 5, 1961. the Calcutta High Court  directed the substitution of the name of M/s Shaw Wallace & Co. Ltd., in (lie place of the Eastern Bank Ltd., in the suit; and  it also  appointed  Shri K. C. Ganguli as Receiver of  the  Tea Gardens in the place of the Receiver appointed by the Jorhat Court.   The new Receiver, Shri K. C. Ganguli, was also  put in  possession  and  management  of  the  said   properties. Therefore,  the  position was that the  Tea  Company,  whose windingup   had   been  ordered,  was  with   the   Official Liquidator. and the Tea Gardens of the company, were in  the possession and management of tile Receiver, appointed in the mortgage suit. On  July 27, 1962, the Government of Assam referred  to  the Labour  Court,  Assam,  an industrial  dispute  between  the management   of   Brahmaputra  Tea   Estate   (Receiver   in Possession) and their workmen, represented by the Karamchari Sangh.   The  dispute  that was  referred,  related  to  the justification,  of the action of the management of  the  Tea Estate,   in  terminating  the  services  of   the   fifteen employees,  and, as to whether. those fifteen  workmen  were entitled  to  reinstatement, or any other  relief,  in  lieu thereof.    The  fifteen  workmen,  referred  to   in   this reference, are the identical workers whose services had been terminated,  by the issue of the notice on August 21,  1961, by  the Superintendent of the Tea Gardens, on behalf of  the Receiver.  This is the reference, which had been numbered as Reference  No. 38 of 1962.  We shall advert, later,  to  the claims made by the workmen, as well as the contest made,  by the  first  respondent,  before us.  The  Labour  Court,  on receipt of this reference. issued the necessary notices,  on August 26, 1962. In the liquidation proceedings, the Calcutta High Court,  on August  17, 1962, permitted the Official Liquidator to  sell the  Tea  Gardens, which were the subject of  mortgage,  and also  certain  other  items  of  moveables.   The   Official Liquidator,  on  the  basis  of  this  order,  conveyed,  by registered  sale deed, dated August 11. 1962, in  favour  of Shri  Ram Gopal Sahariya, the first respondent  herein,  the equity  of  redemption in the three Tea  Gardens,  and  also certain tractors, lorries and other items of machinery,  for a   total  consideration  of  Rs.  5,20,000.    This   total consideration was made Lip of Rs. 2,20,000, being the  price of the moveables  and 630 Rs.  3,00,000  stated  to  be the value  of  the  equity  of redemption.   The sale, in favour of the  first  respondent, was  specifically  by  the Official  Liquidator,  acting  on behalf of the Tea Company, and what was conveyed in the Tea Gardens,  was  the equity of redemption, owned  by  the  Tea Company, and the sale was subject to the mortgage decree and the liabilities payable to M/s Shaw Wallace & Co., Ltd. On  September  18,  1962, the first  respondent’s  name  was ordered,  by  the  Calcutta High Court, to  be  included  in Transfer  Company  Suit No. 7 of 1962.  The  Court  further’ discharged Shri K. C. Ganguli, from his Receivership in  the suit, and he was also directed to deliver possession of  the three Tea Gardens belonging to the Tea Company, to the first respondent.   The  first respondent, on his  own  claim,  by virtue  of  the purchase from the Official  Liquidator,  has become  the sole proprietor of the Tea Gardens; he also  got actual possession of the Tea Gardens, on September 21, 1962. To resume the narrative, regarding the proceedings in Refer- ence  No.  38 of 1962, the Labour Court, as we  have  stated earlier,  had  issued notices to the parties  concerned,  on

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August 26, 1962.  The workmen filed a written statement,  on February 23, 1963.  In that statement, they had stated  that the  fifteen  workmen,  concerned,  had  completed  service, ranging from 8 to 47 years, in the Tea Estates, and that the termination of their services, by the Superintendent of  the Tea  Gardens,  on  behalf of the  Receiver,  was  absolutely illegal and arbitrary.  They also referred to various  other matters,  which  it  is not necessary  to  advert,  in  this appeal.   It  is enough to note that  the  workmen  required relief, by way of reinstatement On June 27, 1963, one K. A. Muddu, as Superintendent of  the Tea  Estates,  filed a written statement, on behalf  of  the management.  He has stated therein. that the services of the fifteen  employees were terminated on account of their  age, and  also because some of them were too ill to be  continued in  service.   He has adverted to the fact that two  of  the workmen  had expressed a desire to retire voluntarily,  from service.   It  is  further  stated  therein,  that,  as  the employees  concerned were 60 years or more, of age,  it  was not possible to continue them in service.  Again, the action of  the Receiver, who was in management of the Tea  Gardens, in  terminating  the services of the workmen,  was  also  be justified. The  workmen filed an additional written statement, on  Sep- tember 2, 1963, controverting the allegation that they  were either too ill or they had completed 60 years of age.   They again  reiterated that the stand, taken by  the  management, was  absolutely  illegal and the Receiver bad  no  right  to authorize the termination of their services. 631 On July 18, 1964/September 10, 1964, Shri R. G. Sahariya, as sole  proprietor  of the Tea Estates,  filed  an  additional written statement, before the Labour Court, on behalf of the incoming  management.  He has referred therein to  the  fact that  the  Tea  Estate  was no longer  in  the  hands  of  a Receiver,  and  its  management had vested in  him  as  sole proprietor.  He has further referred to the fact that  there is  no continuity between the present management of the  Tea Company, represented by him, and that of the past, when  the Tea  Gardens were owned by the Tea Company and were  managed by the Receiver, appointed by the Court.  He then refers  to the  purchase  made  by him, on August 18,  1962,  from  the Official  Liquidator  of the Tea Company, of the  equity  of redemption  in the Tea Gardens.  He has further stated  that the  services of the workmen concerned, had been  terminated by  the Superintendent of the Tea Gardens, acting on  behalf of  the  Court Receiver, as early as August 21,  1961,  long before the Tea Estates were purchased by him. Shri  Sahariya  has further stated that, on July  27,  1962, when the Government of Assam made the present Reference, the incoming  management was nowhere in the picture and  it  was not, in any manner concerned with the claim of the  workmen, inasmuch  as it had no liability, whatsoever, towards  them. He  averred that he had not purchased the Tea  Estates  with the  goodwill of the Tea Company, or, as a running  concern. Therefore,  on all those grounds, he urged, that he was,  in no manner, bound to reinstate or to compensate for the  loss of  employment of the workmen, concerned.  In fact,  he  has specifically  prayed  that an order may be  passed,  by  the Labour  Court,  that  the dispute, referred to  it,  by  the Government of Assam, has lapsed. The  Labour Court, in its order under attack, has taken  the view  that the services of the workmen concerned, have  been terminated,  under instructions of the Receiver of  the  Tea Gardens,  appointed  in  the suit,  long  before  the  first

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respondent  became owner of the Tea Gardens.  It is also  of the  view  that  "the Brahmputra  Tea  Estate  (Receiver  in possession)".  is  the  only party impleaded,  and  the  new management, viz., the first respondent, has not been brought on record, nor was it a party to the reference, made by  the State  Government.  The purchase of the Tea Gardens, by  the first  respondent, does not show that the latter  has  taken over  any  liabilities,  of the  previous  management,  with regard to the claims of the workmen, and that there has been no  purchase of the goodwill of the Tea Company.   On  these grounds,  the  Labour  Court held that no  relief  could  be granted,  as  against  the first respondent,  and  that  the reference itself had become infructuous. Mr.  Gokhale.  learned counsel for  the  workmen-appellants. raised  two contentions before us: (i) that the view of  the Labour  Court, that the first respondent is not  liable  for the claims of the 632 workmen, is erroneous; and (ii) that even if it is held that the first respondent is not liable, the Labour Court,  which had  ample jurisdiction, in this regard, should have  issued notice,  either to the Receiver, appointed in the  suit,  or the Official Liquidator, to the both of them, and  proceeded to  investigate  and  adjudicate  upon  the  claims  of  the workmen.   In this connection, Mr. Gokhale pointed out  that the  document  of purchase, by the first  respondent,  would clearly  show that the Official Liquidator  ha(1)realised  a sum of Rs. 5,20,000, as sale consideration, and there  might also   be  other  assets  of  the  company;  if   a   proper adjudication,  in  the presence of those parties,  had  been made,  and  relief granted to the workmen, they  would  have been in a position to enforce their claims, as against these amounts and assets of the company. The  learned- Solicitor General. appearing on behalf of  the first  respondent,  urged that his client was  not,  in  any manner, answerable to the claims made, by the workmen.   The first  respondent was not the successor-in-interest  of  the Tea Company-, nor did he claim through the Receiver, who wag one  of  the  parties to the Reference,  before  the  Labour Court.  Even if the Tea Company could be considered to be  a party  to the Reference. his client Could not be  considered to  be a successor-in-interest of the Tea Company,  because, he  had purchased only some of the assets belonging  to  the said  company,  by  virtue of the  sale.   The  document  of purchase,  by the first respondent. would clearly show  that he has not taken over any other liabilities of the Tea  Com- pany,  in  that  regard-.   The  learned  Solicitor  General further  pointed  out  that  the  remedy.  if  any.  of  the appellant,  if so advised, was only to proceed  against  the Receiver,  or  the Official Liquidator; even if it  be  held that the ownership or management of the undertaking had been transferred in favour of the first respondent, the rights of the  workmen  would have to be worked out,  as  against  the Receiver, or the Official Liquidator, under s. 25FF, of  the Industrial Disputes Act, 1947 (Act XIV of 1947) (hereinafter called the Act), inasmuch as there was nothing to show  that the transfer, in this case, came within the proviso to  that section. We  are  in agreement with the contentions  of  the  learned Solicitor  General that the view of the Labour  Court,  that the  first  respondent is not liable to answer  any  of  the claims  of  the workmen concerned, is  perfectly  justified. From the various facts, given above, it will clearly be seen that the order terminating the services of the workmen,  was made  on August 21, 1961, by the Superintendent of  the  Tea

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Gardens,  under instructions from The Receiver appointed  by the Jorhat Court, in the mortgage suit.  On October 5. 1961, the  High  Court  had  appointed a  Receiver,  for  the  Tea Gardens.  as  separate from the Tea Company,  in  the  suit, Transfer  Company Suit No. 7 of 1962.  The order,  referring the dispute to the Labour Court was made, by the Government, on July 27, 1962, The 1st respondent, admittedly,                             633 was  not in the picture, on these various dates.  It  cannot also  be stated, having due regard to the various  recitals, contained  in  the  sale deed, dated August  11,  1962,  and considered,  in  the light of the principles, laid  down  by this   Court,  in  Anakapalla  Cooperative  Agricultural   & Industrial  Society  Ltd.,  v. Workmen(1),  that  the  first respondent is the successor-in-interest of the Tea  Company. What  was purchased, by the first respondent, was  only  the equity of redemption in a part of the assets of the Tea Com- pany, in respect of which the Official Liquidator was  still functioning.   Therefore, the learned Solicitor- General  is perfectly  justified  in  his  contention  that  the   first respondent  cannot  be  considered  to  be  a  successor-in- interest  of  the Tea Company nor can he  be  considered  to claim  through  the Receiver, or Liquidator.   Even  on  the basis  that  the  first respondent is  considered  to  be  a person,  to whom the ownership of the undertaking  has  been transferred, it will be seen that the claims of the  workmen will  have to be considered. as against the Tea Company,  in accordance with s. 25FF of the Act, when its proviso  cannot be invoked. Learned  counsel,  for the appellant, has not been  able  to satisfy us that the transfer, in this case, in favour of the respondent,  comes  within  the proviso  to  s.  25FF.   The appellants,   ,is  laid  down  by  this  Court,  under   the circumstances,  in the decision referred to above, will  not be  entitled  to claim reinstatement, as against  the  first respondent.   Section 25FF was first introduced in the  Act, by  the  Industrial Disputes (Amendment) Act, 1956  (LXI  of 1956), and, in its present form, it has been substituted, by the Industrial Disputes (Amendment) Act, 1957 (Act XVIII  of 1957).   Section 25F was in force, on August 21, 1961,  when the  services  of the workmen were terminated, and  s,  25FF had(1)  come  into effect long before the purchase,  by  the first  respondent of the Tea Gardens; and, we  have  already shown,  that  there  is no liability, so far  as  the  first respondent is concerned.  Therefore, the first contention of Mr. Gokhale, will have to be rejected. But  we  are  impressed  by the  second  contention  of  Mr. Gokhale, that the Labour Court should have issued notices to the Receiver, or Official Liquidator. or to both, as it  was entitled  to. and proceeded to consider, as to  whether  any reliefs  Could  be  granted  to  the  appellants.   In  this connection,  counsel  pointed  out that s.  18  of  the  Act clearly  visualizes parties being summoned’, to  appear,  by the  Labour  Court,  in  proceedings,  as  parties  to   the disputes, in which case, the award made, will be binding  on them  also.  In this appeal, before us. the Tea Company,  in Liquidation, and the Official Liquidator of the Tea Company, figure  as respondents Nos. 2 and 3, respectively,  and  are represented by same counsel.  Learned counsel, appearing for those parties, pointed out that the Official Liquidator  may have various defences, (1)  [1963] Supp.  1 S.C.R. 730. 634 available  to  him, if any claim is sought  to  be  enforced against  the  company,  in  liquidation,  or  the   Official

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Liquidator.   Those matters do not arise for  consideration, at  this  stage, in this appeal, because the  claim  of  the appellants,  as  against those persons, remains  yet  to  be considered by the Labour Court. We are satisfied that, even after negativing the claims,  of the  workmen,  as against the first respondent,  the  Labour Court  should  not have merely closed  the  proceedings,  by holding  that the reference has lapsed.  On the other  hand, the Labour Court should have issued notices to the Receiver, or  the  Liquidator.  or to both, and,  in  their  presence, should  have  considered  the question  as  to  whether  the workmen  were  entitled-to claim any relief.  In  fact,  the order of reference also clearly shows that the Labour  Court will  have full jurisdiction to consider as to  whether  the termination,  of the services of the workmen  concerned,  is justified   and,  whether  they  are  entitled   to   either reinstatement,  or any other relief, in lieu thereof.   When the proceedings are being dealt with, afresh, as against the parties indicated above, the Tribunal will bear in mind  the observations  made  above, and consider the  nature  of  the relief,  if  any,  that  may  be  granted  to  the   workmen concerned-.   We make it clear, that if and when either  the Receiver,  or  the  Tea  Company,  in  liquidation,  or  the Official Liquidator, or all of them, are brought before  the Labour  Court,  they will be entitled to raise any  plea  in defence  of the claim of the workmen, that may be  available to   them,  in  law.   In  that adjudication,  the   first respondent herein, will be completely out of the picture, as no  relief  can  be claimed by  the  workmen,  against  him. Further, if the claim of the workmen, is that their services have been dispensed with, by way of retrenchment, that claim will  have to be adjudicated in accordance with s.  25F,  of the  Act.  If, on the other hand, their claim is  based,  on the  event  of a transfer having been effected,  that  claim will have to be adjudicated, under s. 25FF of the Act.   All these  aspects  will  have to be  properly  considered,  and adjudicated upon, by the Labour Court. In  the result, while confirming the findings of the  Labour Court, that the first respondent  is not answerable for  any of the claims of the workmen, the award, dated February  18, 1965, is set aside and the Labour Court is directed to  take up the Reference, over again, for being dealt with,  afresh, in the light of the directions contained above.  The  appeal is  allowed,  to the extent, indicated above, and  in  other respects,  will stand dismissed as against  1st  respondent. Parties will bear their own costs, in this appeal. Y.P.                     Appeal allowed in part,                             635