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CASE NO.: Appeal (civil) 4964  of  1999

PETITIONER: WORKMEN REPRESENTED BY

       Vs.

RESPONDENT: VS.

DATE OF JUDGMENT:       21/03/2001

BENCH: S. Rajendra Babu & S.N. Variava

JUDGMENT:

J  U  D  G  M  E  N  TL...I...T.......T.......T.......T.......T.......T.......T..J

RAJENDRA BABU,  J.  :

   The  management of the Bhugatdih Rise Area Colliery  was taken  over by the Central Government under the Coking Mines (Emergency  Provisions) Act, 1971 which came into effect  on October   17,  1971.   Subsequently,   the  Colliery   stood nationalised  with  effect  from  May   1,  1972  under  the provisions  of the Coking Coal Mines (Nationalisation)  Act, 1972 (for short the Nationalisation Act).  111 workmen who were  working  in  these  collieries were laid  off  by  the management in 1971 and subsequently retrenched from service. Some  of  the workers of the Bhugatdih Colliery  were  taken back in employment though they were purely temporary workmen on  daily  basis.   The  Union   of  the  workmen   demanded employment  of these 111 workers but the respondents did not employ  them.   Thereafter, a dispute whether the action  of the  management  of  Industrial Colliery  of  Messrs  Bharat Coking  Coal  Limited in refusing employment to 111  workmen listed  in the Annexure below was justified and, if not,  to what  relief are the said workmen entitled, was referred  to the Industrial Tribunal.

   The  claim  of the workmen before the Tribunal  is  that they  are  permanent  workers  and   though  they  had  been retrenched, they are entitled to preference in the matter of employment  under  Section 25-H of the  Industrial  Disputes Act,  1947  (hereinafter  referred to as  the  Act).   The respondents  took the stand that Bharat Coking Coal  Limited is neither the employer of the workmen within the meaning of Section  25-H of the Act nor is it successor-in-interest  of the  colliery in question.  The 111 workmen were  retrenched on  June  9,  1971 long before the Coking  Mines  (Emergency Provisions)  Act, 1971 came into effect on October 17, 1971. Inasmuch as the 111 workmen were retrenched on June 9, 1971, they  were neither in employment on the appointed day,  that is, May 1, 1972, nor their retrenchment was set aside by any court  or tribunal.  It is contended that under Section 9 of the Nationalisation Act, the Central Government shall not be liable  for  any liability of the owner, agent,  manager  or

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managing  director of a coking cool mine in relation to  any period  prior to May 1, 1972 and such liability will be that of  the  previous owner.  The respondents contended  that  a person  who does not acquire both the assets and liabilities cannot  be a successor-in-interest and, therefore, reference should be rejected.

   The  Tribunal held that the erstwhile management of  the Bharat  Colliery  retrenched as many as 150 or more  workmen for operational and financial problems and, therefore, there was a statutory obligation on the owner flowing from Section 25-H  of  the Act to re-employ the retrenched workmen if  it proposes  to take in its employment any person as  envisaged in  that Section.  The Tribunal, therefore, gave a direction that  the  refusal to employ the 111 workmen in question  is not  justified  and  on  establishing the  identity  of  the workmen as indicated in the course of the award, their cases will   be  considered  for  employment   as  and  when   any recruitment  is  done.  The matter was carried to  the  High Court  by  way  of a writ petition .   After  examining  the provisions  of Sections 9 and 17 of the Nationalisation Act, the  High  Court  held that the workmen in  question  cannot claim  any benefit under Section 17 as they were neither  in employment  on the appointed day, that is, May 1, 1972,  nor their  retrenchment was set aside by any court or  tribunal; that  thus  they were neither workmen of the respondent  nor are  entitled  to be deemed to its workmen.  The High  Court next    considered    whether    the    respondent   is    a successor-in-interest  of the Colliery and on examination of Section 9 of the Nationalisation Act, took the view that the Government  or  the  respondent cannot be considered  to  be successor-in-interest  of the old business inasmuch as  only the  right, title and interest of the coking coal mines have been  acquired  by the Government under the  Nationalisation Act  free  from  all encumbrances;  that it is  neither  the liability  of  the  owners of the said  mines  nor  goodwill thereof  has been acquired;  that as long as both assets and liabilities  have not been acquired, it cannot be stated  to be  a  successor-in-  interest in  question  unless  statute provides  for  the same;  that there is no contract  between the  Government and the owners providing otherwise and that, therefore, there is no obligation on the respondents to give effect  to  Section  25-H  of the Act.   On  reaching  these conclusions,  the writ petition was allowed and the award of the  Tribunal  is  quashed.  Hence this  appeal  by  special leave.

   The arguments addressed before the Tribunal and the High Court are reiterated before us.

   In  the Workmen v.  the Bharat Coking Coal Ltd.  & Ors., 1978  (2)  SCC 175, this Court had occasion to consider  the effect  of  the  provisions  of Sections 9  and  17  of  the Nationalisation   Act.    Considering   the  definition   of workmen  in the Act, Section 17 [as was in force then]  is interpreted.   It  is  held  that Section 17  is  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,  which was  statutory  protection  and even a person who  has  been dismissed  or  whose  dismissal led to a dispute is  also  a workman  for the purpose of these provisions.  Though they may  not be physically on the rolls on the appointed day  of the  take  over, it cannot be contended that they  were  not legally   workmen  under  the   new  owner.   The  statutory

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continuity  of service will have to be taken note of and  on that  basis  this Court proceeded to hold that  a  dismissed workman  also  is a workman under the Government  company. While  interpreting Section 9 of the Nationalisation Act  it was  stated  that  the liability of the owner prior  to  the appointed  day shall not be enforceable against the  Central Government  or  the Government company but only against  the previous  owner.  It was stated in very emphatic terms  that employees  are  not  a liability as yet  in  our  country. Section  9  deals  with   pecuniary  and  other  contractual liabilities  and has nothing to do with workmen.  If at  all it  has anything to do with workmen, it is regarding arrears of  wages  and  other  contractual,  statutory  or  tortious liabilities.   Section  9(2)  operates only in the  area  of Section  9(1)  and that is why provision is being  made  for removal  of  certain doubts and the whole provision  confers immunity  against liability not a right to jettison  workmen under  the  employment of the previous owner in the  eye  of law.

   Bearing these principles in mind if we examine the scope of the Nationalisation Act, we may notice that in respect of properties  that  vested  in   the  Central  Government,  as provided  under  Sections 8 and 9, the  Nationalisation  Act provides  immunity to the Central Government or its  company from  prior liabilities.  Chapter III of the Nationalisation Act  provides  for  payment of amount  under  that  Chapter. Chapter  VI  provides  for appointment  of  Commissioner  of Payments  who has an obligation to deal with the claims made under  Section  23  of the said Act to persons who  makes  a claim  before  the  Commissioner  within 30  days  from  the specified  date.  On examination of the provisions  thereof, we  may  relate all those items that have been mentioned  in Section  9  to Section 23 of the Nationalisation Act.   They all  pertain to pecuniary or commercial obligations and  not to other matters.  The claim made in the present case is one relating  to employment under Section 25-H of the Act  which merely  creates an obligation that a retrenched workman will have  preference  when  fresh appointments are made  and  an opportunity  will  have  to  be   given  to  them  to  offer themselves  for re-employment.  Such an obligation does  not fall  within  the scope of Section 9 of the  Nationalisation Act.

   Shri  Ajit  Kumar  Sinha, the learned  counsel  for  the respondents,  relying  upon  the decision of this  Court  in Anakapalle  Co-operative Agricultural and Industrial Society Ltd.  v.  Workmen and Ors., AIR 1963 SC 1489, contended that the   respondents   are   not   successor-in-interest   and, therefore, have no obligation to give effect to Section 25-H of  the  Act in respect of workmen in question;  that  since both  rights and obligations have not been taken over by the respondents  and only certain properties have been vested in the  respondent-Company  without any obligation in terms  of Sections  8 and 9 of the Nationalisation Act, the contention of the appellant for re-employment has to be rejected.

   We  have already adverted to the decision of this  Court in  The  Workmen  v.  The Bharat Coking Coal  Ltd.   &  Ors. (supra)  which  examines  the  scope of  Section  9  of  the Nationlisation  Act and the liability contemplated  therein. It  is necessary to understand the obligation of employer as such  contemplated  in Section 25-H of the Act as stated  in clear  terms  by this Court in that decision.  Unlike  civil

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law, industrial law takes a different view with regard to as to  who  is  the  successor   who  runs  the  said  industry subsequently.   Where there is transfer of business from one owner  to another, the rights and obligations which  existed between  the  old management and their workers  continue  to exist  vis-Ã -vis  the new management after the date  of         the transfer  provided  there  is   continuity  of  service  and identity of business.  For purposes of continuity of service Section 17 makes the necessary provisions.  Thus a person on such  transfer  becomes  the owner of the  concern  and  the employer  of the employees of the establishment, and as long as  there  is  identity of business itself and  retains  its identity,  it  must  be held that the respondent is  also  a successor-in-interest  to  that  extent.    This  Court   in Anakapalle  Co-operative Agricultural and Industrial Society Ltd.   (supra)  took  this view  after  considering  several relevant factors into consideration.

   Shri  Sinha submitted that as soon as transfer has  been effected  under Section 25- FF of the Act all the  employees became  entitled to claim compensation and thus who had been paid  such  compensation  will  not  be  entitled  to  claim re-employment  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  present  case.  The workmen in question  have  been retrenched  long  before the colliery was taken over by  the respondents  and,  therefore,  the   principles  stated   in Anakapalle  Co-operative Agricultural and Industrial Society Ltd.   (supra) 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 appeal shall stand allowed accordingly.  However, in the circumstances of the case, there shall be no order as to costs.