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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-à-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.