Manik Vishwanathrao Joshi And ... vs The State Of Maharashtra Through ...
2002 Latest Caselaw 1232 Bom

JUDGMENT

Gokhale, J.

1. These petitions are filed to protect the interest of the employees working either under the Marathwada Development Corporation and/or companies/units which are subsidiary to this Corporation. The last of these petitions (Writ Petition No. 5783 of 1999) is filed by one Marathwada Janata Wikas Parishad, a voluntary organisation, registered under the Societies Registration Act, 1860. The purpose of this petition is also same as that of the earlier petitions.

2. All these petitions apprehend the closure of the Marathwada Development Corporation (for the sake of brevity, hereinafter referred to as the "MDC") and the aforesaid subsidiaries and the consequences thereof on the existing employees and the future employment in the region. Two of these petitions i.e. Writ Petitions Nos. 3346 and 3704, both of 1993, came up for consideration earlier. The petitions were admitted and interim relief in terms of prayer clauses (b) and (c) was granted. In Writ Petition No. 3704 of 1993, prayer clause (b) sought a stay on the implementation of various Government Resolutions in this behalf. Prayer clause (c) sought an injunction restraining the respondents from winding up the MDC, without following procedure under the law. The order passed on 30.11.1993 was slightly modified by another Division Bench on 28.4.1994. However, the fact remains that in view of the stay running in these matters, all these units are kept alive legally. Shri Joshi, learned Special Counsel appearing for the respondents - State authorities, however, informed us that as of now, practically business of all the subsidiaries of MDC is closed but in view of the stay granted by this Court, formal orders are not passed as such. He has drawn our attention to a letter received by him from the concerned officer of the State Government dated 27.11.2002, which states the very thing.

3. It is material to note that during pendency of all these petitions, the State Legislative Assembly has now passed an Act, named as Maharashtra State Enterprises (Restructuring and Other Special Provisions) Act, 2000. This Act has been specially passed, as the preamble itself states, in the public interest for constitution of the Maharashtra Board for Restructuring of State Enterprises. As the preamble further states, the Board is to be invested with the power to determine and recommend the timely measures to be taken by the Government of Maharashtra for;

(i)restructuring,

(ii)amalgamation,

(iii)merger,

(iv)closure,

(v) for determining and recommending measures for disinvestment of the equity capital of the Government in such Enterprises, and;

(vi) for matters concerned therewith or incidental thereto.

4. The Act establishes a Board under Section 3 thereof, which is named as "Maharashtra Board for Restructuring of State Enterprises" (hereinafter referred to as "the Board"). The Board is supposed to consist a Chairperson and two other members. A notification has already been issued on 30.9.2001 constituting this Board with Shri Sharad Upasani, former Chief Secretary to the Government of Maharashtra as a Chairperson of the Board with two other members. One of these Members is a Chartered Accountant, whereas the another Member is the Managing Director and Chief Executive Officer of the National Stock Exchange.

5.(a)Under Section 12 of this Act, the proceedings before the Board are declared to be judicial proceedings.

(b)Under Section 11(2) of the Act, the Board has been given powers as vested in a Civil Court under the Code of Civil Procedure, 1908 while trying suits with respect to summoning and enforcing the attendance of any witness and examining him on oath, discovery and production of documents or other material object producible as evidence, reception of evidence on affidavit, requisitioning of any public record from any court or office, issuing of any commission for the examination of witnesses and such other matters; which may be prescribed.

6. Chapter III of this Act provides for references, inquiries and schemes to be framed.

(i)Under Section 13 of the Act, the State Government is authorised to make a reference to the Board in respect of any State Enterprise where the Government wants to withdraw its ownership or management from the State Enterprise and desires to divest its control in the ownership or management, where in its opinion, the financial position of the State Enterprise is not satisfactory and requires immediate remedial measures and where in its opinion two or more State Enterprises or subsidiaries thereof can be merged to bring about improvement in their financial position or operations and management. Besides, under Section 13(3) of the Act, the management of a State Enterprise may, as well, pass a resolution requesting the Government to make a reference to the Board and then in such cases the Government is expected to make a reference to the Board within one month from the receipt of this resolution. It is however, further provided that where the provisions of Sick Industrial Companies (Special Provisions) Act are attracted or have become applicable, no such reference shall be made or resolution passed.

(ii)Under Section 14 of the Act, the Board is authorised to make an enquiry for ascertaining the financial position of such enterprises. It is also authorised to take help from Assisting Agency. Section 15(i) provides that during this inquiry, the Board may hear the management of the referred enterprise and such other persons or parties as it may deem fit, and consider all relevant facts and circumstances.

(iii)Thereafter, under Section 15 of the Act, the Board is given powers to pass suitable orders at the end of the enquiry, wherein it has to decide whether it is practicable for the referred enterprise to reverse the adverse financial performance within a reasonable time. If there is any such possibility, the Board is expected to send a report, in writing, with guidelines as may be specified therein.

7. As against this, under Section 18 of the said Act (which appear in Chapter IV), if after the enquiry and after giving an opportunity of being heard to all parties concerned, the Board is of the opinion that the referred enterprise is not likely to become viable in future and that it should be wound up, it should forward its opinion to the Government and thereafter, the Government shall -

(a) if it is a company registered under the Companies Act, 1956 or (b) if it is an Enterprise constituted under any State or Central law; - make a reference to the High Court for starting winding up proceedings. Alternatively, as the case may be, it may take necessary action for dissolution of Referred Enterprise under the relevant provisions of law under which the enterprise is constituted.

8. Thus, as we have seen, under Section 15(1) as also under Section 18, it has been specifically provided that while making enquiry under Section 14 the Board is to consider all relevant facts and circumstances and is empowered to hear the management of the referred enterprise and such persons or the parties, as the Board may deem fit.

9(i).As far as winding up is concerned, it has been well settled in case of companies that the employees thereof are entitled to be heard before any such decision is arrived at, as held in the case of National Textile Workers Union Vs. P.R. Ramkrishnan and others .

Inasmuch as the present Sections 15(1) and 18 of the Act clearly provide for hearing to the management and such other persons or parties as the Board may deem fit, we hold that these provisions include a hearing to the employees and/or their unions and they will have a right of hearing before the Board prior to its arriving at its final decision. The Board shall, therefore, issue necessary notice to the employees also when such a notice is issued to the management and hear them and their representatives when the enquiry is held into the affairs of the referred enterprise under this Act. In our view, this should take care of the apprehension of the employees.

(ii)Further, as the Statute provides hearing to such other persons as the Board deems fit, Shri Pradeep Deshmukh, learned Counsel, submits that the Marathwada Janta Wikas Parishad be permitted to be heard. It will be open for the said Parishad to apply to the Board and it will be for the Board to take an appropriate decision.

10. We are told by the representatives of the employees that in some of the subsidiary units, the schemes for voluntary retirement are still in vogue. Shri Joshi, learned Special Counsel for the State, however, disputes this statement. In view of this controversy, all that we have to say is that, if any such scheme is in vogue, it would apply to the extent the provisions are made therein. Undoubtedly, if the date under the voluntary retirement scheme is over, it will not be open for the Court to expand it and we also refrain ourselves from doing so.

11. As far as MDC is concerned, Shri P.R. Deshmukh, learned Senior Counsel has drawn our attention to the memorandum of association of this Corporation and particularly its object clause. The object clause provides that it is a Corporation to promote, encourage and assist the orderly establishment, growth and development of industries and also the socio-economic development of the region by promoting the entrepreneurship and creating an atmosphere of industrial development in the Marathwada area and for that purpose to take up various projects and schemes. The submission of Shri Deshmukh, Sr. Counsel is also supported by Shri Pradeep Deshmukh, learned counsel appearing for the petitioner - Marathwada Janta Wikas Parishad, who further submits that the object of this Corporation ought to be kept in mind when any decision to wind it up is taken. It is submitted that it is a sort of development agency or a promoting organisation and therefore, profit should not be considered as the only criterion to decide as to whether this Corporation should be run or wound up. In our opinion it would be for the Board to consider these submissions and we are sure that the Board will consider them appropriately.

12. The orders passed in these petitions have protected the employment of the employees in MDC and its subsidiaries so far. This status quo with respect to the employment of the employees working under the MDC as also subsidiaries, will have to be maintained until a reference from the Government or a resolution from the management is forwarded to Board and considered and decided by the Board. This is also implicit in the scheme of the Statute, under which the Board has to first form an opinion that either the unit can be revived or it deserves to be wound up. Obviously, until such a decision is arrived at, present status quo will have to be continued. We accordingly direct that it shall be so continued.

13. We are told that the employees in some of these units are not paid their salaries for quite sometime. It will be open for them to represent to the management concerned. The managements are expected to act in accordance with law.

14. In view of what is recorded above, there is nothing further to be done in all these petitions as also the Civil applications which have been moved thereunder. All of them stand disposed of.

Authenticated copy, be supplied, if requested by the parties.