Cement Corporation Of India vs Shri Shriram Chaurasia & Ors.
2009 Latest Caselaw 2357 Del

*IN THE HIGH COURT OF DELHI AT NEW DELHI


       CM No. 5803/2008(17-B) in W.P.(C) No.6927/2007

                                 Judgment reserved on: 25.03.2009

%                                Judgment delivered on: 30.05,2009


Cement Corp.Of India               ...... Petitioner
                    Through: Mr.Arun Birbal, Adv.

                        versus


Shri Shriram Chaurasia & Ors. ....... Respondents/applicants.
                    Through: Mr. Manoj Kr. Singh, Adv.



CORAM:
HON'BLE MR. JUSTICE KAILASH GAMBHIR

1.     Whether the Reporters of local papers may             Yes
       be allowed to see the judgment?

2.     To be referred to Reporter or not?                    Yes

3.     Whether the judgment should be reported               Yes
       in the Digest?


KAILASH GAMBHIR, J.

*

1. This order shall dispose of C.M. No. 5803/2008 in W.P.

(C) 6927/2007, CM No. 5659/2008 in W.P. (C) No. 6970/2007,

CM 5658/2008 in W.P. (C) No. 6998/2007 and CM 5806/2008

in W.P. (C) No. 6954/2007.

2. By way of these applications filed under Section 17-B of

the I.D. Act the applicants/respondents seek grant of full back

wages till final disposal of the petition.

3. Counsel for the petitioner submitted that the award

passed by the learned Tribunal is ultra vires on account of the

fact that the Tribunal had exceeded to the terms of the

reference. Counsel for the petitioner further submitted that in

terms of the reference the respondents sought their

regularization, but exceeding the terms of the reference the

Tribunal gave direction for the reinstatement of the

respondents along with 25% backwages. Counsel further

submitted that services of the respondents were terminated

on account of the termination of the contract of the contractor

as the respondents were employees of the contractor. Counsel

further submitted that even the petitioner was never given an

opportunity to cross-examine some of the workmen. Counsel

for the petitioner further submitted that since the petitioner

was declared sick industry under the provisions of Sick

Industrial Companies (Special Provisions) Act, the

proceedings were liable to be stayed. Counsel also submitted

that in any case this fact is not in dispute that the factory of

the petitioner where the respondents were working through

contractor already stands closed under Section 25-O of the

Industrial Disputes Act w.e.f. 31st August, 2008. Based on

these submissions, counsel states that no order under Section

17-B of the Industrial Disputes Act can be passed and in any

case not after the date of the closure of the factory.

4. Counsel for the respondents on the other hand

submitted that all these pleas taken by the petitioner relates

to the merits of the case, which can be decided at the time of

the final disposal of the present petition. Counsel for the

respondents further submitted that under Section 17-B of the

Industrial Disputes Act, which is in the nature of subsistence

allowance this Court has to see whether the directions for the

reinstatement of the workmen have been passed by the

Tribunal or not and whether such an order is under challenge

by the employer/management. Counsel thus stated that in the

impugned Award the Tribunal has given the direction for the

reinstatement of all these workmen with payment of 25%

backwages and, therefore, the twin requirements of Section

17B are fully satisfied in the present case. Counsel for the

respondents further submitted that the closure of the

petitioner's factory came later i.e. after the publication of the

Award and, therefore, the respondents/workmen cannot be

deprived of the benefit of grant of wages under Section 17-B

of the Industrial Disputes Act. Counsel for the respondents

submitted that merely because of the declaration of the

petitioner as sick industry would not debar the remedy of the

respondents under Section 17-B of the Industrial Disputes Act.

In support of his arguments counsel for the respondents

placed reliance on the following judgments:

1. Mideast India Ltd. vs Shri K.M. Unni & Ors.

2002(62) DRJ 537.

2. Ramniranjan Kedia Tourism Services Pvt. Limited

vs Tilakraj and Ors. -CM No. 11831/2007 in WP ©

No. 14981/2005 (decided on 2.4.2008).

3. Kapur Son (India) vs NCT and Anr. - W.P. (Civil)

No. 1719/2005 (Decided on 24.03.2008).

4. Delhi Transport Corporatoin vs. Balwant Rai Ex.

Cond. W.P. (Civil) No. 11849/2005 (decided on

18.3.2008).

5. Netaji Subhash Institute of Technology vs. Dilkush

Bairwa, LPA No. 975/2006 (Decided on

30.07.2007).

5. I have heard Ld. Counsel for the parties at considerable

length.

6. Section 17-B of the ID Act confers valuable rights on the

workmen and correspondingly imposes onerous duty on the

employer. In order to appreciate the contention of the learned

counsel for the parties, it would be proper to read Section 17-

B.

"Section 17-B :

Payment of full wages to workman pending proceedings in higher Courts :--

Where in any case, a Labour Court, Tribunal or National Tribunal by its award directs reinstatement of any workman and the employer prefers any proceedings against such award in a High Court or the Supreme Court, the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the High Court or the Supreme Court, full wages last drawn by him, inclusive of any maintenance allowance admissible to him under any rule if the workman had not been employed in any establishment during such period and an affidavit by such workman had been filed to that effect in such Court :

Provided that where it is proved to the satisfaction of the High Court or the Supreme Court that such workman had been employed and had been receiving adequate remuneration during any such period or part thereof, the Court shall order that no wages shall be payable under this section for such period or part, as the case may be."

7. A perusal of the above provision would make it clear that

when an award directing reinstatement is made by the Labour

Court or Tribunal or National Tribunal and if that award is

challenged in any proceedings in the High Court or Supreme

Court this section makes it obligatory for the employer to pay

the workman during the pendency of the proceedings in the

High Court or the Supreme Court full wages last drawn by him

or the minimum wages, whichever are higher. The Phraseology

of Section 17-B is very clear. It leaves no discretion to the

court where proceedings are pending. The employee is

required to pay the workman full wages last drawn by him

during the pendency of the proceedings in High Court of

Supreme Court.

8. Section, 17-B, takes care of the period during which

proceedings remain pending before the High Court or the

Supreme Court, it does not take into account any period prior

to the preferring of the proceedings in the High Court or the

Supreme Court. During the pendency of proceedings, the

employer is under obligation to pay full back wages last drawn

by the employer.

9. In Dena Bank v. Ghanshyam,(2001) 5 SCC 169, the

Hon'ble Apex Court dealt in detail with the object and purpose

of the said provision, which is reproduced as under:

8. Section 17-B provides that where the employer prefers any proceedings against an award directing

reinstatement of any workman, the employer shall be liable to pay such workman, during the period of pendency of such proceedings in the High Court or the Supreme Court, full wages last drawn by him inclusive of any maintenance allowance admissible to him under any rule if the workman had not been employed in any establishment during such period and an affidavit by such workman had been filed to that effect in such Court. The proviso says that if the High Court or the Supreme Court is satisfied that the workman had been employed and had been receiving adequate remuneration during such period or part thereof, the Court shall order that no wages shall be payable under that section for such period or part, as the case may be.

9. The Statement of Objects and Reasons for inserting the said provision indicates that when Labour Courts pass awards of reinstatement, they are often contested by employers in the Supreme Court and High Courts. To mitigate the hardship that would be caused due to delay in implementation of the award, it was proposed to provide for payment of wages last drawn by the workman concerned from the date of the award till the dispute between the parties is finally decided in the High Courts or the Supreme Court. It follows that in the event of an employer not reinstating the workman and not seeking any interim relief in respect of the award directing reinstatement of the workman or in a case where the Court is not inclined to stay such award in toto the workman has two options, either to initiate proceedings to enforce the award or be content with receiving the full wages last drawn by him without prejudice to the result of the proceedings preferred by the employer against the award till he is reinstated or proceedings are terminated in his favour, whichever is earlier. In Dena Bank case1 this Court elucidated the expression "full wages last drawn" as follows: (SCC p.

115, para 21)

"... Parliament thought it proper to limit it to the extent of the wages which were drawn by the workman when he was in service and when his services were terminated and therefore used the words „full wages last drawn‟."

10. It may be noticed that Section 17-B of the Act does not preclude the High Courts or this Court under Articles 226 and 136 of the Constitution respectively

from passing appropriate interlocutory orders, having regard to the facts and circumstances of the case, in the interests of justice (Dena Bank case1). The High Court or this Court may, while entertaining the employer‟s challenge to the award, in its discretion, in appropriate cases, stay the operation of the award in its entirety or in regard to back wages only or in regard to reinstatement without interfering with payment of back wages or on payment of wages in future irrespective of the result of the proceedings before it etc. and/or impose such conditions as to the payment of the salary as on the date of the order or a part of the back wages and its withdrawal by the workman as it may deem fit in the interests of justice. The Court may, depending on the facts of a case, direct payment of full wages last drawn under Section 17-B of the Act only by the employer to the workman. The question whether a workman is entitled to the full wages last drawn or full salary which he would be entitled to in the event of reinstatement while the award is under challenge in the High Courts or this Court depends upon the terms of the order passed by the court, which has to be determined on interpretation of the order granting relief.

10. It is thus clear that the intention of the law makers was to

provide a support for sustenance to the workman where an

award of reinstatement is challenged by the employer before

the High Court or Supreme Court and the workman is not in

any gainful employment.

11. Further, granting relief under Section 17B of the Act and

passing orders directing payment of wages last drawn, is

generally the rule; refusing to grant relief under Section 17B is

an exception, as the relief could be denied only in the rarest of

the rare cases of jurisdictional error where there is no

relationship of employer and employee between the parties.

12. From the above discussion, it is manifest that the

following ingredients must be satisfied for the applicability of

Section 17-B of the ID Act:

(i) An Award is passed by a Labour Court, Tribunal or National Tribunal directing reinstatement of a workman;

(ii) The said award is assailed by the employer in proceedings in a High Court or the Supreme Court and the said award so far it directed reinstatement is stayed.

(iii ) If the workman has not been gainfully employed in any establishment during such period and an affidavit has been filed to such effect.

13. In the instant case, the aforesaid conditions/ingredients

have been duly met by all the respondents. Further, it is not

the case of the petitioner that the respondents are gainfully

employed somewhere else.

14. Also, as regards the contention of counsel for the

petitioner that since the petitioner was declared as sick

industry under the provisions of SICA and since the factory

where respondents were employed already stands closed

under S. 25-O of the ID Act, order under S. 17-B cannot be

made, I do not feel that there is any merit in the said

contention of the counsel for the petitioner.

15. Before delving on this issue, I would like to mention some

important dates regarding facts of the present case. The unit

was declared sick on 8/8/1996 but production had stopped

since 9/2/1993; labour court ordered reinstatement on

1/12/2006; award stayed by High Court on 21/9/2007;

application for seeking benefits under S.17-B ID Act was filed

on 19/4/2008 and unit was closed on 31/8/2008, after the said

application for seeking benefits under S.17-B ID Act was filed

by the respondents applicants.

16. As discussed above, the preliminary consideration for

making available such a relief under Section 17B to a workman

is to be found in the benevolent purpose of the enactment, its

spirit, intendment and object underlying, which is to mitigate

and relieve, to a certain extent, the hardship which would be

caused to a workman due to delay in the implementation of an

award directing reinstatement of his services on account of the

challenge made to it by the employer. Section 17B recognizes

workman's right to the bare minimum to keep the body and

soul together when a challenge has been made to an Award

directing his reinstatement. The statutory provisions provide

no inherent right of assailing an order or an award by an

industrial adjudicator by way of an appeal. The payment which

is required to be made by the employer to the workman has

been held to be akin to a subsistence allowance.

17. Section 17B of the Act has to be read as it stands. It

cannot be interpreted or read by introducing different

meanings to the words and the language employed therein.

The object behind introduction of Section 17B in the Act was to

provide support to a workman who is not gainfully employed

during pendency of the litigation which the employer used to

prolong by approaching the High Court and Supreme Court, as

discussed in Dena Bank's case (supra). Section 17B of the

Act does not contemplate any eventuality as canvassed by

learned advocate for the petitioner, namely the closure of Unit,

and if the argument of learned advocate for the petitioner is to

be accepted, a proviso will have to be added and read in

Section 17B which would relieve the employer of his obligation

of paying to the workman the last wages drawn by him or the

minimum wages, whichever are higher.

18. A reading of the Section on the contrary indicates that

full wages last drawn by a workman or the minimum wages,

whichever are higher, are required to be paid by an employer

during the period of pendency of proceedings in the High Court

or the Supreme Court. The liability to pay under this provision

would subsist till the proceedings before the High Court or the

Supreme Court remain pending. Thus, for accepting the

contention of the petitioner, this Court would not only be

required to read something which is not provided in the

Section, but also to ignore something which is provided in the

Section, which cannot be done.

19. On reading the ingredients of S.17-B ID Act as mentioned

above and Dena Bank's case (supra), it is manifest that the

intention of the law makers was to provide a support for

subsistence to the workman where an award of reinstatement

is challenged by the employer before the High Court or

Supreme Court and the workman is not in any gainful

employment. The situation which is projected here, namely

closure of the Unit because of non-viability, was not the factor

which weighed with the law makers while introducing Section

17B on the statute book.

20. The petitioner having been declared as sick industry

under the provisions of SICA and the factory where

respondents were employed having already been closed under

S. 25-O of the ID Act would not come in the way of grant of

relief to the respondents under S. 17-B ID Act as the provisions

of SICA only create an embargo against disposal of assets of

the sick company for the purpose of recovery of its debts and

does not bar payment of money by the company or its

directors to other persons for satisfaction of their legally

enforceable dues. The fact that the petitioner has been

declared as sick industry under the provisions of SICA and the

factory where respondents were employed has already been

closed under S. 25-O of the ID Act would be of relevance while

deciding the issue of grant of reinstatement with backwages or

compensation, but so far the benefit of S. 17-B ID Act is

concerned, the same cannot be withheld from the workmen

respondent.

21. A similar situation came for consideration before Gujarat

High Court in Iron Rolling Mills Pvt. Ltd. vs. Vinodkumar

R. Singh reported in (2008) 3 GLR 1926 (DB), wherein the

Division Bench of Gujarat High Court after discussing various

decisions and contentions of the parties observed as under:

"9. It is thus clear from the foregoing discussion that Section 17B of the Act does not contemplate a situation of closure of the employer's Unit. What is contemplated is retrenchment, order of reinstatement by an award of the Labour Court or Industrial Tribunal or National Tribunal, challenge to the same by the employer before the High Court or Supreme Court,

pendency of the proceedings and lack of gainful employment of the workman. The argument of the learned advocate for the appellant, therefore, cannot be accepted. In our view, no error can be said to have been committed while passing the impugned order refusing exemption from the order granting payment of benefits under Section 17B. The Appeal must fail, stands dismissed. No costs."

22. The said decision of the Division Bench of Gujarat High

Court is also consistent with the discussion made hereinabove.

23. The counsel for the petitioner has relied on the decision

of this court in CM No. 13779/2005 in WPC No. 12496/2005

dated 5/9/2006 entitled M/s. Pure Drinks (New Delhi) Ltd.

vs. Ashish Dhingra. In the said case the petitioner company's

about 20 winding up petitions were sub-judice before the

Punjab and Haryana High Court and the dues of the workmen

were being adjudicated by the company court and the said

high court had vide orders dated 20/2/1997 restrained the said

company from alienating and disposing off its assets and a

liquidator was also appointed in the said matter. Same is not

the case pleaded here. Thus, the said case has no bearing on

the facts of the case at hand and therefore, is of no assistance

to the petitioner.

24. In the circumstances, the petitioner has not been able to

make out any cogent reason for denying the relief claimed by

the applicants. Consequently, for the foregoing reasons, the

application is allowed.

25. The petitioner is directed to pay the last drawn wages or

minimum wages whichever, are higher to the

respondents/applicants from the date of award i.e. 1/12/2006.

Arrears be paid to the applicants within eight weeks. The

petitioner shall continue to pay the last drawn wages or

minimum wages, whichever are higher, by the 15th day of

every English Calendar month during the pendency of the

present writ petition. The respondents/applicants are also

directed to give an undertaking that in case the petition is

allowed, they shall refund/repay the difference of amount of

last drawn wages and the minimum wages whichever are

higher within such time as may be permitted by this Court.

The undertakings be filed by the respondents/applicants within

four weeks before Registrar.

26. With the above directions, the applications are disposed

of.

May 30, 2009                       KAILASH GAMBHIR, J.
rkr