The Management Of M/S Hpl India Ltd vs The Secretary (Labour), Govt Of ...
2010 Latest Caselaw 2741 Del

              *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           W.P.(C) 5825/2004

%                                           Date of decision: 24th May, 2010

THE MANAGEMENT OF M/S HPL INDIA LTD              ..... Petitioner
               Through: Mr. M.Y. Khan, Advocate.

                                       Versus

THE SECRETARY (LABOUR), GOVT OF NCT OF
DELHI & ANOTHER                                 ..... Respondents
                 Through: Mr. Asheesh Kumar Mishra for R-2
                          with respondent no.2-in-person.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may
         be allowed to see the judgment?                   No

2.       To be referred to the reporter or not?            No

3.       Whether the judgment should be reported           No
         in the Digest?

RAJIV SAHAI ENDLAW, J.

1. The Petitioner HPL India Limited by this writ petition impugns the

award dated 31st July, 2001 of the Labour Court "against the petitioner

company because it was never a party to the adjudication of the industrial

dispute of the respondent/workman" and for the reason that it was not

impleaded as a necessary party or even summoned by the Labour Court.

The petitioner, in the writ petition has pleaded that the respondent no.2

workman was not employed with the petitioner; no industrial dispute was

raised by the respondent no.2 workman against the petitioner. It is further

pleaded that M/s Amrex (India) Pvt. Ltd. (hereinafter referred to as "M/s

Amrex") (and which has not been impleaded as a party to the writ petition)

against whom the award of the Labour Court is, has been closed down w.e.f.

31st March, 1995; that even though the said fact was brought to the notice of

the Labour Court and a letter dated 23 rd May, 1995 written by the said M/s

Amrex was filed before the Labour Court but the Labour Court has

misunderstood the said letter. The petitioner has challenged the award on

merits also.

2. The petition was filed after nearly three years of the award and when

the award was sought to be enforced against the petitioner and a Recovery

Certificate issued against the petitioner. This Court vide ex parte order dated

22nd April, 2004 stayed the operation of the award subject to the petitioner

depositing litigation expenses in this Court. Rule was issued in the petition

on 5th September, 2006 and the interim order made absolute. The records of

the Labour Court were requisitioned and on 11th October, 2007 it was

directed that the respondent no.2 workman may contact the Management of

M/s Amrex and it was clarified that since it is the stand of the petitioner that

it was not a party to the industrial dispute, the interim order shall operate only

against the enforcement of the award against the petitioner and not for

enforcement of the award against M/s Amrex. The respondent no.2 workman

filed CM.No.2367/2008 under Section 17B of the ID Act and which is also

pending consideration. Since the case of the petitioner is that the award is

not against the petitioner but against M/s Amrex, the application under

Section 17B was not taken up for hearing before the hearing of the writ

petition.

3. Though the counsels argued on the premise that the award is not

against the petitioner but a perusal of the reference order, title of the award

and the record of the Labour Court requisitioned before this Court revealed

an interesting aspect, which was not highlighted by the counsel for the

respondent no.2 workman also. The order dated 30th November, 1992 of the

Secretary (Labour) of the Delhi Administration making reference of the

dispute records the satisfaction as to the existence of the dispute "between the

Management M/s Amrex (India) Pvt. Ltd./Havell's Electronics Pvt. Ltd.,

Atma Ram Mansions 1/21, Asaf Ali Road, 2nd Floor, New Delhi and its

workman, Shri Bhagwan Singh Rawat....." . The reference made was as

under:

"Whether the services of Shri Bhagwan Singh Rawat have been terminated illegally and/or unjustifiably by the management and if so, to what relief is he entitled and what directions are necessary in this respect?"

However, the statement of claim filed by the respondent no.2 workman

before the Labour Court shows only M/s Amrex (India) Pvt. Ltd as the

respondent management. A reply thereto is also filed by M/s Amrex only,

and authorized representative of the Management appearing before the

Labour Court has also filed authorization on behalf of M/s Amrex only.

However, in the award rendered on the reference, the dispute is again shown

as between the respondent no.2 workman and "the Management of M/s

Amrex (India) Pvt Ltd./Havell's Electronics Pvt. Ltd.......", apparently taken

from the reference order. The copy of the summons, if any, issued by the

Labour Court to the Management and from which it would have been borne

out whether the notice/summons were issued only to M/s Amrex or to

Havell's Electronics Pvt Ltd also are not found on record. However, there

is on the file of the Labour Court an AD card of a registered AD letter sent by

the Labour Court to "Amrex (India) Pvt. Ltd./Havell's Electronics Pvt. Ltd."

at the address of Atma Ram Mansions 1/21, Asaf Ali Road, 2 nd Floor, New

Delhi bearing the stamp and signatures dated 19th March, 1993 on behalf of

Havell's Electronics Pvt. Ltd. The reference order is also addressed similarly

to both M/s Amrex and Havell's Electronics Pvt. Ltd.

4. However, the respondent no.2 workman has not sought to enforce the

award against the said Havell's Electronics Pvt. Ltd. either. There is some

reference in the writ petition to Havell's Electronics Pvt. Ltd. from which it

appears that the said company still exists. However, since that company also

is not before this Court, nothing further turns thereon.

5. It transpires that the respondent no.2 workman sought to enforce the

award against the petitioner for the reason of a letter dated 23rd May, 1995

having been filed during the pendency of the dispute before the Labour

Court, written by M/s Amrex to the ESIC to the effect that M/s Amrex has

closed down its business activity and has transferred all the "staff members"

to its sister concern, namely, the petitioner herein. It is also not in dispute

that the petitioner was earlier known as Havell's Circuit Breakers Pvt. Ltd.

The respondent no.2 workman, on the premise that the staff of M/s Amrex in

which the respondent no.2 workman was employed, having been transferred

to the petitioner, the petitioner is liable under the award against M/s Amrex,

sought enforcement against the petitioner. The Labour Commissioner/Court

also appears to have issued the Recovery Certificate in the name of the

petitioner without recording any satisfaction as to whether the petitioner is a

party to the award or not or is a successor to a party to the award or not.

6. The respondent no.2 workman has filed before this Court certified

copies of the record of Registrar of Companies which indicate that the

petitioner and M/s Amrex have common directors/shareholders. It has also

come on record that M/s Amrex, after closing down its business has invested

its surplus funds in acquiring the shares of the petitioner.

7. The question which arises is, whether an award against M/s Amrex is

executable against the petitioner for the reason of the staff earlier working in

M/s Amrex, on closure of business of M/s Amrex, having been transferred to

the petitioner or for the reason of the petitioner and M/s Amrex though

separate juristic persons having their own identities, having common

shareholders/directors and/or having made investments in the shares of each

other.

8. The identity of a Company, as both M/s Amrex and the petitioner are/

is distinct from its shareholders/directors. Section 18 of the Industrial

Disputes Act, 1947 makes an award binding on the employer, its heirs,

successors or assigns in respect of the establishment to which the dispute

relates. There is nothing to show that the petitioner is an heir or a successor

of M/s Amrex. The only other contingency in which the award against M/s

Amrex can be enforced against the petitioner is if the petitioner is the

assignee in respect of the establishment to which the dispute relates.

However, no fact finding inquiry which is necessary to reach this conclusion

has been done. I have also wondered as to before which fora would such fact

finding inquiry into the assignee of the employer in respect of the

establishment to which the dispute relates would be conducted. The only

answer which comes to mind is that if the factum of such assignment is

brought to light during the pendency of the industrial dispute then such

inquiry will be conducted by the industrial adjudicator before deciding the

reference and if such assignment is brought to light after the award, then the

question would have to be adjudicated under Section 33C(2) of the Act. I,

however find that the Supreme Court in Central Inland Water Transport

Corporation Limited v. The Workmen AIR 1974 SC 1604 has held

otherwise. The Supreme Court has held that an inquiry whether a person is

the assignee of the employer under the award is to be conducted by raising a

dispute on a reference under Section 10 of the Act. In my humble opinion, it

is unduly harsh on the workman to require him to raise a fresh dispute qua

assignee of the employer in the award when it is a settled principle that

Section 33C(2) is in the nature of execution proceedings and the question

whether a particular person is the assignee of the judgment debtor or not can

certainly be decided in execution proceedings.

9. For the enforcement of claim of a workman under the award of the

industrial adjudicator, the corporate veil can also be lifted. However, a case

of piercing the corporate veil has to be made out and which has not been

done in the present case. Moreover, such case in accordance with the

Central Inland Water Transport Corporation Limited (supra) would also

have to be made by way of an industrial dispute under Section 10 of the ID

Act.

10. Merely because the employees of M/s Amrex were transferred to the

petitioner would not constitute the petitioner as the successor or assignee of

M/s Amrex in respect of the establishment to which the dispute relates.

Though the term "establishment" has not been defined in Section 2 of the ID

Act, but it connotes the unit, business or industry or undertaking in which the

workman was employed. Mere transfer of employees from M/s Amrex to the

petitioner would not necessarily imply that the unit, business, undertaking

and industry of M/s Amrex, of which the respondent no.2 workman was an

employee, was transferred/assigned to the petitioner. The Madras High Court

in Workers of Sagar Talkies (South India Cinema Employees' Association)

Vs. Odeon Cinema (1957) I LLJ 1639 has held that where there is no

transfer of business, no taking over of assets and liabilities but only a new

business is conducted in the same premises where earlier another separate

business was conducted by another individual and there is no link to connect

the two managements except the fact that a somewhat similar business is

being carried on in the same premises, it cannot be contended that there is a

continuity so as to constitute one as the successor in business of the other. In

A. St. Arunachalam Pillai Vs. The Chairman, Central Government

Industrial Tribunal, Madras AIR 1957 Mad 614 a transfer of buses and the

route permits was held to amount to a transfer of assets and the purchaser of

the said buses was not held to be a successor or assignee within the meaning

of Section 18(3)(c) of the ID Act. The Supreme Court in Anakapalla Co-

operative Agricultural and Industrial Society Limited

Vs. Workmen AIR 1963 SC 1489 has discussed the various considerations to

determine whether an industrial concern can be said to be a successor-in-

interest or not. There is no averment even in the present case of the petitioner

being the successor in business of M/s Amrex. The petitioner has in the

affidavit stated that M/s Amrex and itself were involved in entirely

separate/distinct businesses having no co-relation with each other. It is also

pleaded that only the staff as distinct from workmen of M/s Amrex were

taken over by the petitioner.

11. Thus on the basis of the material on record and/or in any case in the

exercise of writ jurisdiction this Court is not competent to hold the petitioner

to be the successor or assignee in respect of the establishment of M/s Amrex

to which the dispute is related. The award against M/s Amrex / Havell's

Electronics Pvt. Ltd. cannot be enforced against the petitioner without the

respondent no.2 workman establishing so before the appropriate forum.

12. The counsel for the respondent no.2 workman has drawn attention to

the letter of appointment of the respondent no.2 workman whereunder the

services of the respondent no.2 workman were transferable to any of the

sister concerns of M/s Amrex. However, there was no plea that the services

of the respondent no.2 workman were so transferred to the petitioner. In the

absence of such a plea, no relationship of employer and employee can be said

to have come into existence between the respondent no.2 workman and the

petitioner. For this reason CM.No.2367/2008 filed by the respondent no.2

workman under Section 17B of the ID Act is not maintainable against the

petitioner and is dismissed. For the same reason, the award of the Labour

Court cannot be enforced against the petitioner and the issuance of recovery

certificate in enforcement of the award against the petitioner is found to be

bad and the recovery certificate is liable to be set aside/quashed.

13. However, it is not felt appropriate to leave the matter so. The parties

have been litigating for the last 18 years. The petitioner even though not a

successor/assignee of M/s Amrex has chosen to challenge the award on

merits also. It is the case in the writ petition that M/s Amrex on receipt of the

award had appeared before the Implementation Cell of the Labour

Commissioner and pointed out that it is interested to settle the account of the

respondent no.2 workman amicably. From the challenge in the writ petition

to the award on merits, it is clear that though technically the petitioner is not

bound by the award but the petitioner is otherwise in full know of the facts so

as to be competent to challenge the award. It is also an admitted position that

M/s Amrex, though may have closed down its business, is still in existence

and holds substantial shareholding of the petitioner. Considering the said

aspects, attempts were made for amicable settlement at the time of hearing

but which did not succeed. In this light of the matter, the award has also been

considered on merits.

14. The award finds the respondent no.2 workman to be on probation with

the petitioner. However, M/s Amrex instead of simpliciter termination of the

said probation and/or not confirming the respondent no.2 workman chose to

terminate the services of the respondent no.2 workman for the reason of not

only the performance of the respondent no.2 workman being found

unsatisfactory and not upto the mark but also for the reason of the respondent

no.2 workman being rude to superiors and avoiding their instructions. The

award thus finding the termination to be stigmatic and without holding an

inquiry declared the same to be illegal and found the respondent no.2

workman entitled to reinstatement with full back wages and continuity of

service.

15. Even though M/s Amrex is not a party to the present petition but M/s

Amrex having not challenged the award, the same has attained finality. No

error can be found in the award. However, the reinstatement of the

respondent no.2 workman would be as a probationer only and which can

again be terminated simiplicter and without any stigma. It is, thus, not as if

the respondent no.2 workman has any right to continue in employment of

M/s Amrex also. The award also records the last drawn salary of the

respondent no.2 workman to be Rs.1,200/- per month and his services to have

been terminated on 24th February, 1992. Thus, the respondent no.2 workman

under the award would have been entitled to back wages, say from 1st March,

1992 till the date of the award on 31st July, 2001 i.e. approximately of

Rs.1,50,000/-. The said amount was payable about nine years ago. However,

considering that the respondent no.2 workman has been negligent in

attempting to enforce the award against the petitioner instead of M/s Amrex

and which has led to the delays and further considering that if the respondent

no.2 workman were to now attempt to prove that the petitioner is the assignee

of M/s Amrex, the same would again take a long time, it is directed that

subject to the petitioner itself or through M/s Amrex paying a sum of

Rs.1,25,000/- to the respondent no.2 workman, all claims of the respondent

no.2 workman under the award impugned in this petition and/or against M/s

Amrex/Havell's Electronics Pvt. Ltd and/or the petitioner and/or any other

group company of the petitioner shall stand satisfied. The respondent no.2

workman is to exercise a choice in this regard and to intimate the petitioner

of the same within two weeks hereof. In the event of the respondent no.2

workman opting to receive the said amount from the petitioner and/or

through M/s Amrex, the said amount is to be paid to the respondent no.2 in

full and final settlement aforesaid within four weeks thereafter.

16. The writ petition thus succeeds in the aforesaid terms and is disposed

of leaving the parties to bear their own costs.

RAJIV SAHAI ENDLAW (JUDGE) 24th May, 2010 M