Jhalani Tools Workers Union ... vs M/S Jhalani Tools India Limited ...
2014 Latest Caselaw 4116 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI
                        Judgement Pronounced on 3rd September, 2014
+     CO.APP. 69/2013 & C.Ms No.15318/13, 15320/13, 11811/14 &
      13435/14

      JHALANI TOOLS WORKERS UNION FARIDABAD
                                                          ..... Appellant
                      Through: Mr. Ashwani Dubey, Advocate with
                       Mr. Ved Ram, Authorized Representative

                      versus

      M/S JHALANI TOOLS INDIA LIMITED (IN LIQUIDATION)
                                               ..... Respondent
                      Through: Mr. Harish Sharma, Advocate for
                      Jhalani Tools Workers Union, Aurangabad &
                      Jalna (Maharashtra)
                      Mr. Jos Chiramel, Mr. Ramesh Kumar & Mr.
                      Pankaj Kumar Dua, Advocates for Dena Bank,
                      Syndicate Bank & Indian Overseas Bank
                      (Respondents No.3, 5 & 6)
                      Mr. Sangram Patnaik, Advocate for IDBI Bank
                      Mr. Rajiv Bahl, Advocate for Official Liquidator
                      Mr. Ashutosh Dubey, Advocate for the Ex-
                      Management
                      Mr. Anil Nauriya, Advocate for Ms. Sumita
                      Hazarika for R-13


      CORAM:
      HON'BLE MS. JUSTICE GITA MITTAL
      HON'BLE MR. JUSTICE SUNIL GAUR



                                                             Page 1 of 12
 GITA MITTAL, J.           (ORAL)

1. Leave is sought by Mr. Sangram Patnaik, Advocate appearing for IDBI Bank; Mr. Ashutosh Dubey, Advocate appearing for ex- Management (Respondent No.11); Mr. Harish Sharma, Advocate appearing for Jhalani Tools Workers Union, Aurangabad & Jalna (Maharashtra); and Mr. Rajiv Bahl, Advocate appearing for Official Liquidator to handover affidavits in compliance of the order dated 7th August, 2014, in Court. Copies thereof have been served on other parties. The affidavits are taken on record.

2. In terms of the said directions, affidavits of respondent No. 6 (Dena Bank) & respondent No.13 [Jhalani Tool Workers Union (Kundli Unit)] are already on record. Learned counsel for the parties submit that, therefore, there is no impediment for the court proceeding to make an order in terms of the proposal mooted by Mr. Jos Chiramel, Advocate for Dena Bank, Syndicate Bank & Indian Overseas Bank in para 1 of the order dated 7th August, 2014.

3. We have heard learned counsel for the parties. As back as in the year 1987, the respondent company M/s Jhalani Tools (India) Limited had approached the Board for Industrial and Financial Reconstruction (BIFR) for its declaration as a sick company within the meaning of Sick Industrial Company (Special Provisions) Act, 1985. During the pendency of this reference, Company Petition No.539/1998 was filed by M/s Tata Iron Steel Company Ltd. (TISCO) & Ors. against M/s Jhalani Tools (India) Ltd., the respondent company in this Court. By an order dated 16th December, 1998, the

learned Company Judge issued notice and at the same time restrained the company from transferring, alienating or creating third party interests in its property. In addition, on account of pendency of reference before the BIFR, learned Company Judge adjourned the company petition sine die to await the outcome of the reference.

4. So far as the reference is concerned, by order dated 17th July, 2000, the BIFR noted that the company could not be rehabilitated and, therefore, made a recommendation for its winding up. The BIFR reference was registered as Company Petition No.18/2001 in this Court. In this petition, by an order dated 27th February, 2002, it was directed that Company Petition No.539/1998 and Company Petition No.18/2001 be listed together.

5. On 18th March, 2002, learned Company Judge concluded that company was indebted to TISCO and was unable to pay its debts. The petition was admitted and the Official Liquidator attached to the court was appointed as the Provisional Liquidator of the company. Aggrieved thereby, Company Appeal No.24/2003 was filed.

6. In the meantime, by the order dated 5th March, 2004, the Provisional Liquidator was directed to take over the charge of the assets and records of the company. The Official Liquidator further proceeded to invite claims. It is on record that about 4325 claims were received in the office of Official Liquidator. Out of the aforesaid claims, the appellant before us i.e. M/s Jhalani Tools Workers Union of workers of three units in Faridabad entered into One Time Settlement (OTS) in respect of 2018 workers with the ex- Management on 15th February, 2007. It was thereby agreed between

the parties that the claim of these workmen was of Rs.59 crores and out of this, the ex-Management of the respondent company agreed to pay Rs.13 crores in lumpsum to these workmen on the basis of formula laid down in the said tripartite settlement under Section 12(3) of the Industrial Disputes Act, 1947. This settlement has been placed before us.

7. One material fact needs to be noted at this stage. It appears that learned Company Judge appointed a three-member committee presided over by Mr. Justice S.N.Dhingra, former Judge of this Court for the purposes of scrutinizing all the claims of the workers, eight claims of secured creditors as well as of other parties including the provident fund authorities. Mr. Justice S.N.Dhingra Committee have found the claims of 2018 workers of the three units in Faridabad to be entitled for Rs.14,64,88,422/- on the basis of One Time Settlement.

8. It is on record in the winding up proceedings that out of six units of the company five units have been sold by the Official Liquidator in the winding up proceedings and sale proceeds duly received were credited in the account of the company.

9. The parties are before us because the Official Liquidator filed a company application No.145/2013 in the Company Petition No.539/1998 before the Company Court seeking directions to disburse the amount to the workers out of the available funds in the account of the company between the secured creditors and workers based on a calculation dated 8th January, 2013 submitted by the Chartered Accountant.

10. So far as workers of the other units of the company at Kundli,

Aurangabad & Jalna (Maharashtra) are concerned, they had filed their claims before Mr. Justice S.N.Dhingra Committee, some of which stand finally adjudicated upon while others are under scrutiny.

11. This application came to be considered by the learned Company Judge in the impugned order dated 13 th August, 2013. A view was taken that the workers of the different units of the respondent-company cannot be treated on different footings. Therefore, the 2018 workers from the three units at Faridabad cannot be treated separately and be given the amount equivalent to the amount quantified in One Time Settlement as lumpsum. The learned Company Judge issued a direction to disburse the amount lying with the Official Liquidator amongst all the workers of the several units of the respondent-company on a pro-rata basis. The directions of the learned Single Judge in para 45 of the order dated 13th August, 2013 in this regard read as under:

"45. As regards CA No.145 of 2013 and CA No.302 of 2013, it is directed that hereafter all workers will be treated as one category for the purpose of pro rata disbursement of the funds and inter se amongst the workers there will be no distinction for calculation of the pro rata funds. It is clarified that whatever amounts have been disbursed to the workmen thus far will not be asked to be refunded. This will be the first round of payment to the workmen. As and when more funds are received, another round of pro rata disbursement of payments will take place. This will, of course, be apart from further claims of workmen that may be decided by the OL."

12. Aggrieved by this direction, the appellant-union has filed

present appeal contending that the respondent-company entered into One Time Settlement for total amount of Rs.14,64,88,422/- in lieu of actual claim of Rs.59 crores which infact enured to the benefit not only of the company under liquidation but also to the creditors including the other workers of the company. The 2018 workers, who are members of the appellant, had agreed to make this huge sacrifice only for the reason that they would have received the amount in lumpsum which would have enabled them to arrange their financial affairs and get on with life.

13. We are also informed that pursuant to the settlement, Official Liquidator had already made payments to 285 workers of the appellant in accordance with formula laid down in One Time Settlement in the agreement dated 15th February, 2007.

14. It appears that the parties had also drawn attention of the learned Company Judge to the fact that from the sale of the units and amounts accrued on the fixed deposits of the company and from the sale of its units had been transferred by the Official Liquidator to the Common Pool Fund. This aspect was noted in the following directions in paras 55 & 56 of the learned Company Judge passed in order dated 13th August, 2013:

"55. A direction is issued to the OL to place before the Court, by the next date, the complete accounts as regards the amounts deposited in the CPF from the funds of the company pursuant to the earlier directions issued by the Court. Copies thereof be served in advance to the counsel for the workmen, the ex-Management and the secured creditors.

56. The Court is of the view that augmentation of the CPF of the OL should not result in depletion of funds that should be available for disbursement to the workmen and secured creditors. Given that there is a sufficient amount in the CPF, the court directs that OL to forthwith cease diverting any further sum from the interest accrued on the FDs created from the company's funds. It is further directed that in the event there is any shortfall in the funds available to make payment to the workmen and the secured creditors after the sale of the Faridabad Unit, the OL will refund to the account of the company's funds the sum thus far taken from it for the CPF."

15. During the consideration before us, on 7th August, 2014, appearing for the three banks, a proposal had been mooted, which was noted in para 01 of the order on 7th August, 2014 and reads as under:

"A proposal has been mooted by Mr. Jos Chiramel, Advocate for Dena Bank, Syndicate Bank & Indian Overseas Bank; Mr. Ashutosh Dubey, Advocate for respondent No.11/Ex-Management; Mr. Anil Nauriya, Advocate for respondent No.13 & Mr. Harish Sharma, Advocate for Jhalani Tools Workers Union, Aurangabad & Jalna, Maharashtra, that in case this court was to direct that an amount equivalent to Rs.14,64,88,422/- payable under the OTS with the 2018 workers of the Faridabad Unit, was brought into the funds of the company under liquidation from the accruals on its funds diverted by the Official Liquidator into the Company Pool Fund, they would have no objection to the full payment in terms of the OTS to the workmen represented by the appellant herein."

16. This suggestion appeared to be fair inasmuch as it allayed all apprehensions of the secured creditors as well as the other workers of the company, who feared that in case the amount of One Time Settlement was so disbursed to the appellant, there would be no funds left for meeting the liability to the remaining creditors. Time was sought before us by Mr. Sangram Patnaik, Advocate appearing on behalf of IDBI bank to seek instructions with regard to the proposal. In our order of 7th August, 2014, in order to obviate any controversy in future, we had granted time in para 03 of the order dated 7th August, 2014 to the parties to file affidavits in support of the proposal. At the same time directions were issued to the Official Liquidator to place the statement before this Court with regard to fund position of the company on the next date of hearing including the amounts, which have been diverted to Common Pool Fund since November, 2005.

17. We have before us the affidavits of the respondent No.7-IDBI Bank; respondent No.11-ex-management; respondent No.12-Jhalani Tools Workers Union, Aurangabad & Jalna (Maharashtra); the Official Liquidator; respondent No. 6-Dena Bank & respondent No.13-Jhalani Tool Workers Union (Kundli Unit) in support of the proposal noted in para 01 of order dated 7th August, 2014.

In fact, a fervent prayer is made by all the parties that this proposal be forthwith implemented and the directions be made to the Official Liquidator to restore the amounts from Common Pool Fund to the credit account of the company.

18. A perusal of the affidavit filed by Mr. Rajpal Singh, Dy.

Official Liquidator on behalf of Official Liquidator shows that after the sale of five units of the company, the office of the Official Liquidator on 20th October, 2005, had transferred 50% of the interest amount accrued into the Common Pool Fund and further interest accrued on the fixed deposit receipts created from the company's fund have been deposited in Common Pool Fund.

19. Inasmuch, as the present consideration has been necessitated in view of peculiar facts and circumstances of the One Time Settlement and the sacrifice made by the members of the appellant, we make it clear that none of the directions contained herein shall be treated as a precedent in any other case. The order is being passed to balance equities especially amongst the thousands of workmen of the appellant union, who are languishing and deprived of their legitimate dues for decades. In these facts, it cannot be denied that in the instant case interest of justice mandates that the amounts of the company including not only the principal amount received from the sale of its assets but also the accruals thereon in the nature of interest etc. be restored to the credit of the company and be made available for full and final disbursement between the creditors of the company.

20. Mr. Ashutosh Dubey, Advocate appearing for ex-Management submits that so far as the expenses of Official Liquidator are concerned, they are being regularly met from the account of the company. Subject to reports in this regard before the learned Company Judge and orders thereon by the company court, it shall be open for the Official Liquidator to adjust all expenses from the account of the company in the future as well. It needs no elaboration

that it shall be for the learned Company Judge to pass appropriate orders in this regard as and when a request is received from the office of Official Liquidator.

21. There is no objection to the acceptance of the One Time Settlement as well as the entitlement of 2018 workers who were members of the appellant union in the sum of Rs.14,64,88,422/- as full and final payment to these workers. The same is hereby accepted.

22. The parties before us have stated on affidavits that they would not have any objection to the disbursement of One Time Settlement amount to the appellant. The parties shall remain bound by the consent, which they have given before us on affidavit. All claims of the appellant-Union's 2018 workers shall stand finally satisfied upon receipt of the disbursement of the amount in terms of the One Time Settlement to them. It shall not be open for them to make any other or further claim after they receive the amounts thereof, which shall be in full and final settlement of all claims.

23. In view of above, we direct as follows:

i. The Official Liquidator shall credit the account of the company with all amounts credited to the Common Pool Fund from the sale proceeds of the units of the company under liquidation after 1st November, 2005 till 13th August 2013.

ii. The Official Liquidator shall also credit the account of the company with the amount of all accruals of interests or any other benefit on the deposits credited from the accruals to the credit of the company from sale proceeds of its units or

any other mode.

iii. The Official Liquidator shall release in favour of the appellant the amount of Rs.14,64,88,422/- for disbursement of 2018 workers after adjusting the amounts which may have been paid to 2018 workers of the appellant union, in accordance with due procedure.

iv. The appellant-Jhalani Tools Workers Union Faridabad shall ensure disbursement of the amounts to the 2018 members in terms of the settlement immediately on receipt of the amount from the appellant against verification and receipts. Complete records of the disbursement shall be placed before the Official Liquidator which shall be placed before the Mr. Justice S.N.Dhingra Committee for scrutiny and thereafter before the learned Company Judge by the Official Liquidator.

v. The Official Liquidator shall proceed in the matter of disbursement to the other workers and creditors in terms of the orders passed by the learned Company Judge in terms of the pro-rata distribution between the other workers and the creditors.

vi. The directions made in para 45 of the order dated 13 th August, 2014 of the learned Company Judge to the extent they relate to the 2018 workers of the Faridabad Units, who are members to the One Time Settlement, shall stand modified to the above extent.

vii. In view of the above, pending applications, if any, do not

survive for adjudication and are disposed of.

viii. Needless to say, the directions made by us on 7th August, 2014 with regard to processing the claims of other workers or persons claiming to be successors-in-interest of the deceased workmen concerned as well as directions already made shall bind the scrutiny by the Mr. Justice S.N.Dhingra Committee.

ix. We also make it clear that One Time Settlement as well as orders passed today bind only such workmen, who are part of the 2018 members of the appellant-union. In case there are workers other than the 2018 workers in Faridabad or in any other unit, who may have been members of the appellant union but have not joined in the One Time Settlement, it is made clear that their claims would be scrutinized by Mr. Justice S.N.Dhingra Committee and be processed in the same manner as the claims of the workers in other units are being scrutinized.

This appeal and all pending applications are disposed of in the above terms.

Copy of this order be given dasti to the parties.

GITA MITTAL, J

SUNIL GAUR, J SEPTEMBER 03, 2014 vn