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C. Eduljee and Company Limited and anr. Vs. First Labour Court, Nagpur and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Applications Nos. 121 and 152 of 1972
Judge
Reported in[1977]47CompCas770(Bom); 1976MhLJ20
ActsBombay Industrial Relations Act, 1946 - Sections 3(14), 106, 106(1) and 106(2)
AppellantC. Eduljee and Company Limited and anr.
RespondentFirst Labour Court, Nagpur and ors.
Appellant AdvocateS.P. Khanna, Adv.
Respondent AdvocateH.W. Dhabe, Adv.
Excerpt:
.....but failed. ' 8. the primary scheme of these provisions clearly postulates earlier adjudication before a labour court or industrial court a change which has sub-section (1) in terms makes an employer effecting a change which has been held or declared to be illegal, culpable. unless both these conditions are satisfied, in that the person is a employer and against whom there is a adjudication contemplated by sub-section (1) or (2), proceedings under those provision prima facie and in the very nature of things could not be entertainable. 11. in the result, though we see no cause to interfere with the substantive orders made by the labour as well as industrial courts in favour of the employee, i......secondly, must be a person who under sub-section (1) had effected a change which has been found by labour or industrial court to be illegal and, for the purpose of sub-section (2), must be a person who was required by an effective decision or order of the wage board, labour court or industrial court, to carry out a change or to withdraw an illegal change. unless both these conditions are satisfied, in that the person is a employer and against whom there is a adjudication contemplated by sub-section (1) or (2), proceedings under those provision prima facie and in the very nature of things could not be entertainable. it is primary in the scheme of these two sub-sections that there has to be prior adjudication against an employer and as a result of that adjudication the employer is exposed.....
Judgment:

Masodkar, J.

1. Both these petitions have been filed by the company, now in liquidation, M/s. C. Eduljee & Company. It was a public limited company and by these petitions, the order made by the First Labour Court on July 20, 1971, as well as the order of the Industrial Court of November 24, 1971, in the first case and the order dated July 22, 1971, of the First Labour Court and order dated January 14, 1972, of the Industrial Court in the second case, are challenged.

2. Now, the facts are : The respondent No. 3 in each petition had filed proceedings under section 78 of the Bombay Industrial Relations Act, 1946 (hereinafter called the BIR Act). The Labour Court held that the employee in each case who was dismissed was entitled to relief of restitution, the dismissal being unlawful. However, it granted the relief of back wages and compensation in each case. The company took up the matter before the Industrial Court but failed. Eventually, the present petitions were filed. By that time declarations were also obtained by the employees under section 46 read with section 47 read with section 78 of the BIR Act and proceedings were initiated not against the company, but, as seen from the applications under section 106, against the individual director, one K. B. Agarwal in the first case, and one S. K. Agarwal in the second case. None of these directors were made personally parties in the earlier proceedings and it is admitted for the purpose of the present petition that the entire proceedings were initiated, conducted and relief obtained against the company only.

3. These petitions were filed challenging the substantive orders made by the Labour and Industrial Courts and also the proceedings initiated under section 106 against the individual directors. The petitions were filed in 1972 when the company was a going concern. To the first petition Kunj Bihari Agarwal was also joined as petitioner No. 2, while in the second petition it was not thought necessary by the petitioner to impleaded Santosh Kumar as petitioner though relief was prayed against the institution of prosecution. During the Pendency of those petitions, the company has been taken in liquidation and winding up order has been made. The official liquidator now represents the interest of the company.

4. At the hearing Mr. Khanna, Deputy Official Liquidator, submits that the claim of each of the employees on the basis of adjudication by the Labour Court and the Industrial Court in substance is now a monetary claim and that can be worked out accordingly to law in liquidation. He did not, therefore, press the main challenge to the legality of the orders made by the Labour and Industrial Courts favour of each of the employees. However, he pointed out that the prosecutions instituted by each of the employees were entirely untenable as, on the face of it, those have been instituted against persons who were not parties to the substantive proceedings. Those proceedings instituted should, therefore, be adjudged as untenable.

5. As against this Mr. Dhabe, appearing for the respondent No. 3, i.e., the employee in each case, contends that the person who has been accused in each criminal case filed before the Labour Court has not approached this court and, therefore, it is not open to the Deputy Official Liquidator to canvass this submission in these petitions. He urged that the provisions of section 106 of the BIR Act would take in the directors of the company and though the prosecution is not launched against the company by name, it is against the individual person who was then director. He submitted that non-joinder of such person to the earlier proceedings would not affect the validity of the prosecution because the word 'employer' as defined by the Act also includes an agent of an employer. According to him, the prosecution is against the agent of the employer and, therefore, the same is validity lodged.

6. After giving our careful considerations to these respective submissions, it appears necessary to indicate what is the exact contemplation of the word 'employer' in the provisions of section 106 which makes culpable certain acts and permit imposing of penalty as indicated upon conviction against such person.

7. The provisions of section 106 read as under :

'106. (1) Any employer who makes a change which is held or declared by a Labour Court or Industrial Court to be illegal, shall, on conviction, be punishable with fine which pay extend to Rs. 5,000.

(2) Any employer who contravenes the provisions of section 47 shall, on conviction, be punishable with imprisonment which may extend to three months, or for every day on which the contravention continues with fine which may extend to Rs. 5,000 or with both.

(3) The court convicting any person under sub-section (1) or (2) may direct such person to pay such compensation as it may determine to any employee directly and adversely affected by the change in issue.'

8. The primary scheme of these provisions clearly postulates earlier adjudication before a Labour Court or Industrial Court a change which has Sub-section (1) in terms makes an employer effecting a change which has been held or declared to be illegal, culpable. Sub-section (2) equally makes an employer who contravenes the provisions of section 47 liable subjected to penalty mentioned by that provision. Reference to section 47 indicates that such an employer is a person who is required under the terms of any effective decisions or order of a Wage Board, Labour Court or Industrial Court, to carry out a change or withdraw an illegal change. Thus, from both the provisions it is per-eminently clear that before a proceeding under sub-section (1) or (2) of section 106 could at all be lodged, the person against whom those proceedings are initiated must, firstly, be an employer and secondly, must be a person who under sub-section (1) had effected a change which has been found by Labour or Industrial court to be illegal and, for the purpose of sub-section (2), must be a person who was required by an effective decision or order of the Wage Board, Labour Court or Industrial Court, to carry out a change or to withdraw an illegal change. Unless both these conditions are satisfied, in that the person is a employer and against whom there is a adjudication contemplated by sub-section (1) or (2), proceedings under those provision prima facie and in the very nature of things could not be entertainable. It is primary in the scheme of these two sub-sections that there has to be prior adjudication against an employer and as a result of that adjudication the employer is exposed to certain penalties. The adjudication which is the basis for initiating proceedings under sub-sections (1) and (2) obviously must precede and further the person who is sought to be subjected to prosecution must be a party in adjudication. Any other construction of these two sections would lead to anomalous results, for, a person to be brought before the Court facing a prosecution, if he is not a party to the earlier adjudication, would not be in a position to challenge the same, for there is a finality attached to the adjudication under the provisions of the Act and, secondly, the Court trying such a person for an offence contemplated by these sub-sections will not be able to go behind the earlier adjudication. It, therefore, follows that the term 'employer' used in sub-section (1) or sub-section (2) is a terms of restricted connotation and has a reference to an employer who had been a party to the proceedings before Labour Court or Industrial Court as far as sub-section (1) is concerned, and before Labour Court or Industrial Court or Wage Board as far as sub-section (2) is concerned. Unless the decision is made against the person as an employer by those authorities, further proceedings in the nature of trial for offence under sub-section (1) or (2) against him are not contemplated.

9. Only because the term 'employer' as defined by section 3(14) includes 'any agent of an employer', it is not possible to extend the meaning of the purpose of section 106 to include every agent of an employer making him culpable under sub-section (1) or (2) though he was not a party under the earlier proceedings for adjudication either before the Labour Court or Industrial Court or Wage Board. If the earlier industrial adjudication is against the company as such, the penal liability under sub-section (1) or sub-section (2) would only be against the company.

10. That being the clear premises of the provision of sub-sections (1) and (2) of section 106, it is easy to read the rationale behind sub-section (3) of that provision. It is the person whose is convicted under earlier two provisions how can be subjected to further order regarding payment of compensation to the employee. That provision indicates that such an order as to compensation can be made only on conviction. Only because words 'any person' have been used in sub-section (3), no different intent is indicated as far as the words 'any employer' in sub-section (1) or sub-section (2) are concerned. 'Any person' contemplated by sub-section (3) is the employer who can be subjected to penal proceedings under sub-section (1) or sub-section (2) and none else. The provisions of sub-section (3) too does not aid the construction for which Mr. Dhabe contended. On the facts of the present case it is obvious that the entire adjudication initiated, conducted and carried through was against the company as the employer. It was not against any agent of the company nor against any particular person as the employer. Logically it follows, therefore, that proceedings under sub-section (1) or (2) could have been initiated only against the company who was a party to the proceedings in earlier adjudication and not against any individual person as is attempted to be done by respondent No. 3 while launching proceedings under section 106 in each case.

11. In the result, though we see no cause to interfere with the substantive orders made by the Labour as well as Industrial Courts in favour of the employee, i.e., the respondent No. 3 in each case, we hold that the proceedings initiated by the complaints being Complaint No. 9 of 1971 in the first case and Criminal Case No. 8 of 1971 in the second case, against individuals, viz., K. B. Agarwal and S. K. Agarwal, are untenable. As on the showing of respondent No. 3 in each case himself these proceedings are based on the earlier adjudication against the company and on other, the company is entitled to seek the relief to this extent from the court. However, when the present petitions were filed, the company was a going concern and it could agitate the legality of the proceedings in Complaint No. 9 of 1971 and criminal Case No. 8 of 1971 launched by respondent No. 3 in each case. Only because the same has been taken in liquidation, the lis properly instituted in that regard cannot be said to have been vacated or exhausted.

12. In the result, to the extent indicated above, rule is made absolute in that Complaint No. 9 of 1971 in the first case and Criminal Case No. 8 of the 1971 in the second case are adjudged as entirely incompetent and unentertainable as filed under section 106 of the BIR Act. Though the rule is made absolute, there would be no orders as to costs in any of the petitions.


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