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H.N. Habib and Bros. and ors. Vs. Labour Court and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Judge
Reported in(1979)ILLJ383Mad
AppellantH.N. Habib and Bros. and ors.
RespondentLabour Court and ors.
Cases ReferredCoimbatore v. Labour Court
Excerpt:
- - the difficulty thus presented has been overcome by requiring all those who desire to bring suit against a receiver first to obtain leave to do so from the court which appointed him. the courts usually grant such leave unless it appears clearly from the application of the claimant that his demand has no legal foundation; the only question now is whether leave to sue is necessary before proceeding under section 33c(2). it is well-established that the appointment of a receiver does not itself debar a creditor or a person for whose benefit a receiver has been appointed from suing for his claim provided that such a suit does not in any way interfere with the jurisdiction of the court appointing a receiver on the possession of the estate by such receiver......and directed retrenchment of the persons employed in that business. the petitioner, who is the receiver appointed in that suit, carried out the directions of the court by closing down the business and terminating the services of all the persons employed in the said business.2. all the employees, whose services have been terminated, filed claim petitions under section 33c(2) of the industrial disputes act, claiming (i) closure compensation, (2) unpaid salary for the period in service, and (3) gratuity. the petition was resisted by the receiver.3. in the counter-affidavit filed, the receiver raised the only objection that the petition under section 33c(2) will not lie against him as leave to sue the receiver has not been obtained from the court. the labour court, without considering.....
Judgment:

Ramanujam, J.

1. The petitioner herein is the Receiver appointed by the Court in O.S. No. 219 of 1972 on the file of the sub-Court, Tiruchirapalli. That was a suit for administration of the estate of two brothers, Nazrulla and Habibulla. One of the businesses which the brothers carried on was the business of drapers and tailors. During the pendency of the suit Nazrulla died and his legal representatives were brought on record. In the suit some of the parties wanted the said business to be closed on the ground that it is incurring loss. But this was resisted by the other parties who wanted the continuation of the business pending suit. The Court, however, felt that since loss is being incurred in the business, closure of the business will be in the interest of the parties and directed retrenchment of the persons employed in that business. The petitioner, who is the Receiver appointed in that suit, carried out the directions of the Court by closing down the business and terminating the services of all the persons employed in the said business.

2. All the employees, whose services have been terminated, filed claim petitions under Section 33C(2) of the Industrial Disputes Act, claiming (I) closure compensation, (2) unpaid salary for the period in service, and (3) gratuity. The petition was resisted by the Receiver.

3. In the counter-affidavit filed, the Receiver raised the only objection that the petition under Section 33C(2) will not lie against him as leave to sue the Receiver has not been obtained from the Court. The Labour Court, without considering this question, proceeded to consider the employees' claim on merits and by its award dated 11th June, 1974, it held that since admittedly there is a closure of the business, the claimants are entitled to closure compensation. As regards the arrears of salary the Labour Court directed the petitioner herein to pay the arrears of salary for the period already worked. As regards the gratuity also the Labour Court directed the payment of gratuity for the periods in service according to the provisions of the Payment of Gratuity Act. The said award of the Labour Court has been challenged before this Court in the writ petition.

4. Before me it is contended that the Labour Court has no jurisdiction to entertain the application under Section 33C(2) of the Industrial Disputes Act as against the Receiver unless leave to sue the Receiver is obtained from the Court which appointed him. According to the learned Counsel for the petitioner, the property is in custodia legis and the administration of the property has vested in officer of the Court and as such any claim against the estate represented by the Receiver, should be made after getting leave of the Court. Reference has been made by the learned Counsel to the following passage in ' Kerr on Receivers', fourteenth petition, at page 149:

Persons whose rights are interfered with by having a receiver put in their way may, on making a proper application to the Court, obtain all that they can justly require. The Court will always take care to give to a party, who applies in a regular manner, protection of his rights, and will even assist him in asserting his rights and having the benefit of them, though the Court does not profess to cure every inconvenience arising from its action in appointing a receiver. An instance is the method adopted to enable creditors of a partnership business to obtain payment from the receiver without legal execution, which is discussed on another page.

He also refers to another passage in 'Wood-roffe's Law Relating to Receivers' sixth edition, at page 77, which is as follows:

On the other hand, to deny to those having just causes of action or claims which call for the adjudication of Courts of law or equity, all opportunity for investigation and all right to a proper remedy, simply, because the property to which they must look for reparation, has been seized by the Court and is in its keeping, would violate the fundamental principles of personal rights. The difficulty thus presented has been overcome by requiring all those who desire to bring suit against a receiver first to obtain leave to do so from the Court which appointed him. Leave of the Court is necessary in order that by impleading the Receiver the estate may be bound. The Courts usually grant such leave unless it appears clearly from the application of the claimant that his demand has no legal foundation; the petition should, therefore, show a probable cause of action--one demanding adjudication by proceedings in Court.

The argument that appears to have been presented before the Labour Court by the petitioner was that the employees should go before the Court which appointed the Receiver for any relief and that they cannot seek any relief before the Labour Court. Admittedly the application under Section 33C(2) of the Industrial Disputes Act cannot be filed before a civil Court. Therefore, it cannot be said that the remedy under Section 33C(2) of the Act is not available to the employees when the business or undertaking is carried on by a Receiver appointed by the Court. The only question now is whether leave to sue is necessary before proceeding under Section 33C(2). It is well-established that the appointment of a Receiver does not itself debar a creditor or a person for whose benefit a Receiver has been appointed from suing for his claim provided that such a suit does not in any way interfere with the jurisdiction of the Court appointing a Receiver on the possession of the estate by such receiver. But where the property in the hands of the Receiver is intended to be affected as a result of the litigation, leave to sue the Receiver may be necessary. In the present case the petitioner had been continuing the business for sometime as a result of his appointment as a Receiver by the Court. It is only the Receiver who terminated the services of the employees. The employees are seeking relief with reference to an action taken by the Receiver. In such cases it does not appear to be necessary to take the leave of the Court to sue the Receiver. It is true that the Court has directed the Receiver to close down the business and terminate the services of the employees. But that does not mean that the employees cannot proceed against the Receiver who terminated their services, by seeking remedies available to them under the Industrial Disputes Act. With reference to his defence in the proceedings started by the employees, the Receiver can take directions of the Court if he considers necessary. But that will not prevent the employees from proceeding with their claim against the Receiver who actually terminated their services. The passage referred to above do not appear to deal with a situation as in the one present case where the relief is sought by the employees on the basis of an action taken by the Receiver under orders of Court. I am, therefore, of the view that the application under Section 33C(2) of the Industrial Disputes Act is maintainable even though leave to sue the Receiver has not been obtained by the employees.

5. On the merits, the learned Counsel for the petitioner contends that though there is, in fact, a closure of the business, the employees will be entitled to claim retrenchment compensation not exceeding the average pay for three months under the proviso to Section 25FFF as the closure of the business was beyond the control of the employer. This point has not been urged before the Labour Court and the Labour Court has merely proceeded on the basis that since there is a closure of the business, closure compensation has to be paid under Section 25FFF.

6. Being a question of law, the petitioner was permitted to raise this point in this Court. The question is whether the closure of the business in this case was beyond the control of the employer. The learned Counsel for the petitioner submits that it is only an order of Court the business has been closed and, therefore, it has to be taken as one beyond the control of the employer, A perusal of the order of the Court directing the closure of the business shows that the closure was necessitated by the fact that loss was incurred in the business. The learned Counsel relies on the decision of Ganapatia Pillai, J., in Workers of N. Desal Gounder & Co., Coimbatore v. Labour Court, Coimbatore : (1962)IILLJ133Mad , in support of his plea that once a Court orders the winding up of a business carried on in partnership, it should be taken to be a circumstance beyond the control of the partners who constitute the partnership and that, therefore, the proviso to Section 25FF will stand attracted in such a case. I do not see how the principle laid down in that case will apply to this case. In that case there was a disagreement between the partners who carried on the business and a suit was filed for dissolution of the partnership and as a result of the preliminary decree for dissolution, a Receiver was appointed to carry out the directions in the preliminary decree and one of the directions contained in the preliminary decree was the winding up of the business consequent on the dissolution. In fact the reliefs sought for in that suit were the dissolution of the partnership and winding up of the business. In this case the suit is for administration and, as a matter of fact, there is no relief asked for in the original plaint for closure of the business. In fact, the Receiver appointed in the case conducted the business for some time and it is only after a certain stage one of the parties filed an application for closing down the business which was resisted by the other parties. Ultimately the Court felt that since the business is incurring a loss, it may be closed in the interest of the parties. Therefore, the business has been closed much against the will of the parties and for the reason that the business is incurring loss. I cannot, therefore, say that in this case the closing down of the business by the Receiver was due to circumstances beyond the control of the parties who carried on the business before and who come under the definition of 'employer'. I cannot, therefore, uphold the contention advanced on behalf of the petitioner in this regard.

7. As regards the arrears of salary and gratuity there cannot be any dispute that the employees are entitled to the same for the period they worked before the business was closed down.

8. In view of the finding that the closure of the business was not purely due to circumstances beyond the control of the employer, the award of the Labour Court cannot be said to be vitiated. The petition is, therefore, dismissed. There will, however, be no order as to costs.


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