Premier Tyres Ltd., Kalamassery v. Industrial Tribunal, Alappuzha & Premier Tyres Workers' Association, Kalamassery & Government of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE SMT. JUSTICE P.V.ASHA** ## **FRIDAY, THE 22ND DAY OF JULY 2016/31ST ASHADHA, 1938** ## **OP.No. 14230 of 2002 (R)** **---------------------------------------** **PETITIONER(S) :** **--------------------------** **PREMIER TYRES LIMITED, KALAMASSERY REPRESENTED BY HEAD, HR & ADMINISTRATION, SHRI JAMES K.JOSEPH** **BY SRI.M.PATHROSE MATTHAI (SENIOR ADVOCATE) ADV. SRI.SAJI VARGHESE** **RESPONDENT(S) :** - **----------------------------** **1. INDUSTRIAL TRIBUNAL, ALAPPUZHA.** **2. PREMIER TYRES WORKERS' ASSOCIATION, KALAMASSERY - 683 104.** **3. GOVERNMENT OF KERALA, REPRESENTED BY THE SECRETARY, LABOUR & REHABILITATION DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM.** **R1 & R3 BY GOVERNMENT PLEADER SRI.JIBU P.THOMAS R2 BY ADVS. SRI.H.B.SHENOY** **SRI.B.ASHOK SHENOY** **THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 22-07-2016, ALONG WITH W.P(C).NO.33245 OF 2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Msd. **OP.No. 14230 of 2002 (R)** ## **---------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** **EXHIBIT P1: TRUE COPY OF THE ORDER OF BIFR DATED 17.04.1995.** **EXHIBIT P1(A): TRUE COPY OF THE AGREEMENT IS ANNEXURE V TO EXT.P1 ORDER OF THE BIFR DATED 17.04.1995.** - **EXHIBIT P2: TRUE COPY OF THE AGREEMENT ENTERED INTO IN ACCORDANCE WITH THE DIRECTION OF THE BIFR ISSUED ON 28.02.1995.** - **EXHIBIT P3: TRUE COPY OF THE CERTIFICATE OF REGISTRATION OF THE PETITIONER.** - **EXHIBIT P4: TRUE COPY OF THE ORDER OF THE 3RD RESPONDENT DATED 18.06.1999.** **EXHIBIT P5: TRUE COPY OF THE AWARD PASSED BY THE 1ST RESPONDENT DATED 22.09.2001.** ## **RESPONDENT(S)' EXHIBITS :** ## **NIL** **//TRUE COPY//** **P.A.TO JUDGE.** Msd. ## **P.V.ASHA, J.** ----------------------------------------------------- O.P No.14230 of 2002-R and W.P(c) No.33245 of 2007-G ---------------------------------------------------Dated this the 22[nd] day of July, 2016 ## **JUDGMENT** The Premier Tyres Ltd., Kalamassery, challenges Ext.P5 award dated 09.10.2001 of the Industrial Tribunal, Alappuzha in I.D. No.29 of 1999 by which the denial of employment to three workmen was held illegal and it was declared that they were eligible for reinstatement with full back wages along with continuity of service and all other consequential benefits. It is pointed out by either side that as at present the only surviving claim is with respect to one of the workers namely K.P.Meera, and in respect of the other 2, the matter is already settled. The petitioner is also challenging the reference made by the Government for adjudication by the Industrial Tribunal on the ground that, as on the date of reference, the employees under the petitioner were already covered by a scheme framed under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the “SICA”). O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 2 2. Ext.P5 award arises from a reference made by the Government of Kerala as per its order dated 18.6.1999 for adjudication by the Industrial Tribunal, Alappuzha. The issue for adjudication was “denial of employment” to Sri M.Raveendran, Junior Assistant, Smt.Elizabeth Treasa Paul, Senior Clerk Typist and Smt.K.P.Meera, Junior Clerk/Typist. Premier Tyres Workers' Association claimed that the aforesaid 3 workmen were denied employment from 17.4.1995 onwards in an arbitrary manner. The petitioner company was declared as a sick industrial undertaking under the provisions of the SICA. As per Ext.P1 order dated 17.4.1995, the Board for Industrial and Financial Reconstruction (`BIFR' for short) sanctioned the rehabilitation scheme, Ext.P1(a), under Section 18(4) read with Section 19(3) of the SICA, 1985. As per Ext.P1(a) scheme the management of the petitioner company was to be taken over by M/s.Apollo Tyres Ltd., which was to operate for a period of 8 years; the Scheme envisaged one time settlement of its dues of the Banks and financial institutes and under para 3, the scheme further envisaged retirement of all employees/staff employed in Head Office and Sales Offices under a voluntary retirement scheme. It O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 3 is stated therein that an agreement was arrived at between the Apollo Tyres Ltd. and an authorised representative of the staff representing all employees in the Sales Department (Sales offices throughout India except Bombay Head Office) and offices at Head Office of Premier Tyres Pvt Ltd. In view of the scheme Ext.P1, the petitioner treated the workmen as having been voluntarily retired from service. Accordingly, they were denied employment from 17.4.1997 onwards. 3. The workmen claimed that they were not governed by the scheme on the ground that they had not authorised anybody to enter into an agreement on their behalf. The scheme Ext.P1 as well as the agreement show that, one Sri M.S.Nair represented the staff in the sales office and he put his signature on behalf of the employees. The workmen claimed that the said person, ie. Sri M.S.Nair, did not have any authority to represent all the staff and at any rate, they had not entrusted him or authorised him to represent them. Therefore their claim was that, the denial of employment to them in violation of the provisions contained in the Industrial Disputes Act (`I.D Act' for short) is illegal and they are entitled to reinstatement with back O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 4 wages and continuity of service. 4. The case of the management was that once the scheme was evolved in terms of the provisions contained in SICA and a scheme was sanctioned, the State Government did not have any authority to refer the dispute in respect of the employment of the workmen under the I.D Act. Ext.P1(a) scheme is binding on the entire staff including the 3 workmen who disputed the authority of Sri. M.S. Nair to enter into an agreement on their behalf also. According to the petitioner, the scheme Ext.P1(a) was sanctioned on 17.04.1995 in terms of Section 18 of SICA observing all the procedural formalities prescribed in the Act, after issuing notice to all the parties including the trade unions of workmen and employees of the petitioner company for the purpose of framing the scheme and after hearing all the parties. ICICI was appointed as the operating agency. The management points out that the workmen had every opportunity to raise their objections in case they were not agreeable to the scheme. In support of their contention they produced Ext.P2 containing the record of proceedings of hearing held on 28.2.1995 before the special bench of the BIFR. Among O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 5 the parties present shown therein, there were 3 employees having objections, apart from trade unions, bank, the petitioner company, the Apollo Tyres etc. It is only after the draft scheme was published that, the scheme was sanctioned. Moreover there was a provision for appeal also under the SICA and the workmen if at all aggrieved ought to have resorted to that statutory remedy. 5. It is also their case that the SICA is a special enactment, whereas the Industrial Disputes Act is a general enactment and when the service conditions in respect of the employees are covered by the scheme framed under SICA, no proceedings are maintainable under the I.D Act. According to the management, the benefits made available to the workmen under the scheme was much more better than what the workmen were eligible under the provisions contained in the I.D Act. It was their further contention that, 99% of the employees authorised Sri M.S.Nair and did not raise any objection as against the scheme. The SICA has overriding effect over the I.D Act and therefore, the workmen were not entitled to relief under the I.D Act. O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 6 6. Before the Industrial Tribunal, parties did not adduce any oral evidence. On behalf of the management, documents M1 to M4 were marked. The Industrial Tribunal found that denial of employment to the workmen from 17.4.1975 was an admitted fact. It was also an admitted fact that the 3 workmen as well as the management come under the definition of `workman' and `industry' respectively within the purview of Section 2(s) and 2(j) of the I.D Act. The contention of the management that the workmen were treated to have been retired from service voluntarily in accordance with the scheme was not accepted by the Tribunal on the ground that the management did not produce any documents executed by the workmen authorising Sri. M.S. Nair to represent them. It was found that the agreement entered into between Sri M.S.Nair and the management on 28.03.1995 -referred to in Ext.P1(a), was not a settlement as contemplated under Section 18(3) of the I.D Act so as to bind the workmen. The Tribunal found that Sri M.S.Nair was not a trade union representative or a power of attorney holder of the workmen and therefore, it was held that the scheme Ext.M1 which was based on such an agreement Ext.M1 O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 7 (a), was not binding on the workmen and hence the management had no authority to deny them employment based on that scheme treating the workmen as voluntarily retired. It was further held that, there is no provision which empowers BIFR to compel the workmen to retire from service against his will and therefore the provisions contained in SICA cannot be pressed into service to legalise the termination of service of the workmen. Hence the denial of employment of the workmen was held to be illegal as it amounted to retrenchment under Section 2(oo) of the I.D Act. Since the retrenchment is from an establishment having more than 100 employees, the retrenchment should have been in accordance with the provisions contained in Section 25N under Chapter V (B) of the I.D Act, 1947, which envisages prior permission from appropriate Government. In the absence of any such permission, the retrenchment was held illegal as provided under Section 25N(7) of the Act and that they were eligible for reinstatement with back wages. 7. I heard Sri Saji Varghese, the learned Counsel appearing for the petitioner and Sri Ashok B.Shenoy, the learned Counsel appearing for the party respondent. O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 8 8. Sri. Saji Varghese strenuously argued, referring to the various provisions contained in the SICA as well as the I.D Act, that the provisions contained in the I.D Act cannot be applied in a case after the scheme under the SICA, is sanctioned. It is an admitted fact that the petitioner was a sick industrial company, as defined under Section 2 (3) of the Act and that a reference was made to BIFR under Section 15 of the SICA. The BIFR, after registering the reference, appointed the ICICI as operating agency, under Section 16 of SICA. The ICICI had thereupon prepared a scheme as per which the factory establishment of the petitioner company was to be given on lease to M/s.Apollo Tyres Ltd. for a period of 8 years. It also provided for voluntary retirement of the staff in the Sales Offices, Head Offices and District Offices, under a separate scheme, for which an agreement was to be executed between the Apollo Tyres Ltd. and the staff, as directed by BIFR as per its order dated 28.2.2005. All the 305, out of a total of 308 staff, i.e all except the 3 workmen entered into an agreement through Sri. M.S. Nair on 28.3.1995 agreeing for the VRS scheme, according to which, the staff had to retire under the VRS scheme. After publication of O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 9 the draft scheme with notice to all concerned, inviting objections against the same, the BIFR sanctioned as per Ext.P1(a) scheme, in terms of Section 18 of the Act, i.e after the draft scheme was published in daily newspapers inviting for suggestions and objections. Clause b of sub section 3 of Section 18 provides as follows: “18(3)(b): The Board may make such modifications, if any, in the draft scheme as it may consider necessary in the light of the suggstions and objections received from the sick industrial company and the operating agency and also from the transferee industrial company and any other company concerned in the amalgamaton and from any shareholder or any creditors employees of such companies.” It was possible for the workmen to seek modifications if any required, when the draft scheme was published, by furnishing suggestions and objections from the employees of the companies. Sub section 7 provides that, the sanction accorded by the Board is conclusive proof that the scheme relating to reconstructions or amalgamation had been prepared observing all requirements. Sub section 8 reads as follows: “On and from the date of the coming into operation of the sanctioned scheme or any provision thereof, the scheme or such provision shall be binding on the sick industrial company and the transferee companyt or, as the case may be, the other company and also on the shareholders, creditors and gurantors and employees of the said companies.” Thus it can be seen that the scheme, as soon as it is sanctioned, O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 10 binds the company, transferee company, the share holders as well as employees of the companies. Section 25 of the SICA provides that, any person aggrieved by an order of the Board made under this Act can prefer an appeal to the appellate authority within a period of 45 days from the date on which a copy of the order is issued to him. Section 26 provides that, a civil court shall not have any jurisdiction over the orders passed under the Act. It is the case of the petitioner that the scheme when it was sanctioned applies to all the employees and in case they are aggrieved by the scheme, their remedy was before the appellate authority as provided under Section 25. It is also their case that, the workmen had sufficient opportunity to raise objections or seek modifications as against the scheme and even assuming that they did not authorise Sri M.S.Nair, they cannot escape from the provisions contained in the scheme. Moreover it is pointed out that under Section 32, the SICA is having overriding effect over any other law on the subject. It is the contention of the petitioner that Industrial Disputes Act is only a general enactment and SICA is a special enactment. Moreover it is a later enactment. Therefore, in respect of the case of the O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 11 company like the petitioner, the provisions under SICA alone can be applied. In support of that contention the judgments of the Apex Court in **Official Liquidator, Uttar Pradesh and Uttarakhand v. Allahabad Bank & Ors.** [(2013) 4 SCC 381], **Allahabad Bank v. Canara Bank** [(2000) 4 SCC 406], **Raheja Universal Limited v. NRC Limited & Ors.** [(2012) 4 SCC 148] and **P.Rajan Sandhi v. Union of India** [(2010) 10 SCC 338] were relied on. 9. On the other hand the contention of Sri Ashok B.Shenoy is that, both these enactments are not parallel enactments and they relate to entirely different fields. The object of SICA is to make special provisions in order to secure the timely detection of sick and potentially sick companies owning industrial undertakings, speedy determination by a Board of experts of preventive, ameliorative, remedial and expeditious enforcement of the measures. The I.D Act is enacted to make provisions for settlement of industrial disputes. Therefore, there is no question of conflict as far as both these enactments are not operating in the same field. According to him, Ext.P2 scheme has to be read along with an agreement and O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 12 there is no independent existence for the scheme and moreover the workmen herein had not entrusted the person who represented them and signed the agreement; even according to the respondents, only 99% of the employees have authorised Sri. M.S.Nair. Therefore, the scheme is not binding on them and they continued to be the employees of the petitioner until and unless their services are terminated in accordance with Section 25N of Chapter 5B of the I.D Act. The denial of their employment is without following any provisions. 10. On consideration of the rival contentions on either side, the question to be considered in this case is whether the scheme sanctioned under Section 18(4) of the SICA can take away the benefits of a workman under the I.D Act and whether they can be said to be bound by the provisions in those scheme without their consent. 11. It is an admitted fact that the petitioner company is a sick company and the BIFR has sanctioned a scheme of voluntary retirement as per Ext.P1. That the workmen have not agreed to the scheme and they have not authorised Sri M.S.Nair to represent them and to enter into an agreement on their behalf 13 O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G cannot also be disputed. At the same time it is to be seen that subsection 8 of Section 18 of the SICA makes the provisions of the scheme binding on the sick industrial company and the transferee company as well as the employees of the said companies. Section 18 which provides for the preparation and sanction of scheme starts as follows: **18. Preparation and sanction of schemes** .—(1) Where an order is made under sub-section (3) of Section 17 in relation to any sick industrial company, the operating agency specified in the order shall prepare, as expeditiously as possible and ordinarily within a period of ninety days from the date of such order, a scheme with respect to such company providing for any one or more of the following measures, namely:— (a) the financial reconstruction of the sick industrial company; (b) the proper management of the sick industrial company by change in, or take over of, management of the sick industrial (c) the amalgamation of— (i) the sick industrial company with any other company; or (ii) any other company with the sick industrial company; (hereafter in this section, in the case of sub-clause (i), the other company, and in the case of sub-clause (ii), the sick industrial company, referred to as “transferee company”;] (d) the sale or lease of a part or whole of any industrial undertaking of the sick industrial company; **(da) the rationalisation of managerial personnel, supervisory staff and workmen in accordance with law;** (xxxxxxxxxxxxxx xxxxxxxxxxxxx xxxxxx (2) The scheme referred to in sub-section (1) may provide for any one or more of the following, namely:— (a) the constitution, name and registered office, the capital, assets, powers, rights, interest, authorities and privileges, duties and obligations of the sick industrial company or, as the case may be, of the transferee company; xxxx xxxxx xxxx The procedure to be followed after the scheme prepared by the O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 14 ## operating agency furnished to the Board is given from subsection ## 3 onwards, which reads as follows: (a) The scheme prepared by the operating agency shall be examined by the Board and a copy of the scheme with modification, if any, made by the Board shall be sent, in draft, to the sick industrial company and the operating agency and in the case of amalgamation, also to any other company concerned, and the Board shall publish or cause to be published the draft scheme in brief in such daily newspapers as the Board may consider necessary, for suggestions and objections, if any, within such period as the Board may specify. (b) The Board may make such modifications, if any, in the draft scheme as it may consider necessary in the light of the suggestions and objections received from the sick industrial company and the operating agency and also from the transferee industrial company and any other company concerned in the amalgamation and from any shareholder or any creditors or employees of such companies xxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxxxx (4) The scheme shall thereafter be sanctioned as soon as may be, by the Board (hereinafter referred to as the ‘sanctioned scheme’) and shall come into force on such date as the Board may specify in this behalf: Sub sections 7 and 8 of Section 18 of the Act read as follows: (7) The sanction accorded by the Board under sub-section (4) shall be conclusive evidence that all the requirements of this scheme relating to the reconstruction or amalgamation, or any other measure specified therein have been complied with and a copy of the sanctioned scheme certified in writing by an officer of the Board to be a true copy thereof, shall, in all legal proceedings (whether in appeal or otherwise) be admitted as evidence. (8) On and from the date of the coming into operation of the sanctioned scheme or any provision thereof, the scheme or such provision shall be binding on the sick industrial company and the transferee company or, as the case may be, the other company and also on the shareholders, creditors and guarantors and employees of the said companies. Thus it can be seen that the scheme provides for rationalisation O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 15 of the staff including workmen under the petitioner. Under clause (a) of subsection 3, scheme is sanctioned only after publishing the draft scheme in newspapers so as to enable the affected parties including the employees to furnish objection if any against the scheme and under clause (b) thereof, the Board was to examine the objections or suggestions against the draft scheme and to modify the scheme if it finds that there is substance in the objections/suggestions of unions. However, once the scheme is sanctioned under subsection 4, it has to be presumed that the scheme is sanctioned in accordance with the prescribed procedure, as provided in subsection 7 and it shall be binding on all concerned including the employees as provided in subsection 8. Thus the scheme is binding on all the workmen irrespective of the authorisation or otherwise to Sri. M.S. Nair. The workmen did not choose to file any objection against the draft scheme, when opportunities were available to them. Once the scheme is sanctioned in Ext.P1, then the only remedy available for the employees was to file an appeal as provided in Section 25 of the Act. The workmen have not availed that remedy. O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 16 12. Going by subsection 8 of Section 18 of the Act, once the scheme was sanctioned as per Ext.P1, the workmen are bound by that scheme and they have to retire from the services of the petitioner. When the scheme is specific with respect to the conditions of service of the workmen, they cannot seek remedies under the provisions contained in the I.D Act. Therefore, even though there is no conflict between the 2 enactments, it can be seen that the scheme, while providing for giving the petitioner company on lease to another company, deals with the course of action to be adopted with respect to the employees in the sales department etc. also and specifically provides that there shall not be any retrenchment for those workmen in the factories. Therefore the affairs of the workmen in other offices like sales department is covered by the scheme. When there is such a coverage in the scheme with respect to the workmen, to that extent the provisions in SICA should have overriding effect over the provisions in the I.D Act, as provided in Section 32 of the Act, which read as follows: **32. Effect of the Act on other laws** .—(1) The provisions of this Act and of any rules or schemes made thereunder shall have effect notwithstanding anything inconsistent therewith O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 17 contained in any other law except the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and the Urban Land (Ceiling and Regulation) Act, 1976 (33 of 1976), for the time being in force or in the Memorandum or Articles of Association of an industrial company or in any other instrument having effect by virtue of any law other than this Act. Now I will examine the judgments relied on by Sri. Saji Varghese. In the judgment in **Rajan Sandhi** (supra), the Apex Court was considering the question of denial of gratuity to a journalist which was challenged for violation of the provisions contained in section 4(6) of Payment of Gratuity Act. But it could be denied under the Section 5(1)(a)(i) of the Working Journalists Act. Apex Court held that the Working Journalist Act is a special law which will prevail over Payment of Gratuity Act. In the judgment in **Official Liquidator's** case (supra) also, it was held that the special law was to prevail over the general law. It was held therein that the official liquidator under the Companies Act, 1956, which is a general law, cannot question the sale by the recovery Officer under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act), which is a special law and a complete code in itself and that he could have only filed appeal under the RDB Act. In **Raheja Universal Ltd's** case (supra), it was held that the provisions in SICA will override O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 18 those in Transfer of Property Act. There the appellant company had entered into an agreement for sale. As the scheme came into force subsequently, it was held that the provisions in SICA were held to have overriding effect over the general law in Transfer of Property Act, 1882 and the assets of the sick company were not liable to be appropriated without the approval of BIFR. In **Allahabad Bank** 's case (supra) it was held that when there are two special enactments, the later one shall prevail, in case there is any inconsistency. There the Companies Act as well as RDB Act were found special law and provisions in RDB Act were held applicable. 13. The question arising in this case is whether the cessation of employment of the workmen were in terms of the scheme treating them as having retired from service, under the SICA or whether it amounted to retrenchment under the I.D Act. As already found, the provisions regarding the conditions of service of the workmen is covered by the scheme under SICA, providing them voluntary retirement. When such a provision is available in the scheme under the SICA, then the provisions in the I.D Act cannot be pressed into service. O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 19 Therefore I am unable to uphold the findings of the Industrial Tribunal and the contentions of the respondents. The conclusion of the Industrial Tribunal that the scheme is not binding on the workmen and therefore they are entitled to reinstatement, cannot be upheld. The Tribunal has not passed the award in the correct persective of the provisions in SICA. Hence the award is set aside. The Writ Petition is accordingly allowed. ## **W.P(C) No. 33245/2007** This writ petition was filed by the management against the common order Ext.P3 dated 23.10.2007 of the Labour Court, Ernakulam in C.P. Nos.66, 67 and 68 of 1999 by which the application filed by the 3 workmen under Section 33 C of the I.D Act was held maintainable, repelling the preliminary objection raised by the petitioner on the ground that their claims were covered under the scheme sanctioned under SICA. The Labour Court found that the opposite parties had only claimed the wages due to them for the period prior to the sanctioning of the scheme and that claim petition was maintainable even at the instance of O.P No.14230 of 2002-R & W.P(c) No.33245 of 2007-G 20 those who ceased to be in service. 2. The learned Counsel for the petitioner fairly conceded that in view of the subsequent judgment reversing Ext.P1 judgment, there cannot be any valid objection against the impugned order or against the claim raised by the workmen. In these circumstances I dismiss this Writ Petition. As the only claim now subsists is in C.P. 68 of 2007, it will be only fair that the petitioner settles their dues at the earliest. Sd/- **(P.V.ASHA, JUDGE)** rtr/