Case Note & Summary
The dispute arose from the liquidation of Gaya Sugar Mills Ltd, which owned a sugar factory at Guraru, District Gaya. The company was ordered to be wound up on November 4, 1951, and a liquidator was appointed on February 1, 1952. To preserve the mills, the liquidator obtained court sanction to lease the factory. On December 3, 1954, the Patna High Court sanctioned a lease in favour of S.K.G. Sugar Ltd (the appellant) for the period December 5, 1954 to November 14, 1955; the lease was executed on December 6, 1954, and possession delivered the same day. The lease provided that the lessee would not be liable for prior liabilities and was not bound to engage prior employees except eighteen named persons, with a restriction on retrenching existing staff. Meanwhile, four days before execution of the lease, on December 2, 1954, the Government of Bihar issued a notification under Section 7 read with Section 10(1) of the Industrial Disputes Act, 1947, referring an industrial dispute between management of specified sugar factories including Gaya Sugar Mills Ltd, Guraru, and workmen represented by unions to an Industrial Tribunal consisting of sole member Sri Ali Hassan. The reference covered matters of retaining allowance, leave and holidays, and deductions. The liquidator received notice of hearing scheduled for January 11, 1955 only on January 13, 1955, and the tribunal proceeded; no notice was issued to the appellant, and proceedings against it were ex parte. The tribunal made an award on February 17, 1955, published on February 23, 1955, and proceedings concluded on March 25, 1955 under Section 20(3). On March 23, 1955, two workmen groups filed applications under Section 33A before the tribunal, alleging that the appellant discharged fifteen workers and changed conditions of service of five workers during pendency of the disputes without obtaining permission under Section 33. The appellant objected, asserting compliance with lease terms and not being bound as an employer under Sections 33 and 33A. The appellant then filed a writ petition in the Patna High Court under Articles 226 and 227 of the Constitution to quash Miscellaneous Cases Nos. 26 and 27 of 1955, but the High Court dismissed it on September 20, 1957. The appellant appealed by special leave. Legal issues were whether the reference under Section 10(1) was bad for failure to obtain leave of the company court under Section 171 of the Indian Companies Act, 1913, given the company was in liquidation, and whether the appellant as subsequent lessee was an 'employer' within the meaning of Sections 33 and 33A of the Industrial Disputes Act, 1947. The appellant argued that no leave was obtained, and that 'employer' meant only the identical employer actually concerned with the industrial dispute; a successor lessee not a nominee, benamidar, heir, successor or assign within Section 18(3)(c) was not covered. The respondents/workmen contended that the appellant discharged or altered service conditions without permission and that proceedings were maintainable. The Supreme Court examined the notification terms and held that what was sought to be a party was not the company itself but its management at the date of reference, so leave under Section 171 of the Indian Companies Act did not arise. On the meaning of 'employer', the Court held that the word in Sections 33 and 33A meant the identical employer concerned with the industrial dispute subject-matter of adjudication, not an employer who merely happened to discharge or punish or alter conditions unless that employer was a mere nominee or benamidar of the former or fell within the category of heirs, successors or assigns under Section 18(3)(c). The appellant satisfied none of these tests. Therefore, it was not bound to seek permission under Section 33, and the proceedings under Section 33A against it had to be quashed. The Supreme Court allowed the appeal, set aside the High Court's dismissal and quashed the proceedings in Miscellaneous Cases Nos. 26 and 27 of 1955.
Headnote
A) Industrial Disputes - Interpretation of 'Employer' in Sections 33 and 33A - Employer Means Identical Employer Concerned with the Industrial Dispute - Industrial Disputes Act, 1947, Sections 33, 33A, 18(3)(c) - Workmen sought relief under Section 33A against the appellant lessee for alleged discharge and alteration of service conditions without permission under Section 33. The Supreme Court held that 'employer' in Sections 33 and 33A referred only to the identical employer who was party to the industrial dispute under adjudication, not to an employer merely discharging or changing conditions unless shown to be a nominee, benamidar, or heir, successor, or assign under Section 18(3)(c). The appellant satisfied none of these tests; hence it was not required to obtain permission and the Section 33A proceedings against it had to be quashed. B) Company Law - Leave for Reference Against Company in Liquidation - Reference to Management Not Company Does Not Attract Section 171 - Indian Companies Act, 1913, Section 171 - The State Government referred an industrial dispute to the Industrial Tribunal concerning Gaya Sugar Mills Ltd, then in liquidation. The Court interpreted the notification and observed that it sought to make the management at the date of reference a party, not the company itself. Held that therefore no leave under Section 171 of the Indian Companies Act, 1913 was required, and the reference was not bad on that ground.
Issue of Consideration
Whether the reference under Section 10(1) of Industrial Disputes Act was bad for want of leave under Section 171 of Indian Companies Act, 1913; whether the appellant as subsequent lessee was an 'employer' within the meaning of Sections 33 and 33A of Industrial Disputes Act, 1947
Final Decision
Appeal allowed; proceedings under Section 33A in Miscellaneous Cases Nos. 26 and 27 of 1955 before Industrial Tribunal, Bihar against appellant quashed; reference held valid without leave under Section 171; appellant held not to be identical employer under Sections 33 and 33A and not bound to seek permission
Law Points
- Legal points not extracted
- Employer under Sections 33 and 33A of Industrial Disputes Act
- 1947 means identical employer concerned with the industrial dispute
- not include employer merely discharging or altering service conditions unless nominee
- benamidar
- heir
- successor or assign under Section 18(3)(c)
- reference under Section 10(1) Industrial Disputes Act to management of company in liquidation does not require leave of company court under Section 171 Indian Companies Act
- 1913 if reference is to management not company as such
