S. Duraisamy v. The Managing Director Anglo French Textiles

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 27.6.2008CORAM:THE HONOURABLE MR.JUSTICE ELIPE DHARMA RAOANDTHE HONOURABLE MR.JUSTICE M.VENUGOPALWrit Appeal No.1734 of 20011. S. Duraisamy2. B.Ramalingam3. K.G.Simon4. P.Chellian5. T. Muthusamy6. K.Sivaraman7. J. Thirumurthy.. Appellants/PetitionersVs.1. The Managing Director Anglo French Textiles Cuddalore Road, Mudaliarpet, Pondicherry-605 004.2. Suryamurthi.. Respondents/Respondents* * *Writ Appeal preferred under Clause 15 of the Letters Patent asagainst the order of the learned single Judge of this Court inW.P.No.9019 of 1993 dated 20.6.2000, Writ Petition praying to issue aWrit of Mandamus directing the 1st Respondent to provide thePetitioners herein re-employment with effect from the date whenJuniors and Freshers were appointed and award costs.For appellants ... Mr.N.G.R. Prasad for M/s Row and ReddyFor R.1 ... Mrs. N. Mala R.2. ... Died https://hcservices.ecourts.gov.in/hcservices/ JUDGMENTELIPE DHARMA RAO, J.The first respondent Anglo French Textiles is a Unit ofPondicherry Textile Corporation Limited, Pondicherry, a Companycreated under the Companies Act and it is a Government of PondicherryUndertaking. Originally, the Anglo French Textiles Limited was aprivate concern and was owning a Mill, which was one of the largestMills in the Union Territory of Pondicherry and it was functioningtill July,1983 and thereafter, there was no manufacturing process.Since the efforts of the Government of Pondicherry to reopen the Millby negotiations with the private management and the trade UnionLeaders failed, it has promulgated the Anglo French Textiles Limited(Acquisition and transfer of Textile Undertaking) Act, 1986 and theMill was taken over by the Government of Pondicherry with effect from24.12.1985 by promoting a Government company in the name and style ofPondicherry Textile Corporation Limited. It is seen from thematerials placed on record that the appellants herein, who were theemployees of the Anglo French Textiles Limited, were removed fromtheir services on some charges of instigation of strike, misbehaviouretc. and the particulars regarding their removal are as follows:Sl.No.Name of the employeeCode No.Reason for discharge1Duraisamy3100Name removed on 14.6.19762Sivaraman5745Instigation of strike on5.5.19783RamalingamAL5239Misbehaved with hisimmediate superior on25.5.19764Thirumoorthy8484Instigation of strike on5.5.19765Simon4874Instigation of strike on5.5.19766Chellaian1180Committing theft on22.8.19757Muthusamy-Misbehaved with securityCommander in 19772. Aggrieved over their removal, the appellants have raisedindustrial disputes before the Labour Court, which has ordered fortheir reinstatement with half/full wages and subsequently by virtueof the orders passed in various forums, they have also received their https://hcservices.ecourts.gov.in/hcservices/ compensation. In this backdrop, the appellants herein have filedW.P.No.9019 of 1993, praying to issue a Writ of Mandamus, directingthe first respondent to provide them re-employment with effect fromthe date when their juniors and freshers were appointed. Theappellants would contend that since the present Corporation is asuccessor in interest to the erstwhile Anglo French Textiles Limited,they will have to discharge those obligations which the previousemployer has to discharge, had the undertaking not been transferredand on such obligation, there is right to reemployment under Section25-H of the Industrial Disputes Act. They would further submit thatthe Mill is under statutory obligation to give re-employment becausethey have taken over the assets and liabilities of the previous MillAnglo French Textiles Limited.3. For this claim of the appellants, a detailed counter-affidavit was filed before the learned single Judge. In the counter,inter alia, it has been submitted that the unique character of theAnglo French Textiles Limited (Acquisition and Transfer of TextileUndertaking) Act,1986 is that the right, title and interest of theowner in relation to the Textile Undertaking got vested in thePondicherry Textile Corporation Limited, freed and discharged fromany trust, obligation, mortgage, charge, lien and all otherencumbrances, affecting it as per Section 4(2) of the said Act andthe liabilities and obligations of the erstwhile owner were not takenover by the Corporation and it is also provided therein that anyattachment, injunction or decree or order of any Court restrictingthe use of such property in any manner shall be deemed to have beenwithdrawn and therefore, under the abovesaid provisions of Law, byforce of such vesting under Section 3(1) of the said Act, the Awardsof the Labour Court should be deemed to have been withdrawn and thePondicherry Textile Corporation Limited should also be deemed to havebeen discharged from the obligation of implementing the said Awards.4. It is their specific case that the reliance on Section 25-H of the Industrial Disputes Act by the appellants/petitioners forseeking reemployment is untenable in view of the express provisionscontemplated under Section 11(3)(b) of the Act, which says that "aperson whose services stand terminated under sub-clause (1) of clause(a) shall not be entitled to claim employment in the Corporation asof right" and therefore, the persons who have not been employed bythe Pondicherry Textiles Corporation Limited before the designateddate i.e. 25.6.1986 are not entitled for employment by way of rightsubsequently. It is also submitted that the provisions of the saidAct, clearly reveal that neither the Government nor the Corporationviz., the first respondent herein shall be liable for any liabilityof the owner of textile undertaking in respect of any liability forthe period prior to the appointed date and as such claim cannot atall be enforced against the Government or the respondent Corporation. https://hcservices.ecourts.gov.in/hcservices/

5. An additional affidavit was filed by theappellants/petitioners before the learned single Judge, furnishingthe list of names of their juniors who were given employment by thefirst respondent and it is also stated that some other workers whowere sent out were also taken back by the first respondentmanagement. It is further submitted by the appellants/petitionersthat they were not taken back and were sent out by paying a paltrysum as compensation, which is in violation of Section 25-H of theIndustrial Disputes Act.6. The learned single Judge, having observed that there is nodispute with regard to the fact that the retrenchment compensationwas received by the petitioners, has held that they are not entitledto claim any right for further appointment either in respondents unitor any other subsidised unit. However, the learned single Judge hasobserved that the petitioners can seek for the relief of sympatheticconsideration, but not as a matter of right, and it is for theauthority concerned to consider the petitioners claim for futureappointment on merits. This order of the learned single Judge isunder challenge in this appeal by the appellants/petitioners.7. A detailed counter affidavit has been filed by the firstrespondent in this appeal wherein they have submitted that theservices of the appellants were terminated during the years 1975-1978i.e. during the erstwhile management period for certain misconductsand they had raised Industrial disputes which came up before theLabour Court, Pondicherry and Awards were passed in their favour asagainst the erstwhile management and the petitioners did not offerthemselves for employment before the designated date i.e. 25.6.1986as notified in spite of the fact that wide publication was given byway of newspapers, notice boards etc. calling for applications frominterested ex-employees and accordingly, based on the applicationsreceived , call letters were sent to the concerned ex-employees andas the appellants did not respond before the designated date, callletters were not sent to them and thus they are not entitled to claimre-employment and the management has re-employed only such workers,who were required for the re-construction and re-organisation of thetextile undertaking; that Section 25-H of the Industrial Disputes Actprovides for re-employment of retrenched employees, only if theyoffer themselves for re-employment which the petitioners have notdone.8. It is further submitted that the Government of Puducherryby way of Notification had extended the Tamil Nadu ReliefUndertaking (Special Provisions) Act, 1969 to Anglo French Textilesafter the take over, whereby the Mill was exempted fromthe application of the Industrial Disputes Act, 1947, Industrial https://hcservices.ecourts.gov.in/hcservices/ Employment (Standing Orders) Act, 1946, for the period from 22.5.1986to 22.5.1990 and therefore, the appellants did not have any rightunder the Industrial Disputes Act or Standing Orders; that as thiswas a special enactment to take over a closed undertaking, theprovisions of retrenchment could not be directly applied to theemployees; that the appellants having elected to receive thecompensation, pursuant to the Labour Court Award, cannot approbateand reprobate and claim employment and the appellants are estopped bytheir conduct from seeking employment and hence, once they havereceived the entire payments from the Commissioner of Payments whichconstitutes terminal benefits, they are not entitled to claim re-employment as of right; that the writ petition itself is barred bylimitation and latches in view of the enormous and unexplained delayin filing the writ petition only in the year 1993; that themanagement had made several publications and advertisements in thedailies calling for applications for employment on or before thedesignated date; that the persons who applied before the designateddate alone were registered and considered for re-employment; that onenquiry from the Senior staff and officers of the Corporation andfrom the available records, it is understood that around 7500 ex-employees applied for employment and approximately over 85% of thesame i.e. 6000 employees were given employment under the Corporation;that with reference to the employment of the 19 persons stated tohave been employed after the designated date, though employment waslater to the designated date, they were given employment on the basisof their applications filed before the designated date; that as noapplication was received from the appellants before the designateddate, they were neither considered nor given employment; that out ofsuch registered employees, who had applied, initially only suchworkers were employed depending upon the reconstruction andrequirement of the Units i.e. before the designated date and thus theappellants cannot be equated with the 19 persons who were employedpursuant to the designated date as the petitioners had never appliedprior to the designated date and only applied during the year 1987.9. Heard Mr.N.G.R. Prasad, learned counsel for the appellantsand Mrs.Mala for the first respondent.10. Mr.N.G.R.Prasad, learned counsel appearing for theappellants would submit that Section 25-H of the Industrial DisputesAct specifically mandates that preference in re-employment should begiven to employees who have been retrenched and therefore, the caseof the appellants should be considered by the first respondent.This argument of the learned counsel for the appellants has beencountenanced by the learned counsel for the first respondent sayingthat no such vested right has been accrued on the appellants, sincethey have already received their compensation, as has been fixed byvarious legal forums. https://hcservices.ecourts.gov.in/hcservices/

11. There is no dispute regarding the fact that all theappellants were the employees of the erstwhile management of thefirst respondent and they all were removed from service for certainalleged misconducts, as has been tabulated supra. The appellantshave successfully challenged their removal and the orders ofreinstatement with full/half backwages were passed and since by thattime, the first respondent has taken over the Management, it is seenthat all the appellants have received their compensation. It hasbeen vehemently argued on the part of the respondents that since theappellants have already received their compensation, they cannotclaim re-employment as of right.12. The undisputed fact is that the erstwhile Anglo FrenchTextiles Limited, Pondicherry, which was a private concern was owninga Mill,and it was functioning till July,1983 and thereafter sincethere was no manufacturing process, and since the efforts of theGovernment of Pondicherry to reopen the Mill also failed, the Millwas taken over by the Government of Pondicherry, with effect from24.12.1985 by promoting a Government Company in the name and styleof Pondicherry Textile Corporation Limited, by promulgating the AngloFrench Textiles Limited(Acquisition and Transfer of TextileUndertaking) Act, 1986. This Act has made several protective clausesin favour of the present Management. Section 5 of the said Act reads:"Every liability of the owner of the textile undertaking inrespect of any period prior to the appointed day shall bethe liability of such owner and shall be enforceableagainst him and not against the Government or theCorporation. For the removal of doubt, it is herebydeclared that-(a) save as otherwise expressly provided in this Section orin any other Sections of this Act, no liability in relationto the textile undertaking in respect of any period priorto the appointed day shall be enforceable against theGovernment or the Corporation".Section 14(2) of the said Act provides that:"Save as otherwise provided in this Act, the liabilities inrelation to the textile undertaking in respect of anyperiod prior to the appointed day shall be the liabilitiesof the owner of the textile undertaking"13. Under Section 23 of the said Act, this power of thePondicherry Textile Corporation is protected even as against anydecree or order of any Court, Tribunal or Authority. It is alsoprovided that any attachment, injunction or decree or order of anyCourt restricting the use of such property in any manner shall bedeemed to have been withdrawn. https://hcservices.ecourts.gov.in/hcservices/

14. On a perusal of the provisions of this Act, it is clearthat neither the Government of Pondicherry nor the first respondentCorporation shall be liable for any liability of the owner of textileundertaking in respect of any liability for the period prior to theappointed date. But, we are not concerned of this aspect in this writappeal.15. From the materials placed on record, it is seen that theCentral Government has extended to the Union Territory ofPondicherry, the Tamil Nadu Relief Undertakings (Special Provisions)Act, 1969 by notification No. G.S.R.33(E), dated 13.1.1984. As aresult, the Government of Pondicherry, by G.O.Ms.No.34/Ind, dated22.5.1986, had declared the Anglo French Textiles Mill, a Unit of thePondicherry Textiles Corporation Limited, as a "Relief Undertaking"for a period of one year with effect from 22.5.1986, which was timeand again extended till 22.5.1990, during which period the followingenactments shall not apply in relation to the said Anglo FrenchTextiles:"1. Industrial Employment (Standing Orders) Act,1946. 2. The Industrial Disputes Act, 1947. 3. The Minimum Wages Act, 1948, 4. The Pondicherry Shops and Establishments Act, 1964"16. As could be seen from the materials placed on record,neither the Anglo French Textiles Limited (Acquisition and Transferof Textile Undertaking) Act, 1986 nor the above Notifications werechallenged by the petitioners. While such is the position,admittedly, the appellants raised disputes in the Labour Court, asagainst the erstwhile management, without impleading the presentmanagement, even after the specified date i.e. 2.6.1986. Now, we arenot on the point of legality or otherwise of the various orderspassed by various forums and the only question that is required to beanswered in this appeal is whether the appellants are entitled forre-employment , that too on preference over others. The undisputedfact is that the appellants have received compensation from the firstrespondent and after receiving the same, they are claiming preferencein appointment under Section 25-H of the Industrial Disputes Act.17. Since the issue pertains to Section 25-H of theIndustrial Disputes Act, it is proper to quote the same, which readsas follows:"25-H. Re-employment of retrenched workmen-Where anyworkmen are retrenched, and the employer proposes to takeinto his employ any persons, he shall in such manner as may be prescribed, give an opportunity to the retrenchedworkmen who are citizens of India to offer themselves forre-employment, and such retrenched workmen who offerthemselves for re-employment shall have preference overother persons." https://hcservices.ecourts.gov.in/hcservices/

18. As per this Section, the employer, who proposes to employany person, shall give an opportunity to the retrenched workmen tooffer themselves for re-employment and on that if the retrenchedworkmen offer themselves for re-employment, undoubtedly, they shallhave preference over other persons. In the case on hand, the strongassertion of the first respondent that in spite of wide publicity,these appellants have not offered themselves for re-employment andhave thus not complied with the mandatory requirement of Section 25-Hof the Industrial Disputes Act, was not at all questioned orchallenged by the appellants, making it clear that the mandatoryrequirement of this Section that the retrenched employee must offerhimself for re-employment has not been complied with.19. Further more, as per Section 11(3)(b) of the Anglo FrenchTextiles Limited ( Acquisition and Transfer of Textile Undertaking)Act, 1986, "a person whose services stand terminated under sub-clause (1) of clause (a) shall not be entitled to claim employment inthe Corporation as of right". Therefore, there is no vested right onthe appellants for re-employment in the first respondent Corporation.As has already been adverted to supra, none of the provisions of theAnglo French Textiles (Acquisition and Transfer of TextileUndertaking) Act and the Notifications issued by the Government ofPondicherry extending the provisions of Tamil Nadu ReliefUndertakings (Special Provisions) Act,1969 to the first respondent,were under challenge from any corner, particularly by the appellants.Therefore, in the considered opinion of this Court, the appellantscannot claim re-employment as of right.20. The learned counsel for the appellants would rely on ajudgment of the Honourable Supreme Court Court in N.T.C. (SOUTHMAHARASHTRA LIMITED VS. RASHTRIYA MILL MAZDOOR SANGH AND OTHERS[(1993) I SCC 217]. In this case, the managements of textileundertakings were taken over by the National Textile CorporationLimited and while discussing the power of the National TextileCorporation Limited to terminate employment of workmen of theundertakings and while dealing with the provisions of TextileUndertakings (Taking Over of Management) Act, 1983, the Apex Courthas held that "neither the custodian nor the appellants who steppedinto his shoes had at any time put an end to the contract ofemployment of any of the workmen involved in the present disputepursuant to the provisions of Section 13 of the Textile Undertakings(Taking Over of Management) Act,1983). Hence the contention thatthere was no obligation on the appellants to continue the services ofthe workmen after the take over of the management cannot be accepted".21. In the case before the Honourable Supreme Court, theprovisions of the Textile Undertakings (Taking Over of Management) https://hcservices.ecourts.gov.in/hcservices/ Act ,1983, which entitled the National Textile Corporation Limited totake over the management of textile undertakings were underchallenge. But, in the case on hand, as has been held supra, none ofthe provisions of the Anglo French Textiles Limited(Acquisition andTransfer of Textile Undertaking ) Act and the Notifications issued bythe Government of Pondicherry extending the provisions of Tamil NaduRelief Undertakings (Special Provisions) Act, 1969 to the firstrespondent were under challenge from any corner, particularly by theappellants. It is also not in dispute that the appellants havealready received their compensation, as has been fixed by theauthorities concerned. Therefore, this judgment of the HonourableSupreme Court has no application to the case of the appellants.22. The learned counsel for the appellants has also relied onthe judgment of the Honourable Apex Court in CENTRAL BANK OF INDIAvs. S.SATYAM AND OTHERS [(1996) 5 SCC 419] wherein it has been heldthat "the retrenched workmen are entitled to priority in re-employment over retrenched workmen not so covered." There is nodispute with regard to the proposition laid down by the HonourableApex Court. But, in the case on hand, the appellants, in spite ofwide publicity, have not offered themselves for re-employment, whichis mandatory under Section 25-H of the Industrial Disputes Act.Therefore, this judgment also does not come to the rescue of theappellants.23. The learned counsel for the appellants would also rely ona judgment of the Honourable Apex Court in NAR SINGH PAL VS UNION OFINDIA AND OTHERS [(2000) 3 SCC 588), wherein it has been held that"acceptance of retrenchment compensation cannot validate an invalidorder of termination". In the said case, the order of terminationwas passed by way of punishment, without conducting any enquiry.Only in such circumstances, the Honourable Apex Court has gone intothe rescue of the workman there, which is not the case herein. Theappellants have not complied with the mandatory requirement ofSection 25-H of the Industrial Disputes Act. Therefore, thisjudgment also does not come to the rescue of the appellants.24. The learned counsel for the appellants has also relied ona judgment of the Division Bench of this Court in M.SEKARAN vs.GENERAL MANAGER, T.N. STATE TRANSPORT CORPORATION [2006(1) LLN 257].It was a case wherein the appellants were appointed as traineedrivers on consolidated wages for two years and when they were soughtto be relieved on completion of two years, they filed writ petitionsand the learned single Judge granted relief in favour of the personswho had not been relieved till that time, but rejected the same inrespect of the candidates who had been relieved. In the appeal theDivision Bench of this Court has held that "as per Section 25-H of https://hcservices.ecourts.gov.in/hcservices/ the Act, retrenched workers had a prior right of re-employment".There is no dispute with regard to this proposition. But, as hasalready been adverted to supra, the appellants have alreadyreceived compensation fixed by the legal forums and have not compliedwith the mandatory requirement of Section 25-H of the IndustrialDisputes Act, by offering themselves for re-employment whenopportunity was afforded to him. Therefore, this judgment also doesnot come to the rescue of the appellants.25. On the other hand, the learned counsel appearing for thefirst respondent would rely on a judgment of the Honourable ApexCourt in ANAKAPAALLE COOPERATIVE AGRICULTURAL AND INDUSTRIAL SOCIETYLIMITED VS WORKMEN AND OTHERS [AIR 1963 SC 1489]. This judgment hasbeen delivered by the Constitution Bench of the Honourable SupremeCourt of India on 23.10.1962 i.e. well before the amendment ofSection 25-H of the Industrial Disputes Act, w.e.f. 19.12.1964 by Act36 of 1964. Therefore, we do not propose to refer to this judgmentof the Honourable Apex Court.26. The learned counsel for the first respondent would alsorely on another judgment of the Honourable Apex Court in RASHTRIYAMILL MAZDOOR SANGH vs. STATE OF MAHARASHTRA AND OTHERS [(1996) 5 SCC542] , wherein while dealing with Maharashtra Central India Spinning,Weaving and Manufacturing company Limited, the Empress Mills, Nagpur(Acquisition and Transfer of Undertakings) Act, 1986, the HonourableApex Court has held that 'the effect of the legislation which was tosave as many employees as possible from unemployment since the onlyother option was liquidation which would result in all the employeesbeing rendered unemployed and thus it was not a case of retrenchmentand unemployment of those who could not be continued was not becauseof the nationalisation since the act of nationalisation savedmajority of employees from unemployment.'27. In the other judgment relied on by the learned counsel forthe first respondent in M/s.MARUTI UDYOG LTD. vs. RAM LAL AND OTHERS[AIR 2005 SC 851], the Honourable Apex Court has held that 'workmandespite having received amount of compensation would not again haveto be offered job by person reviving industry.' It has also beenheld therein that 'sympathy has no role to play in such matters'.28. Therefore, there is no doubt that the appellants cannothave any right to claim re-employment with the first respondent.Further more, the contention of the appellants that they were sentout by paying some paltry sum cannot be accepted since thecompensation was fixed as per law and they never challenged thecompensation amounts arrived at by various authorities. On alitigation, they were also paid bonus etc. The learned single Judge https://hcservices.ecourts.gov.in/hcservices/ has properly appreciated the facts and circumstances of the case,wherein we find no reason to cause our interference.29. To sum-up,(i)None of the provisions of the Anglo French Textiles Limited(Acquisition and Transfer of Textile Undertaking) Act and theNotifications issued by the Government of Pondicherry extending theprovisions of Tamil Nadu Relief Undertakings (Special Provisions)Act, 1969 to the first respondent were under challenge from anycorner, particularly by the appellants and therefore, now, theycannot rake up all such pleas as against such enactments before us.(ii)Admittedly, the appellants have received their compensation, ashas been fixed by the legal forums and the quantum of suchcompensation was never challenged by them. Therefore, as per thejudgment of the Honourable Apex Court in M/s.MARUTI UDYOG LTD. vs.RAM LAL AND OTHERS [AIR 2005 SC 851], such workmen who receivedamount of compensation need not again have to be offered job byperson reviving industry and thus they do not have any priority overothers.(iii)There is no dispute regarding the fact that in spite of widepublicity, these appellants have not offered themselves for re-employment, as is mandated under Section 25-H of the IndustrialDisputes Act, before the designated date and therefore, they cannotbe equated with the other employees, who offered themselves for re-employment and got employment. No material has been placed beforeus by the appellants to show that they have offered themselves forre-employment and the same was not considered by the firstrespondent. Even regarding the employees, who were appointed afterthe designated date, it has been satisfactorily explained before usby the first respondent that they all have applied before thedesignated date, but were offered employment, subject toavailability of vacancies, after the designated date. Therefore,even on this aspect, the appellants cannot succeed.(iv)There is no plea of any mala fide or bias attitude on the part ofthe first respondent by the appellants so as to term the action ofthe first respondent as illegal or otherwise. The first respondenthas scrupulously followed the rules and regulations and no flaw,much less a legal flaw, has been found by us in the entire processof the first respondent and therefore, it follows that the prayer ofthe appellants is misconceived and the same has been properlyrejected by the learned single Judge. https://hcservices.ecourts.gov.in/hcservices/ For all the above reasons, this appeal is dismissed,confirming the order of the learned single Judge. It is made clearthat the appellants are not entitled for re-employment as of rightand it is for the first respondent to consider the claim of theappellants for appointment, purely on humanitarian considerations. Sd/-Asst. Registrar/true copy/Sub Asst. Registrar Rao To1. The Managing Director Anglo French Textiles Cuddalore Road, Mudaliarpet, Pondicherry-605 004.+1 cc to M/s Row and Reddy, Advocate, SR.No.33072+1 cc to Mr.K.S.Ahamed, Advocate, SR.No.32806Judgment in W.A.No.1734/2001GV(CO)SMK/29.9.08