M/S New Horizon Sugar Mills vs Ariyur Sugar Mills Staff Welfare & Ors

M/S. NEW HORIZON SUGAR MILLS LTD., ARIYUR ... APPELLANT

Vs.

ARIYUR SUGAR MILLS STAFF WELFARE UNION & ORS. ... RESPODNENTS

WITH

CIVIL APPEAL NO. 6382 OF 2009 (arising out of SLP [C] No. 13569 of 2007)

EID PARRY INDIA LTD. ...APPELLANT

VS.

PUDUVAI PRADESA SARKARAI AALI THOZHILALAR SANGAM & ORS. ... RESPODNENTS

O R D E R

Leave granted. Heard the learned counsel

2. The assets of New Horizon Sugar Mills (for short, `New

Horizon') were seized and sold by auction under the provisions of

SARFAESI Act, 2002 by Indian Bank, a secured creditor. EID Parry

India Ltd. (for short `EID Parry') was the auction purchaser.

3. While dismissing a batch of writ petitions arising

from/challenging the proceedings initiated by Indian Bank under

SARFAESI Act, a learned single Judge of the Madras High Court, by order dated 12.7.2005 directed that the workmen of New Horizon will

be entitled to the benefits under Section 25FF of the Industrial

Disputes Act, 1947 as against the employer - New Horizon and EID

Parry. Aggrieved by the said order, EID Parry filed W.A. No.

1788/2005.

4. By interim order dated 7.12.2005 passed in writ petitions

filed by the two employees unions of New Horizon, another learned

single Judge appointed a retired Judge of the High Court as the

Special Authority to compute the claims of the workmen (instead of

Commissioner of Labour, Pudhucherry) and submit a report to the

Court. He also directed the Indian Bank which had the sale proceeds

in respect of sale of the assets of New Horizon to deposit

initially a sum of Rs. 6,00,00,000/- (Rupees six corers) for being

disbursed to the workmen. The said amount was ordered to be placed

in a no-lien account in the Pondicherry main branch of the said

Bank. Feeling aggrieved by the said order New Horizon filed W.A.

No. 1209/2006.

5. The said two writ appeals along with other writ petitions

and writ appeals were disposed of by a Division Bench of the Madras

High Court by the impugned judgment dated 27.3.2007. The said

judgment deals with several aspects. We are concerned in this

appeal, with only one aspect of the said judgment, that is, the

workers' dues. By the said judgment, W.A. No. 1788/2005 filed by

EID Parry and W.A. No. 1209/2006 filed by New Horizon were dismissed. The order of the learned single Judge dated 7.12.2005

directing quantification of the amount due to the employees and

further direction for earmarking Rs. six crores for meeting the

employees dues was upheld. The Division Bench, however, directed

that the quantification should be done by Commissioner of Labour,

Puducherry (instead of by the retired Judge appointed by the

learned Single Judge.

6. Feeling aggrieved by the dismissal of W.A. No.1209/2006, and

W.A. No. 1788/2005, New Horizon and EID Parry have filed these

appeals by special leave. The common issue involved in these two

appeals is who should be made liable to pay the compensation under

Section 25FF of the Industrial Disputes Act, 1947, to the employees

of New Horizon whose services were deem3dto have been terminated.

7. After the matter was argued for some time, Mr. S. Ganesh,

learned senior counsel appearing for New Horizon fairly conceded

that having regard to the wording of Section 25FF of the said Act

and the settled legal position under several decisions of this

Court starting from Anakapalla Co-operative Agricultural and

Industrial Society v. Its Workmen [1962 (2) LLJ. 629], the

liability to pay its workmen would be on New Horizon. Therefore, it

follows that the amount due to the workers will have to be paid

from out of the sale proceeds which are lying with the Indian Bank.

The purchaser - EID Parry, who has already paid the sale price,

will have no liability.

8. However, having regard to the fact that the quantification

of the workmen's dues would involve verification of records/claims,

it will be convenient and appropriate, if the management of New

Horizon is associated with the process of verification,

quantification and payment to its workmen. Therefore, the

Commissioner of Labour will hear New Horizon in regard to each

claim before passing appropriate orders in favour of workmen.

9. The Indian Bank will now transfer the sum of Rs. six crores

as directed by the High Court, from the sale proceeds, without

prejudice to its contentions to a no-lien account in its

Pondicherry Main Branch which shall be operated by the

Commissioner, who shall endeavour to complete the exercise of

verification, quantification and payment of the employees' dues

within three months. The balance, if any, remaining in the no-lien

account after such settlement of workers' dues, shall be paid to

the New Horizon without prejudice to the contentions of the Bank.

If the amount of Rs. 6 crores is found to be insufficient by the

Commissioner, the Commissioner may apply to Madras High Court for

release of further funds from the amount in deposit with it.

10. The sum of Rs. 2 crores (or such other sum) that was

deposited by the EID Parry with the Commissioner of Labour,

Pondicherry in pursuance of our interim order dated 19.3.2009 shall

be refunded to EID Parry.

11. With the above directions, the appeal of New Horizon is

dismissed and the appeal of EID Parry is allowed. The intervention

applications of some workmen are dismissed as not calling for any

orders.

12. As a consequence, the interim direction dated 19.3.2009

directing EID Parry not to prevent the workmen from attending to

their duties in the factory premises is vacated, without prejudice

to the rights of the workers in accordance with law.

....................J. (R. V. Raveendran)

....................J. (B. Sudershan Reddy) New Delhi;

August 31, 2009.