P. D. Dinakaran, J.
1. Heard all the parties.
2. The writ petitioner has prayed for issue of a writ of mandamus for bearing the respondents from interfering with the rehabilitation scheme and with the restarting of the third respondent mill by way of interim working without prior sanctions from the second respondent herein as envisaged under 19A of the Sick Industrial Companies (Special Provisions) Act, 1985, and consequently to direct the respondents to proceed as per the directions of the second respondent in so far as it relates to the rehabilitation and re-starting/continuing operations of the third respondent mill.
3. The petitioner contends that :
4. Dhanalakshmi Mills Ltd., Tiruppur, Tamil Nadu, the third respondent herein, is a composite textile mill located at Tiruppur and was incorporated in April, 1932, as a spinning mill. It started commercial production in May, 1932.
5. Thereafter, a separate weaving unit called 'B' Mill was started in 1960, and the earlier spinning unit came to be called as 'A' Mill. 'A' Mill, namely the spinning mill, was engaged in spinning cotton, viscose, polyester, blended yarns, and weaving units, and the 'B' mill namely, the weaving mill was engaged in weaving grey cotton fabrics.
6. Right from its inception, the third respondent company is under the management of the same family members under the guidance, superintendence and the control of the board of directors consisting of ten directors including the nominees, Industrial Investment Bank of India, State Bank of India, and the Government of Tamil Nadu.
7. The spinning mill was expanded to 53,304 spindles in various stages and the weaving mill, which was started with 200 looms, also got expanded. The third respondent-company, further modernised the mill during 1991-92, by availing of term loans from financial institutions.
8. It is alleged that due to various factors, viz.,
(i) uneconomical working of the weaving mill;
(ii) sharp increase in the cotton price during the year 1991-92;
(iii) abnormal increase in the power tariff;
(iv) increase in wages cost;
(v) accumulation of finished stock from January 1995, onwards due to very poor off-take;
and due to such other factors, the company's financial position became very critical, and consequently, the company sustained huge loss of Rs. 177.94 lakhs for the financial year 1991-92, and coupled with the carry forward loss of Rs. 6 lakhs in previous years, and hence there was a total loss of Rs. 183.72 lakhs during the financial year 1991-92.
9. The board of directors of the third respondent-company, brought to the notice of the shareholders in an extraordinary general meeting held on August 7, 1992, that the accumulated losses have resulted in the erosion of the net worth of the company, during the immediately preceding five financial years, and, therefore, the third respondent-management, by their lefter dated October 10, 1992, submitted Form-C to the second respondent as to the potential sickness of the third respondent-company as per 23(1) of the Sick Industrial Companies (Special Provisions) Act, 1985.
10. As the cash losses incurred by the third respondent-company since the financial year 1991-92, thus got increased and accumulated resulting in a gross erosion in the net worth of the company as per the audited annual report for the year 1992-93, the third respondent-company made a reference under 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, to the second respondent herein and registered a case bearing No. 105 of 1993, and, consequently, the second respondent made an inquiry under 16 of the Sick Industrial Companies (Special Provisions) Act, 1985 and, therefore, in its proceedings dated February 22, 1994, declared the third respondent-company as a sick industrial company within the meaning of 3(1)(o) of the Sick Industrial Companies Act and also appointed the fifth respondent, namely, the Industrial Investment Bank of India (IIBI), as the operating agency under 17(3) of the Sick Industrial Companies Act to prepare a rehabilitation scheme for the third respondent-company and also indicated the guidelines for the purpose of rehabilitation proposal and for the revival of the third respondent-company.
11. The proceedings of the second respondent dated February 22, 1994, was placed before the board of directors of the third respondent on March 30, 1994, and the board authorised the managing director, C. R. Sethuramalingam, the fourth respondent herein to prepare the rehabilitation proposal for the revival of the company and submit the same to the operating agency on or before April 7, 1994.
12. The petitioner complains that the third respondent-company was not interested to submit a comprehensive proposal, and, therefore, one of the directors of the third respondent-company wanted to submit a proposal to have the Cheran group, viz., the writ petitioner herein as a co-promoter and the other of the directors of the third respondent-company submitted another proposal to have P. Rajarathnam and Associates as the co-promoter for rehabilitation of the third respondent-company.
13. In the meanwhile, the second respondent directed the existing promoters to deposit Rs. 50 lakhs in a no-lien account with S.B.I. before September 30, 1994, on condition that only after fulfilment of the said deposit of Rs. 50 lakhs within the stipulated time, the proposal of the third respondent-company would be evaluated by the operating agency.
14. The third respondent-company, identifying P. Rajaratnam and Associates to be a co-promoter, thus deposited Rs. 51 lakhs on September 19, 1994, as directed by the second respondent.
15. With this background, the fifth respondent reviewed the proposal of the third respondent-company in their joint meeting held on October 4, 1994. In the said meeting, it was observed that only P. Rajaratnam and Associates had deposited Rs. 51 lakhs on behalf of the third respondent-company, contrary to the directions of the second respondent requiring the promoters of the third respondent-company to deposit the said amount. Therefore, in the subsequent joint meeting held on December 28, 1994, the second respondent rejected the arrangements of bringing in P. Rajaratnam and Associates as a co-promoter as it would, in fact, amount to take over of the third respondent-company, and, therefore, the second respondent directed the operating agency, namely, the fifth respondent herein to release an advertisement inviting offers for taking over of the company in order to give an opportunity to the outside parties to submit a proposal for rehabilitation of the third respondent-company.
16. Accordingly, an advertisement was issued on January 1, 1995, inviting proposals for rehabilitation of the third respondent-company from outsiders, and in continuation of which, the second respondent herein received proposals for rehabilitation of the third respondent-company from :
(i) The writ petitioner herein (Cheran group of companies).
(ii) P. Rajaratnam and Associates and
(iii) K. G., Coimbatore.
17. Aggrieved by the order of the second respondent dated December 28, 1994, rejecting the proposal of the third respondent herein to have P. Rajaratnam and Associates as co-promoter, the third respondent preferred an appeal before the Appellate Authority for Industrial and Financial Reconstruction (hereinafter referred to as the AAIFR), bearing Appeal No. 20 of 1995 and also obtained an order of stay of all further proceedings of the decision of the second respondent dated December 28, 1994.
18. The writ petitioner, therefore, claims that they had updated and submitted their proposal to the third respondent-company only pursuant to an invitation by a statutory authority, namely, the second respondent herein, while exercising statutory powers under the Sick Industrial Companies (Special Provisions) Act, 1985, in continuation of the proceedings initiated by the third respondent-company.
19. While thus submitting a rehabilitation scheme pursuant to an advertisement dated January 1, 1995, the writ petitioner also remitted Rs. 50 lakhs to the eighth respondent herein under a no-lien account deposit as required in the advertisement dated January 1, 1995.
20. In the meanwhile, the entire functioning and activities of the third respondent mills got paralysed and the workers could not be paid except for a month wage during June, 1995, and the workers resumed the work on May 30, 1995, on an assurance by the third respondent-management for payment of arrears of wages to workers.
21. In the meanwhile, the Appellate Authority for Industrial and Financial Reconstruction by order dated July 14, 1995, allowed Appeal No. 20 of 1995 and set aside the order of the second respondent dated December 28, 1994, and remanded the matter for examining the proposal of the company for rehabilitation and directed the second respondent to consider the scheme submitted by the third and fourth respondents herein, namely, the managing director of the third respondent along with P. Rajaratnam and Associates as co-promoters.
22. The third respondent-company along with P. Rajaratnam and Associates arrived at a settlement with the workers under 18(1) of the Industrial Disputes Act, but the terms of the said settlement could not be given effect to, by the third respondent-company.
23. As the writ petitioner had already submitted a proposal for reviving the third respondent-company and also deposited a sum of Rs. 50 lakhs as required in the said advertisement dated January 1, 1995, issued by the second respondent herein, the writ petitioner filed W.P. No. 12073 of 1995 challenging the said order dated July 14, 1995, of the Appellate Authority for Industrial and Financial Reconstruction and obtained an order of interim stay of all further proceedings before the second respondent herein by order dated September 5, 1995.
24. In the meanwhile, the K.G. group of companies withdrew their proposal for rehabilitation submitted before the second respondent herein and Writ Petition No. 12073 of 1995 filed by the writ petitioner against the order dated July 14, 1995, of the Appellate Authority for Industrial and Financial Reconstruction was also allowed by this court by an order dated January 28, 1997, and the second respondent was directed to invite fresh proposals for rehabilitation and to give an opportunity to all those who have submitted the proposals earlier to enable them to submit fresh proposals or to update and reaffirm their proposals.
25. Even though this court, by order dated January 28, 1997, set aside the order of the Appellate Authority for Industrial and Financial Reconstruction dated July 14, 1995, the petitioner was aggrieved by the said order dated January 28, 1997, of this court in so far as the said order dated January 28, 1997, was not consistent with the earlier directions of the second respondent to deposit a sum of Rs. 50 lakhs in a no-lien account. That apart, the petitioner was also aggrieved by the direction inviting fresh proposals. The petitioner claims that in the absence of a proposal by P. Rajaratnam and Associates and any other proposal, the petitioner's proposal alone should be considered. Hence, the petitioner filed a writ appeal against the orders of this court dated January 28, 1997, made in W.P. No. 12073 of 1995.
26. Due to the above entanglement caused by the directors of the third respondent-company and other proposed co-promoters, the workers, for no fault on their part, were suffering, and, therefore, went on strike from October 10, 1996. The workers also held road-roko to show their protest as the statutory settlement arrived at under 18(1) of the Industrial Disputes Act could not be given effect to.
27. The third respondent, therefore, came forward to pay one month's wage to the workers on October 17, 1996, in the presence of the Government authorities, the Assistant Commissioner of Labour-II, the Revenue Divisional Officer and the Tahsildar, but again failed to keep their promise. However, the third respondent-company, by their letter dated October 22, 1996, informed the Assistant Commissioner of Labour No. 2 to co-operate with the trade union if they could arrange to run the unit with the help of conversion parties or any other interested outside parties, as the case may be, and consequently the Assistant Commissioner of Labour, by notice dated October 25, 1996, called the management and the union for a meeting on October 31, 1996, for resolving the dispute relating to the non-payment of wages to the workmen and the strike by the workmen.
28. As no concrete solutions were arrived at, meetings were called on November 5, 1996, and then on November 13, 1996, but nothing turned fruitful. However, the ninth respondent, namely, the Commissioner of Labour, in their letter dated February 18, 1997, expressed their hope to revive the mill with the financial help of interested parties and also proposed to hold meetings with the trade unions in that regard.
29. The petitioner claims that the major trade unions such as AITUC, CITUC, INTUC, HMS and ATB, etc., have held simultaneous negotiations with the petitioner for the revival of the mills and, finally, it is claimed that the petitioner and the eleventh respondent, a joint action committee of workers, have entered into a memorandum of understanding on April 2, 1997, for interim working of the mills under 19A of the Sick Industrial Companies (Special Provisions) Act, 1985, besides extending full support for the rehabilitation scheme.
30. Thereafter, the eleventh respondent, by their letter dated April 24, 1997, appraised the facts regarding the memorandum of understanding entered into between the eleventh respondent and the petitioner, and urged the fourth respondent to extend their co-operation to the trade unions to run the mills. The eleventh respondent also took up the matter to the second respondent requesting to take proper steps for interim working of the mills.
31. Even though a writ appeal was preferred by the petitioner against the order of this court dated January 2B, 1997, in W.P. No. 12073 of 1995 the same was not numbered. Hence, the fifth respondent issued a fresh advertisement on May 11, 1997, in the Economic Times, inviting fresh proposals for rehabilitation of the third respondent-company without any pre-conditions. Therefore, without prejudice to the rights of the writ appeal already filed by the petitioner, the petitioner again submitted a fresh proposal on May 26, 1997, with a revised rehabilitation proposal, providing for interim working of the mill under 19A of the Sick Industrial Companies (Special Provisions) Act, 1985.
32. While so, the petitioner complains that at the instance of the third and fourth respondents herein, the ninth respondent called the labour union for a discussion on two occasions, namely, on June 12, 1997, and June 19, 1997, at Chennai and Coimbatore, respectively, in order to arrive at a settlement, after giving due publication in the newspaper on June 17, 1997. Therefore, the eleventh respondent submitted a letter on June 23, 1997, to the fifth respondent appraising their commitments to the memorandum of understanding signed with the petitioner herein on April 2, 1997, and further requested the fifth respondent to recommend for interim working arrangement of the third respondent mill pending final settlement of the rehabilitation proposal. The petitioner also states that the eleventh respondent attended a joint meeting of the financial institutions and banks on June 27, 1997, and informed lack of confidence in the managing director of the proposed co-promoters of the third respondent-company and reiterated their support to the rehabilitation scheme proposed by the petitioner and urged for interim working of the mill.
33. However, the petitioner complains that at the instance of the third and fourth respondents, respondents Nos. 1, 9 and 10 were exercising pressure on the unwilling trade unions for a long-term labour settlement. The petitioner claims that he is a bona fide promoter of the third respondent mill identified by respondents Nos. 2, 5 and 11. The petitioner complains that the action initiated by respondents Nos. 1, 9 and 10 without giving due consideration to the memorandum of understanding entered into by the petitioner and the eleventh respondent and without seeking prior permission from the second respondent is arbitrary and violative of 19A of the Sick Industrial Companies (Special Provisions) Act, 1985.
34. The petitioner contends that as per 19A, an arrangement for continuing operation of the sick company has to be provided during the enquiry under 16 of the Act. It is contended that since the third respondent, in order to protract the proceedings before the Board for Industrial and Financial Reconstruction, called for discussions for a long-term labour settlement before the first, ninth and tenth respondents herein, and, therefore, the petitioner caused a legal notice on July 16, 1997, calling on the ninth respondent to refrain from conducting any meeting for restarting the third respondent mill without prior approval of the second respondent herein, but, there was no reply from the ninth respondent. The petitioner further apprehends that if the meetings before the first, ninth and tenth respondents are allowed to proceed for restarting the mill without obtaining the required sanction from the second respondent, the petitioner and the workers of the third respondent mill would be put into irreparable loss and hardship. Hence, the above writ petitioner is seeking a writ of mandamus forbearing the respondents from interfering with the rehabilitation scheme and for the restarting of the third respondent mill by way of interim working without prior sanction from the second respondent herein, envisaged under 19A of the Sick Industrial Companies (Special Provisions) Act, 1985, and to direct the respondents to proceed as per the directions of the second respondent in so far as it related to the rehabilitation, restarting and continuing operation of the third respondent mill.
35. On the other hand, respondents Nos. 3 and 4 would contend that they were able to identify financially sound persons who came forward to infuse funds for running the third respondent mill and also to support the scheme of rehabilitation submitted on behalf of the third respondent company. It is also stated that four more eminent directors with wide experience in managing textile mills were inducted in the board of directors of the third respondent-company, and thus, the reconstituted board of directors were taking steps for reopening the mill. In such circumstances, respondents Nos. 1, 9 and 10 have initiated conciliation proceedings between the management and the workers for reopening the mill. It is claimed by the third and fourth respondents that most of the trade unions were anxious to sign the settlement and to pave the way for the opening of the mill.
36. That apart, respondents Nos. 3 and 4 also contend that the mere subsequent advertisement by the fifth respondent calling for fresh proposals would not, by itself, stand in the way of finding a solution for restarting the third respondent mill by identifying financially sound persons, infusing funds for running the mill and for finding long-term labour settlement for their wages. In fact, the third and fourth respondents claim that all major trade unions expressed their confidence in the proposal initiated by the third and fourth respondents to reopen the mill and also expressed their willingness to hold a meeting with all the trade unions and to chalk out a long-term plan for economical and uninterrupted working of the mill. Hence, respondents Nos. 3 and 4 strongly question the locus standi of the eleventh respondent for taking a contra view from that of the other trade unions who have expressed their confidence and willingness to co-operate with the third respondent management to reopen the mill. The third respondent mill also critically questions the validity of the memorandum of understanding and contends that the same shall not have any legal sanction as the petitioner cannot claim to be the employer of the third respondent-company as defined under 2(g) of the Industrial Disputes Act. It is contended that the petitioner cannot, at any rate, claim any vested right to run the mill even before orders are passed by the Board for Industrial and Financial Reconstruction sanctioning a scheme for rehabilitation submitted by them. The averment that the trade unions decline to enter into any agreement with the management as complained by the petitioner, is denied by respondents Nos. 3 and 4.
37. In the light of the above facts and circumstances, Mrs. Nalini Chidambaram, learned senior counsel appearing for the petitioner, argues that the act of respondents Nos. 3 and 4 requesting respondents Nos. 1, 9 and 10 inviting the trade unions for a meeting and the consequential attempt by respondents Nos. 1, 9 and 10 to convince the trade unions to enter into a settlement between the third respondent-company and the trade unions would render the proceedings already initiated by the second respondent under the Sick Industrial Companies (Special Provisions) Act, 1985, to find a permanent solution in the matter for restarting the mill, infructuous, particularly when the petitioners themselves have offered a revised rehabilitation scheme with a concrete proposal to restart the mill and the same is pending finalisation before respondents Nos. 2 and 5 but no prior approval was obtained from the second respondent under 19A of the Act and the petitioner has also entered into a memorandum of understanding dated April 2, 1997.
38. On the other hand, respondents Nos. 3 and 4 state that all the trade unions, except the eleventh respondent, self-styled Joint Action Committee, have participated in the conciliation proceedings convened by the ninth respondent herein on August 6, 1997, for arriving at a settlement under 18 of the Industrial Disputes Act. The third and fourth respondents contend that there is no prohibition in the Sick Industrial Companies (Special Provisions) Act, 1985, for constitution of a new contract during the pendency of an enquiry; nor is any prior approval of the second respondent required for appointment of directors, particularly when the directors inducted were willing to bring sufficient funds to reopen the mill and it is only under such improved financial position that respondents Nos. 1, 9 and 10 have initiated conciliation proceedings under the provisions of the Industrial Disputes Act which is a special enactment.
39. Respondents Nos. 3 and 4 further deny the contention of the petitioner that respondents Nos. 1, 9 and 10 have to apply for the permission of the second respondent to initiate conciliation proceedings as illogical and untenable in law and equally, the contention of the petitioner that respondents Nos. 1, 9 and 10 should not proceed with the conciliation proceedings between the third respondent-company and the trade unions until the Board for Industrial and Financial. Reconstruction passes final orders sanctioning the scheme of rehabilitation of the third respondent mill.
40. The ninth respondent, in their counter-affidavit, precisely states that Dhanalakshmi Mill Ltd., namely, the third respondent herein, was not functioning since October, 1996, and consequently 1,200 workers were rendered jobless since the existing management of the third respondent has reported that they had finally made certain financial arrangements and hence have approached the Government to hold talks in that regard, and, therefore, the ninth respondent, namely, the Chief Conciliation Officer of the State, by exercising powers under s 11 and 12 of the Industrial Disputes Act, initiated conciliation proceedings, and hence, the ninth respondent contends that such statutory powers should not be obstructed by unsustainable claims raised by the petitioner.
41. It is further contended that such power to discharge the statutory duty cannot be prevented by issue of a writ of mandamus, as prayed for by the petitioner. It is also contended by the ninth respondent that 19A of the Sick Industrial Companies (Special Provisions) Act, 1985, does not contemplate any proper permission from the second respondent to hold conciliation proceedings under the Industrial Disputes Act.
42. G. Subramaniam, learned senior counsel appearing on behalf of the third and fourth respondents herein, argues that there is no justification in interfering with the statutory exercise of powers conferred by respondents Nos. 1, 9 and 10 under s 11 and 12 of the Industrial Disputes Act to initiate conciliation proceedings, between the management and the workmen to work out the possibility of reopening the mill, particularly when the mill remains closed since 1996, rendering 1,200 workers jobless; the claim of the petitioner for prior permission under 19A of the Sick Industrial Companies (Special Provisions) Act, 1985, even for initiating such conciliation proceedings under the Industrial Disputes Act, which is a special enactment, to resolve the disputes between the employer and employees, is totally misconceived, illogical and illegal; the petitioner has to establish a legal right for seeking a writ of mandamus, but in the instant case, the petitioner neither established their legal right, nor satisfied the legal obligation to be discharged by respondents Nos. 1, 9 and 10. The petitioner cannot seek a writ of mandamus to prevent the authorities to discharge their statutory obligation in exercising the powers under s 11 and 12 of the Act to resolve the dispute between the employer and employee for arriving at a long-term settlement between the management and employees and to finalise the steps for reopening the mill; and in any event, the petitioner cannot be construed as an employer unless and until the rehabilitation proposal is accepted by the second respondent.
43. In support of his contentions, G. Subramaniam relies upon the following decisions :
(i) Baburao P. Tawade v. HES Ltd. [1995] 2 LLN 96; [1995] LIC 2200 (Bom).
(ii) Metal Box India Ltd. v. State of Tamil, Nadu [1995] 2 LLN 814 (Mad).
(iii) Management of Binny Ltd. (B & C Mills) v. Government of Tamilnadu [1989] 1 LLJ 180.
44. Since the petitioners claim that they have entered into a memorandum of understanding dated April 2, 1997, with the eleventh respondent, viz., Joint Action Committee, the other trade unions, namely, the petitioners in W.M.P. No. 20248 of 1997, seek themselves to be impleaded as party respondents in the above writ petition contending that the petitioner is not their employer and, therefore, the petitioner has no locus standi to object to the conciliation proceedings initiated by respondents Nos. 1, 9 and 10 in exercise of statutory powers conferred under s 11 and 12 of the Industrial Disputes Act that they have to participate in the conciliation proceedings convened by respondents Nos. 1, 9 and 10. The proposed respondents also contend that the memorandum of understanding dated April 2, 1997, said to have been entered into between the petitioner and the eleventh respondent has no legal sanctity and, therefore, the same is not binding either on the third respondent-company or on the proposed respondent-union and the prior approval of the Board for Industrial and Financial Reconstruction is not required for holding conciliation proceedings.
45. In this connection, it is relevant to refer to the decision in Management of Binny Ltd. (B & C Mills) v. Government of Tamilnadu [1989] 1 LLJ 180 which reads as follows :
'63. The Special Tribunal has observed that if the benefits provided in the settlements to the workers are more than those granted by the award, they can avail of the same. As rightly contended by learned counsel for the petitioners, the settlements are 'package deals' as described by the Supreme Court and they cannot be dissected or split up at the choice of one party thereto, viz., the workers.
69. We have already referred to the conclusion of the Special Tribunal in connection with the mills actually closed to the effect that the application of this award is left to be negotiated and concluded by the parties concerned. A statutory tribunal cannot pass an award and leave the applicability to be decided by the parties by negotiations. Yet, when settlements arrived at between parties after negotiations are placed before the Tribunal for passing an award in terms thereof, they are rejected. We hold that the Special Tribunal is in error in rejecting the settlements projected by the petitioners in this group of cases particularly when they have been entered into by the workers with their eyes open and when there is no opposition to the same from any of the concerned workers. The onus of proving that those settlements are not valid and binding is on the persons who oppose the same. There is absolutely no material on record to countenance any such opposition. We hold that the Joint Action Council has no locus standi to oppose the post-reference-settlements relied upon by the petitioners in this group of cases. Hence, the award passed by the Special Tribunal in so far as these petitioners are concerned is quashed, as prayed for by them.'
46. Of course, the writ petitioner objected to impleading the other trade unions that they are trying to interfere with the rehabilitation of the third respondent mill. I do not see any valid reasons to refuse permission to implead the trade unions. Hence, the trade unions are permitted to be impleaded as respondents and, accordingly, they are impleaded as respondents Nos. 12 to 15 in the above writ petition. Therefore, W.M.P. No. 20248 of 1997 is ordered as prayed for.
47. N. R. Chandran, learned senior counsel appearing on behalf of respondents Nos. 12 to 15, contends that the interpretation of 19A as suggested by the petitioner is not tenable in law. As the Industrial Disputes Act being a special enactment to resolve the dispute between the employer and the employees will prevail over the Sick Industrial Companies (Special Provisions) Act, 1985, in so far as the conciliation proceedings are concerned and, therefore, in the absence of any specific bar under the statute, there is no requirement to get any prior approval from the second respondent under 19A of the Sick Industrial Companies (Special Provisions) Act, 1985, for initiating conciliation proceedings by respondents Nos. 1, 9 and 10.
48. I have bestowed my anxious consideration to the submissions of all parties.
49. The pertinent issue that arises for my consideration in the above writ petition is whether placing a rehabilitation scheme by the petitioner under 18 of the Sick Industrial Companies (Special Provisions) Act, 1985, pursuant to the proceedings initiated under s 15, 16 and 17 of the Sick Industrial Companies (Special Provisions) Act, 1985, or placing a proposal by the petitioner under 19A under the Sick Industrial Companies (Special Provisions) Act, 1985, for an interim relief, namely, an arrangement for continuing the operation of the third respondent sick industrial company, by itself, confers any right on the petitioners under 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, to seek a writ of mandamus for preventing the statutory authorities, namely, respondents Nos. 1, 9 and 10 to discharge their legal obligations under s 11 and 12 of the Industrial Disputes Act.
50. The Sick Industrial Companies (Special Provisions) Act, 1985, was enacted in public interest, of course, with an object to provide special provisions to secure the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures, which needs to be taken with respect to such companies, and the expeditious enforcements of the measures so determined and for matters connected therewith or incidental thereto.
51. Whereas the Industrial Disputes Act was enacted to provide machinery and procedure for investigation and settlement of industrial disputes. The objects of the Industrial Disputes Act are mainly to ensure speedy resolution of industrial disputes by removing procedural delay. As observed by the apex court, in Workmen of Hindustan Lever Ltd. v. Management of Hindustan Lever Ltd. : (1984)ILLJ388SC , the Industrial Disputes Act was designed to provide a self-contained code to compel the parties to resort to industrial arbitration for the resolution of existing or apprehended disputes without prescribing statutory norms for varied and variegated industrial relation norms so that the forums created for resolution of disputes may remain unhampered by any statutory control and devise rational norms keeping pace with improved industrial relations reflecting and imbibing socio-economic justice. That being the object of the Act, the court by interpretative process must strive to reduce the field of conflict and expand the area of agreement and show its preference for upholding agreements sanctified by mutuality and consensus in larger public interest, namely, to eschew industrial strife, confrontation and consequent wastage.
52. Under the scheme of the Sick Industrial Companies (Special Provisions) Act, 1985, 14 provides for establishment of the Board for Industrial and Financial Reconstruction (BIFR). 15 enables the industrial company to make a reference to the Board for Industrial and Financial Reconstruction for determining the measures which shall be adopted in respect of the company. 18 enables the Board for Industrial and Financial Reconstruction to make such inquiry as it may deem fit for determining whether such industrial company has become a sick industrial company within the guidelines mentioned therein; on completion of such inquiry, the Board for Industrial and Financial Reconstruction is empowered to make suitable orders under 17 of the Act, and, thereafter, to prepare such schemes in accordance with 18 of the Act. 19A further provides for an arrangement for continuing operation during the enquiry under 16 of the Act. 22 of the Act provides for suspension of all legal proceedings, contracts, etc., during an enquiry under 16 or when a scheme preferred under s 17 and 18 of the Act was in preparation or consideration or under sanction.
53. It is sufficient to refer to the following s of the Sick Industrial Companies (Special Provisions) Act, 1985 :
' 3(1)(b) :
In this Act, unless the context otherwise requires, - ...
(b) 'Board' means the Board for Industrial and Financial Reconstruction established under 4.
4. Establishment of Board. - (1) With effect from such date as the Central Government, may, by notification, appoint, there shall be established a Board to be known as the 'Board for Industrial and Financial Reconstruction' to exercise the jurisdiction and powers and discharge the functions and duties conferred or imposed on the Board by or under this Act.
(2) The Board shall consist of a chairman and not less than two and not more than fourteen other members, to be appointed by the Central Government.
(3) The chairman and other members of the Board shall be persons who are or have been or are qualified to be High Court judges, or persons of ability, integrity and standing who have special knowledge of, and professional experience of not less than fifteen years in science, technology, economics, banking industry, law, labour matters, industrial finance, industrial management, industrial reconstruction, administration, investment, accountancy, marketing or any other matter, the special knowledge of, or professional experience in which, would in the opinion of the Central Government be useful to the Board.
19A. Arrangement for continuing operations, etc., during inquiry. - (1) At any time before completion of the inquiry under 16, the sick industrial company or the Central Government or the Reserve Bank or a State Government or a public financial institution or a State level institution or a scheduled bank or any other institution, bank or authority providing or intending to provide any financial assistance by way of loans or advances or guarantees or reliefs or concessions to the sick industrial company may make an application to the Board -
(a) agreeing to an arrangement for continuing the operations of the sick industrial company; or
(b) suggesting a scheme for the financial reconstruction of the sick industrial company.
(2) The Board may, within sixty days of the receipt of the application under sub- (1), pass such orders thereon as it may deem fit.
22. Suspension of legal proceedings, contracts, etc. - (1) Where in respect of an industrial company, an inquiry under 16 is pending or any scheme referred to under 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956) or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.'
54. While so, under the scheme of the Industrial Disputes Act, 11 prescribes the procedures and powers to the conciliation officer, Board, Courts and Tribunals, to exercise their judicial discretion and 12 prescribe the duties of the conciliation officers to be followed for the purpose of bringing about a settlement of dispute without delay and to give effect to the same and report the same within the period fixed by the appropriate Government.
55. If the issue raised in the above writ petition is tested in the light of the above provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, and the Industrial Disputes Act, it is relevant to decide whether the Sick Industrial Companies (Special Provisions) Act, 1985, will prevail over the Industrial Disputes Act or vice versa. This issue came up for consideration before the apex court as well as a Division Bench of the Bombay High Court and a Division Bench of this court.
56. While interpreting 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, the apex court, in Gram Panchayat v. Shree Vallabh, Glass Works Ltd., : [1990]1SCR966 , had an occasion to consider whether the bar in 22 would affect the proceedings to recover the property tax under 122 of the Bombay Village Panchayats Act unless they were taken out under the consent of the Board for Industrial and Financial Reconstruction. The apex court held as follows (page 173) :
'In the light of the steps taken by the Board under s 16 and 17 of the Act, no proceedings for execution, distress or the like proceedings against any of the properties of the company shall lie or be proceeded with further except with the consent of the Board. Indeed, there would be automatic suspension of such proceedings against the company's properties. As soon as the inquiry under 16 is ordered by the Board, the various proceedings set out under sub- (1) of 22 would be deemed to have been suspended.'
57. The apex court, again, in Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. [1993] 78 Comp Cas 803 has held that the word 'proceedings' used in 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, has got a wider meaning so as to cover all manner of proceedings akin to the proceedings specifically enumerated under sub- (1) of 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. Thus, the apex court interpreting 22, held as follows (page 813) :
'The underlying idea is that every such action should be frozen unless expressly permitted by the specified authority until the investigation for the revival of the industrial undertaking is finally determined.'
58. But, admittedly, in both the cases, the proceedings considered by the apex court were akin to the proceedings specifically enumerated under sub- (1) of 22 of the Sick Industrial Companies (Special Provisions) Act, 1985. For instance, in Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. [1993] 78 Comp Cas 803 (SC), the finance corporation resorted to remedies under 29 and/or 31 of the State Financial Corporations Act, 1951, when proceedings were pending before the Board for Industrial and Financial Reconstruction, without the consent of the Board for Industrial and Financial Reconstruction. In Gram Panchayat v. Shree Vallabh Glass Works Ltd. : [1990]1SCR966 the respondent-company holds the money of the village panchayat and proceedings with respect to the company were pending before the Board for Industrial and Financial Reconstruction, but in the meantime, the panchayat sought to use the power under 129 of the Bombay Village Panchayat Act by taking recourse with the proceedings for recovering the monies due to each.
59. But, in the instant case, the question that remains to be considered is whether there is a bar under the Sick Industrial Companies Act, 1985, for the conciliation proceedings under s 11 and 12 of the Industrial Disputes Act. To decide the above issue, it is relevant to refer to Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association : [1992]2SCR999 , wherein the apex court has held as follows (page 450) :
'It could not be the intention of Parliament in enacting the said provision to aggravate the financial difficulties of a sick industrial company while the said matters were pending before the Board or the appellate authority by enabling a sick industrial company to continue to incur further liabilities during this period. This would be the consequence if sub- (1) of 22 is construed to bring about suspension of proceedings for eviction instituted by landlord against a sick industrial company which has ceased to enjoy the protection of the relevant rent law on account of default in payment of rent. It would also mean that the land-lord of such a company must continue to suffer a loss by permitting the tenant (sick industrial company) to occupy the premises even though it is not in a position to pay the rent. Such an intention cannot be imputed to Parliament.'
60. Following the said decision in Shree Chamundi Mopeds Ltd. v. Church of South India Trust Association : [1992]2SCR999 , a learned judge of the Allahabad High Court in Modi Industries Ltd. v. Addl. Labour Commissioner [1993] 2 LLN 548; [1994] 1 LLJ 482, 486 held as follows :
'In my opinion, the purpose and object of 22 cannot be to cover those proceedings or actions which are necessary for running the industry irrespective of the fact whether it is sick or non-sick. If the industry cannot run without workers the workers also cannot expect to work without payment of their wages. The timely payment of the wages for which the provisions of the Act of 1978, have been enacted would thus be a step helping rehabilitation and it cannot be said that it creates any obstacle in fulfilling the object for which the Act of 1985 has been enacted. Both the Acts are thus complementary to each other, 22 cannot thus affect the proceedings taken under 3 of the Act of 1978 for compelling the petitioner to make payment of the wages already accrued to the workers ...
Parliament while putting 22 of the Act, 1985, could never have intended that the industrial unit under the garb of sickness or any like difficulty may be allowed to shirk its liability to pay the wages to its workers for the work they have done.'
61. Similarly, in Baburao P. Tawade v. HES Ltd. [1995] 2 LLN 96; [1995] LIC 2200, (Bom) the learned judge of the Bombay High Court, after referring to the decisions above mentioned, held that :
'No construction can be put upon the provisions of 22, which could result in a situation of exploitation of human beings, contrary to the provisions of our constitutional directives. I am, therefore, unable to accept the contention that the payment of earned wages to the workmen (it cannot be disputed that payment under settlement would be 'wages' within the meaning of 2(rr) of the Industrial Disputes Act) was intended to be defeated by invoking the bar under 22(1) or to drive the workmen to run to New Delhi for seeking the consent of the Board for Industrial and Financial Reconstruction, every time their monthly wages were required to be paid.'
62. A Division Bench of this court in Metal Box India Ltd. v. State of Tamil Nadu [1995] 2 LLN 814 rejected the plea that the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, will prevail over the Industrial Disputes Act, held as follows :
'11. Point 3 : The submission of the learned senior counsel for the petitioner on this point is that the petitioners' company has been declared as a sick industrial company within the meaning of 3(1)(o) of the Sick Industrial Companies Act, and the preparation of the scheme under 17 of the Sick Industrial Companies Act, is pending and that since the company has been declared as a sick industrial company it can be governed only by the provisions of the Sick Industrial Companies Act which is a special enactment made by Parliament to deal with sick industrial companies. According to the learned senior counsel for the petitioner, the Industrial Disputes Act is a general enactment which deals with relations between labour and management and it will not apply to the petitioners-company as it is governed by the Sick Industrial Companies Act which is the special law, that the special law contained in the Sick Industrial Companies Act overrides the Industrial Disputes Act which is a general law and, therefore, the order under 10(3) of the Act passed by the Government prohibiting the continuance of the lockout is illegal and liable to be set aside. We are unable to accept the above contention of the learned senior counsel for the petitioners. It is seen from the preamble to the Sick Industrial Companies Act that the said Act has been enacted by Parliament to make in public interest, special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. The Supreme Court in Navnit R. Kamani v. R. R. Kamani [1989] 66 Comp Cas 132; [1989] 1 LLN 602 has explained, in para. 10, at page 610, the object of the Sick Industrial Companies Act stating that the legislation had been enacted with the end in view to :
(1) afford maximum protection of employment;
(2) optimise the use of the funds of the companies, etc.;
(3) salvaging the production assets;
(4) realising the amounts due to the banks, etc.; and
(5) to replace the existing time-consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts'.
Chapter II of the Sick Industrial Companies Act comprising s 4 to 14 deals with establishment of the Board for Industrial and Financial Reconstruction and the appellate authority for Industrial and Financial Reconstruction. 15 of the Sick Industrial Companies Act provides that when an industrial company becomes sick, the board of directors of the company should refer to the Board for Industrial and Financial Reconstruction within sixty days from the date of finalisation of the duly audited accounts of the company or within sixty days of forming the opinion that the company has become a sick industrial company. 16 deals with the inquiry into the working of sick industrial companies. 17 empowers the Board to make suitable orders on completion of the inquiry under 16. 19 deals with rehabilitation a sick industrial company by giving financial assistance and 19A of the Act deals with the arrangement for continuing operations of the sick industrial company during inquiry under 16. 12 deals with the suspension of legal proceedings, contracts, etc. 32 says that the provisions of the Sick Industrial Companies Act will have overriding effect on the provisions of other Acts. The contention of the learned senior counsel for the petitioners is that in view of 32 of the Sick Industrial Companies Act, when the petitioners-company is declared as a sick industrial company, only the Board for Industrial and Financial Reconstruction can frame a scheme for running the company and, the Government cannot pass an order under 10(3) of the Industrial Disputes Act. The scheme of the Act and the various provisions of the Sick Industrial Companies Act, referred to above, do not support the above contention of the learned senior counsel for the petitioners. We must point out that 19A of the Sick Industrial Companies Act only speaks of an interim relief for sick industrial companies during the pendency of inquiry under 16 and 22 of the Sick Industrial Companies Act only deals with suspension of legal proceedings relating to winding up of the industrial company or the like for execution, distress or the like, against any properties of the industrial company or for the appointment of a receiver in respect thereof during the pendency of an inquiry under 16 or the preparation of scheme under 17. No doubt, 32 of the Sick Industrial Companies Act provides that the provisions of the Sick Industrial Companies Act will have overriding effect on the similar provisions if any provided in any other Acts on the same subject. On a careful examination of the various provisions of the Sick Industrial Companies Act we are of the view that there is no provision in the Sick Industrial Companies Act dealing with the relationship between the employer and employee and the disputes between management and workmen. As rightly contended by learned counsel for respondents Nos. 2 and 3, both the Acts, namely, the Sick Industrial Companies Act and the Industrial Disputes Act can harmoniously co-exist inasmuch as the said Acts operate in different areas and that the intendment and object of both the enactments are different. As observed by the Supreme Court in Life Insurance Corporation of India v. D. I. Bahadur [1980] 2 LLN 575; [1981] 58 FJR 51 while examining the question as between the Industrial Disputes Act and the Life Insurance Corporation Act, which enactment is special and which is general, the peaceful co-existence of both legislations is best achieved, if that be feasible, by allowing to each its allotted field for play.
12. The next question we have to examine is as between the Industrial Disputes Act and the Sick Industrial Companies Act which enactment is special and which is general. To consider this question, we have to bear in mind the scheme of the two enactments in the context of the specific controversy involved in this case between the parties. A perusal of the preamble to the Sick Industrial Companies Act, the scheme and the various provisions of the Sick Industrial Companies Act clearly goes to show that the Sick Industrial Companies Act does not deal with the relationship between labour and management and the particular problem of dispute between workmen and management or the investigation and adjudication of such disputes between workmen and management. The Sick Industrial Companies Act also does not deal with the dispute between workmen and their employer or the dispute between workmen and workmen. Therefore, we have no hesitation in holding that so far as industrial disputes between employer and employee are concerned, whether it relates to a strike or lockout or on the question of wages, etc., Sick Industrial Companies Act which is totally silent on workmen's disputes is a general statute and the Industrial Disputes Act is a special law which specifically deals with industrial disputes between workmen and management providing the machinery for the adjudication of such industrial disputes. As pointed out by the Supreme Court in Life Insurance Corporation of India v. D. J. Bahadur (1980) 2 LLN 575; [1981] 58 FIR 51 the Industrial Disputes Act is a special statute devoted wholly to investigation and settlement of industrial disputes which provides definitionally for the nature of industrial disputes coming within its ambit. It creates an infrastructure for investigation into, solution of, and adjudication upon, industrial disputes. It also provides the necessary machinery for enforcement of awards and settlements. The object of the Industrial Disputes Act is the resolution of the, industrial disputes between workmen and management through specialised agency according to the procedure prescribed in the Act. Therefore, with reference to industrial disputes which arise between workmen and management it has to be held that the Industrial Disputes Act is a special law and the Sick Industrial Companies Act which does not at all speak with specific reference to workmen is only a general law. However, the Sick Industrial Companies Act may be a special law within its field of operation, namely securing timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a board of experts of the preventive ameliorative, remedial and other measures which need be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. The disputes between workmen and management are clearly beyond the ambit of and have no specific place in the scheme of the Sick Industrial Companies Act and wherever there is such a dispute between employer and workmen, the provisions of the Industrial Disputes Act has to be resorted to.'
63. In the light of the principles laid down in the decisions, I have no hesitation to hold that neither a reference by the third respondent-company under 15 of the Sick Industrial Companies (Special Provisions) Act, 1985, nor an enquiry initiated under 16 of the Act, much less the pendency of consideration, preparation, and sanction of the scheme by the Board for Industrial and Financial Reconstruction for the revival of the sick industry, nor any arrangement for continuing the sick industrial company by way of an interim relief can be considered as a bar under s 11 and 12 of the Industrial Disputes Act for initiating conciliation proceedings, by respondents Nos. 1, 9 and 10. When s 11 and 12 of the Industrial Disputes Act empower respondents Nos. 1, 9 and 10 to initiate conciliation proceedings under the facts and circumstances of the present case, in the absence of any legal bar, no prior consent from the Board for Industrial and Financial Reconstruction is required to initiate conciliation proceedings under s It and 12 of the Industrial Disputes Act. Consequently, this court cannot give a direction to respondents Nos. 1, 9 and 10 to refrain from enforcing such provisions of law, namely, in the instant case, s 11 and 12 of the Industrial Disputes Act.
64. At the same time, I am obliged to refer to the ratio laid down by a Division Bench of this court in Metal Box India Ltd. v. State of Tamil Nadit [1995] 2 LLN 814 following the ratio in Life Insurance Corporation of India v. D. J. Bahadur [1980] 2 LLN 575; [1981] 58 FJR 51 :
'We have no hesitation in holding that in so far as the dispute which arise between workmen and management, whether it relates to strike or lockout or payment of wages, etc., are concerned, the Industrial Disputes Act is a special law and must prevail over the Sick Industrial Companies Act, a general law intended for the purpose of securing timely detection of sick and potentially sick companies owning industrial undertakings and speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies.'
65. This while dismissing the writ petition, warrants me to direct the respondents Nos. 1, 9 and 10 to permit the petitioner as well as all the trade unions to participate in the conciliation proceedings initiated, or to be initiated, if necessary, for a limited purpose, place their proposal for revival of the third respondent sick industrial company if no effective settlement could be arrived at between the third respondent sick industrial company and the workmen, and such settlement arrived at in the course of conciliation proceedings under s 11 and 12 of the Industrial Disputes Act shall be taken into consideration by the Board for Industrial and Financial Reconstruction in considering, approving and sanctioning the scheme as well as making any arrangement for taking over under the provisions of s 16, 17, 18 and 19A of the Sick Industrial Companies (Special Provisions) Act, 1985.
66. In the result, the writ petition is dismissed with the direction mentioned above. However, there will be no orders as to costs. Consequently, W.M.P. No. 19031 of 1997 is also dismissed.