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Judgment
P. Jyothimani, J.—The Writ Petition is filed by the union of workers belonging to the first respondent Inlac Grand Stone Limited,
Thenkanikottai, Dharmapuri for a declaration that the members of the petitioner union are entitled for their legal dues in connection with their
employment under the first respondent from and out of the sale proceeds of the secured movables and immovables of the first respondent for
which admittedly the second respondent bank has issued sale certificate in favour of the third and fourth respondents who are the purchasers and
the said sale certificate is issued on 31.3.2008. The Writ petition is also prayed for a direction against the second respondent bank who is the
secured creditor to pay to the members of the petitioner union their legal dues.
The case of the writ petitioner is that the first respondent has declared lockout on 13.5.1998 and their dues to the workers numbering 38 running
to nearly one crore was not paid. This has resulted for the workmen of the petitioner union to file I.D. No. 266/2000 on the file of the Labour
Court. The Labour Court has passed an award on 29.6.2006 declaring the lock-out as illegal. However, as on date the members of the petitioner
union have not filed any application for quantifying the amount due to them to which they are entitled under law. In the meantime, it appears that in
respect of the amount borrowed by the first respondent management from the second respondent Bank, the second respondent bank by invoking
the powers under the SARFAESI Act has brought the properties movable as well as immovable belonging to the first respondent - Company as
security for the repayment of the said amount of loan for sale and ultimately, in the sale effected under the SARFAESI Act the 3rd and 4th
respondents are the subsequent purchasers and their purchase have been confirmed and sale certificate to that effect has been issued by the
second respondent in favour of the 3rd and 4th respondents. The sale consideration in respect of both movables and immovables is Rs.
2,04,76,000/-(Rupees Two Crores Four Lakhs Seventy Six thousand only). The question to be decided in this writ petition is as to whether the
members of the petitioner union are entitled to have a claim over the amount which has been recovered by the second respondent bank.
Admittedly, the amount recovered by the second respondent by way of sale proceeds is much less than the actual amount due to the bank and
therefore, some more amount to be paid by the first respondent in respect of the contract of loan. In such circumstances, the contention of the
learned Counsel for the petitioner is that the workers of the petitioner union by virtue of decision of the Labour Court that the lock-out effected by
the first respondent has been illegal and that decision having become final, they should be treated on par with the secured creditors like that of the
bank.
A similar issue has arisen before this Court in PNL Depositors'' Welfare Association, Registered No. 94/2005, 59, Kamaraj Salai,
Pondicherry-605 001, rep. by Secretary, Nattaraj v. Union of India by Secretary to Government, Ministry of Finance, New Delhi-110001 and
others 2005 (4) CTC 469. The right of such employees whether should be treated on par with the secured creditors while bank exercises its
powers u/s 3 of the SARFAESI Act was dealt with by this Court holding that in such circumstances, the workers are to resort to the remedy
available u/s 25-FF of the Industrial Disputes Act. It is also held that the benefits given to the employees by way of compensation u/s 25-FF of the
Industrial Disputes Act will stand gain to the workers since such compensation can be beneficially worked out in favour of them u/s 25- FF of the
Industrial Disputes Act. The operative portion of the judgment of this Court is extracted hereunder:
Moreover, in the case on hand, the operation of the third respondent Sugar Mills admittedly came to a grinding halt in the year 2003 itself. By
virtue of the sale now resorted to by the first and second respondents by invoking section 13(4), when once the transfer of the secured assets,
namely, the land, building along with plant and machinery vest with the transferee, namely, the fourth respondent, as rightly contended by Mr. A.L.
Somayaji, learned Senior Counsel for the fourth respondent, the workmen who are the members of the petitioner or any other union will also stand
to gain inasmuch as whatever rights that had accrued to the workmen which can be worked out u/s 25-FF of the Industrial Disputes Act remains
intact. Section 25-FF of the Industrial Disputes Act is to the following effect:
25-FF. Compensation to workmen in case of transfer of undertakings.--Where the ownership or management of an undertaking is transferred,
whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who has been
in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in
accordance with the provisions of section 25-F, as if the workman had been retrenched:
Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if-
-
(a) the service of the workman has not been interrupted by such transfer;
(b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those
applicable to him immediately before the transfer; and
(c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment,
compensation on the basis that his service has been continuous and has not been interrupted by the transfer.
Therefore, either in the event of the proviso to the said section not being operated upon whatever benefits conferred on the workmen under the
substantive provision would be available to the workmen and thereby they can also reap the benefits which they earned by virtue of the service put
in by them under the erstwhile management, namely, the third respondent herein. Reliance placed upon by the learned Counsel for the petitioner on
the judgment reported in Olga Tellis and Others Vs. Bombay Municipal Corporation and Others, only states that any deprivation of one''s right to
livelihood can only take place according to just and fair procedure established by law. Therefore, so long as the rights of the workmen by virtue of
their service put in the erstwhile management continue to enure to their benefit by virtue of operation of section 25-FF of the Industrial Disputes
Act vis-a-vis section 13(6) of the SARFAESI Act, I do not find any grievances to be redressed in so far as the workmen of the third respondent
Sugar Mills are concerned. One other relevant factor to be mentioned is that pursuant to the sale made as per the sale notice dated 16.2.2005 a
sum of Rs. 50.20 Crores have been secured which is lying in deposit in the first respondent bank. Admittedly, the secured debt of the first
respondent is only of the order of around Rs. 30 Crores and therefore at best it can only be held that from the remaining sum whatever legal dues
payable to the workmen of the third respondent should be set apart for distribution in the event of any necessity arising for such distribution by
virtue of section 25-FF of the Industrial Disputes Act. Except observing to the above extent, I do not find any other scope or grant any other relief
as prayed for by the petitioner in this writ petition.
Having regard to my above said conclusion, I find that the prayer of the petitioner as couched in the Writ Petition cannot be granted. However,
it will have to be held that the members of the petitioner as well as the other workmen represented by the fifth respondent union or any other union
are entitled for the benefits available u/s 25-FF of the Industrial Disputes Act as against the third and fourth respondents by virtue of the
prescription made u/s 13(6) of the SARFAESI Act.
The said judgment of the learned Single Judge was subsequently confirmed by the Division Bench consisting of P. Sathasivam, J. (as he then was)
and N. Paul Vasanthakumar, J. in a batch of cases in W.A. Nos. 1788/2005 etc. batch in M/s. New Horizon Sugar Mills Ltd., v. Union of India,
rep. by the Secretary to Government, Ministry of Finance, New Delhi 110001 and others. The Division Bench while confirming the above said
judgment of the learned single Judge has held as A follows:
11-d. Now, the vital aspect to be analysed is the claim of the workmen and various Unions for compliance of section 25-FF. In order to find out
an answer to the claim of the workmen and justifiability of the direction of A.K., J., it is useful to refer to section 25-FF of the Industrial Disputes
Act, which reads as under:--
25-FF. Compensation to workmen in case of transfer of undertakings.--Where the ownership or management of an undertaking is transferred,
whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who has been
in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in
accordance with the provisions of section 25F, as if the workman had been retrenched:
Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if
--
(a) the service of the workman has not been interrupted by such transfer;
(b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those
applicable to him immediately before the transfer; and
(c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment,
compensation on the basis that his service has been continuous and has not been interrupted by the transfer.
11-e.Now, let us refer to the order of Kalifullah, J. in W.P. Nos. 9834 of 2005 etc. Batch (reported in PNL Depositors'' Welfare Association Vs.
Union of India (UOI) and Others, ), while considering the claim of PNL Depositors'' Welfare Association, Puduvai Pradesa Sarkarai Aalai
Thozhilalar Sangam, Indian Bank, Government of Pondicherry and the learned Judge elaborately analysed the issue relating to relief u/s 25-FF of
the I.D. Act read with section 13(6) of the SARFAESI Act. As rightly observed by the learned Judge so long as the rights of the workmen by
virtue of their service put in the erstwhile management continue to enure to their benefit by virtue of section 25-FF of the I.D. Act vis-a-vis section
13(6) of the SARFAESI Act, there cannot be any grievance to be redressed insofar as the workmen of the Mill are concerned. It is also not in
dispute that the Indian Bank realised a sum of Rs. 50.20 crores and the secured debt payable to the bank was around Rs. 30 crores. In those
circumstances, the learned Judge observed that the workmen of the Mill are entitled to their claim u/s 25-FF from and out of the excess amount
lying in the hands of Indian Bank.
Of course, on the facts of the said case before the Division Bench, the bid amount recovered by the bank was much more than the amount actually
due to it. It was in those circumstances, the Division Bench while confirming has directed the workmen to approach the Labour Court u/s 25-FF of
the Act. It is true that in subsequent judgment in Coromandel Leather Employees Union Vs. Indian Bank and Others, the Honorable first Bench
has held that by virtue of the provisions to sections 13(7), (9) and 10 including various provisos contained therein the SARFAESI Act it confers
sufficient safeguards to the workmen and therefore, the apprehension of the workmen in that case that the bank itself would receive the entire
amount was found to have no basis--
In the light of the above provisions of the Act being made clear towards the realisation of the amounts due and the distribution of the amount, the
apprehension raised by the workmen has no basis. Accordingly, we dispose of the writ petitions by directing the first respondent to disburse the
amount strictly in terms of the provisions of the Act. However, there will be no order as to costs.
On the facts of this case, admittedly, the sale consideration is much less than the amount due to the bank. It is for the workers of the petitioner
union to work out their remedies before the Debts Recovery Tribunal, which cannot be made before this Court by invoking Article 226 of the
Constitution of India. The rights of the petitioner union can be decided only by the Debts Recovery Tribunal constituted as per the SARFAESI
Act, especially, by exercise of powers of appeal u/s 17 of the Act. Certainly, it is open to the members of the petitioner union to work out their
remedy in respect of quantifying the amount due to them.
In such circumstances, leaving it open to the petitioners to approach the Debts Recovery Tribunal u/s 17 of the Act, the writ petition is disposed
of. It is made clear that in the event of the exercise of making necessary appeal to the Debts Recovery Tribunal u/s 17 of the Act within a period of
two weeks from the date of receipt of the copy of this order, the Tribunal shall take up such appeal and decide the same on merits and in
accordance with law without dismissing it on the basis of limitation. It is open to the Tribunal to make any interim orders. If the petitioner fails to
approach the Tribunal within two weeks from the date of, receipt of the copy of the order before the Tribunal or to get any interim order, it will be
open to the respondents to proceed in accordance with law.
The writ petition is disposed of in the above terms. No costs. Consequently, M.P. Nos. 1 and 2 of 2008 are disposed of.