Industrial Paper (Assam)
Ltd. Emps. Union Vs. Management Assam Industrial Dev. Corpn. Ltd  Insc 30
(10 January 2007)
Arijit Pasayat & S.H. Kapadia Dr. Arijit Pasayat, J.
calls in question legality of the judgment rendered by a Division Bench of the Guwahati
High Court dismissing the writ petition filed by the appellant. The writ appeal
was directed against the common judgment and order dated 7.5.2002 passed by
learned Single Judge wherein the writ petition filed by the respondent No.2 i.e.
Management of Assam Industrial Development Corporation Ltd. (in short the
'AIDC') was allowed while dismissing the writ petition filed by the appellant.
Both the writ petitions were directed against the Award of the Presiding
Officer, Labour Court, Assam, at Guwahati (hereinafter referred
to as the 'Labour Court'). The appellant claims to be the Union of employees of M/s Industrial Papers (Assam) Ltd. (in short the 'IPAL').
Learned Single Judge held that there is a clear cut finding in the Award to the
effect that workmen were not employees of AIDC, and therefore, the question of
giving them benefit as was done by the Labour Court did not arose and
consequently that part of the Award was quashed.
facts in a nutshell are as follows:
appellant, being the registered Trade Union, looking after the welfare of its
members employed by AIDC in its Extensible Sack Kraft. Paper Project (for sake,
called as 'ESKPP') under IPAL, raised a dispute for non-payment of salaries of
its members by AIDC after October 1998 on the plea that the members of the
appellant were not the employees of AIDC but of the IPAL. Accordingly the
notification dated 20.2.1999 referred the following issues to the Labour Court for adjudication. The issues are
the management of Assam Industrial Development Corporation is justified to deny
as owner of the Sack Kraft Paper Project of M/s Industrial Papers (Assam) Ltd.
though they have signed an agreement with a contractor as 'owner' of the Sack
Kraft Paper Project, Dhing
Assam Industrial Development Corporation AIDC is justified to deny to take the
responsibility of the Industrial Papers (Assam) Ltd. employees, though the employees were appointed by the AIDC
through the advertisement published in the News Paper.
management of AIDC is justified by not absorbing or engaging the employees of
the IPAL, in their other Promoted industries or give them salary regularly
though they have failed to install or run the proposed Paper Mill in Dhing, Nagaon.
If not, then the
said affected employees are entitled for either regular monthly salary from the
management or absorption in the other Industrial Units promoted by the Assam
Industrial Development Corporation, Guwahati.
And the AIOC
should not recruit or appoint new employees to say other their Promoted
Industries until and unless the employees of the Industrial paper are engaged
or absorbed by the Management." The Labour Court issued notice dated 22.5.1999 to the respective parties to
the alleged disputes. In pursuance of the notice, both the AIDC and the
appellant filed their respective written statements and additional written
statements. AIDC, in their written statement, raised preliminary objection,
specifically with the issues under reference, inter-alia, questioning the
maintainability of the reference stating that the purported dispute referred to
by the Notification is not an industrial dispute within the meaning of
Industrial Disputes Act, 1947 (hereinafter called as the Act') and the
Notification issued by the Government cannot constitute an industrial dispute
because AIDC was not a proper or necessary party and the members of the
appellant, being employees of a separate company i.e. IPAL, cannot claim to be
employees of AIDC which was only a Promoter Company.
from the preliminary objection so raised as mentioned above, AIDC gave its
reply in respect of all other issues. Regarding issue No.1, it was stated that
AIDC, being a promotional organization, had also promoted the IPAL by signing
various documents and agreements with IPAL since it was in the nascent stage
for the project for protection of ESKPP at Dhing. The role of AIDC was merely
to assist IPAL as its promoter for setting up its project. AIDC claimed that
under no circumstances AIDC could be called as owner of the project because
IPAL was a separate Company registered under the Companies Act, 1956 with an
independent Board of Directors having its separate Memorandum and Articles of
Association. In support of its claim, AIDC mentioned that the Govt. of Assam
vide Notification dated 23.2.88 re-constituted the Board of Directors of IPAL
Insofar as issue No.2 is concerned, it was stated that since the ESKPP of IPAL
was not owned by AIDC, the appellants were the employees of IPAL, and AIDC
being a nodal agency of the State Government for implementation of various
projects as promoter only, cannot be saddled with any responsibility of the
employees of IPAL and the appellant's members were not the employees of AIDC
Besides IPAL, the AIDC promoted several other companies like Fertichem Ltd.,
Assam Syntex Ltd. Assam Petrochemical Ltd.
and those are managed by their independent Board of Directors. The employees
who were claimed by the appellant to be the employees of AIDC, on being
appointed in pursuance of the advertisement, were not the workmen as defined
under the Act. According to them, none of 11 categories of posts advertised,
mentioned in the reference itself, were workmen as defined under the Act arid
the persons appointed against those posts had not raised dispute. Such dispute
had only been raised by the IPAL Employees Union, the appellant, which did not
represent the persons appointed as per the advertisement. As regards issue
No.3, the contention of AIDC was that they were already overstaffed for which
Voluntary Retirement Scheme had already been introduced to reduce excess
manpower and as such absorption of employees of IPAL in AIDC did not arise.
With regard to issue No.4, AIDC stated that AIDC as a promoter was not liable
for payment of salaries to the employees of IPAL which was a separate and
distinct Company. On issue No.5, the stand of AIDC was that due to the
precarious financial position, the question of fresh recruitment did not come.
appellant in the written statement alleged that the ESKPP was owned by AIDC
inasmuch as ESKPP, being established under the licence obtained from the
Central Government under the Industries (Development and Regulation) Act, 1951
(for short, the 'IDR Act'), AIDC cannot claim that they established the said
project as a 'Promoter' as they failed to show that the Industrial Licence
obtained by it was either transferred or revoked at any stage. According to it,
AIDC also admitted that ESKPP was never amalgamated with any other company
under the Companies
Act and as such, the AIDC remained the 'owner' for the said project even
under the Act itself and no further document or any evidence was necessary to
prove the same from the appellant's side.
it was pleaded that issue No.1 should be decided in favour of the appellant
holding that AIDC was not justified in denying the ownership of the project.
Regarding issue No.2, it was alleged that since AIDC was owner of the project,
it could not deny its responsibilities to its employees who were appointed in
the project. Insofar as issue No.3 and 4 are concerned, it was claimed that the
AIDC, being the owner of the project, was liable to pay regular salaries to its
regards issue No.5, it was submitted that AIDC should be restrained from
recruiting or appointing new employees until and unless the employee of IPAL
were engaged or absorbed by AIDC.
The Labour Court in its Award held as follows:
There was no
material on record to show that AIDC had transferred Sack Kraft Paper Project Dhing
to the IPAL at any point of time. It was observed that though both parties have
approved the appointment of candidates at IPAL and AIDC none of them came
within the categories of those post advertised
The Issue is
redundant as members of the Union do not
come within the categories of posts advertised.
It was not
incumbent of AIDC to absorb members of the appellant union to any other AIDC
IPAL could not
be run it was incumbent for AIDC to terminate the services of the members of
the appellant-Union giving them terminal benefits according to relevant
industrial and labour laws.
Until that was
done AIDC was obliged to give the members of the appellant union regular
noted above, both the appellant and AIDC filed writ petitions. While the writ
petitions filed by the AIDC was allowed and one filed by the appellant was
dismissed. Learned Single Judge held that since workmen were not employees of
the AIDC, the question of giving them benefit as done by the Labour Court did not arise. The question of
employer and employees (of AIDC) was not the subject matter of reference.
appeal was filed by appellant before the High Court. The High Court inter alia
held while dismissing the writ appeal that AIDC is not the owner of the
Extensible Sack Craft Paper Project of IPAL. Being a separate and independent
company, the members of the appellant-union are not the employees of AIDC which
could not be saddled with the responsibility of these employees. Therefore,
AIDC was not liable for absorption or engagement of the employees of IPAL in
any other AIDC promoted industry and to give them salaries regularly after the
closure of the project.
support of the appeal learned counsel for the appellant submitted that the Labour Court had taken a practical and pragmatic
view. Learned Single Judge and the Division Bench should not have interfered
with the findings recorded.
counsel for the respondent AIDC on the other hand submitted that in view of
materials placed on record, both learned Single Judge and Division Bench of the
High Court was justified in its conclusion and no interference is called for.
There is ample material on record to show that employment was for a specific
project and on an expiry of that project the question of any claim to be
appointed by IPAL much less by AIDC does not arise. According to AIDC the
project was closed in 1991 whose assertion is denied by the appellant.
is no claim that the members of appellant union were employees of AIDC. In the
reference IPAL was not a party.
evident from materials on record that IPAL was promoted by AIDC and was
incorporated in 1974. It was not even subsidiary of AIDC.
Single Judge and the Division Bench have categorically found that IPAL was a
separate, independent company and the members of the appellant union are not
employees of AIDC. That being so the conclusions of learned Single Judge and
the Division Bench that AIDC cannot be saddled with the responsibility of those
employees is irreversible.
Memorandum and Article of Association of both AIDC and IPAL as well as the
Certificate of Incorporation of IPAL has been referred to by the Division Bench
in the impugned judgment. It has, with reference to those come to hold that
they have separate independent existence having independent Board of Directors.
The Notification dated 22.2.1988 by which Board of Directors of IAPL has also
been referred to for the purpose of coming to the conclusion that both the
companies have independent existence. AIDC was a nodal agency of the Government
of Assam and was acting only as a promotional organization for promoting IPAL
at the initial stages. As is rightly pointed out by the AIDC cannot be branded
as a owner of the establishment. The expression "Owner" has been
defined in Section 3(f) of the Act. It reads as follows:
in relation to an industrial undertaking, means the person, who, or the
authority which, has the ultimate control over the affairs of the undertaking,
and, where the said affairs are entrusted to a manager, managing director or
managing agent shall be deemed to be the owner of the undertaking".
Black's Law Dictionary 6th Edition, the expression "promoter" has
been described as follows:
who promotes, urges on, encourage, in cites, advances etc. one promoting a plan
by which it is hoped to insure the success of a business, entertainment etc.
venture. The person who, for themselves or others, take a preliminary steps to
the finding or organization of a corporation or other venture. These person who
first associate themselves together for the purpose of organizing the company,
issuing its prospectus, procuring subscriptions to the stock, securing a
charter etc. From an ordinary reading of the meaning of 'promoter', it can be
well deduced that 'promoter' can not be treated as owner." In the written
statement before the Labour
Court, AIDC has taken
specific stand in the following manner:
when the employees were paid regular salary by IPAL Project from its own
fund/account at that time no such demand was raised by the employees of IPAL.
When they found that the Project is virtually closed and they are not getting
salary from their own Project, they demanded that they belong to AIDC for the
sake of getting salary from AIDC without doing any job for AIDC. In such
situation the employees of IPAL cannot be treated as employees of AIDC. These
employees were appointed/recruited against the Project against the Project as
per the job specification and as per requirement and sanctioned strength of
IPAL while seeking requisition from Employment Exchange the requisition was
signed by General manager, Sack Kraft Paper Project as the employer. All the
employees have been appointed on behalf of the IPAL Project. They are employees
of IPAL governed by all rules and regulations of Industrial Papers Assam Ltd.
Under these circumstances stated above the management of AIDC cannot take any
responsibility for the employees of IPAL." Above being the position, the
judgment of the Division Bench affirming that of learned Single Judge cannot be
faulted and the appeal stands dismissed. Subject to what is stated above,
dismissal of the appeal shall not stand in the way of the concerned employees
or recognized Unions making claim for arrears of salaries or claims to be due
been submitted by learned counsel for the appellant that the committee has been
appointed by the High Court in the matter of arrears of salary and on the
question of absorption of various sick public sector undertakings. It needs no
emphasis that those are the aspects about which we have not expressed any
appeal is dismissed but without any orders as to costs.