Holding

The new management is a successor‑in‑interest under Section 17 of the Nationalisation Act and is liable to give preferential re‑employment to the retrenched workmen, as Section 9 does not cover the employment obligation created by Section 25-H of the Industrial Disputes Act.

Summary

The workmen of a coking coal colliery were retrenched in June 1971 before the mine was taken over by the Central Government and nationalised under the Coking Coal Mines (Nationalisation) Act, 1972. After nationalisation, the new management, Bharat Coking Coal Ltd., refused to re‑employ the 111 retrenched workers. The Industrial Tribunal held that, under Section 25-H of the Industrial Disputes Act, 1947, the workers were entitled to preferential re‑employment and directed the new management to consider them for any fresh appointments. The Patna High Court set aside the Tribunal’s award, holding that the new management was not a successor‑in‑interest and that Section 9 of the Nationalisation Act shielded it from any liability for re‑employment. The Supreme Court allowed the appeal, ruling that Section 9 does not cover the employment obligation created by Section 25-H and that, under Section 17 of the Nationalisation Act, the new management is a successor‑in‑interest because of continuity of business, making it liable to give preferential re‑employment. Consequently, the Tribunal’s award was restored.

Issues considered

Whether Section 25-H of the Industrial Disputes Act creates an obligation for the successor‑in‑interest under the Coking Coal Mines (Nationalisation) Act, 1972.
Whether the new management is a successor‑in‑interest of the colliery for purposes of Sections 9 and 17 of the Nationalisation Act.
Whether retrenched workmen who were not in service on the appointed date can claim preference for re‑employment under Section 25-H.
Whether Section 9 of the Nationalisation Act immunises the new management from liability for re‑employment obligations.

Legislation cited

Coking Coal Mines (Nationalisation) Act, 1972s. 17, s. 9
Industrial Disputes Act, 1947s. 25-F, s. 25-FF, s. 25-H

Subjects

re‑employmentretrenchmentsuccessor‑in‑interestnationalisationindustrial disputespreferential employmentSection 25-Hcontinuity of service

Judgment

WORKMEN REPRESEN1ED BY AKHIL BHARTIYA KOYLA A
:4 KAMGAR UNION
v.
EMPLOYERS IN RELATION TO THE MANAGEMENT OF INDUSTRY
COLLIERY OF MIS. BHARAT COKING COAL LTD. AND ORS.

MARCH 21, 2001 B

[S. RAJENDRABABU AND S.N. VARIAVA, JJ.]

Coking Coal Mines (Nationalisation) Act, 1972 : Sections 9 and 17.

Workmen-Retrenchment of-Right to re-employment-Workmen of a
c
colliery laid off and retrenched-Subsequently, Colliery taken over and nation-
alised-But the new management refused to employ the workmen-Industrial
Tribunal held that new management was not justified in refusing to employ the
workmen and that the workmen had preference when fresh appointments were
made-However, the High Court quashed the Tribunal's award-Correctness D
of-Held: S. 9 of the Nationalisation Act does not cast an obligation to give
pllferential re-employment to retrenched ivorkmen like S. 25-H of the ID Act-
Since there is identity of business new management is the successor-in-inter-
est-Hence, new management liable to give preferential employment to
retrenched workmen under S. 17 of the Nationalisation Act-High .Court's
E
onfer set aside and Tribunal's award restored-Industrial Disputes Act, 1947,
s. 25-H.
Wonll- and Phrases :

'Successor-in-interest"-Meaning of-In the context of S. 9 of Coking F
Coal Mines (Nationalisation) Act, 1972.

The appellants-workmen of a colliery were laid off by the manage-
ment and retrenched. Subsequently, the colliery was taken over and
nationalised under the Coking Coal Mines (Nationalio;ation) Act, 1972. But
the respondent-management refused employment to the appellants and, G
therefore, an industrial dispute was raised. The Industrial Tribunal held
that the refusal to employ the appellants was not justified and that the
appellants were entitled to preference in the matter of employment under
~
Section 25-H of the Industrial Disputes Act, 1947. However, the High
Court set aside the award of the Tribunal. Hence this appeal. H
553
i

554 SUPREME COURT REPORTS [2001] 2 S.C.R.
A On behalf of the respondent it was contended that the respondent
was neither the employer within the meaning of Section 25-H of the ID Act >
nor was it successor-in-interest of the colliery in question and, therefore,
liability to employ the appellants was that of the previous owner.

Allowing the appeal, the Court
B
HELD : 1. The claim made in the present case is one relating to
employment under Section 25-H of the Industrial Disputes Act, 1947 which
merely creates an obligation that a retrenche:l workman will have prefer-
ence when fresh appointments are made and an opportunity will have to
c be given to them to offer themselves for re-employment. Such an obliga·
tion does not fall within the scope of Section 9 of the Coking Coal Mines
(Nationalisation) Act, 1972. [557-F-G]

2. Unlike civil law, industrial law takes a different view as to who is
the successor who runs an industry subsequently. Where there is transfer
D of business from one owner to another, the rights and obligations which
existed between the old management and their workers continue to exist
vis-a-vis the new management arter the date of the transfer provided there
is continuity of service and identity of business. For the purposes of conti·
nuity of service Section 17 of the Act makes the necessary provisions. Thus,
E a person on such transfer becomes the owner of the concern and the
employer of the employees of the establishment, and as along as there is +
identity of business itself and retains its identity, it must he held that the
respondent is also a successor-in-interest to that extent. [558-C-E]

Anakapalle Co-operative Agricultural andlruiustrial Society lJd v. Work-
F men, AIR (1963) SC 1489, teld inapplicable.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4964 of 1999.

From the Judgment and Order dated. 21.9.98 of the Patna High Court
in C.W.J.C. No. 899 of 1989.
G
Gobind Dass, S.B. Upadbyay, D.K. Verma, Ms. Mrinalini Padbi and
Tathagat H. Vardbani for the Appellant.

Ajit Kumar Sinha for the Respondents.

H The Judgment of the Court was delivered by
AKHJL BHARTIYA KOYLA KAMGAR UNION v. EMPLOYERS BHARAT COKING COAL LTD. [RA1ENDRA BABU, 1.] 555
RAJENDRA BABU, J. The management of the Bhugatdih Rise Area A
Colliery was taken over by the Central Government under the Coking Mines
(Emergency Provisions) Act, 1971 which came into effect on October 17,
1971. Subsequently, the Colliery stood nationalised with effect from May I,
1972 under the provisions of the Coking Coal Mines (Nationalisation) Act,
1972 (for short 'the Nationalisation Act'). 111 workmen who were working
B
in these collieries were laid off by the management in 1971 and subsequently
retrenched from service. Some of the workers of the Bhugatdih Colliery were
taken back in employment though they were purely temporary workmen on
daily basis. The Union of the workmen demanded employment of these 111
workers but the respondents did not employ them. Thereafter, a dispute
whether the action of the management of Industrial Colliery of Messrs Bharat c
Coking Coal Limited in refusing employment to l ll workmen listed in the
Annexure below was justified and, if not, to what relief are the said workmen
entitled, was referred to the Industrial Tribunal.

The claim of the workmen before the Tribunal is that they are perma-
D
nent workers and though they had been retrenched, they are entitled to
preference in the matter of employment under Section 25-H of the Industrial
Disputes Act, 1947 (hereinafter referred to as 'the Act'). The respondents
took the stand that Bharat Coking Coal Limited is neither the employer of
the workmen within the meaning of Section 25-H of the Act nor is it
successor-in-interest of the colliery in question. The 111 workmen were E
retrenched on June 9, 1971 long before the Coking Mines (Emergency
Provisions) Act, 1971 came into effect on October 17, 1971. Inasmuch as the
Ill workmen were retrenched on June 9, 1971, they were neither in employ-
ment on the appointed day, that is, May I, 1972, nor their retrenchment was
set aside by any court or tribunal. It is contended that under Section 9 of the F
Nationalisation Act, the Central Government shall not be liable for any
liability of the owner, agent, manager or managing director of a coking coal
mine in relation to any period prior to May I, 1972 and such liability will
be that of the previous owner. The respondents contended that a person who
does not acquire both the assets and liabilities cannot be a successor-in-
interest and, therefore, reference should be rejected. G

The Tribunal held that the erstwhile management of the Bharat Colliery
retrenched as many as 150 or more workmen for operational and financial
problems and, therefore, there was a statutory obligation on the owner
flowing from Section 25-H of the Act to re-employ the retrenched workmen H
\

556 SUPREME COURT REPORTS [2001] 2 S.C.R.
A .if it proposes to take in its employment any person as envisag~d in that
Section. The Tribunal, therefore, gave a direction that the refusal to employ
th~ 111 workmen in question is not justified and on establishing the identity
of the workmen as indicated in the course of the award, their cases will be
c sidered for employment as and when any recruitment is done. The matter
was carried to the High Court by way of a writ petition . After examining
B
the provisions of Sections 9 and 17 of the Nationalisation Act, the High Court
held that the workmen in question cannot claim. any benefit under Section
17 as they were neither in employment on the appointed day, that is, May
1, 1972, nor their retrenchment was set aside by any court or tribunal; that
thus they were neither workmen of the respondent nor are entitled to be
C deemed to its workmen. The High Court next considered whether the
respondent is a successor-in-interest of the Colliery and on examination of
Section 9 of the Nationalisation Act, took the view that the Government or
the respondent cannot be considered to be successor-in-interest of the old
business inasmuch as only the right, title and interest of the coking coal mines
D have been acquired by the Government under the Nationalisation Act free
from all encumbrances; that it is neither the liability of the owners of the said
mines nor goodwill thereof has been acquired; that as long as both assets and
liabilities have not been acquired, it cannot be stated to be a successor-in-
interest in question unless statute provides for the same; that there is no
contract between the Government and the owners providing otherwise and
E that, therefore, there is no obligation on the respondents to give effect to
Section 25-H of the Act. On reaching these conclusions, the writ petition was
allowed and the award of the Tribunal is quashed. Hence this appeal by
special leave.

F The arguments addressed before the Tribunal and the High Court are
reiterated before us.

In The Workmen v. The Bharat Coking Coal Ltd. & Ors., [1978] 2 SCC
175, this Court had occasion to consider the effect of the provisions of
Sections 9 and 17 of the Nationalisation Act. Considering the definition of
G 'workmen' in the Act, Section 17 [as was in force then] is interpreted. It is
held that Section 17 is a special provision relating to workmen and their
continuance in service notwithstanding the transfer from private ownership
to the Central Government or the Government company, which wasstatutory -..,:-
protection and even a person who has been dismissed or whose dismissal led
H to a dispute is also a 'workman' for the purpose of these provisions. Though
AKHIL BHARTIYA KOYLA KAMGAR. UNION v. EMPLOYERS BHARAT COKING COAL LTD. [R.AJENDRA BABU, I.] 557
they may not be physically on the rolls on the appointed day of the take over, A
it cannot be contended that they were not legally workmen under the new
owner. The statutory continuity of service will have to be taken note of and
on that basis this Court proceeded to hold that a dismissed workinan also is
a 'workman' under the Government company. While interpreting Section 9
of the Nationalisation Act it was stated that the liability of the owner prior
B
to the appointed day shall not be enforceable against the Central Government
or the Government company but only against the previous owner. It was
stated in very emphatic te~ that "employees are not a liability as yet in our
country". Section 9 deals with pecuniary and other contractual liabilities and
has nothing to do with workmen. If at all it has anything to do with workmen,
it is regarding arrears of wages and other contractual, statutory or tortious c
liabilities. Section 9(2) operates only in the area of Section 9(1) and that is
why provision is being made for removal of certain doubts and the whole
provision confers immunity against liability not a right to jettison workmen
under the employment of the previous owner in the eye of law.
D
Bearing these principles in mind if we examine the scope of the
Nationalisation Act, we may notice that in respect of properties that vested
in the Central Government, as provideil under Sections 8 and 9, the Nation-
alisation Act provides immunity to the Central Government or its company
from prior liabilities. Chapter III of the Nationalisation Act provides for
payment of amount under that Chapter. Chapter VI provides for appointment E
of Commissioner of Payments who has an obligation to deal with the claims
made under Section 23 of the said Act to persons who makes a claim before
the Commissioner within 30 days from the specified date. On examination
of the provisions thereof, we may relate all those items that have been
mentioned in Section 9 to Section 23 of the Nationalisation Act. They all F
pertain to pecuniary or commercial obligations and not to other matters. The
claim made in the present case is one relating to employment under Section
25-H of the Act which merely creates an obligation that a retrenched
workman will have preference when fresh appointments are made and an
opportunity will have to be given to them to offer themselves for re-
employment. Such an obligation does not fall within the scope of Section 9 G
of the Nationalisation Act.

Shri Ajit Kumar Sinha, the learned counsel for the respondents, relying
upon the decision of this Court in Anakapalle Co-operative Agricultural and
Industrial Society Ud. v. Workmen and Ors., AIR (1963) SC 1489, contended H
l'

558 SUPREME COURT REPORTS [2001] 2 S.C.R.
A that the respondents are not successor-in-interest and, therefore, have no
obligation to give effect to Section 25-H of the Act in respect of workmen
in question: that since both rights and obligations have not been taken over
by the respondents and only certain properties have been ~ested in the
respondent-Company without any obligation in terms of Sections 8 and 9 of
the Nationalisation Act, the contention of the appellant for re-employment has
B
to be rejected.

We have already adverted to the decision of this Court in The Workmen
v. The Bharat Coking Coal Ltd. & Ors. (supra) which examines the scope
of Section 9 of the Nationalisation Act and the liability contemplated therein.
C It is necessary to understand the obligation of employer as such contemplated
in Section 25-H of the Act as stated in clear terms by this Court in that
decision. Unlike civil law, industrial law takes a different view with regard
to as to who is the successor who runs the said industry subsequently. Where
there is transfer of business from one owner to another, the rights and
obligations which existed between the old management and their workers
D
continue to exist vis-a-vis the new management after the date of the transfer
provided there is continuity of service and identity of business. For purposes
of continuity of service Section 17 makes the necessary provisions. Thus a
person on such transfer becomes the owner of the concern and the employer
of the employees of the establishment, and as long as there is identity of
E business itself and retains its identity, it must be held that the respondent is +
also a successor-in-interest to that extent. This Court in Anakapalle Co-
operative Agricultural and Industrial Society Ltd. (supra) took this view after
considering several relevant factors into consideration.

Shri Sinha submitted that as soon as transfer has been effected under
F
Section 25-FF of the Act all the employees became entitled to claim com-
pensation and thus who had been paid such compensation will not be entitled
to claim re-employment under Section 25-H of the Act as the same would
result in double benefit in the form of payment of compensation and
immediate re-emplo.yment and, therefore, fair justice means that such work-
G men will not be entitled to such conferment of double benefit. It is no doubt
true that this argument sounds good, but there has been no retrenchment as
contemplated under Section 25-FF of the Act in the present case. The
workmen in question have been retrenched long before the colliery was taken
over by the respondents and, therefore, the principles stated in Anakapalle
H Co-operative Agricultural and Industrial Society Ltd. (supra) in this regard
AKHIL BHARTIYA KOYLA KAMGAR UNION v. EMPWYERS BHARAT COKING COAL LID. [RAIENDRA BABU, J.] 559
j_ cannot be applied at all. The workmen had been paid compensation only A
under Section 25-F and not under Section 25-FF of the Act on transfer of
the colliery to the present management. That case has not been pleaded or
established. Hence, we do not think that the line upon which the High Court
has proceeded is correct. The order made by the High Court deserves to be
set aside and the award made by the Tribunal will have to be restored.
B
The appeal shall stand allowed accordingly. However, in the circum-
stances of the case, there shall be no order as to costs.

v.s.s. Appeal allowed.