Chamunda Standard Mills, Balgarh, Dewas vs Ravindra

A.K. Shrivastava, J.—This petition is directed against the order dated 19.3.2010 passed by President, Industrial Court, Indore in Misc. Civil Case No. 17/MPIR/2009, by which the application u/s 67 M.P. Industrial Relations Act, 1960 (hereinafter referred to as the MPIR Act) filed by the respondent has been allowed by setting aside the order dated 22.5.2009 passed by the Labour Court, Dewas and it was directed to pay an amount of Rs. 1,52,125/- to the respondent/Ravindra.

No exhaustive statement of facts are required to be narrated for the purpose of disposal of this writ petition. Suffice it to say, that there is an order of Labour Court dated 12.11.1992 against Chamunda Standard Mills Company Ltd., Dewas imposing liability of Rs. 1,52,125/- against the said company. This unit was sold to the petitioner on 6.8.1997 by Chamunda Standard Mills Company Ltd. It is also not disputed that the appeal which was filed by the transferor company against the employee assailing the above said order of Labour Court before the Industrial Court was disposed of by Industrial Court vide order dated 9.5.2000 on the submission being made by the employee that he will not file execution against the transferer company since the Unit has been sold to the present petitioner.

Indeed the proceedings u/s 108 of the MPIR Act was initiated by the employee/respondent Ravindra. against the present petitioner and in those proceedings the learned Labour Court disallowed the prayer of employee/respondent to realise the award amount of Rs. 1,52,125/- from the petitioner against which an application u/s 67 of the MPIR Act was filed by the employee, before the learned Industrial Court which has been allowed by that Court by holding that the petitioner is required to pay a sum of Rs. 1,52,125/- to the respondent/employee. This order of Industrial Court dated 19.3.2010 has been assailed by the petitioner company who is transferee of the Unit in which the respondent was an employee.

The contention of Shri Kuldeep Bhargava, learned counsel for the petitioner is that on bare perusal of the agreement of sale, it is as clear like a noon day that whatever liability the then owner of the unit was having, it was required to be paid by that transferer unit only. Since the award of Labour Court is prior to the date of agreement, therefore, the petitioner is totally exonerated in making any payment to the respondent, however, he did not dispute that appeal against the award was already pending in the Industrial Court. Indeed this was the point which was taken into consideration by learned Industrial Court.

Considered the argument of learned counsel for the petitioner.

Indeed, the proceedings u/s 108 of the Act which pertains to the execution was filed by the employee against the petitioner in which he lost and, therefore, he filed an application u/s 67 of the Act before learned Industrial Court, which has been allowed. On bare perusal of Section 108 of the Act we find that its nature is that of execution and according, to this provision the amount may be realised in the same manner as the fine is realised under the provisions of Code of Criminal Procedure. If we read this provision by keeping it in juxtaposition to Section 77 (c) of the MPIR Act, we find that learned Industrial Court did not commit any error in holding that the present petitioner who is a transferer company, is liable to pay a sum of Rs. 1,52,125/- to the respondent. We think it apposite to quote relevant clause of Section 77 of the MPIR Act, which reads thus :-

Section 77, Parties on whom orders of Board, etc. binding -

An [order or decision] of a Labour Court, the Industrial Court or a Board shall he binding on-

(a)............................

(b)............................

(c) in the case of an employer who is a party to the proceeding before such court or Board in respect of the undertaking to which the dispute relates, his successors, heirs or assigns in respect of such undertaking; and

On bare perusal of this provisions we are not leaving any scintilla of doubt that this provision is applicable to the transferee company/petitioner who has purchased the unit from the transferer company Standard Mills Ltd., hence, the petitioner is bound to pay the amount which has been directed by learned Industrial Court to be paid to the employee/respondent.

We do not find any merit in the contention of learned counsel for the petitioner that the agreement in which there is a clause that the liability should be incurred upon the then owner of the unit, hence it should be given effect to and the petitioner be absolved from the liability, for the simple reason that if any agreement is made contrary to law it is a void agreement. In this regard Sections 10, 23 and 24 of the Contract Act may be seen and, therefore, according to us learned Industrial Court has not committed any error in allowing the application of employee/respondent filed u/s 67 of the MPIR Act by passing the impugned order in his favour.

Chapter II of the Indian Contract Act throws sufficient light to contracts and agreements, which are voidable and void. Section 10 of the said Act speaks about what agreements are contracts and according to this provision all agreements are contract if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not expressly declared to be void under the Contract Act, In this section the legislature has specifically enacted the term "expressly declared to be void" and thus, after magnifying this section we find that all agreements are the contracts, if they are made by the parties with free consent for a lawful consideration and with a lawful object and further if they are not expressly declared to be void under other provisions of the Contract Act. Section 23 of the said Act throws sufficient light that what consideration and objects are lawful, and what not and according to this section the consideration or object of an agreement is lawful, unless -

it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy."

In the aforesaid cases, the consideration or object of an agreement is always said to be unlawful. Further this section envisages, every agreement of which the object or consideration is unlawful is void.

If we visualize Section 24 of the Contract Act we find that this section speaks about void agreements and according to this section if considerations and objects are unlawful in part and further if the object is unlawful the agreement is void. What is the meaning of unlawful object, we have already mentioned herein above as legislated u/s 23 of the Contract Act. Hence, if there is a Clause 7.5 in the aforesaid agreement dated 6.8.1997 executed between the transferer company and the petitioner company that the transferer company shall bear, pay and discharge or otherwise secure to pay all the liabilities earlier to the date of execution of the agreement, even than the transferee company viz petitioner would not be absolved from the liability for the simple reason that the said clause runs contrary to Section 77 of the MPIR Act and, therefore, according to us the object of the agreement was not lawful and hence, that agreement is void so far as the application of Clause 7.5 of the agreement to the respondent is concerned.

Learned Industrial Court by the impugned order has also taken into consideration several other factors on the anvil and touch stone of the Industrial Dispute Act particularly Section 25(FF) and we find that this section has been enacted later on because it was not clear from Section 25(F) of the Industrial Disputes Act. whether as to the transfer of the unit would be a good ground for a claim for retrenchment compensation even when services of the workman is continued and this section is highlighted by the apex Court in the case of H.S. Shukla Vs. A. D. Divelkar - AIR 1957 SC 121. Hence, according to us the right conferred under this provision would add another feather in the cap of the workman and as of right the workman can enforce the award against the successor of the Unit, according to Section 77 (c) of the MPIR Act.

Accordingly, this petition is dismissed summarily.