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Judgment
Justice S. Muralidhar
The prayer in this writ petition is for a direction to the Respondent Union of India through the Central Registrar of Cooperative Societies (''Central Registrar'') as well as through the Ministry of Small Scale Industries & Agro and Rural Industries to pay the dues of the Petitioner in terms of an Award dated 2nd August 1996 passed by the Labour Court in relation to his erstwhile employment with the National Federation of Industries Co-operative Ltd. (NAFIC). The background facts are that the Petitioner was employed on 28th December 1991 as an Electrician/Mechanic in the Leather Manufacturing Unit of NAFIC at Agra. The registered address of NAFIC was at Hauz Khas, New Delhi. It was a Multi State Cooperative Society (MSCS) and under the administrative control initially of the Government of India, Ministry of Industry, Department of Industrial Department and later the Ministry of Small Scale Industries & Agro and Rural Industries, Government of India.
The Petitioner''s services were terminated on 8th July 1991. Pursuant to a reference made u/s 4-K of the Uttar Pradesh Industrial Disputes Act (''UP ID Act''), the dispute was referred to the Labour Court at Agra. An Award dated 2nd August 1996 was passed in favour of the Petitioner. The operative portion of the Award was that the termination of the services of the Petitioner were held to be illegal and he was directed to be reinstated with back wages together with Rs. 200 by way of costs.
The said Award was duly published on 9th December 1996. The Petitioner on 16th December 1996 applied to the Respondent No. 3 NAFIC for reinstatement. When Award was not complied with, he made an application u/s 6H of the UPID Act for execution of the Award. A recovery certificate dated 26th August 1997 was issued by the Deputy Labour Commissioner (DLC), Agra directing the Deputy Collector (South) S.D.M. Mehrauli to release the sum of Rs. 2,55,777.47 as arrears of land revenue to the satisfaction of the Award. The Award was challenged by the NAFIC in the High Court of Judicature at Allahabad by way of Writ Petition No. 35409 of 1999.
Meanwhile on 11th March 1999 the Department of Small Scale Industries requested the Central Registrar under the Multi State Cooperative Societies Act, 1984 (''MSCS Act'') to initiate action for winding up of the NAFIC. It was provided a sum of Rs. 1.95 crores for the purpose.
With the Petitioner''s Award amount not yet recovered, he filed Writ Petition No. 10264 of 1999 which was disposed of by an order dated 18th March 1999. The Deputy Collector (South) SDM Mehrauli was directed to recover the amount from the NAFIC at Hauz Khas and remit the amount to the DLC, Agra for payment to the Petitioner.
Even this order was not complied with. The Petitioner, therefore, preferred a Contempt Application No. 3226 of 1999 in which notice was directed to be issued by the Allahabad High Court on 21st September 1999.
On 21st January 2000 a liquidator was appointed for NAFIC by an order passed under Sections 77 and 80 of the MSCS Act. Copies of letters dated 28th January 2000 and 29th September 2000 of the Ministry of Small Scale industries & Agro & Rural Industries releasing grants-in-aid "for meeting strictly the expenditure on salary and wages" of the remaining employees have been enclosed with the writ petition. The Central Registrar got published a public notice in the newspapers on 13th June 2001 inviting claims under Rule 19 of the MSCS Rules, 1985. However, the Petitioner who was based in Agra was not aware of this notice. His contempt petition in any event was pending and despite the express orders of the High Court, the payment was not made. It is the case of the Respondent Central Registrar that the Petitioner should have lodged a claim for that purpose. On the other hand, the Petitioner refers to Rule 19(M) of the MSCS Rules, 1985 which provides that in the event a liability cannot be discharged by the Liquidator for any reason, that amount should be deposited in a co-operative bank, and should be made available for meeting the claim(s) of the person(s) concerned.
The Writ Petition No. 35409 of 1999 filed by NAFIC challenging the Award came to be dismissed as withdrawn by the Allahabad High Court on 16th May 2002.
The Liquidator appointed for the NAFIC submitted a report on 26th July 2002 about the pending cases. However, the case of the Petitioner was not mentioned in this report.
The NAFIC came to be dissolved by an order dated 23rd October 2002 and a liquidator was appointed. A duty was cast on the Central Registrar u/s 81(2) and Section 84 of the MSCS Act to satisfy all the known claims.
In the meanwhile in Contempt Petition No. 3226 of 1999 bailable warrants were issued requiring the presence of the Deputy Collector, SDM Mehrauli in the contempt proceedings. This order was passed on 16th August 2004 by the Allahabad High Court.
On 19th October 2005 the Central Registrar wrote to the Ministry of Small Scale Industries & Agro & Rural Industries to arrange the amount payable to the Petitioner in compliance with the order dated 18th March 1999 passed by the High Court. On 23rd May 2006 the SDM filed an affidavit in the High Court in the Contempt Petition No. 3226 of 1999. The stand taken was that the Government was neither legally responsible for making the payment nor it had committed to make the payment at any stage. It was stated in the affidavit that the Central Registrar of the Cooperative Societies had after being served with the contempt notice, met the Joint Secretary (SSI) on 16 February 2006 and discussed the matter. It was claimed that the Joint Secretary "had merely stated that his Ministry would examine the matter in consultation with the Department of Legal Affairs, Government of India." It was claimed that after such examination it was revealed that the Ministry of SSI "was not at all liable to comply with the judgment of the Hon''ble Court and make payment." It was claimed that it was only the Central Registrar who was supervising the work of Liquidator who was the competent authority to make the payment. A reference was made to clause 15 of the bye-laws of NAFIC.
On its part, the Central Registrar claimed that he had no funds to settle the claim while at the same time admitting in para 18(vi) of the reply that in case the Petitioner had approached earlier it could have been possible to pass suitable orders by way of compliance.
The contempt petition No. 3226 of 1999 was disposed of on 21st November 2006 by the High Court after noticing that the NAFIC had been dissolved by an order dated 23rd October 2002 and a liquidator had been appointed. The Petitioner states that he again approached the Central Registrar with the letter dated 26th April 2007. By a reply dated 25th June 2007 the Central Registrar declined to make payment only on the ground that the Petitioner had not filed a claim despite notice being issued on 13th June 2001.
It is in the above circumstances that the present petition has been filed.
In the present petition also the stand taken by the Respondents is no different. On 7th August 2009 this Court passed the following order:
"The petitioner is a workman, who has an Award in his favour for payment of compensation. The petitioner workman was an employee of National Federation of Industries Cooperative Limited, a multi state cooperative society, which has gone into liquidation. However, before the said cooperative society had gone into liquidation they had filed a writ petition challenging the Award in favour of the petitioner. Obviously the Award and compensation Awarded was within the knowledge of National Federation of Industries Cooperative Limited and in normal course necessary entries should have been made in the books of accounts.
The plea taken by the respondent No. 1 is that the cooperative society has been wound up and no claim was made by the petitioner before the Liquidator. The aforesaid contention prima facie cannot be accepted and overlooks the factum that the cooperative society before it was wound up was aware of the said Award and the compensation amount and in normal course would have shown the said amount in their books of accounts. It appears that the Liquidator should have taken notice of the amount due to the petitioner. The Court prima facie is of the opinion that the petitioner herein is a workman, who is semi-literate and his claim should not be rejected on technical grounds.
Learned counsel for the petitioner states that they are ready for mediation to resolve and settle the matter. Learned counsel for respondent No. 1 prays for some time to obtain instructions in this regard."
Despite the above statement made before the court, the Respondents 1 & 2 have not made any effort to settle the matter. On the other hand, the submission of Shri R.V. Sinha, the learned counsel appearing for the Respondents 1 & 2 is a reiteration of the stand in the counter affidavit. The Respondents have taken an adversarial stand and refused to accept any liability for making payment.
Pursuant to an order passed by this Court, Mr. Ashwin Vaish, the learned counsel appearing for the Petitioner has filed the affidavit of the Petitioner indicating the amount due to him. In the said affidavit dated 1st February 2010, the Petitioner has stated as under:
"1. I am the Petitioner above named and in compliance with order dated 01.02.2010 passed by this Hon''ble Court do hereby depose that pursuant to the Award passed by the Labour Court two recovery certificates were issued in the sum of Rs. 2,55,727.47 (Rupees Two lacs, Fifty five thousand, Seven hundred and Twenty seven only) and Rs. 4,28,448/- (Rupees Four Lacs, Twenty eight thousand four hundred and forty eight only). Thus, the total amount due to me as per the Recovery Certificates is a sum of Rs. 6,84,175.47 (Rupees Six Lacs, Eighty Four thousand, One hundred and Seventy five and Forty seven paisa only). The said amounts are due and payable to me for the last so many years and therefore, with interest @ of 12% the amount due and payable to me is a sum of Rs. 14,00,000/- (Rupees Fourteen Lacs only) approximately.
I say that I have only received a sum of Rs. 16,500/- (Rupees Sixteen thousand and five hundred only) as three months salary in lieu of three months notice period and a sum of Rs. 21,500/- (Rupees twenty one five hundred only) towards my provident fund."
Mr. Sinha has raised three objections. Firstly, he submitted that this Court does not have the territorial jurisdiction to entertain this writ petition since the Award sought to be enforced has been passed in Agra. This objection is without merit since the registered office of NAFIC is located in Delhi. The Petitioner has from the beginning sought to get the Award enforced in Delhi. Initially the recovery certificate was also issued to the Sub Divisional Magistrate at Delhi for execution. This Court is satisfied that a part of the cause of action has arisen within the territorial jurisdiction of this Court. This objection is therefore negatived.
The second objection is that the Petitioner ought to have made a claim pursuant to the public notice that was issued.
The admitted position is that the NAFIC was aware of the Award made against it and in favour of the Petitioner. In fact it challenged the Award by way of Writ Petition No. 35409 of 1999 which came to be dismissed as withdrawn on 16th May 2002. Consequently the said Award attained finality as far as NAFIC is concerned. Therefore, it cannot possibly plead that it is not liable in terms of the Award to pay the Petitioner the arrears of back wages. Even if the portion of the Award regarding reinstatement of the Petitioner is not capable of being worked out, the monetary dues in terms of the Award cannot be wiped out merely because NAFIC went into liquidation.
In the above connection a reference may be made to Rule 19(b) & (m) of the MSCS (Privileges, Properties and Funds, Accounts, Audit, Winding up and Execution of Decrees, Orders and Decisions) Rules, 1985 which reads:
"(b) The liquidator shall, as soon as the order of winding up of the multi-state cooperative society takes effect, publish by such means as he may, think proper, a notice, requiring all claims against the multi-state cooperative society, the winding up of which has been ordered, to be submitted to him within two months of the publication of the notice. All liabilities recorded in the account books of a multi-state cooperative society shall be deemed ipso-facto to have been duly submitted to him under this clause.
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(m) If any liability cannot be discharged by the liquidator owing to the whereabouts of the claimants not being known or for any other cause, the amount covered by such liability may be deposited in a Cooperation (sic ''Cooperative'') Bank and shall be available for meeting the claims of the person or persons concerned."
The short question therefore is whether the Award was a "liability" which qualified as a claim in terms of Rules 19(b) & (m) of the above Rules. With the NAFIC having itself challenged unsuccessfully the Award by filing a writ petition which came to be dismissed as withdrawn on 16th May 2002, there is no question that it was an outstanding liability as far as NAFIC is concerned. If for some reason, the Liquidator, while preparing his report to the Government on 26th July 2002 failed to include the Award as a liability, the Petitioner cannot be made to suffer. It is not possible to countenance the plea of the Respondents that merely because the Petitioner did not respond to the public notice issued in the newspaper, his claim does not qualify for being settled. Irrespective of whether the Petitioner responded to such publication of notice, since the Award in which NAFIC was a party was passed much prior to the notice being published and that Award became final with NAFIC''s writ petition being dismissed as withdrawn, the liability in terms of the Award could not be avoided by the Liquidator only because no claim was lodged pursuant to the public notice.
It is lastly claimed that since the NAFIC has been dissolved and no funds are left with the Central Registrar, the Petitioner''s claim cannot be satisfied. This court rejects this submission as being untenable in law.
Given the scheme of the MSCS Act, there was a responsibility cast on a Liquidator to satisfy all legal liabilities which were outstanding on the date he was appointed. The Labour Court''s Award in favour of the Petitioner which, it attained finality by the dismissal of the NAFIC''s writ petition by the Allahabad High Court, was one such liability. If the Liquidator failed to perform his duty in including the above amount in the list of outstanding dues, and in the report submitted to the Central Registrar, the Petitioner cannot be made to suffer. He has been waiting for the Award amount to be satisfied for over 15 years. It would be a travesty of justice to tell the Petitioner that the Award in his favour which has become final is to no avail. The interpretation on the MSCS Act must be such that it does not enable an entity to escape its legal liability which has been outstanding on the date of its being wound up.
In a situation where the funds for winding up are exhausted without meeting the statutory liability of a creditor, then obviously the administrative machinery which is the department of the Government under whose administrative control NAFIC was functioning should be made liable. Otherwise a workman who has put in long years of work and has succeeded in demonstrating that the termination of his services was illegal would be left without a remedy notwithstanding that he adopted the due process of law to recover his dues.
In Commissioner of Payments v. Kishni Devi 168 (2010) DLT 706, this Court in similar circumstances, held that the Central Government would have to bear the liability of depositors. It was held that the liability could not be avoided on the ground that the moneys for the purposes of meeting the liabilities of the entity that had gone into liquidation, was exhausted.
For the aforementioned reasons, this Court negatives the objections raised by the Respondents 1 and 2. The writ petition is accordingly allowed. It is directed that the Respondents 1 and 2 will within four weeks jointly and severally pay the Petitioner a sum of Rs. 6,84,175.47 as computed in the affidavit dated 1st February 2010 filed by the Petitioner which has not been disputed together with simple interest at 6% per annum from the date of the filing of the writ petition, i.e., 16 September 2008 till the date of payment together with costs of Rs. 20,000/-. It is made clear that if the aforementioned payment together with costs is not paid within the said period, further penal simple interest @ 12% per annum on the said sum will be paid by the Respondent Nos. 1 and 2 to the Petitioner for the period of the delay. The writ petition is disposed of in the above terms. Application stands disposed of.