S. K. G. Sugar Ltd vs Sri Ali Hassan

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 793 of 1957

Decision Date: 04/11/1958

Coram: Natwarlal H. Bhagwati, Bhuvneshwar P. Sinha, K.N. Wanchoo

In this matter the Supreme Court of India heard a petition filed by S. K. G. Sugar Ltd against Sri Ali Hassan, who was then Chairman of the Industrial Tribunal of Bihar, together with other respondents. The judgment was delivered on 4 November 1958 by a bench comprising Justice Natwarlal H. Bhagwati, Justice Bhuvneshwar P. Sinha and Justice K. N. Wanchoo. The case is reported as 1959 AIR 230 and 1959 SCR Supl. (1) 254. The statutory provisions relevant to the dispute were sections 33 and 33A of the Industrial Disputes Act, 1947 (XIV of 1947) and section 171 of the Indian Companies Act, 1913 (7 of 1913).

The factual background, as recorded in the headnote, indicated that Gaya Sugar Mills Ltd. had entered liquidation and that the liquidator, with the permission of the court, had executed a lease of the mill’s sugar factory to the appellant on 6 December 1954. The lease expressly stipulated that the lessee would not assume any liabilities of the company, the liquidator, or the preceding lessees, nor would the lessee be required to retain any employees of the former owners except those specifically identified in the lease. Four days before the appellant actually took possession of the factory, on 2 December 1954, the Government of Bihar issued a notification referring a dispute involving the management of several named sugar factories, including Gaya Sugar Mills Ltd., and their workmen, represented by trade unions, to the Industrial Tribunal presided over by the respondent. No notice of this reference was given to the appellant, and the subsequent proceedings were conducted ex parte.

Subsequently, two groups of workmen filed complaints before the Industrial Tribunal against the appellant under section 33A of the Industrial Disputes Act. One complaint alleged that the workmen had been discharged, while the other claimed that the appellant had altered the conditions of their service without first obtaining the Tribunal’s permission required under section 33 of the Act. The appellant contended that the lease had not been breached and that there was no violation of section 33. After the High Court refused to grant a writ of certiorari under articles 226 and 227 of the Constitution to set aside the Tribunal’s proceedings, the appellant obtained special leave to approach this Court.

The appellant’s principal submissions before this Court were twofold: first, that the State Government had not obtained the leave of the court required under section 171 of the Indian Companies Act before making the reference under section 10(1) of the Industrial Disputes Act, rendering the reference legally defective; and second, that the term “employer” in sections 33 and 33A of the Industrial Disputes Act should be interpreted to refer only to the employer actually party to the industrial dispute identified in the reference, thereby excluding the appellant, who assumed possession only after the reference had been made.

In its reasoning, the Court held that the entity which had taken possession of the mills only after the industrial reference could not be regarded as an employer within the meaning of sections 33 and 33A of the Industrial Disputes Act. The Court examined the wording of the notification and concluded that the party intended to be made a respondent to the reference was not the corporate entity itself but its management as it existed on the date of the reference. Consequently, the Court found that no question arose as to whether leave of the court under section 171 of the Companies Act was required. The Court explained that the term “employer” occurring in sections 33 and 33A refers to the very employer who is directly concerned with the industrial dispute that forms the subject of the adjudication. It cannot be extended to an employer who merely discharges, punishes, or alters the conditions of service of workmen unless that employer can be shown to be a mere nominee or agent of the former employer, or to fall within the category of heirs, successors or assigns defined in section 18(3)(c) of the Act. The Court found that the appellant satisfied none of these criteria. Therefore, the appellant was not obligated to obtain the Tribunal’s permission under section 33, and the proceedings instituted under section 33A against it were ordered to be set aside.

The appeal, numbered 793 of 1957, was taken by special leave from a September 20 order of the Patna High Court in miscellaneous case numbers 26 and 27 of 1955. Counsel for the appellant and counsel for the respondents were instructed, and the judgment was delivered on November 4, 1958 by Justice Bhagwati. The case concerned Gaya Sugar Mills Limited, a company incorporated in 1934 that owned a sugar factory at Guraru in the Gaya district. An order for the compulsory winding up of the company was issued on November 4, 1951, and a liquidator, Dhansukh Lal Mehta, was appointed on February 1, 1952. To preserve the mill’s operation and to facilitate an orderly winding up, the liquidator obtained, under section III(b) of the Companies Act, the court’s sanction to lease the mill together with its land, buildings, and machinery. After the previous lessees, Guraru Cane Development and Cane Marketing Union Limited, vacated the premises, the liquidator secured a court order on December 3, 1954, authorising a lease in favour of Shri Krishna Gyanody Sugar Limited, the appellant, for the period from December 5, 1954, through November 14, 1955. The lease was executed on December 6, 1954, and possession of the mill was handed over to the appellant on the same day.

The liquidator formally executed a lease of the Guraru sugar mills in favor of the appellant on 6 December 1954 and on that very same day handed over possession of the plant, its lands, buildings and machinery to the appellant. The lease contained several material provisions. First, it required that the appellant be placed in possession of the leased premises in good working order and that the appellant be allowed to operate and manage the factory without any interference, obstruction or hindrance from the lessor or any representative of the lessor. Second, the lease permitted the appellant to retain the whole income and profit generated by the factory; the lessor expressly waived any right to share in either profit or loss and was limited to receiving only the rent stipulated in the lease. Third, the appellant was expressly excluded from any liability for the debts, obligations or other liabilities of the company, the liquidator or the previous lessee, whether such liabilities arose before or after the appellant took possession, except for those liabilities that were specifically enumerated in the lease. Fourth, the lease authorised the appellant, at its own expense, to install any additional machinery, equipment or structures, including the erection of new godowns, provided that the lessor was given prior notice of such installations. Fifth, the appellant was not compelled to employ any of the lessor’s existing workers, the outgoing lessee’s workers, or any other persons previously engaged, except for eighteen employees expressly listed in Clause 11 of the lease. Moreover, the appellant agreed not to dismiss any staff who were already employed at the Guraru factory at the time of taking possession, as required by Clause 13(v). Finally, the lease declared that the demised properties fell under the jurisdiction of the Patna High Court; any dispute arising between the lessor and the appellant concerning the lease was to be presented before that court, and the court’s decision would be binding on all parties.

It further appears that on 2 December 1954, four days before the execution of the lease and the transfer of possession, the Government of Bihar issued a notification directing certain industrial disputes between the management of listed sugar factories and their workmen, represented by specified unions, to be adjudicated by an Industrial Tribunal. The notification identified the sugar factories in Appendix I and the labour unions in Appendix II, and appointed Shri Ali Hassan, who is respondent No. 1 in the present matter, as the sole member of the Tribunal. The reference stated that the State Government believed an industrial dispute existed or was likely to arise concerning matters set out in Annexure A, which included issues such as retaining allowances for seasonal employees, leave and holidays, and the legality of deductions from wages. Acting under the authority conferred by Section 7 read with Sub‑section (1) of Section 10 of the Industrial Disputes Act, 1947, the Governor of Bihar constituted the Tribunal and referred the identified disputes for determination.

In exercising the powers granted by section ten of the Industrial Disputes Act, 1947, and superseding Notification No. III‑DI‑14020/54L15146 dated 1 October 1954, the Governor of Bihar constituted an Industrial Tribunal with Mr Ali Hussain as the sole member and referred the dispute to that Tribunal for adjudication. The reference listed three matters in Annexure A: the payment of retaining allowance to seasonal employees in Bihar’s sugar factories; the grant of leave and holidays to all employees, including seasonal workers; and whether deductions made from the leave and holiday entitlements of the factory workers were unjustified, and if so, the compensation or relief to which the workmen were entitled. The reference identified twenty‑eight sugar factories in Appendix I and thirty‑eight labour unions in Appendix II. The second entry in Appendix I named Gaya Sugar Mills Ltd., Guraru, and the third entry in Appendix II named Chini Mazdoor Sangh, Guraru. The respondent, Mr Ali Hussain, entered upon the reference. Although Gaya Sugar Mills Ltd. was in liquidation, the liquidation status was not expressly mentioned in Appendix I. The respondent sent a notice to the liquidator on 11 January 1955, fixing that date for the hearing. The notice arrived with the liquidator on 13 January 1955, and the liquidator replied on 14 January 1955, informing the respondent of its receipt. The respondent merely endorsed the liquidator’s letter, stating that the hearing had already concluded, and did not investigate the postal delay. The respondent rendered his award on 17 February 1955, and the award was published in the Official Gazette on 23 February 1955. The adjudication, which had commenced on the reference date of 2 December 1954, terminated on the expiry of thirty days after the award’s publication, i.e., on 25 March 1955, pursuant to section 20(3) of the Industrial Disputes Act. An appeal against this award was filed with the Labour Appellate Tribunal, and the appellate decision was delivered on 31 August 1956.

During the period that the appellant held possession of the mills under the lease dated 6 December 1954, no notice of the proceedings was served on the appellant by the respondent, and consequently the appellant neither appeared before the respondent nor was afforded an opportunity to be heard; thus, the proceedings before the respondent were effectively ex parte. On 23 March 1955, two applications were filed under section 33A of the Industrial Disputes Act. The first application, filed by fifteen individuals, alleged that the appellant had, without any justification or prior notice, terminated their employment one by one during January and February 1955. The second application, filed by five individuals, contended that the appellant had altered their conditions of service without reason. These applications were recorded as Miscellaneous Cases Nos. 26 and 27 of 1955. On 7 April 1955, the appellant received two notices from the respondent, both dated 25 March 1955, informing the appellant of the filing of the two miscellaneous cases and directing the appellant to submit statements showing cause by 19 April 1955. The appellant complied by filing statements before the respondent, arguing that the application under section 33A brought by persons numbered 4 to 23 was not maintainable and should be dismissed. The appellant further asserted that, as lessee of the mills, it had fully complied with the applicable legal requirements.

In the present proceedings the appellant was alleged to have altered the conditions of service of certain workmen without any justification. The appellant further contended that the dismissals and the modifications in service conditions had been carried out while the disputes were still pending before the Industrial Tribunal, and that such actions had been taken without obtaining the permission of the Tribunal that is required under section thirty‑three of the Industrial Disputes Act. The two applications filed by the aggrieved workers were recorded as Miscellaneous Cases number twenty‑six and twenty‑seven of the year 1955. On the seventh day of April, 1955, the appellant received two separate notices from respondent number one. Both notices were dated twenty‑fifth March, 1955 and each informed the appellant of the filing of the respective miscellaneous cases. The notices also required the appellant to submit statements showing cause by the nineteenth day of April, 1955. In compliance with the demand, the appellant filed before respondent number one two written statements disputing the validity of the applications filed under section thirty‑three‑A of the Industrial Disputes Act by the persons identified as respondents numbers four to twenty‑three. The appellant argued that those applications were not maintainable and should be dismissed. It was further asserted on behalf of the appellant that, as lessee of the mill in question, it had strictly observed all the terms and conditions of the lease and had not violated section thirty‑three of the Act with respect to any of the workmen named in the two miscellaneous cases. The appellant highlighted that none of the individuals who lodged the applications were among the eighteen persons specifically listed in clause eleven of the lease, a clause that expressly exempted those persons from its operation. Moreover, the appellant observed that the persons were not members of the staff class that, under clause thirteen (v) of the lease, the lessee was prohibited from retrenching. Consequently, the appellant maintained that neither of the lease provisions had been breached. Subsequently, on the thirteenth day of July, 1955, the appellant instituted a writ petition in the High Court of Judicature at Patna under articles two hundred twenty‑six and two hundred twenty‑seven of the Constitution. The petition, recorded as Miscellaneous Judicial Case number three hundred ninety‑two of 1955, named the Chairman of the Industrial Tribunal, Bihar as respondent number one, the State of Bihar as respondent number two, the liquidator as respondent number three, and the individuals who had filed the miscellaneous cases twenty‑six and twenty‑seven of 1955 as respondents numbers four to twenty‑three. The appellant sought a writ of certiorari to set aside the two miscellaneous cases, a writ of mandamus to restrain respondent number one from proceeding with or otherwise dealing with those cases, an order for costs, and any further relief deemed appropriate. The principal contentions advanced in the petition were twofold. First, the appellant argued that each of the matters referred for adjudication imposed an undue burden on the sugar factories concerned and that, from the date of the winding‑up order, all the property and effects of Gay Sugar Mills Limited had been placed under the custody of the Court.

In the petition the appellant contended that the notification dated 14 November 1951 failed to mention Gaya Sugar Mills Ltd. and consequently did not describe the company as already being in liquidation. The appellant further argued that no permission from the Court had been obtained before the Tribunal proceedings were started or continued, and that the liquidator had neither been named as a party nor served with any notice of the commencement of the proceedings. Because of those omissions, the appellant asserted, there was no legal proceeding against Gaya Sugar Mills Ltd. (In Liquidation) before respondent No 1, and therefore the Miscellaneous Cases Nos 26 and 27 of 1955, for which notices had been sent to the appellant, could not be maintained. The appellant also maintained that no notice of the adjudication proceedings arising from the notification of 2 December 1954 had ever been given to him, even though he was in possession of the premises under a lease granted by the Court. He submitted that, as a lessee working under orders and under the terms of the Court‑approved lease, he could only be liable for breach of the lease, if any, and that such liability could be addressed only by the Court. Moreover, the appellant argued that there was no breach of section 33 of the Industrial Disputes Act because he had acted in good faith in accordance with the lease and, being not a party to any adjudication before any Tribunal or before respondent No 1, no violation of section 33 could be said to have occurred, and consequently no application under section 33A of the Act could be maintained against him.

No respondent filed an affidavit in reply to the application. The matter was heard before Chief Justice Ramaswami and Justice Raj Kishore Prasad, who delivered the judgment on 20 September 1956 and dismissed the application, awarding costs against the appellant. The High Court, while assuming without expressing a view that the reference made by the State Government under section 10(1) of the Industrial Disputes Act constituted a legal proceeding within the meaning of section 171 of the Companies Act, held that section 10(1) of the Industrial Disputes Act was not governed by section 171 of the Companies Act. Accordingly, the Court found that prior leave of the Court was not required before making a reference under section 10(1). The Court further observed that, although the reference under section 10(1) was made on 2 December 1954 and the appellant took the lease of the mills on 6 December 1954, the appellant qualified as an “employer” within the meaning of sections 33 and 33A of the Industrial Disputes Act. The Court stated that it was not necessary for the operation of those sections that the employer who discharges or punishes a workman be the same employer who is a party to the industrial dispute; the existence of an employer‑employee relationship at the relevant time was sufficient.

The Court observed that, for the purposes of sections 33 and 33A, the employer who dismisses a workman or who modifies the workman’s conditions of service must be the same employer who is a party to the industrial dispute that is before the tribunal. It further held that it is enough to invoke either of those provisions where, at the moment the workman is dismissed, punished, or his service conditions are altered to his detriment, a clear employer‑employee relationship exists. The Court also expressed the view that, although the liquidator had not been formally made a party to the reference issued by the State Government under section 10(1) of the Industrial Disputes Act, Gaya Sugar Mills Ltd., Guraru was specifically named among the parties in Appendix I of the reference. Consequently, the Court found that Gaya Sugar Mills continued to exist as a legal entity despite the winding‑up order, and therefore it was properly included as a party to the reference under section 10(1). The Court further stated that any delay in the receipt of the notice sent to the liquidator on 11 January 1955 did not affect the situation, because the Industrial Tribunal’s award was rendered on 17 February 1955, well after the notice date, and the Tribunal possessed full jurisdiction to make an award that would be valid and binding upon Gaya Sugar Mills Ltd., Guraru. On this basis, the High Court dismissed the application that had been before it.

The appellant then sought leave to appeal to this Court on 9 November 1956, but the High Court declined to grant a certificate, reasoning that a petition for a writ of certiorari under article 226 of the Constitution did not constitute a civil proceeding within the meaning of article 133. The appellant subsequently applied for and obtained special leave to appeal from this Court on 1 April 1957, and the appeal is now before us for final disposal. The counsel for the appellant advanced two principal submissions. First, it was contended that Gaya Sugar Mills Ltd., Guraru had already entered liquidation and that respondent No. 3 had been appointed as its liquidator; that the State Government’s reference to the Industrial Tribunal dated 2 December 1954 imposed a substantial financial burden on the mill; and that, because of the liquidation, the State Government should have obtained the Court’s sanction under section 171 of the Indian Companies Act before referring the industrial dispute to the Tribunal under section 10(1) of the Industrial Disputes Act. The appellant argued that, having failed to secure such sanction, the reference was void, and consequently sections 33 and 33A of the Industrial Disputes Act could not apply. Second, the appellant submitted that a proper construction of sections 33 and 33A would limit the term “employer” to the employer who is directly concerned in the industrial dispute that is the subject of the reference.

The appellant maintained that the expression “employer” appearing in sections 33 and 33A of the Industrial Disputes Act should be interpreted to mean only the employer who was a party to the industrial dispute that formed the subject‑matter of the reference. According to the appellant, the applicant had taken a lease of the sugar mills on 6 December 1954, which was four days after the State Government had made the reference under section 10(1) of the Act. Consequently, the appellant argued that the applicant could not be described as an “employer” within the meaning of sections 33 or 33A, because the lease was executed after the reference date. The appellant further contended that, even assuming that the allegations made by the applicant in Miscellaneous Cases Nos 26 and 27 of 1955 before respondent 1 were correct, the applicant was not required to obtain permission from the Industrial Tribunal under section 33 of the Act. Accordingly, the appellant concluded that the applications filed under section 33A of the Act by respondents 4 to 23 were not maintainable.

At this point, the Court found it appropriate to reproduce the statutory provisions that were relevant to the appeal. Section 171 of the Indian Companies Act, as it stood then, provided that when a winding‑up order had been made or a provisional liquidator had been appointed, no suit or other legal proceeding could be instituted against the company except with the leave of the Court and subject to such terms as the Court might impose.

Section 10(1) of the Industrial Disputes Act, 1947 authorised the appropriate Government, when convinced that an industrial dispute existed or was likely to arise, to issue a written order for one of three purposes: (a) to refer the dispute to a Board for the purpose of promoting settlement; (b) to refer any matter that appeared connected with or relevant to the dispute to a Court for inquiry; or (c) to refer the dispute or any related matter to a Tribunal for adjudication. The provision also stipulated that where the dispute concerned a public utility service and a notice under section 22 had been given, the Government should still make the reference unless it considered the notice frivolous, vexatious or the reference inexpedient, even if other proceedings under the Act had already commenced.

Section 33 of the same Act dealt with the preservation of conditions of service during the pendency of conciliation proceedings or Tribunal proceedings concerning an industrial dispute. It prohibited any employer, during such pendency, from (a) altering conditions of service to the prejudice of the workmen affected by the dispute, where those conditions had applied immediately before the commencement of the proceedings; or (b) discharging or punishing any workman concerned in the dispute, unless the employer obtained express written permission from the conciliation officer, Board or Tribunal, as the case required.

Section 33A, also extracted from the Act, set out special provisions for adjudication when an employer contravened the provisions of section 33 during the pendency of Tribunal proceedings. It allowed any aggrieved employee to lodge a written complaint in the prescribed manner with the Tribunal, which would then treat the complaint as if it were a dispute referred to or pending before it, adjudicate accordingly, and forward its award to the appropriate Government, thereby applying the relevant provisions of the Act.

The judgment explained that, where an employer violates the provisions of section 33 while a proceeding before a Tribunal is ongoing, any employee who feels aggrieved may submit a written complaint in the manner prescribed to that Tribunal. Upon receipt of such a complaint, the Tribunal is required to treat the complaint as if it were a dispute that had either been referred to it or was already pending before it. The Tribunal must then adjudicate the matter in accordance with the provisions of the Act, issue an award, and forward that award to the appropriate Government. The same provisions of the Act that govern ordinary industrial disputes will apply to the award and its enforcement. The judgment then turned to the application of section 171 of the Indian Companies Act, a provision that appears in Part V dealing with the winding up of companies. Section 171 stipulates that once a winding‑up order has been made, no suit or other legal proceeding may be instituted against the company unless the winding‑up Court grants leave, and the court may impose conditions on that leave. The court overseeing the winding up retains custody of all the company’s property and assets through the liquidator and directs the winding‑up process so that the assets can be realised and distributed equitably among the creditors. Consequently, any suit or other proceeding against the company requires the prior permission of the winding‑up Court, making such leave a mandatory prerequisite for the commencement of the proceeding. To determine whether section 171 applies to the reference in question, the court held that two inquiries are necessary: first, whether the reference constitutes a proceeding against the company, and second, whether the reference falls within the meaning of “legal proceeding” as defined in section 171.

The court observed that the lower tribunal had become confused about these points and had failed to appreciate the factual matrix correctly. The lower court appeared to assume that Gaya Sugar Mills Ltd. was itself a party to the reference and that the only defect in the reference order was the omission of the liquidator as a party. To resolve that defect, the lower court had held that, despite the winding‑up order, Gaya Sugar Mills Ltd. continued to exist as a legal entity and therefore could be made a party to the reference under section 10(1) of the Industrial Disputes Act. The present judgment rejected that conclusion as a misinterpretation of the reference. It clarified that the reference was actually between the management of the sugar factories listed in Appendix I and the workmen represented by the unions listed in Appendix II. Gaya Sugar Mills Ltd. was mentioned in item 2 of Appendix I only to identify the particular factory whose management was to be a party to the reference. The reference intended to bind the management of that factory, not the corporate entity itself. The State Government could not have been unaware that the company had entered liquidation and that a liquidator had been appointed and was leasing the factory to various lessees. Had the company itself been a party, the liquidator would have had to be named explicitly, which did not occur. Therefore, the reference did not constitute a proceeding against the company within the meaning of section 171, and the lower court’s analysis was deemed erroneous.

In item 2 of Appendix I the reference was intended to include, not the corporate entity itself, but the management of the sugar factory that belonged to Gaya Sugar Mills Ltd. The reference to the company was merely a way of identifying the particular factory whose management, whatever its composition, was to be a party to the reference. Consequently it was necessary to determine who actually comprised the “management” of the mills. The State Government could not have been unaware that the company had entered liquidation, that a court‑appointed liquidator had been installed, and that the liquidator was leasing the factory to various lessees. If the company itself had been a party to the reference, the liquidator would have had to be named as such; this was not done because the factory was being operated by the lessees under leases duly sanctioned by the court. Hence the liquidator was not in management of the factory; the sole individuals who were in management were the lessees who held the leases granted by the liquidator with the court’s approval. The Industrial Tribunal therefore erred in serving notice of the proceedings on the liquidator. Since the liquidator no longer managed the factory, he was not entitled to receive notice; the appropriate recipients of notice were the lessees who were then managing the factory. The liquidator wrote to the Tribunal stating that he had received the notice too late to attend. The Tribunal gave this letter scant courtesy, merely annotating at the foot of the letter that the hearing had already concluded and suggesting that only an inquiry with the Post Office could explain the delivery delay. Nevertheless, the Tribunal proceeded to issue its award on 17 February 1955 without the presence of the lessees who had obtained the lease from the liquidator. For all practical purposes the award was ex parte as far as those lessees, who at the date of the reference were the factory’s managers and the intended parties to the reference, were concerned. The appellant assumed management of the factory only after the reference was made and therefore could not, at the time of the reference, have been contemplated by the State Government as a party; moreover, no notice of the Tribunal’s proceedings was given to the appellant. It cannot be said, even by a stretch of imagination, that the company in liquidation was a party to the reference.

In this case the Court observed that the mills had been leased to lessees who thereafter operated the mills on their own account, not for or on behalf of the Company, and that the lessees bore the profit and loss of the mill operations. Consequently the Company was not a party to the reference, and the proceedings that began on 2 December 1954 before the Industrial Tribunal were not proceedings against the Company (in liquidation). The Court held that, when the terms of the notification that made the reference are properly construed, it is unnecessary to decide whether the reference constitutes a legal proceeding within the meaning of section 171 of the Indian Companies Act, and therefore it refrained from expressing an opinion on that issue. Turning to the second point, the Court examined the meaning of the term “employer” as used in sections 33 and 33A of the Industrial Disputes Act. Those sections contemplate the pendency of a proceeding concerning an industrial dispute, which requires a dispute to be raised between two parties. Section 2(k) defines an industrial dispute as any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, that is connected with employment, non‑employment, terms of employment or conditions of labour of any person. If this definition is substituted for the expression “industrial dispute” occurring in sections 33 and 33A, it becomes clear that the employer referred to must be the employer with whom the workers actually have the dispute; the term cannot be extended to an employer who merely discharges, punishes or alters the conditions of service of the workers. The Court noted that if the High Court’s interpretation were accepted, a dispute referred to the Industrial Tribunal could have arisen between employer A and its workmen, yet during the pendency of those proceedings employer B, who had no relationship with employer A, would be barred from dismissing, disciplining or altering the conditions of the same workmen solely because the workmen were interested in the pending dispute. The Court found that, in the absence of any connection between employer A and employer B, mere identity of the establishments or of the workmen does not suffice to bring employer B within the ambit of sections 33 and 33A. The Court further explained that the purpose of sections 33 and 33A, as observed in Automobile Products of India Ltd. v. Bukmaji Bala, is to ensure that industrial dispute proceedings already pending are concluded peacefully and that no employer, during the pendency of those proceedings, should take actions that could create new disputes and aggravate the strained relationship between employer and workmen.

In this case the Court explained that the purpose of the statutory provisions is to ensure that an industrial dispute that has been referred for adjudication to an Industrial Tribunal should be concluded in a peaceful manner and that, during the pendency of such proceedings, no employer should take any action of the kind mentioned in the relevant sections which might create fresh disputes and further aggravate the already strained relationship between the employer and the workmen. To achieve this purpose the legislation imposes a ban on the ordinary right that an employer possesses under the general law governing a contract of employment. Both Section 22 of the 1950 Act and Section 33 of the 1947 Act, which impose the ban, also contain a provision for the removal of that ban by granting express written permission in appropriate cases by the authority specified in those sections.

The Court then turned to the scope of the enquiry under Section 33 of the Industrial Disputes Act, referencing its earlier judgment in Atherton West and Co., Ltd. v. Suti Mill Mazdoor Union (2) [1953] S.C.R. 780, 787. In that judgment the Court held that the authority concerned must institute an enquiry and reach a conclusion as to whether there is a prima facie case for the discharge or dismissal of the workman and whether the employer, his agent or manager is not motivated by any improper motive nor resorts to any unfair practice or victimisation in connection with the proposed discharge or dismissal. The same ratio, the Court observed, applies where an employer proposes to change the conditions of service of the workmen concerned.

If this test is to determine whether an employer is entitled to discharge, punish or alter the conditions of service of the workmen without first obtaining written permission, then the employer who may act without such permission can only be the employer who is a party to the industrial dispute that is the subject of adjudication. An employer identified as “employer B” who has no relationship with “employer A”, the actual party to the dispute, cannot be said to have acted with improper motive or unfair practice in relation to the action he proposes against the workmen. Whether employer B may lawfully take such action must be decided in separate proceedings that may arise subsequently between him and his own workmen after the action has been taken. However, employer B is not bound to seek the written permission of the Industrial Tribunal that is hearing the dispute between the workmen and employer A, with whom he has no connection. This interpretation is more consistent with the principle underlying the enactment of Section 33, and therefore the Court held that the employer contemplated by Sections 33 and 33A of the Industrial Disputes Act must be the identical employer who is a party to the industrial dispute that is the subject of adjudication.

The Court explained that the employer referred to in sections 33 and 33A of the Industrial Disputes Act had to be the same employer with whom the workmen described as aggrieved under section 33 were in an existing employer‑employee relationship at the start of the proceedings covered by those sections. Accordingly, it was necessary to establish that the employer who later intended to take action within the prohibition created by section 33 was identical to the employer who was a party to the industrial dispute that was the subject of adjudication. If the latter employer had no connection or relationship with the former, then sections 33 and 33A would not apply at all. The Court noted that such identity could be proved, even when the employer had changed, by demonstrating that the new employer was merely a nominee or benamidar of the original employer, or by relying on the analogy of section 18(3)(c), which treats “his heirs, successors or assigns in respect of the establishment to which the dispute relates” as binding the award of the Industrial Tribunal upon them just as upon the original employer. The Court emphasized that these were the only circumstances under the Industrial Disputes Act in which the identity of the employer at the commencement of the reference and the employer who later sought to discharge, punish, or alter the conditions of service of the workmen could be linked. Without such identity, no question could arise as to the operation of sections 33 or 33A. Turning to the facts of the present reference, the Court observed that the record did not disclose who managed the Mills on 2 December 1954. The lease held by the former lessees, Guraru Cane Development and Cane Marketing Union Ltd., appeared to have expired by the natural termination of the lease, which was presumed to run until the end of the crushing season in November 1954. An application by the liquidator for a lease in favour of the appellant was filed and the Court granted this lease on 3 December 1954, indicating that the appellant could not have been in management of the Mills before that date. In reality, the lease was executed in favour of the appellant on 6 December 1954, and the liquidator handed possession of the Mills to the appellant on the same day. Consequently, the Court concluded that it could not be said that the appellant was part of the management of the Mills at the time the State Government made the reference.

The tribunal observed that the appellant could not be described as part of the management of Gaya Sugar Mills Ltd. at the time the State Government issued the reference. The reference was dated 2 December 1954, whereas the appellant only became lessee of the mills on 6 December 1954, after the lease had been executed and possession transferred by the liquidator. Consequently, a reference made on a prior date could not, by itself, bring the appellant within its scope. This interpretation was shared by the Industrial Tribunal, which failed to serve any notice on the appellant and instead gave notice of the proceedings to the liquidator of the company. Because the appellant was not in management of the mills, it could not be bound by the reference. Moreover, no effort was made either to modify the terms of the reference or to serve the appellant with notice of the impending tribunal proceedings. Under the Industrial Disputes (Central) Rules, 1947, which were framed by the Central Government pursuant to section 38 of the Industrial Disputes Act, rule 10 required that the place and time of hearing be communicated to the parties to the reference. Rule 11 obliged the tribunal to call upon the parties at the first sitting to present their case. The only circumstance in which the tribunal could proceed ex parte was when a party failed to attend or be represented without satisfactory cause, as provided by rule 19. Furthermore, rule 24 guaranteed that representatives of the parties had the right to examine, cross‑examine and address the tribunal when evidence was adduced. The whole procedural scheme presupposed that the parties to the reference received proper notice and participated either personally or through authorized representatives. The tribunal’s failure to give any notice to the appellant demonstrated that, in the circumstances, the tribunal did not regard the appellant as a party to the reference, and it could not be said that the appellant, which only became lessee on 6 December 1954, was a party to the reference dated 2 December 1954.

In the event that the former lessees were in management of the mills on 2 December 1954, there was no continuity of employer identity between them and the appellant. The appellant neither claimed under the former lessees nor could it be characterized as their “heirs, successors or assigns” within the meaning of section 18(3)(c) of the Industrial Disputes Act. There was no indication whatsoever that the appellant acted as a benamidar of the previous lessees. Accordingly, the appellant could not be deemed bound by the reference or by any award issued by the tribunal. Because the identity of the employer at the date of the reference differed from that at the time the acts complained of under section 33‑A of the Act were alleged to have been committed, the appellant was not required to obtain written permission from the tribunal under section 33 for the discharge, punishment, or alteration of service conditions of the workmen concerned. In the absence of such a requirement, section 33‑A could not be invoked, and the applications filed as Miscellaneous Cases Nos. 26 and 27 of 1955 were not maintainable. While the outcome was regrettable, the industrial disputes referred to the tribunal by the reference were of a general nature and would have encompassed the workmen employed at Gaya Sugar Mills Ltd. at the relevant time, but the appellant could not be held liable for them.

In this case, the Court observed that the appellant could not be bound by the reference or by the award made by the Industrial Tribunal because the identity of the employers on the date of the reference had not been established as being the same as the employer at the time when the acts complained of in the applications under section 33‑A of the Industrial Disputes Act were alleged to have been done. If that was the true situation, there was no question of the appellant having to obtain written permission from the Industrial Tribunal under section 33 of the Act before discharging, punishing, or effecting a change in the conditions of service of the workmen concerned. Consequently, section 33‑A could not be triggered and the applications filed as Miscellaneous Cases Nos. 26 and 27 of 1955 could not be maintained. The Court noted that this result was regrettable, because the industrial disputes referred to the Tribunal by the reference were of a general nature and would have covered the workmen employed in Gaya Sugar Mills Ltd. at all relevant times. The appellant had taken over the management of those mills from and after December 6, 1954, and it was clearly intended that any disputes, whether existing or anticipated, between the appellant and the mill’s workmen should be decided under the terms of that reference. Had the appellant been describable as part of the “management” of the mills on the date of the reference, i.e., December 2, 1954, the purpose of the reference with respect to the mill’s workmen would have been fulfilled. However, the Court explained that the several successive managements created by successive leases granted by the Court could not be said to fall within the phrase “managements of the Sugar factories specified in Appendix I,” even though Gaya Sugar Mills Ltd., Guraru was listed as item 2 therein. Interpreting the phrase in that way would have required that each new lessee, appearing during the period while the reference was pending, be treated as a separate party to the reference, necessitating fresh notices, fresh statements of case, and fresh hearings under the Industrial Disputes (Central) Rules, 1947. Such an outcome could not have been contemplated by the State Government when it made the reference. Accordingly, the Court concluded that the appellant was not a party to the reference dated December 2, 1954, and therefore could not be regarded as an “employer” within the meaning of sections 33 and 33‑A of the Industrial Disputes Act with respect to the workmen who filed the applications in Miscellaneous Cases Nos. 26 and 27 of 1955. If the workmen felt that they have been victimised or that there had been an

In this case the Court observed that if the workmen believed that an unfair labour practice had been committed, they might be able to start a new industrial dispute and ask the State Government to refer that dispute to an Industrial Tribunal under section 10(1) of the Industrial Disputes Act; the Court expressly declined to comment on that possibility. However, the Court made it clear that, given the facts before it, the workmen could not, in the present circumstances, raise an industrial dispute indirectly by filing an application under section 33‑A of the Act. The Court explained that the appellant was not required to obtain the written permission of the Industrial Tribunal before dismissing, punishing, or altering the service conditions of the workmen concerned, and the Court held that this requirement did not exist. Consequently, even if the allegations contained in the applications under section 33‑A were taken as true, no such application could be maintained against the appellant. On this basis, the Court concluded that the proceedings instituted in Miscellaneous Cases Nos. 26 and 27 of 1955 before Respondent No. 1, the Industrial Tribunal of Bihar at Patna, were beyond the Tribunal’s jurisdiction and therefore had to be set aside. The Court therefore allowed the appellant’s appeal, overturned the order dated 20 September 1956 issued by the High Court, and directed that a writ of certiorari be issued against Respondent No. 1 to quash the disputed proceedings. In addition, the Court ordered that the appellant be awarded costs for the entire litigation against the respondents who had contested the appeal. Accordingly, the appeal was allowed.