# M/s LML Ltd., Kanpur v. State Of U.P. & Ors

- **Citation:** (2022) 2 ILRA 801
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-01-25
- **Case number:** Writ C No.10015 of 2021
- **Bench:** Jayant Banerji
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-lml-ltd-kanpur-v-state-of-u-p-ors-48158
- **Pages:** 34

## Headnote

A. Labour Law - UP Industrial Dispute
Rules, 1957 - Rule 40 - Suo moto
reference by the State Government -
Workman's right of representation - Held,
clause (i) of sub-rule (1) of Rule 40 of the
U.P.
Rules
gives
discretion
to
the
workmen for opting for representation by
the persons mentioned therein - The
contention regarding non-entitlement of
the respondent-Union to represent the
interest of the workmen before the
Industrial
Tribunal
would
not
be
acceptable. (Para 19)
B. Labour Law - UP Industrial Dispute Act,
1947 - Sections 2(n) and 6-K - Lay off -
Lay off compensation - Entitlement of
workmen - Petitioner-company had gone
into liquidation - Effect - Settlement
occurred - Lay off compensation not duly
paid to the workmen - Consequence -
Industrial
Tribunal
answered
the
reference which pertained to the validity
of the lay-off by means of the award and
has recorded a definite finding about the
lay-off being unjustified and illegal -
Tribunal analyzed the settlement only for
802 INDIAN LAW REPORTS ALLAHABAD SERIES
consideration of the provisions and terms
of lay-off - Validity challenged - Held, the
finding of the Industrial Tribunal with
regard to the lay-off done on 15.04.2007
by
the
petitioner-company
being
completely
unjustified
and
illegal,
is
correct and deserves no interference.
(Para 41, 43 and 45)
C. Company Law - Insolvency and
Bankruptcy Code, 2016 - Sections 14, 33,
34, 36 and 53 - Company was declared
sick by BIFR and is not continuing with its
business - It is under the liquidation
process - Effect - Workmen's dues -
Payment - Liability to pay the back wages
etc. of the workmen, on whom lie - Held,
it is for the liquidator to assess the claims
of the workmen, taking into account the
impugned award of the Industrial Tribunal
- If any monetary liability arises on the
petitioner-company after the final disposal
of the matter, the liquidator undertook to
safeguard the interest of the workmen in
accordance with Section 53 of the Code.
(Para 46, 48, 50 and 61)
Writ petition disposed of. (E-1)
List of Cases cited:

## Text

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2 All. M/s LML Ltd., Kanpur Vs. State of U.P. & Ors.
801
12.12.2013 are bad in law and liable to be
set aside.

17. Secondly once the complainants
are not found the card holders of the
petitioner's shop, they cannot be treated as
aggrieved poerson. In light of the settled
law, this Court is of the firm view that only
aggrieved person can file complaint and in
the present case complainants are not the
aggrieved person. Therefore, on this ground
too, impugned orders dated 10.10.2011 and
12.12.2013 are bad in law and liable to be
set aside.

18. Further, petitioner in the writ
petition
specifically
pleaded
that
complainants are not card holders either in
Gram Sabha or shop of the petitioner, but
there is very vague denial in counter
affidavit
not
supported
with
any
documentary evidence or relevant facts. In
light of Order 8 Rule 5 Civil Procedure
Code as well as law laid down, this Court is
of the firm view that there must have been
specific denial supported with relevant
documents and facts. In lack of specific
denial it would be treated admission.
Therefore, on this ground too, impugned
orders dated 10.10.2011 and 12.12.2013 are
bad in law and liable to be set aside.

19. Accordingly, under such facts of
the case, writ petition is allowed. Writ of
certiorari is issued quashing the impugned
orders
dated
10.10.2011
passed
by
respondent no. 3 and 12.12.2013 passed by
respondent no. 2.

20. The respondents are directed to
restore the licence of fair price shop of the
petitioner and ensure supply of essential
commodities to the petitioner's fair price
shop for distribution.

21. No order as to costs.
----------
(2022)02ILR A801
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 25.01.2022

BEFORE

THE HON'BLE JAYANT BANERJI, J.

Writ C No.10015 of 2021

M/s LML Ltd., Kanpur ...Petitioner
Versus
State Of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Shubham Agarwal, Sri Amar Gupta, Sri
Anuj Aggarwal, Sri Divyam Agarwal, Sri
Navin Sinha

Counsel for the Respondents:
C.S.C., Ms. Bushra Maryam

A. Labour Law - UP Industrial Dispute
Rules, 1957 - Rule 40 - Suo moto
reference by the State Government -
Workman's right of representation - Held,
clause (i) of sub-rule (1) of Rule 40 of the
U.P.
Rules
gives
discretion
to
the
workmen for opting for representation by
the persons mentioned therein - The
contention regarding non-entitlement of
the respondent-Union to represent the
interest of the workmen before the
Industrial
Tribunal
would
not
be
acceptable. (Para 19)
B. Labour Law - UP Industrial Dispute Act,
1947 - Sections 2(n) and 6-K - Lay off -
Lay off compensation - Entitlement of
workmen - Petitioner-company had gone
into liquidation - Effect - Settlement
occurred - Lay off compensation not duly
paid to the workmen - Consequence -
Industrial
Tribunal
answered
the
reference which pertained to the validity
of the lay-off by means of the award and
has recorded a definite finding about the
lay-off being unjustified and illegal -
Tribunal analyzed the settlement only for
802 INDIAN LAW REPORTS ALLAHABAD SERIES
consideration of the provisions and terms
of lay-off - Validity challenged - Held, the
finding of the Industrial Tribunal with
regard to the lay-off done on 15.04.2007
by
the
petitioner-company
being
completely
unjustified
and
illegal,
is
correct and deserves no interference.
(Para 41, 43 and 45)
C. Company Law - Insolvency and
Bankruptcy Code, 2016 - Sections 14, 33,
34, 36 and 53 - Company was declared
sick by BIFR and is not continuing with its
business - It is under the liquidation
process - Effect - Workmen's dues -
Payment - Liability to pay the back wages
etc. of the workmen, on whom lie - Held,
it is for the liquidator to assess the claims
of the workmen, taking into account the
impugned award of the Industrial Tribunal
- If any monetary liability arises on the
petitioner-company after the final disposal
of the matter, the liquidator undertook to
safeguard the interest of the workmen in
accordance with Section 53 of the Code.
(Para 46, 48, 50 and 61)
Writ petition disposed of. (E-1)
List of Cases cited:
1. Parry & Company Ltd. Vs P.C. Lal, Judge of
the Second Industrial Tribunal; AIR 1970 SC
1334
2. B. Srinivasa Reddy Vs Karnataka Urban
Water Supply & Drainage Board Employees'
Assc. & ors.; (2006) 11 SCC 731
3. Tata Engineering and Locomotive Company
Ltd. Vs Their Workmen; (1981) 4 SCC 627
4.
Surendra
Kumar
Verma
Vs
Central
Government Tribunal-cum-Labour Court, New
Delhi & ors.; (1980) 4 SCC 443
5. National Engineering Industries Ltd. Vs
State of Rajasthan and ors.; (2001) 1 SCC
371
6. Newspaper Limited Allahabad Vs U.P. State
Industrial Tribunal; AIR 1960 SC 1328
7. Shree Chamundi Mopeds Ltd. Vs Church or
South India Trust Association; (1992) 3 SCC 1
(Delivered by Hon'ble Jayant Banerji, J.)

1. This writ petition has been filed by
the Company under liquidation through the
authorized signatory of the liquidator
against the following respondent:

"1. State of U.P. through State of
U.P.

through its Principal Secretary,
Labout Department,

Government of U.P. Secretariate,
Bapu Bhawan, Lucknow

2. Presiding Officer, Industrial
Tribunal(III), Kanpur,Uttar Pradesh

3. LML Mazdoor Ekta Sangathan

F-679, Barra-8, Kanpur"

2. The prayer in the petition is for
quashing/setting aside the award dated
19.2.2020 published on 12.3.2020 made by
the Industrial Tribunal. Further relief has
been sought for restraining the respondents
from proceedings against the petitionercompany pursuant to the aforesaid award.

3. The facts appearing in the present
petition is that the Company was engaged
in the business of manufacturing of geared
scooters and had an employee strength of
more than 6,000 employees including staff
and workers. Around the late 1990s in view
of the significant change in the consumer
behavior towards motorcycles as opposed
to
scooters,
the
Company
suffered
substantial losses. On inability to arrange
fresh working capital, the Company was
only able to achieved partial restructuring
in the year 2005. However, in view of the
rapid erosion of the Company's net worth, a
2 All. M/s LML Ltd., Kanpur Vs. State of U.P. & Ors.
803
reference was filed before the Board for
Industrial and Financial Restructuring1
under the provisions of the Sick Industrial
Companies
(Special
Provisions)
Act,
19852. In the proceeding of BIFR held on
8.5.2007,
an
operating
agency
was
appointed to prepare a revival scheme if
feasible.

4. The workmen of the petitionerCompany
resorted
to
strikes
and
demonstrations with effect from 27.2.2006,
which paralyzed its functioning and a
lockout was declared with effect from
7.3.2006.
In
order
to
salvage
the
Company's business, the management of
the Company and its workmen represented
by the registered union of the Company
namely Lohia Machines (LML) Karmchari
Sangh3, engaged in protracted tripartite
discussions and arrived at settlement on
13.4.2007 before the Additional Labour
Commissioner,
Kanpur
Region,
Conciliation Officer and Additional Labour
Commissioner (IR) U.P., Head Office
Kanpur. It is stated that since the inception
of the petitioner-Company, and at the time
of the negotiations, the interests of the
workmen were represented solely by
LMLKS. In terms of the aforesaid
settlement, it was decided that the workmen
would withdraw the strike and the lockout
would be lifted with effect from 15.4.2007;
that the petitioner-Company will take steps
to revive the establishment and only such
number of workmen shall be taken on work
and
employment
in
phases
as
per
requirement of work and production as far
as on departmental seniority basis, and all
other workmen, save and except those who
were required to resume work and
production, shall stand laid off. The
settlement further provided that the laid off
workmen would be entitled to receive lay
off compensation in the manner specified.

5. Thereafter, the lockout was lifted
with effect from 15.4.2007 and the
settlement was implemented. However, a
small splinter group of workmen describing
themselves as LML Mazdoor Union which
was neither a registered nor a recognized
union filed a Writ Petition No. 25445 of
2007 seeking to dissolve the settlement,
which petition was dismissed by this Court.
Subsequently, by means of a reference
order
dated
21.5.2008,
the
State
Government suo moto referred an industrial
dispute for adjudication to the Industrial
Tribunal (respondent no. 2) on the
following terms:

^*D;k lsok;kstdksa }kjk izfr"Bku esa fnukad
15-04-2007 ls fd;k x;k ys&vkQ mfpr rFkk
@vFkok oS/kkfud gS\ ;fn ugha] rks izfr"Bku ds
ys&vkQ ls izHkkfor Jfedx.k D;k fgrykHk@mi'ke
ikus ds vf/kdkjh gSa o vU; fdu fooj.kksa lfgrA^*

"Whether the lay-off done by the
employers in the industry from 15.04.2007
is correct and / or legal? If not, then what
benefits / relief are the workman of the
industry affected by lay-off are entitled to
and what other details."

(English translation provided)

6. The respondent no. 3, LML
Mazdoor Ekta Sangathan4, was granted a
registration certificate on 18.1.2008 under
the
Trade
Unions
Act,
1926.
The
registration
certificate
issued
to
the
respondent-Union was challenged before
this Court by way of Writ Petition No.
5903 of 2008 and Writ Petition No. 13658
of 2008. The aforesaid petitions were
allowed on 21.04.2008 holding that since
all the members of the respondent-Union
are laid off employees, therefore, the
registration was granted dehors the statute.
The Special Appeals, bearing numbers 834
of 2008 and 833 of 2008, filed by the
804 INDIAN LAW REPORTS ALLAHABAD SERIES
respondent-Union came to be dismissed by
this Court by a judgement dated 1.2.2013.
However, Special Leave Petitions filed
against the aforesaid judgement passed in
the Special Appeals are pending before the
Supreme court in which the effect and
operation of the order dated 1.2.2013 has
been stayed until further orders.

7. The order of reference dated
21.5.2008 made under Section 4K of the
Act was also challenged by the petitionerCompany in Writ Petition No. 33896 of
2007 which was dismissed by a judgement
delivered on 17.09.2010. The Special
Appeal No. 1699 of 2010 filed challenging
the judgement of the writ Court was also
dismissed by means of a judgement dated
31.1.2014.

8. A corporate insolvency resolution
process of the petitioner-company, which is
a corporate debtor, was initiated pursuant to
an order dated 18.5.2017 passed by the
NCLT admitting the company petition
bearing CP No. (IB)-55/ALD./2017 filed
under Section 10 of the Insolvency and
Bankruptcy Code, 20165. The NCLT
issued
consequential
directions
while
passing an order of moratorium under
Section 14 of the Code. Since, the
resolution plan submitted by one Rimjhim
Ispaat Limited was rejected by the
Committee of Creditors in the meeting held
on 21.1.2018, the NCLT, by means of its
order dated 23.3.2018 ordered liquidation
of the petitioner-company in the manner
laid down in Chapter III of the Code and
passed consequential directions. By the
order dated 9.4.2018, the NCLT appointed
a Liquidator. Pursuant to the order dated
23.3.2018 passed by the NCLT, the
petitioner-company
made
a
public
announcement dated 16.4.2018. Around
2016 claims of workmen/employees were
received. However, on perusal of the books
of accounts and record, the Liquidator in
accordance
with
the
provisions
of
Regulation 19(4) of the Insolvency and
Bankruptcy Board of India (Liquidation
Process) Regulations, 2016 admitted claims
of
6337
workmen/
employees.
The
petitioner-company
started
disbursing
funds of the employees/workmen whose
claims were admitted and till the date of
filing of the petition, the Liquidator had
disbursed
funds
amounting
to
Rs.
37,03,28,557/-
to
2946
workmen/employees
of
the
Corporate
Debtor/petitioner-company. However, by
means of the impugned award dated
19.2.2020, the Industrial Tribunal answered
the reference in favour of the workmen and
held that the lay off of workmen on
15.4.2007 was illegal and for the period of
lay off from 15.4.2007, the workmen are
entitled to entire wages, allowances and
benefits. It was further held that from
15.4.2007 till the closure of production of
the unit of the factory or till the date of
appointment
of
the
Liquidator,
the
workmen who have received lay off
compensation, the same would be adjusted
and the payable amount would be disbursed
within 30 days of the award by the
employer/Liquidator.

9. The contention of the learned
counsel for the petitioner-company is that
in view of the repeated strikes and unrest
created by the workmen as well as the
losses suffered by the Company, rapid
erosion of the Company's net wealth took
place whereafter a reference was filed
before the BIFR under the provisions of
SICA in which, in the proceedings of BIFR
held on 8.5.2007, an operating agency was
appointed to prepare a revival scheme, if
possible. The discussions between the
Company and the registered union of the
2 All. M/s LML Ltd., Kanpur Vs. State of U.P. & Ors.
805
Company, LMLKS, before the Additional
Labour Commissioner and the Conciliation
Officer, resulted in a settlement on
13.4.2007 which was given effect to. The
lockout was lifted with effect from
15.4.2007
and
the
settlement
was
implemented. It is contended that since the
registration of the respondent-Union, was
canceled by the order of the Court,
therefore, under the provisions of Section
6(I) of the U.P. Act, none of its officers
were entitled to represent the workmen
before the Industrial Tribunal. It is
contended that the validity of the settlement
was upheld in Special Appeal before this
Court, which order has become final and
the lay off compensation contemplated in
the settlement is strictly in accordance with
the provisions of the U.P. Act. The
contention is that after the repeal of the
SICA, steps were taken by the Company
before the NCLT under the provisions of
the Code in which an order of moratorium
was passed under the provisions of Section
14 of the Code. Given the order of the
NCLT, the Labour Court ought not to have
proceeded with the matter. It is further
contended that once the order of liquidation
was
passed
on
23.3.2018
and
the
Liquidator was appointed by NCLT by the
order dated 9.4.2018, no award could have
been made by the Industrial Tribunal for
grant of full back wages and other dues in
view of the provisions of Section 53 of the
Code. It is contended that there was no
material before the Industrial Tribunal to
demonstrate want of gainful employment of
the workmen after lay-off. Therefore, there
was no occasion to grant back wages to the
workmen. He has contended that the
Tribunal has vaguely referred to new
appointments being made without giving
any specific details as to which new
appointments were made and as such no
adverse inference can be drawn against the
petitioner-Company.
Claims
of
6337
workmen / employees of the petitionercompany had been admitted by the
Liquidator
and
funds
amounting
to
Rs.37,03,28,557/-
had
already
been
disbursed to the workmen/employees. It is
contended that pursuant to the award of the
Industrial Tribunal, the respondent-Union
has called upon the Liquidator to compute
the amount payable to the workers seeking
implementation of the award. It is stated
that the respondent-Union has not even
submitted a list of workers, whose interest
it claims to represent, and though, by a
letter dated 05.11.2020, has claimed a sum
of Rs.216.91 crores to be payable to 1338
workers, yet, it has sought payment of
wages for the entire work-force by a letter
dated 31.08.2020 that has been enclosed as
Annexure-16 to the writ petition. No
finding has been recorded in the award
regarding the number of the workmen of
the respondent-Union. Though the learned
counsel for the petitioner-company has
submitted a compilation of judgements and
several judgements are mentioned in the
pleadings, however, in support of his
contentions, he has relied upon the
following judgments:- Parry & Company
Ltd. Vs. P.C. Lal, Judge of the Second
Industrial
Tribunal6;
B.
Srinivasa
Reddy vs. Karnataka Urban Water
Supply & Drainage Board Employees'
Association & Ors.7; Tata Engineering
and Locomotive Company Ltd. v. Their
Workmen8; Surendra Kumar Verma vs.
Central
Government
Tribunal-cumLabour Court, New Delhi & Ors.9; and
National Engineering Industries Ltd. vs.
State of Rajasthan and Ors.10.

10.

Learned
counsel
for
the
respondent-Union, on the other hand, has
urged that wages were not paid to the
employees of the petitioner-company since
806 INDIAN LAW REPORTS ALLAHABAD SERIES
December 2006. The Union with which the
petitioner-company
entered
into
the
settlement, does not represent the majority
of the workmen. The circumstances led to
the workmen forming the respondentUnion, the registration of which was
challenged in a writ petition. It is
contended that in view of the interim order
passed by the Supreme Court in a Special
Leave Petition staying the operation of the
order of the Division Bench of this Court
passed in a Special Appeal, the registration
of the respondent-Union stood revived. It is
contended that even an unregistered Union
is not debarred from representing the
interest of a workman. In this regard, the
learned counsel has referred to the
aforesaid judgment of the Division Bench
of this Court in Special Appeal No.1699 of
2010 in which, while observing that
whether the circumstances existing after
seven years of the settlement still justify its
terms to be binding on more than 2500
workmen, which is about 80% of the total
number of workmen, which were employed
on the date of lock-out requires to be
examined by the Industrial Tribunal, the
Court held that it is not disputed that even
the workmen of unregistered Union may
make a reference by raising an industrial
dispute. Learned counsel, in this regard, has
referred to paragraph no. 4 of the judgment
of the Supreme Court in the matter of
Newspaper Limited Allahabad vs. U.P.
State Industrial Tribunal11. The learned
counsel has also urged that the Court had
further observed that the industrial dispute
had been referred suo moto by the State
Government and as such the satisfaction of
the State Government cannot be lightly
interfered with by the High Court nor the
settlement could be said to be binding on
the State Government for all times to come
if it is satisfied that there exists an
industrial dispute which needs to be
adjudicated and resolved. The Court had
further observed that the settlement was
inconclusive and was entered into to bring
temporary industrial peace and it did not
end the relationship of employer and
employee. The learned counsel has referred
to that part of the award which deals with
whether the layoff done on 15.02.2007 is
correct or legal, to contend that the
settlement was never filed on behalf of the
petitioner-company before the Industrial
Tribunal. It is contended that given the
definition of lay-off appearing in Section
2(n) of the U.P. Act, it was incumbent on
the
petitioner-company
to
have
demonstrated before the Industrial Tribunal
that circumstances existed justifying lay-off
by the petitioner-company. That having not
been done, it is contended, it is not open for
the petitioner-company to challenge the
award. It is further submitted that it is
evident from the cross-examination made
on behalf of the authorized representative
of
the
petitioner-company
that
no
documentary evidence was filed and
neither was there any material placed to
demonstrate that 50% of the lay-off
compensation was paid.

11. In rejoinder, Shri Navin Sinha,
learned Senior Advocate appearing on
behalf of the petitioner-company, has
contended that way back in the year 2006
itself, the petitioner-company had become
sick which finally led to the order of
liquidation passed by the NCLT under the
Code. It is contended that the petitioner
was not a healthy company where the
production was going-on in full swing that
could enable it to meet its statutory
liability.

12. Having heard the learned counsel
for the parties and perused the record, the
issue that arises for consideration is
2 All. M/s LML Ltd., Kanpur Vs. State of U.P. & Ors.
807
whether the award made by the Industrial
Tribunal was justified. For consideration of
the issue, the submissions on behalf of the
learned counsel require to be analyzed.

Representation
of
the
workmen
before the Industrial Tribunal:

13. Annexure No.7 to the writ petition
is an order issued on 21.05.2008 passed by
the ex-officio Secretary to the Labour
Department of the Government of Uttar
Pradesh communicating the opinion of the
Governor regarding the industrial dispute
between the employer and its workmen and
referring the same under Section 4-K of the
U.P. Act suo moto. The aforesaid order of
reference was challenged by the petitionercompany in a writ petition which came to
be dismissed on 17.09.2010. In the Special
Appeal filed by the petitioner-company,
M/s
L.M.L.
Limited12,
against
the
aforesaid order, the Appellate Court upheld
the settlement to be binding despite it being
unregistered,
however,
held
that
the
settlement is not binding on all the
workmen of the petitioner-company. It was
held as follows:-

"26. We find that though learned
Single Judge has committed an error in law
in holding that the settlement or agreement
to be binding must be registered under
Section 6-B of the Industrial Disputes Act
and has ignored the ratio of the judgment
in Herbertsons Limited vs. The Workmen of
Herbertsons Limited (supra) as well as the
judgment of Supreme Court in National
Engineering Industries Ltd vs. State of
Rajasthan (supra), in respect of the validity
and effect of the settlement arrived at
during
the
course
of
conciliation
proceedings, he did not commit any mistake
on the other count namely that in the
circumstances of the case the settlement is
not binding on all the workmen of the
petitioner-company. From the facts and
documents available on record we find that
the question, whether the agreement is
valid, fair and reasonable and whether at
such a distance of time, the open ended
provisions in the settlement giving the
option to the management-employer to take
some of the employees at its discretion
leaving the remaining employees with only
50% of lay off compensation and which has
also not been paid in full or even in part
awaiting finalisation of draft resettlement
plan before BIFR, is a question, which
requires to be considered by the Industrial
Tribunal.

27. The reference made by the
State Government, as to whether the lay off
was legal and valid and if it is held to be
illegal and invalid, the benefits to which the
laid off workmen are entitled, is a question,
which will also require adjudication of the
validity of the settlement.

28. The argument, that the
settlement is binding upon all the workmen,
does not meet the question raised by Ms.
Bushra Maryam that the settlement is not
valid in law inasmuch as it is unfair,
unconscionable and thus against public
policy. In the circumstances, even if the
settlement, which did not resolve the
dispute with all or even majority of
workmen and was not conclusive as it
provided for only part payment of lay off
compensation, when it was entered into on
13.4.2007, treated to be binding on all the
workmen,
the
question
whether
the
circumstances existing today, after seven
years still justify its terms to be binding on
more than 2500 workmen, which is about
80% of the total number of workmen which
were employed on the date of lock-out
requires to be examined by the Industrial
808 INDIAN LAW REPORTS ALLAHABAD SERIES
Tribunal. In case the settlement is not
found to be illegal as it left an unguided
discretion to the employer to take back a
group of workmen in employment leaving
the majority of workmen to be laid off for
an indefinite period providing payment of
only 50% of the laid of compensation, is
not found to be legal and valid, its binding
effect on all the workmen would not make
the settlement valid for all the workmen for
denying a reference.

29. The legal position, that even
the workmen of unregistered union may
make a reference, is not disputed and thus
even if the LML Mazadoor Ekta Sangathan,
Kanpur is not a registered union, it could
have raised an industrial dispute. In the
present case, the industrial dispute has
been referred suo moto by the State
Government, which makes the case of the
petitioner still weaker inasmuch as the
satisfaction of the State Government cannot
be lightly interfered with by the High Court
under Article 226 of Constitution of India,
nor the settlement could be said to binding
on the State Government for all times to
come, if it is satisfied that there exists an
industrial dispute which needs to be
adjudicated and resolved. The settlement in
any case on the face of its terms was
inconclusive and was entered into to bring
temporary industrial peace on 13.4.2007. It
did not end the relationship of employer
and employee.

30. We further find that even if
the
settlement
dated
13.4.2007
for
arguments sake was valid and binding on
all the workmen, its effect and consequence
on all the workmen cannot be considered to
be valid for all times to come and that at
this distance of time, when the settlement
has not worked out to benefit all the
workmen inasmuch majority of workmen
being more than 80% of the employees at
the time of lock out have not been paid the
full laid off compensation and are still
waiting for the settlement of such lay off
compensation, it cannot be said that there
is no bonafide or genuine industrial
dispute, which requires to be decided by
the Industrial Tribunal."

14. The validity of the registration
granted in favour of the respondent-Union,
is subject to adjudication before the
Supreme Court. It is iterated that the
registration
certificate
granted
on
18.01.2008 was quashed in a writ petition
which order was upheld in the intra-court
Special Appeal. The order passed in the
Special Appeal was stayed until further
orders by the Supreme Court on 21.02.2014
in Special Leave to Appeal (Civil) (CC)
No.21380-21381 of 2013 (Vijay Bahadur
Kushwaha & Anr. vs. Registrar, Trade
Unions, State of U.P. & Ors.).

15. The Supreme Court in the case of
Shree
Chamundi
Mopeds
Ltd.
vs.
Church
or
South
India
Trust
Association13, observed that quashing of
an order results in the restoration of the
position as it stood on the date of passing of
the order which has been quashed. The stay
of operation of an order does not, however,
lead to such a result. It only means that the
order which has been stayed would not be
operative from the date of passing of the
stay order and does not mean that the said
order has been wiped out from existence.

16.

Therefore,
the
order
of
cancellation
of
registration
of
the
respondent-Union, remains in abeyance
with effect from 21.02.2014 on which date
the Supreme Court stayed the order dated
01.02.2013 passed by this Court in Special
Appeal No.833 of 2008 and 834 of 2008.
2 All. M/s LML Ltd., Kanpur Vs. State of U.P. & Ors.
809

17. Learned Senior counsel for the
petitioner-company has relied upon the
provision of sub-section (3) of section 6-I
of the U.P. Act to demonstrate the
ineligibility of the respondent-Union to
represent the workmen before the Industrial
Tribunal. Section 6-I of the U.P. Act reads
as follows:-

"6-I.
Representation
of
the
parties.--(1) Subject to the provisions of
sub-sections (2) and (3), the parties to an
industrial dispute may be represented
before a Board, Labour Court, or Tribunal
in the manner prescribed.

(2) No party to any proceeding
before a Board shall be represented by a
legal practitioner, and no party to any
proceeding before a Labour Court or
Tribunal shall be represented by a legal
practitioner, unless the consent of the other
party or parties to the proceeding and the
leave of the Presiding Officer of the Labour
Court or Tribunal, as the case may be, has
been obtained.

(3) No officer of a Union shall be
entitled to represent any party unless a
period of two years has elapsed since its
registration under the Indian Trade Unions
Act, 1926, and the Union has been
registered for one trade only:

Provided that an officer of a
federation of unions may subject to such
conditions as may be prescribed represent
any party."

18. It has been observed by this court
in the Special Appeal of L.M.L. Limited
(supra) that the reference was made suo
moto by the State Government and that it
was always open to the workmen of the
petitioner-company who are members of
the respondent-Union, which is stated to be
unregistered, to raise an industrial dispute.
Rule 40 of the U.P. Industrial Disputes
Rules, 195714 reads as follows:-

"40. Representation of parties. -
(1) The parties may, in their discretion, be
represented before a Board, Labour Court
or Tribunal, -

(i) in the case of a workman
subject to the provision of sub-section (3)
of Section 6-1, by -

(a) an officer of a Union of which
he is member, or

(b) an officer of a Federation of
Unions to which the union referred to in
clause (a) above, is affiliated, and

(c) where there is no union of
workmen,
any
representative,
duly
nominated by the workman who are
entitled to make an application before a
Conciliation Board under any orders
issued by Government, or any member of
the executive, or other officer;

(ii) in the case of an employer, by

(a) an officer of a union or
Association of employers of which the
employer is a member, or

(b) an officer of a federation of
unions or associations of employers to
which the union or association referred to
in clause (a) above, is affiliated, or

(c) by an officer of the concern, if
so authorized in writing by the employer :

Provided that no officer of a
federation of unions shall be entitled to
represent the parties unless the federation
810 INDIAN LAW REPORTS ALLAHABAD SERIES
has
been
approved by
tire
Labour
Commissioner for this purpose.

(2) A party appearing through a
representative shall be bound by the acts of
that representative.

(3) .............

(4) .............

(5) .............

(6) .............

(7) .............

(8) ............."

19. Therefore, clause (i) of sub-rule
(1) of Rule 40 of the U.P. Rules gives
discretion to the workmen for opting for
representation by the persons mentioned
therein. It has not been stated in this
petition
that
who
was
the
person
authorized by the workmen to represent
them and appear before the Industrial
Tribunal. It is also not known on which
date was the authority letter filed on
behalf of the workmen before the
Industrial Tribunal. In any view of the
matter, an authority letter filed after the
aforesaid interim order of the Supreme
Court dated 21.02.2014, even by an
officer of the respondent-Union would
anyway enable him to represent the
workmen. For that matter, even if such
letter of authority was filed prior to the
aforesaid interim order of the Supreme
Court, such an officer would be enabled
to represent after 21.02.2014 in view of
the interim order of the Supreme Court.
Therefore, the contention regarding nonentitlement of the respondent-Union to
represent the interest of the workmen
before the Industrial Tribunal would not
be acceptable.

20. While placing the judgment in
the case of B. Srinivasa Reddy, the
learned
counsel
for
the
petitionercompany has specifically referred to
paragraph no.38 thereof in which it is
held as follows:-

"38. In the writ petition filed by
Respondents 1 and 2 their locus standi to
challenge the appointment of the appellant
was asserted in the following words:

"The petitioner Association is a trade
union registered under the Trade Unions
Act, 1926. The petitioner is the only
registered trade union existing in the 2nd
respondent Board. The Board has held
several negotiations with the petitioner
Union with regard to the service conditions
of the employees of the 2nd respondent
Board since its formation in the year 1986.
The Board has entered into several
settlements with the petitioner Union with
regard to their service conditions. The
petitioner which is a recognised trade
union is entitled to agitate the matter with
regard to the appointment of the 3rd
respondent to the Board. The petitioner is
concerned about the functioning of the 2nd
respondent Board, and as such is entitled
to question the appointment of the 3rd
respondent as Managing Director on
contract basis. Hence, the petitioner has
locus standi to file this writ petition."
(emphasis supplied)

These averments were established
to be false. The registration of the first
respondent under the Trade Unions Act
had been cancelled as early as on 2-111992. It is not a registered and recognised
union. In fact, it was pointed out that the
2 All. M/s LML Ltd., Kanpur Vs. State of U.P. & Ors.
811
one
recognised
association
is
the
Karnataka Urban Water Supply and
Drainage Board Officers' and Employees'
Association and the first respondent does
not have even a handful of members. The
fact of cancellation of registration of the
first respondent came to the knowledge of
the appellant long after the disposal of the
earlier Writ Petition No. 44001 of 1995
wherein the Court had given a finding that
the first respondent has locus standi to
challenge the appointment of the appellant
to the post of Managing Director of the
Board solely on the ground that it is a
registered trade union. In our opinion, the
High Court gravely erred in refusing to
examine the question of locus standi on the
ground that it is decided in the earlier writ
petition which operates as res judicata and
that the petitioners even otherwise have
locus standi. Chapter III of the Trade
Unions Act, 1926 sets out rights and
liabilities of the registered trade unions.
Under the said enactment, an unregistered
trade union or a trade union whose
registration has been cancelled has no
manner of right whatsoever, even the rights
available under the ID Act have been
limited only to those trade unions which
are registered under the Trade Unions Act,
1926 by insertion of clause 2(qq) in the ID
Act w.e.f. 21-8-1984 defining a trade union
to mean a trade union registered under the
Trade Unions Act, 1926."

21. In view of the facts and
circumstances of the present case, the case
of B. Srinivasa Reddy, is distinguishable.
On the other hand, in the judgement of the
Supreme Court in Newspapers Ltd.
(supra) it was observed as follows:-

"4. Then it was urged that the
association which sponsored the case of
Respondents 3 to 5 was an unregistered
body and that made the reference invalid.
Both the courts have held, and rightly, that
it is not necessary that a registered body
should sponsor a workman's case to make
it an industrial dispute. Once it is shown
that a body of workmen, either acting
through their union or otherwise had
sponsored a workman's case it becomes an
industrial dispute."

22. Under the circumstances, the
challenge to the representation by the
respondent-Union in seeking the reference
or in appearing before the Industrial
Tribunal cannot be sustained.

Consideration of the settlement
by the Industrial Tribunal:

23. As regards the settlement dated
13.4.2007, its scope and extent has already
been discussed by the judgement dated
31.1.2014 in the aforesaid Special Appeal
of M/s L.M.L. Limited (supra). Lay-off by
the petitioner-Company formed part of the
settlement. The issue regarding lay-off was
the subject matter of the reference made
suo moto by the State Government to the
Industrial Tribunal which, in turn, has
answered the reference aforesaid in favour
of the workmen.

24. It, however, needs to be
mentioned that the reference by the State
Government does not refer to the workmen
who are the members of any particular
Union, but, refers to the workmen who
were laid off. Given the unrest among the
workers with regard to their disengagement
as a result of lay off, the State Government
suo moto made the order of reference under
Section 4-K of the U.P. Act. It is pertinent
to mention here that the award of the
Industrial Tribunal is in respect of the
workers who were laid off by the
812 INDIAN LAW REPORTS ALLAHABAD SERIES
petitioner-company on 15.4.2007, and not
only in respect of workmen having
membership of any particular Union.
Interestingly, it appears from the award
itself that the registered Union which had
signed the settlement, namely, LMLKS,
had appeared before the Industrial Tribunal
and had filed a copy of the settlement dated
13.04.2007
as
an
enclosure
to
its
application 33/D. However, there is no
material on record to demonstrate that it
opposed the respondent-Union.

25. As far as the settlement dated
13.04.2007 being binding on the parties to
the settlement is concerned, the Court in
the Special Appeal of M/s LML Limited
(supra) has already affirmed that position,
but, the Court has also observed that in the
circumstances of the case, the settlement is
not binding on all the workmen of the
petitioner-company. The Court went on to
observe that whether the agreement is
valid, fair and reasonable and whether at
such a distance of time, the open ended
provisions in the settlement giving the
option to the management-employer to take
some of the employees at its discretion
leaving the remaining employees with only
50% of lay off compensation and which
was also not paid in full or even in part
awaiting finalisation of draft resettlement
plan before BIFR, was a question, which
required consideration by the Industrial
Tribunal. The Court also held that the
reference made by the State Government
was
one which
would
also
require
adjudication about the validity of the
settlement dated 13.04.2007.

26. As referred to above, the
settlement dated 13.04.2007 was not filed
by the petitioner-company before the
Industrial Tribunal, but it was filed by the
registered Union, LMLKS. The Industrial
Tribunal has observed that with regard to
the rationale and legality of the settlement,
no documentary or oral evidence was
furnished by the employers which could
have demonstrated that the settlement was
lawful and logical. It is observed by the
Industrial Tribunal that Section 2(n) of the
U.P. Act specifies all conditions under
which lay-off can be made, but the lay-off
done by the employers was shown to be
due to the crisis of working capital, which
is contrary to the provisions of Section
2(n). It is pertinent to mention here that the
Industrial Tribunal has observed that from
15.04.2007, for a continuous period of 10
years, the workmen are without any work
and despite the respondent-Union opposing
the lay off, the lay-off was not brought to
an end and no work was allotted to them.
The Industrial Tribunal has further held
that in the settlement no additional benefit
has been given to the workmen and they
were entitled to lay-off compensation, but
lay off compensation has not been paid in
its entirety which is improper and illegal.
The Industrial Tribunal further noticed that
the partial payments of the compensation
for the lay-off that was being made from
the year 2017 was stopped from March,
2017 and accordingly, it held that it cannot
be assumed that by means of the
settlement, approval had been given to the
petitioner-company to keep the workmen
laid off for an indefinite period of time and
not
make
payment
of
the
entire
compensation.

27. Section 2(n) of the U.P. Act reads
as follows:-

"(n)
'Lay-off'
(with
its
grammatical
variations
and
cognate
expressions) means the failure, refusal or
inability of an employer on account of
shortage of coal, power or raw materials
2 All. M/s LML Ltd., Kanpur Vs. State of U.P.