Industrial Disputes Act, 1957 - Section 2 (s) - Workman - Performing managerial functions involving dependent decisions - Whether excluded from the definition of workman - Held No.

Issues: The Petitioner was a member of the petitioner association. The duties of the petitioner included, inter alia, sanctioning of leave, recommend for promotion, filling up of the confidential report (CR) and participating in interviews. The Conciliation Officer, Respondent No. 2 herein, refused to refer the dispute for adjudication on the ground that the members of the petitioner association were not workmen within the meaning of section 2 (s) of the Act. The petitioners challenged the order of the conciliation officer by way of Writ before the Gujarat High Court.

Decision: Petition allowed.

Detailed Facts: There are different duties depending upon the establishment, but there is no definition given under the Act that what are the duties covered as of managerial nature and what the functions as in supervisory capacity. Therefore each and every case depends upon the fact. Merely having some powers, which normally a subordinate employee is not possessing, that itself is not sufficient to describe that function as managerial in nature. Ultimately managerial nature and administrative nature and supervisory capacity are the functions in which a concerned employee is free to take independent decision which will bind the company or establishment. Therefore, so long as, the employee is not having power to take independent decision in respect of an important issue which relates to managerial or supervisory capacity which ultimately binds the company, other functions are covered by the definition of section 2(s). That means to sanction leave, to recommend for promotion, to fill up the CR and to participate in interview are not powers which are required to be exercised by the concerned employee independently without any guidance of the higher authority and therefore, merely describing same as managerial function or supervisory capacity of administrative nature is not enough to exclude such employee from the scope of definition in section 2 (s).

Respondent No. 2 (the conciliation officer), merely considering the duties, which were little higher in comparison to ordinary workmen, had treated the function as managerial in nature, administrative in nature and of supervisory capacity. The word 'supervisory' has been interpreted by the Apex Court and in that interpretation the Apex court had observed that such employee is entitled to take free, independent decision in respect of his duties and functions which ultimately bind of the concerned employee and establishment or company. Therefore, looking to these duties, these are not the functions which are to be performed as an independent and free decision. Therefore, ultimately each employee has to work under the higher officer. These are the powers subject to confirmation from the higher authority. These are not independent powers and duties which are required to be performed by employee. Therefore, the decision which had been taken by respondent no. 2, merely considering the duties, was not proper while exercising the powers under section 10 read with section 12.

Therefore, said decision was beyond the jurisdiction of respondent no. 2 and required to be quashed and set aside.

(2) BENGAL IMMUNITY LTD. V. MUKUL KUMAR KAR [(2004) 106 FJR 290 (CAL)]

Industrial Disputes Act, 1947 - Section 33C - SICA - Section 22 - Sick Industrial Company - Statutory payments due to workmen - Whether protected - Held No.

Issues: The respondent workman was terminated from his services during his probationary period. The Industrial Tribunal held the dismissal to be bad and directed the employer company to make payments due to him. The Labour Court computed the monetary benefit in accordance with the award and the Deputy Labour Commissioner issued a recovery certificate to the Chief Metropolitan Magistrate before whom the proceedings were pending. The petitioner company challenged the issue of recovery certificate contending that the recovery of dues to the workman was bared under Section 22 of the SICA.

Decision: Petition dismissed

Detailed Facts: Though the language of section 22 is wide, import regarding suspension of legal proceedings from the moment an enquiry is started, till the implementation of the scheme or the disposal of an appeal under section 25, it will be reasonable to hold that the bar or embargo envisaged in section 22 (1) can apply only to such of those dues reckoned or included in the sanctioned scheme. Such amounts like sales tax, etc. which in the sick industrial company is enabled to collect after the date of sanctioned scheme legitimately belonging to the revenue, cannot be and could not have been intended to be covered within section 22. Any other construction will be unreasonable and unfair and will lead to a state of affairs enabling the sick industrial unit to collect the amounts due to the revenue and withhold it indefinitely and unreasonably. In order to see that the scheme is successfully implemented and no impediment is caused fro the successfully implemented and no impediment is caused for the successful carrying out of the scheme, the Board is enabling to have a say when the steps for recovery of the amounts or other coercive proceedings are taken against sick industrial company which, during the relevant time acts under the guidance / control or supervision of the Board (BIFR). Any step for execution distress or like against properties of the industrial company, or other similar steps should not be pursued which will cause delay or impediment in the implementation of the sanctioned scheme. In order to safeguard such state of affairs embargo or bar is placed under section 22 against any step for execution, distress or the like or other similar proceedings against the company without the consent of the Board or as the case may be, the appellate authority.

In the instant case, the case was not only registered in the year 1992 but the rehabilitation scheme under section 184 (4) was also sanctioned in that year. Therefore, in the garb of review in the year, 2002 the company could not take the advantage of the situation to frustrate the claim of the respondent / workman. In the view of the above there could not be any impediment in implementing the order passed in the earlier writ petition arising out of disputes before the Industrial Tribunal as well as before the Labour Court in connection with the releases of the wages of the workman. Thus, the writ petition stands dismissed.

(3) SANDVIK ASIA LTD, IN RE. [(2004) 121 COMP CAS 58 (BOM)]

Companies Act - Scheme of Capital reduction - Buy back of minority non-promoter shares - No option to reject the offer - Whether permissible - Held No.

Issues: The petitioner company has filed a scheme of capital reduction before the Bombay High Court for sanction. The scheme envisaged the purchase of entire minority shares (4.46%) held by non-promoters by the company with no option to them but to leave the company at a particular day. Though at the meeting six non-promoter members opposed the scheme the scheme was approved by the company with the majority votes of the promoter group. The minority shareholders opposed the scheme before the court on the grounds (i) that there was no reason to reduce the capital of the company by paying out the minority shareholding and (ii) that there was discrimination between one class of shareholders to other shareholders among the equity shareholders.

Decision: Objection allowed and the scheme was not sanctioned.

Detailed Facts: The basic issue in the instant case is that amongst the paid up equity shareholders themselves, there are two distinct groups in the sense one belonging to the promoters group and the other of non-promoters group. If the be so, the meeting ought to have been convened separately for the non-promoters group otherwise the meeting would be rather absurd and would result in injustice. Over and above in the instant case, the minority shareholders of 4.46 per cent, were not given any option under the proposal. By a particular date if they do not accept the offer of Rs.850 per share, in any event, they will have to leave the company and they will be paid Rs.850/- per share. In fact even a single minority shareholder is entitled to oppose, and if the court finds the scheme to be unjust, the court should not confirm the said reduction of share capital. Even with regard to the judgment of the High Court in the case of SEBI v. Sterlite Industries (India) Ltd. [2003] 113 Comp Cas 273 (Bom), wherein it was a scheme under section 391 read with section 100 of the Companies Act, in that context the court held that there was no necessity to buy back only section 77A of the Companies Act. Here the contention is that there ought to have been a scheme under section 391 of the Companies Act and not only by way of section 100 whereby the statutory protection offered to minority shareholders is denied. The emphasis is that the proposal had no option and in any event the proposal was highly inequitable, unjust, unfair, in the sense that the minority shareholders will have to leave the company. Therefore, the promoters group could virtually bulldoze the minority shareholders and purchase their shares at the price dictated by them, which is totally unfair and unjust.

It may be noted here that even in the case before the Division Bench in Sterlite case [2003] 113 Comp. Cas 273 [Bom], an option was given to the shareholders to purchase or to continue whereas that was not so in the instant case. Under these circumstances, I am fully in agreement with the submissions made by the counsel for the objectioners for the above reasons. Hence, the company petition stands dismissed with cost.

(4) CORE HEALTHCARE LTD. V. STATE OF GUJARAT [(2004) 121 COMP CAS 77 (GUJ.)]

SICA-Section 22 - Recovery of Sales Tax dues from the Sick Company - Rights of the State - Law points explained.

Issues: Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (th Act) provides for the sanction of the Board for Industrial and Financial Reconstruction (BIFR) to recover dues from a sick company registered with it. In the case under discussions the Sales Tax Department sought to recover the arrears of sales tax dues from the petitioner sick company. The petitioner resisted the recovery under the umbrella of section 22 of the Act before the High Court. The Court trifurcated the issue as (i) dues for the period up to the date of registration (pre-registration period) (ii) dues for the period commencing from the date of registration till the sanction of the rehabilitation scheme (enquiry period) and (ii) dues for the period after the date of sanction of the rehabilitation scheme (post-sanction period).

Detailed Facts: the court held that as far as the pre-registration period is concerned the sales tax dues collected by a sick company inter-mingles with the properties of the company and therefore the State is prohibited from recovering such arrears from any particular property of the company without obtaining prior consent of the BIFR. Sales tax amount collected during the enquiry period legitimately belongs to the State and even before the scheme for revival and rehabilitation of the company is to be taken up for consideration and before it is sanctioned, the State could recover the dues from the company. As far as the post - sanction is concerned the sales tax, which the company is enable to collect after the date of the sanction of the scheme, legitimately belongs to the State and such amount could be recovered by the State from the Company.

(5) SARASWATI BAI v. REGIONAL DIRECTOR, ESIC [(2004) 106 FJR 240 (KAR)]

Employees State Insurance Act, 1948 - Section 51 A - Employment injury - Death of workman in factory - compensation denied on the ground of suicide - Whether the workman died in the course of his employment - Held Yes.

Brief Facts: The appellant's husband was a workman who died by falling into the furnace. The application for compensation made to the respondent Corporation was rejected on the ground that the death had not arisen due to any employment injury but due to the voluntary act of the deceased workman because he had committed suicide by jumping into the furnace. The Insurance court also confirmed the decision of the Corporation. The appellant approached the High Court in appeal against the order of the Insurance Court.

Decision: Appeal allowed

Reasons: It is clear from section 51 A that no sooner an accident is found to have arisen in the course of an insured person's employment, the same shall also be presumed in the absence of any evidence to the contrary to have arisen out of that employment. In the instant case, since the deceased had died in the course of his employment, i.e., during the period of his employment in the factory, it must be presumed that the accident leading to his death had arisen out of his employment, i.e., during the period of his employment in the factory. It must be presumed that the accident leading to his death had arisen out of his employment. That presumption is, on a plain reading of the provision, rebuttable in nature, for the presumption will arise only if there is no evidence to the contrary. Stated differently, once the accident leading to the death of the employee is shown to have taken place in the course of his employment, the burden to show that the same did not arise out of the employment of the said employee will shift tot the employer.

The production of the statutory register so maintained would have thrown light on whether the deceased was on the date of the accident posted in the moulding section as alleged by the respondents or the melting section as suggested by the appellants, the non-production of a material documents touching upon the controversy would, therefore, give rise to an inference that if produced or summoned, the same would have gone against the respondents. Suffice it to say that the evidence produced by the respondents in an attempt to rebut the presumption arising under section 51A had failed to achieve that object. The finding of the State Insurance Court that the death of the deceased did not arise out of his employment was, therefore, rendered unsustainable.