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2016 (2) TMI 777 - HC - Companies LawLocus standi to make the application - prayer for impleadment - sanction of Scheme of Compromise under companies act - the effect is that all the secured creditors have been paid, though the substantial dues of the workmen, who have first priority as per Section529A of the Companies Act, and who are to be given overriding preferential payment, are still pending - whether Representative Union is authorized to represent the workmen and no other recognized union or individual can do so - whether the applicant cannot claim to be the representative of the workmen? - Held that - The applicant has no right to appear or act in the proceedings under the GIR Act, where the Representative Union has entered appearance and has acted as a representative of the employees. The allegations of malafide and loss of confidence in the Representative Union, therefore, have no relevance in view of the dictum of the Supreme Court in the case of Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills 2008 (7) TMI 994 - SUPREME COURT . A submission has been advanced on behalf of the applicant that this Court may consider the present application as one for leave to appear at the hearing of the petition, under Rule34 of the Rules. The applicant had notice of the petition which, admittedly, was advertised. It, however, did not file any objections within the stipulated period of time. It has now appeared belatedly by the present application for joining. This Court is unable to accede to the submission regarding leave to appear, in view of the total lack of reasons why objections were not filed at the relevant point of time. Further, in view of the settled position of law, as the applicant is not the Representative Union or even a recognized one, but appears to be a loose body of workmen without any legal status, it is not possible to grant the prayer for impleadment. The interest of the workmen can be protected by the Representative Union at the relevant point of time. For this purpose, the presence of the applicant is not necessary. Mr.S.I.Nanavati, learned Senior Advocate has clarified that the secured creditors have been paid by the Sponsor of the Scheme and not through the funds of the Company. This aspect further reduces the relevance of the submissions made on behalf of the applicant. For the aforestated reasons, this Court is of the considered view that the applicant, not being the Representative Union, has no locus standi to pray for impleadment as a partyrespondent in the Company Petition, especially as the Representative Union is already there. The application, being devoid of merit, deserves to be rejected.
Issues Involved:
1. Whether the applicant can be impleaded as a party-respondent in Company Petition No. 264/2008. 2. The role and authority of the Textile Labour Association (TLA) as the Representative Union. 3. The legal implications of the cancellation and subsequent conditional restoration of TLA's registration. 4. The relevance of Sections 529 and 529A of the Companies Act in the context of the proposed Scheme of Compromise. 5. The procedural and legal requirements for filing objections and seeking impleadment in company petitions. Issue-wise Detailed Analysis: 1. Impleadment of the Applicant: The applicant, Prakash Mills Kamdar Samiti, sought to be joined as a party-respondent in Company Petition No. 264/2008, claiming to represent the majority of the workmen of the company. The applicant argued that the TLA, the Representative Union, had not taken the workmen into confidence and had colluded with the scheme sponsors. The applicant contended that its impleadment was necessary to protect the interests of the workmen and to bring the correct facts to light. 2. Role and Authority of TLA: The court emphasized that under the Gujarat Industrial Relations Act (GIR Act), the TLA is the duly recognized Representative Union. The TLA had already given its consent to the Scheme of Compromise through an affidavit filed on 26.07.2008. The Supreme Court in Shivanand Gaurishankar Baswanti Vs. Laxmi Vishnu Textile Mills and others held that the decision of a Representative Union is binding on all workmen, including those who are not members of the union. The court reiterated that only the Representative Union has the authority to represent the workmen, and no other body or individual can do so. 3. Cancellation and Conditional Restoration of TLA's Registration: The applicant argued that the TLA's registration was canceled by the Deputy Registrar under the Trade Unions Act, 1926, and although it was conditionally restored by the Industrial Tribunal, the TLA was prohibited from taking any policy decisions without the court's permission. The court noted that the policy decision to sanction the Scheme had already been taken by the TLA in 2008, and the subsequent cancellation and conditional restoration of registration could not retrospectively affect that decision. The TLA still retained its status as the Representative Union. 4. Relevance of Sections 529 and 529A of the Companies Act: The applicant invoked Sections 529 and 529A, claiming that workmen's dues had priority and should be paid before secured creditors. The court clarified that these sections come into play during the distribution of the company's assets in winding-up proceedings. Since the present case involved the revival of the company through a Scheme of Compromise, these provisions were not applicable. 5. Procedural and Legal Requirements: The court highlighted that the applicant had not filed any objections within the stipulated period after the petition was advertised, as required by Rule 34 of the Companies (Court) Rules, 1959. The applicant's delay in seeking impleadment was unexplained, and the court found no reasonable cause or cogent reasons for the late application. The court also noted that the applicant was not a registered or recognized body and lacked the legal status to represent the workmen. Conclusion: The court concluded that the applicant, not being the Representative Union, had no locus standi to be impleaded as a party-respondent in the Company Petition. The TLA, as the Representative Union, was already representing the workmen, and its decision to sanction the Scheme was binding. The court rejected the application for impleadment, emphasizing that the interest of the workmen could be protected by the Representative Union. The application was found to be devoid of merit and was accordingly dismissed.
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