2005 (1) TMI 671 - SC - Companies Law

Whether Shri Ram Lal is entitled for reemployment, if yes, with what details ? Whether Shri Ghinak Prasad is entitled for reemploymenbt, if yes, with what details, with what details ? Whether Shri Sampath Prasad is entitled for reemployment, if yes, with what details ?

Issues Involved:
1. Successor-in-interest liability
2. Applicability of Section 25H of the Industrial Disputes Act, 1947
3. Interpretation of retrenchment under Sections 25F, 25FF, and 25FFF
4. Effect of the non-obstante clause in the Maruti Limited (Acquisition and Transfer of Undertakings) Act, 1980
5. Role of sympathy in statutory interpretation

Detailed Analysis:

1. Successor-in-interest liability:
The primary issue was whether Maruti Udyog Limited (the Appellant) could be considered the successor-in-interest of Maruti Limited (the Company) and thus liable to reemploy the Respondents. The Labour Court held that the Appellant was the successor-in-interest and liable to reemploy the Respondents with back wages. However, the Single Judge of the Punjab and Haryana High Court reversed this, stating that the Appellant could not be considered the successor-in-interest because the Company's liabilities were not taken over by the Appellant under the Acquisition Act.

2. Applicability of Section 25H of the Industrial Disputes Act, 1947:
The Respondents sought reemployment under Section 25H of the Industrial Disputes Act, 1947, which provides for reemployment of retrenched workmen. The Single Judge held that Section 25H was not applicable as the Respondents were not retrenched by the Appellant but by the Company, which had ceased operations and was wound up before the Appellant took over. The Supreme Court upheld this view, stating that Section 25H applies only when retrenchment occurs under Section 25F, not in cases of transfer or closure under Sections 25FF and 25FFF.

3. Interpretation of retrenchment under Sections 25F, 25FF, and 25FFF:
The Court emphasized that the term "as if" in Sections 25FF and 25FFF is significant and is used only for the purpose of computing compensation, not for extending other consequences of retrenchment under Section 25F. The Court cited the Constitution Bench decision in Hariprasad Shivshankar Shukla vs. A.D. Divikar, which clarified that retrenchment under Section 2(oo) does not apply to cases of genuine closure or transfer of undertakings. The Court held that since the Respondents were not retrenched under Section 25F, they could not claim reemployment under Section 25H.

4. Effect of the non-obstante clause in the Maruti Limited (Acquisition and Transfer of Undertakings) Act, 1980:
The Appellant argued that the Acquisition Act, being a self-contained code with a non-obstante clause, should prevail over the Industrial Disputes Act. The Court agreed, stating that the non-obstante clause in the Acquisition Act ensures that its provisions prevail over any inconsistent laws, including the Industrial Disputes Act. The Court noted that the Acquisition Act specifically provided for the transfer of only those employees who were in service on the appointed day, which did not include the Respondents.

5. Role of sympathy in statutory interpretation:
The Court explicitly stated that sympathy should not influence the interpretation of statutory provisions. It emphasized that legal principles and statutory schemes must be adhered to, even if the outcome appears unsympathetic to the affected parties. The Court cited multiple precedents to reinforce that sympathy cannot override clear statutory mandates.

Conclusion:
The Supreme Court set aside the judgment of the Division Bench of the Punjab and Haryana High Court, holding that the Appellant was not liable to reemploy the Respondents. The Court concluded that the Respondents, having been retrenched by the Company before its liquidation and the subsequent acquisition by the Appellant, were not entitled to reemployment under Section 25H of the Industrial Disputes Act, 1947. The appeal was allowed with no costs.

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