1995 (11) TMI 480 - SC - Indian Laws

Summary

Issues Involved:
1. Liability of NTC for gratuity payable to an employee who ceased employment prior to the takeover of management.
2. Interpretation of Section 3(7) of the Textile Undertakings (Take Over of Management) Act, 1983.
3. Applicability of Section 6 of the Act concerning suspension of liabilities.
4. Construction of the Act in light of its Preamble.
5. Impact of the Textile Undertakings (Nationalisation) Ordinance, 1995 on the liability for gratuity.

Issue-wise Detailed Analysis:

1. Liability of NTC for gratuity payable to an employee who ceased employment prior to the takeover of management:
The core issue was whether NTC was liable for the gratuity payable to an employee who had resigned before the management of the textile undertaking was taken over by the Central Government. The employee, respondent No. 2, had resigned on March 22, 1983, and claimed gratuity under the Payment of Gratuity Act, 1972. The Controlling Authority initially directed respondent No. 3 (the original employer) to pay the gratuity. However, the Industrial Court later ruled that NTC could be liable if respondent No. 3 failed to pay. The High Court overturned this, holding that the liability arose before the takeover and was therefore the responsibility of respondent No. 3.

2. Interpretation of Section 3(7) of the Textile Undertakings (Take Over of Management) Act, 1983:
Section 3(7) of the Act explicitly states that any liability incurred by the textile company in relation to the textile undertaking before the appointed day shall be enforceable against the concerned textile company and not against the Central Government or the Custodian. The Supreme Court agreed with the High Court's interpretation that since the liability for gratuity arose on the date of resignation (March 22, 1983), it was enforceable against respondent No. 3 and not NTC, as the takeover occurred on October 18, 1983.

3. Applicability of Section 6 of the Act concerning suspension of liabilities:
The appellant argued that Section 6 of the Act, which allows the Central Government to suspend certain liabilities, should apply. However, the Supreme Court clarified that Section 6 pertains to liabilities accruing after the takeover and does not affect liabilities incurred before the takeover. Therefore, Section 6 could not be construed to suspend the liability for gratuity that arose before the appointed day.

4. Construction of the Act in light of its Preamble:
The appellant contended that the Act should be interpreted in light of its Preamble, which aims to protect the interests of workmen. However, the Supreme Court emphasized that the clear language of Section 3(7) could not be restricted by the Preamble. The Court noted that the Preamble's reference to protecting workmen's interests pertained to those employed at the time of the takeover, not those who had ceased employment prior.

5. Impact of the Textile Undertakings (Nationalisation) Ordinance, 1995 on the liability for gratuity:
The Court also considered the provisions of the Textile Undertakings (Nationalisation) Ordinance, 1995, which further supported the view that liabilities incurred before the takeover were to be borne by the original owner and not by NTC. The Ordinance explicitly stated that liabilities for the pre-takeover period were to be discharged from the compensation payable to the owner for the acquisition of the undertaking.

Conclusion:
The Supreme Court upheld the High Court's decision, affirming that NTC was not liable for the gratuity payable to respondent No. 2, as the liability arose before the management takeover. The appeal was dismissed, with no order as to costs.