2017 (12) TMI 847 - HC - Companies Law

Workmen to approach the NCLT - Held that - Whether or not there was/is any violation, and the effect thereof and the consequences following therefrom, would be examined by the NCLT. While dealing with the aforesaid situation, the NCLT would examine the directions given and findings recorded in the order passed by the Supreme Court in Ghanshyam Sarda And Others Versus M/s. Shiv Shankar Trading Co. And Others 2014 (12) TMI 982 - SUPREME COURT. The workmen and the respondents would be entitled to refer to the subsequent order passed by the Supreme Court in the contempt proceedings dated 18th November, 2016. In view of the aforesaid position, learned Senior counsel for the petitioner does not press his prayer challenging vires of Section 4 (b) of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 as modified by the Code. He further submits that the question as to whether Trade Unions can invoke the jurisdiction of NCLT under the Code is subjudice before the Supreme Court and they would abide by the decision of the Supreme Court. This statement is without prejudice to the rights and contentions of the petitioner-trade union to challenge the vires of the Code, if so advised, for it is submitted that the trade unions have been wrongly denied the right to invoke the jurisdiction of the NCLT under the Code. We direct that the interim orders passed on 16th June, 2017, 6th July, 2017 and 21st August, 2017 would continue and would be in operation for a further period of 2 months from today so as to enable the workmen to approach the NCLT. It will be, thereafter, for the NCLT to decide whether or not to continue with the said interim orders and / or to modify, amend or vacate the same. Similarly in case there is violation of the directions given in the order dated 26th May, 2017, by which it was directed that the Company would keep ₹ 2.5 crores in reserve, it will be open to the petitioner to invoke contempt jurisdiction and also for the workmen to highlight the said fact before the NCLT.

Summary

Issues:
Challenge to Section 4(b) of the Sick Industrial Companies (Special Provision) Repeal Act, 2003 under Article 226 of the Constitution of India. Interpretation of provisions of the Insolvency & Bankruptcy Code, 2016. Jurisdiction of the National Company Law Tribunal (NCLT) under the Code. Examination of directions given by the Supreme Court in previous orders. Allegations of violation of court orders by respondent No. 3-company. Consideration of contempt proceedings.

Issue 1: Challenge to Section 4(b) of the Sick Industrial Companies (Special Provision) Repeal Act, 2003
The J.K. Jute Mills Mazdoor Ekta Union challenged Section 4(b) of the Act under Article 226 of the Constitution, alleging that the Insolvency & Bankruptcy Code, 2016 did not provide an effective remedy to implement directions of the Supreme Court. The petition sought appropriate orders from the Union of India and appointment of a court Receiver.

Issue 2: Interpretation of provisions of the Insolvency & Bankruptcy Code, 2016
The counsels for both parties agreed on the operational creditor status of the workmen of M/s J.K. Jute Mills under the Code. They acknowledged the entitlement of workmen to invoke NCLT's jurisdiction under relevant sections of the Code.

Issue 3: Jurisdiction of the National Company Law Tribunal (NCLT) under the Code
The consensus was reached on the scope and power of NCLT under the Code. It was agreed that NCLT could examine directions issued by the Supreme Court under Sections 47 and 49 of the Code without any limitation period restriction.

Issue 4: Examination of directions given by the Supreme Court in previous orders
The directions given by the Supreme Court in previous orders were deemed examinable under Sections 47 and 49 of the Code if the conditions for invoking these provisions were met. NCLT was identified as the appropriate forum to consider and undertake these directions.

Issue 5: Allegations of violation of court orders by respondent No. 3-company
Allegations of violation of court orders were made against respondent No. 3-company, with conflicting assertions from the parties involved. The matter was left open for examination by NCLT to determine any violations and their consequences.

Issue 6: Consideration of contempt proceedings
The judgment clarified that in case of violations of court orders, including the directions given in the order dated 26th May, 2017, the petitioner could file contempt proceedings. The workmen were also granted the right to raise such issues before NCLT.

In conclusion, the writ petition challenging Section 4(b) of the Act was not pressed further, and the interim orders were extended to allow the workmen to approach NCLT. The judgment highlighted the importance of NCLT's role in examining violations and directions issued by the Supreme Court, emphasizing the need for adherence to court orders and the provisions of the Insolvency & Bankruptcy Code, 2016.