INLAND STEAM NAVIGATION WORKS' UNION versus UNION OF INDIA AND ORS.

Citation: [2001] 1 S.C.R. 798 · Decided: 01-02-2001 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Case Partly allowed

Judgment (excerpt)

A 
INLAND STEAM NAVIGATION WORKS' UNION 
v. 
UNION OF INDIA AND ORS. 
FEBRUARY I, 2001 
B 
[S. RAJENDRA BABU AND SHIVRAJ V. PATIL, JJ.] 
Labour Laws: 
Industrial Disputes Act, 1947: Section 25 FF, 25 FFF and 33C (2)-
C A limited Company operating river service from West Bengal to Assam with 
its 8,000 personnel-Due to armed conflict with Pakistan, a major part of the 
company's operations were suspended leading to retrenchment on large 
scale-Seulemenl between lhe Management of the Company and its workers 
Union-Winding-up petition filed by the creditors of the Company-An 
application for sanctioning of the Scheme of Arrangement between Central 
D Inland Water Transport Corporation and the Company filed-One of the 
terms of the scheme was that the Corporation would take as many employees 
as it would be possible-The unabsorbed employees were to be paid 
compensation out of the funds to be supplied to it by the Government-The 
Scheme was sanctioned in 1967 and notice of closure issued on the same 
E day-Industrial dispute referred to the Industrial Tribunal-Tribunal held 
that there was complete closure of business with effect from the day of 
issuance of the notice of closure-Writ Petition filed challenging the said 
award-The High Court held that the appellant Union could claim 
compensation which required to be quantified by a Court in accordance with 
F 
law in the presence of necessary parties-On appeal, Held: Jn the present 
case there was no transfer of the underlaking from the Company to the 
Corporation-The Scheme of Arrangement was to close down the Company 
and whal was taken by the Corporation was a separate arrangemen/-/n 
case a company closes down due to unavoidable circumstances beyond the 
control of the employer, the workmen in service of the Company for more than 
G I 0 years immedia/ely before the closure are entitled to compensation under 
section 25 FFF of 1he Act-In the present case, the situation being different, 
it will be proper for the labour Court lo examine the claim of the Union/ 
workmen for compensation on an application moved under Sec/ion 33C (2) 
of the Act-The compensation shall be payable by lhe Government which will 
be a party to the said proceedings alongwith the erstwhile Company-
798 
INLAND STEAM NAVIGATION WORKS'S UNION v. U 0.1 
799 
Companies Act, 1956-Section 391 to 394. 
River Steam Navigation Co. Ltd., operating a river service from West 
Bengal tc Assam with the workforce of about 8,000 personnel underwent 
heavy losses during the armed conflict with Pakistan. The said losses resulted · 
A 
in large scale retrenchment. In the course of conciliation proceedings, the 
Management of the company arrived at a settlement with the appellant Union. B 
However, the creditors of the Company filed a winding-up petition in the High 
Court which, protracted for long. Later, an application was filed under 
_Sections 391to394 of the Companies Act, 1956 for sanctioning a Scheme of 
Arrangement and Compromise between the company and the Central Inland 
Water Transport Corporation Ltd. Under the Scheme, all the properties and C 
assets except some of the liabilities were to vest in the Corporation. The 
Corporation was left at its discretion to take over as many employees as 
possible and those not so taken over were to be paid compensation by the 
Company out of the funds the Government of India had agreed to supply. 
Further, upon approval of the Scheme, the Company was to be closed and on 
payment of all creditors it was to stand dissolved without winding up. The D 
Scheme was sanctioned.in 1967 when the appellant Union also appeared before 
the Court to protect the interest of the workers. An appeal before a Division 
Bench preferred by the appellant Union was dismissed. The Company issued 
~ 
notice of closure on the very day of sanctioning of the Scheme itself. 
Thereafter the Corporation issued fresh letters of appointment appointing E 
only 5173 employees out of the said 8000. After the decision in Central 
Inland Water Transport Corporation ltd. v. The Workmen & Anr., 11974) 4 
SCC 696, the Government of West Bengal referred the industrial dispute 
between the Company and the Corporation on the one hand and their workmen 
represented by the appellant Union on the other for adjudication upon the 
issues (i) whether there was closure of the Company within the meaning of F 
Section 25FFF of the Act, (ii) whether the Company was transferred to the 
Corporation, (iii) whether Secti

Excerpt shown. Read the full judgment & AI analysis in Lexace.