STATE OF U.P. AND. ANR. versus UPTRON EMPLOYEES UNION CMD-I AND ORS.

Citation: [2006] SUPP. 1 S.C.R. 377 · Decided: 26-04-2006 · Supreme Court of India · Bench: B.P. SINGH · Disposal: Appeal(s) allowed
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Judgment (excerpt)

STATE OF U.P. AND.ANR. 
A 
v. 
UPTRON EMPLOYEES' UNION CMD-I AND ORS. 
APRIL 26, 2006 
[B.P. SINGH AND AL TAMAS KABIR, JJ.] 
B 
Company Law: 
15. 
Sick Industrial Companies (Special Provisions) Act, 1985 (SICA): Section c 
Sick industry-Payment of salaries and wages to workmen of a company 
declared sick under S. I 5-Jurisdiction of Board of Industrial and Financial 
Reconstruction (BJFR) in respect of-Held: Jn respect of a sick industrial 
company, there is no legal obligation cast upon the State Government to pay D 
the wages due to its workmen-There is nothing in SICA which authorizes the 
BIFR to pass an interim order directing the State Government in such 
circumstances to pay the wages due to the employees of the sick industrial 
company. 
The respondent-Company was declared a sick industry under Section E 
15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). 
The Board of Industrial and Financial Reconstruction (BIFR) passed an 
interim order directing the appellant-State to make arrangements for 
payment of salaries/wages to the workers of the respondent-Company on 
humanitarian grounds till the proposed package of revival/rehabilitation 
of the respondent-Company was finalized by the BIFR. The appellant filed F 
an appeal before the Appellate authority under SICA challenging the 
direction for payment of salaries/wages to the workers of the respondent-
Company, which was dismissed. The High Court also dismissed the writ 
petition filed by the appellant. Hence the appeal. 
On behalf of the appellant, it was contended that the BIFR had no 
jurisdiction in a proceeding under SICA to make a direction to the State 
Government to pay the wages due to the workers of a sick company. 
Allowing the appeal, the Court 
377 
G 
H 
378 
SUPREME COURT REPORTS (2006] SUPP. I S.C.R. 
A 
HELD: In respect of a sick industrial company, even if it be a 
subsidiary of a Government company, there is no legal obligation cast upon 
the State Government to pay the wages due to the workmen. The rights 
of the workmen are governed by the relevant provisions of the Companies 
Act, I 956 where their claim has been accorded priority. Moreover, there 
B is nothing in the Sick Industrial Companies (Special Provisions) Act, 1985 
which authorizes the Board of Industrial and Financial Reconstruction to 
pass an interim order directing the State Government in such 
circumstances to pay the wages due to the employees of the sick industrial 
company. 1387-G; 388-A-BI 
C 
A.K. Bindal v. Union of India, 1200315 SCC 163, Officer & Supervisors 
D 
E 
of l.D.P.l. v. Chairman & MD., l.D.P.L., 120031 6 SCC 490 and Heavy 
Engineering Mazdoor Union v. State of Bihar, (196911 SCC 765, relied on. 
Workmen of Rohtas Industries v. Rohtas Industries, 119951Supp.4 SCC 
5 and Kapi/a Hingorani v. State of Bihar, (20031 6 SCC 1, held inapplicable. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6217 of 1999. 
From the Interim Order dated 23.12.1998 of the High Court of Judicature 
at Allahabad in C.M.A. No. 7329 (W) of 1998 in W.P. No. 4041 (MB) of 
1998. 
WITH 
C.A. Nos. 6171-6172 of 1999, and C.A. No. 6176 of 1999. 
Dinesh Dwivedi Abhishek Choudhary and Kavita Wadia for the 
F Appellants. 
Prateek Jalan, Malvika Trivedi T. Mahipal, A.K. Raina for R.D. 
Upadhyay, Vikram Dholakia, Niel Hilduth, Shiraz C. Patodia, Sanjay Kapur, 
Shubra Kapur, Rajiv Kapur, Miss Arti Singh, Meera Mathur, Mis. Manoj 
G Swarup & Co. (NP), S.K. Mehta, Sarla Chandra, M.T. George, Meenakshi 
Arora and Pradeep Misra for the Respondents. 
The Judgment of the Court was delivered by 
B.P. SINGH, J. The State of Uttar Pradesh is the appellant in these 
H appeals Civil Appeal No. 6176/1999 has been preferred against the order of 
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STATE OF U:P. v. UPTRON EMPLOYEES' UNION, CMD-1 [B.P. SINGH, J.]379· 
the Board .of Industrial and Financial Reconstruction (hereinafter referred to A 
as the '.'BIFR") dated 28.8.1998 whereby it directed. the State of Uttar Pradesh 
to. make on account payment to the workers towards their wages for ·the 
period June, L998 on wards on humanitarian grounds. Civil Appeal Nos. 
6171-6172/1999 has been preferred against the order of the High Court of 
Delhi whereby the writ petition preferred by the State of Uttar. Pradesh against . B 
the order of BIFR dated. 27.8.1997, as affirmed by the Appellate Authority 
vide its order dated 6.5.1998, was rejected. Cixil Appeal No, 621711999 has 
been preferred against the interim order of the High Court of
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