w w w . L a w y e r S e r v i c e s . i n

General Labour Union & Another v/s Arjandas Metal Industries Pvt. Ltd. & Others


    Decided On, 22 February 2002

    At, High Court of Judicature at Bombay


    Mr. Sanjay Singvi with Mr. Bhavesh Parmar i/by Mr. Colin Gonsalves for petitioners. Mr. S.K. Talsania i/by Mr. R.V. Paranjape for respondents.

Judgment Text


The petitioners have filed this petition, alleging that the respondents have wilfully disobeyed the order dated 18th April, 2000 passed by this Court in W.P. No.610/2000 and thereby committed contempt of the Court. Petitioner No.1 is a registered Trade Union, representing the employees in respondent No.1 Factory. Respondent No.1 is a private limited company, engaged in the manufacture of non-ferrous metals. Respondent No. 2 is the Managing Director of respondent No.1 and respondent No. 3 is the wife of respondent No. 2 and also a Director of respondent No.1. It appears that there was a Memorandum of Understanding (hereinafter referred to as MOU for short) between the parties on 24th September, 1989 and 29th April, 1999 as per which the respondents were liable to pay to 67 workers working in the factory their earned wages and also give certain other benefits. The respondents, however, failed to give benefits of both the MOUs to their workers. Hence, the petitioner union filed three complaints bearing (ULP) Nos. 1714/1998, 727/1999 and 971/1999 in the Industrial Court, Mumbai. The petitioner union also moved separate applications for interim reliefs. By the order dated 6th August, 1999 the Industrial Court, inter alia, directed the respondents to comply with the terms of the MOU dated 24th September, 1998 and also directed them to pay to these workers, their wages and other monetary benefits. By the same order, the respondents were restrained from transferring, selling or creating any third party interest in the premises, plant and machinery. By another order dated 15th November, 1999, the Industrial Court directed the respondents to pay to their workers monetary benefits, flowing from the settlement dated 29th April, 1999. It was further clarified that the workers will be entitled to wages from 6th May, 1999 to 2nd October, 1999.

2.Thereafter, the respondents moved an application before the Industrial Court and the learned Member of the Industrial Court by his order dated 25th January, 2000 kept both the interim orders dated 6th August, 1999 and 15th November, 1999 in abeyance for a period of one year from the date of starting of the manufacturing activities. He further directed the respondents to pay the workers first instalment of Rs.5000/- on the date of restarting the manufacturing activities. While passing this order, the learned Member of Industrial Court expressed his opinion that the respondents needed to be given an opportunity to restart its manufacturing activities as it was heading for a closure. Thus in effect, the learned Member stayed the operation of his own earlier orders dated 6th August, 1999 and 15th November, 1999. Feeling aggrieved thereby, the petitioner union filed writ petition No. 610/2000, challenging the said order. The learned Single Judge (Dr. Pratibha Upasani, J.) admitted the petition on 18th April, 2000 and granted interim reliefs in terms of prayer clauses (e) and (f) of the petition which are as under:

(e) pending hearing and final disposal of this petition for an order staying the operation of the two orders of the Industrial Court, Mumbai dated 25.1. 2000 in Complaint (ULP) No. 1714 of 1998, 727 of 1999 and 971 of 1999 and 21.2.2000 in Complaint (ULP) No. 971 of 1999.

(f) pending hearing and final disposal of this petition for an order directing the Respondent Nos.1 and 2 to forthwith pay all the wages and other benefits of the workers in accordance with the MOU dated 24.9.1998 and 29.4.1999 and contract or employment and the Industrial Court orders dated 6.8.1999 in Complaint (ULP) No.1714 of 1998 and order dated 15.11.1999 in Complaint (ULP) No.727 of 1999. While admitting the writ petition, the learned Judge expressed her surprise and dissatisfaction about the impugned order dated 25th January, 2000 by observing that the same is intriguing and that it is difficult to understand why the Industrial Court has taken such a somersault. Any way the grant of interim reliefs in terms of prayer clauses (e) and (f) of the writ petition in favour of the petitioner union was to restore the earlier two orders dated 6th August, 1999 and 15th November, 1999 passed by the Industrial Court.

3.The petitioners have alleged that despite the order dated 18th April, 2000 passed in writ petition No. 610/2000, the respondents have wilfully refused to pay the wages and benefits to the workers in accordance with the memorandum of understanding dated 24th September, 1998 and 29th April, 1999 and the contract of employment. They have further alleged that the respondents, though capable of making the said payments have decided to defy the said orders. Along with the petition the petitioners have annexed a statement Exh. F giving the details of the wages due to the 67 workers. The same have been calculated at Rs.29,75,150/-. The petitioners have pointed out that the respondents continued to pay to their staff members, who are not concerned with this petition and therefore, according to them the respondents have money to pay the dues of the workers but they have wilfully refused to pay the same. The petitioners, therefore, pray for holding the respondents guilty of contempt of court and for punishing them with maximum possible imprisonment and fine. They have also prayed for an order directing the respondents to file an affidavit, disclosing their entire assets, including the personal assets of respondents Nos. 2 and 3.

4.On behalf of respondents 1 and 2, respondent No. 2 has filed his detailed affidavit, wherein he has denied to have wilfully disobeyed the Court's order and committed contempt of court. He has affirmed that on the contrary at every stage, he made earnest and sincere efforts to raise the funds and that he has already paid substantial amount to the workers. He has pointed out that ever since 1961 the respondent company, has never defaulted in making any payments to the workers. Respondent No. 2 has, thereafter referred to the financial difficulties of respondent No. 1 and stated that in order to ensure continuous supply of raw material to the factory, the respondents entered into an agreement dated 21st March, 1998 and agreed to lease out a portion of the vacant shed of the factory. However, this agreement was strongly opposed by the petitioner union with the result that the supply of raw material was adversely affected. Respondent No. 2 has further submitted that on account of his illness and other difficulties, he decided to close down the factory, sell the plant, machinery and other assets and pay to the workers and other creditors their dues. Accordingly, he gave a closure notice dated .2nd July, 1998. However, the petitioner union made a complaint to the Commissioner of Labour and opposed the closing down of the factory. Finally with the intervention of the Commissioner of Labour, a Memorandum of Understanding was reached between the parties on 24.9.1998 as per which a formula was agreed upon to raise funds by leasing out a portion of the factory premises strictly as per the agreement dated 21.3.1998. The respondents agreed not to give effect to the closure notice dated 2.7.1998. Under the said MOUs, the factory was to start on or about 2nd October, 1998 and the entire exercise was done with an understanding that the operation of the factory will be leased out to M/s.Choudhury Metal Syndicate, who was the sole supplier of raw material to the factory so that the said supplier would remain assured about his payment of raw material which he would supply. According to respondent No.2, the total liability of agreed wages as per the said MOUs at the rate of 60% was worked out as Rs. 5,30,047/- and the same was agreed to be paid in six instalments. He has further stated that the bonus account was worked out at Rs. 2,76,486/- and the society dues were to Rs.35,911/-. Respondent No. 2 has affirmed that unfortunately by that time M/s.Choudhury Metal Syndicate backed out from its commitment to supply raw material against the leasing out a portion of the factory. He has further stated that the efforts of both the management and the workers to persuade the said party did not bring any result and consequently, the respondents were required to give a second closure notice dated 1st December, 1998. According to respondent No. 2, the company was not having any funds to pay the dues of the workers and that the only way to pay the dues was to sell the factory, plant and machinery. But the petitioner union by filing application for interim relief before the Industrial Court, prayed for restraining the respondents from transferring, selling or creating third party interest in the factory premises, plant and machinery. According to respondent No. 2, he was, therefore, again stuck up.

5.In order to come out of the situation, he decided to enter into a conducting agreement with M/s. Durga Metal Industries and invited the petitioner union and its workers to participate in the negotiations but they did not join. Finally after negotiations, an agreement dated 6th March, 1999 was signed by the respondent company with M/s. Durga Metal Industries under which the latter agreed to conduct the factory and pay to the workers their remaining dues as per the MOU dated 24th September, 1998. Respondent No.2 has alleged that this effort on the part of the respondents was also opposed by the petitioner union by filing an application for additional interim relief which was allowed by the Industrial Court by passing an order dated 6th August, 1999. The respondents were thus restrained from executing the agreement dated 6th March, 1999. Thereafter, the respondent company and M/s. Durga Metal Industries, in order to remove the apprehension from the minds of the workers expressed their willingness to modify the agreement dated 6th March, 1999. Accordingly a tripartite agreement dated 29th April, 1999 came to be signed with M/s. Durga Metal Industries under which the second closure notice dated 1st December, 1999 was revoked. As per the conducting agreement, M/s.Durga Metal Industries was to bring finance for conducting the business but for certain technical objections there was a slight delay in releasing the finance and therefore. re-opening of the factory had to be postponed till 14th May. 1999. Respondent No. 2 has pointed out that after the re-opening of the factory, the workers who reported for work were paid Rs. 5000/- immediately and the remaining workers were paid subsequently. It is pointed out that the amount of Rs. 5000/- was a part of payment of wages and the workers were assured that other financial commitments would be honoured and they were requested to bear with the management till the finance from the conductor was received. A similar request was made even on behalf of M/s. Durga Metal Industries Despite this, the representative of the conductor was prevented from entering the factory premises on 20th June 1999 for about 4 to 5 hours and the workers were demanding payment of wages then and there only. The petitioner union was requested to advise the workers not to indulge in such coercive acts as with great difficulty M/s. Durga Metal Industries had agreed to bring the finance and conduct the factory. Petitioner union and the workers were cautioned that if the workers behaved in this manner without realizing and understanding the bona fides of the parties, the conductor will lose its interest. It is stated that due to the above occurrences, M/s. Durga Metal Industries lost their interest and also could not overcome the technical objections raised by their bankers.

6.Finally the respondent company was required to give another closure notice dated 2nd August, 1999, which was also opposed by the petitioner union who filed another complaint in the Industrial Court and sought directions against respondent No.1 for withdrawal of the closure notice. Respondents thereafter, gave second thought and decided to agree with the prayer made by the petitioner union for withdrawal of the closure notice and submitted to the Industrial Court, a scheme of running the factory and schedule for payment of the outstanding dues. However, this was also opposed by the petitioner union. It is alleged that the petitioner union opposed the reopening of the factory and did not permit its workers to join duty. It is further alleged that even the office bearers of the petitioner union indulged in acts of violence and therefore, respondent No. 1 was required to file an application for restraining the workers from indulging in such activities. The said application was granted. Respondent No. 2 has stated that all the efforts have been made with utmost sincerity to obtain funds for running the factory. He has pointed out that a bank has sanctioned a loan of Rs. 25 lakhs for restarting the factory and the management has taken the additional liability. The respondent No. 2 has given a proposal to make the payment of the remaining dues in 14 instalments, payable in alternative months. Ultimately, he has further proposed that the respondents are willing to make payment by seeing the idle machines lying in the factory premises.

7.I have heard Mr. Singvi, the learned Advocate for the petitioners and Mr. Sudhir Talsania the learned Advocate for the respondent. Mr. Singvi submitted that the inability pleaded by respondent No. 2 is not true and correct. He contended that the respondents have not deliberately disclosed their true financial position. According to him the respondents are earning Rs. 25 lakhs per month after re-opening the factory and starting manufacturing activities. Mr. Singvi further pointed out that the respondents do not have any regard for their own commitments under both the MOUs and they went on giving false promises without any intention to fulfill the same. Therefore, according to him the respondents are clearly in contempt. Mr. Singvi referred to the unreported decision of the learned single Judge in Contempt Petition No. 60/98 delivered on 12th June, 2001 wherein it was held that financial liabilities is no defense for non-payment of wages. The learned Judge rejected the contention that inability to pay amounts indicates that there is wilful default or contumacious conduct. Mr. Singvi also referred to the Supreme Court decisions. First of which is T.R. Dhananiaya 1995 II CLR 965, wherein the purpose of contempt jurisdiction has been explained by the Supreme Court by observing that it has to uphold the majesty of law not with any idea of vindicating the prestige of the Court. It was further observed that if the orders of the court are allowed to be wilfully disobeyed and a person found guilty of contempt is let off by remitting sentence on plea of mercy. It would send wrong signals to everybody in the country. It was further observed that if such orders are disobeyed, the effect would be that people would lose faith in the system of administration of justice and would desist from approaching the Court, by spending time, money and energy to fight their legal battles. The second decision relied on by Mr. Singvi is Kapildeo Prasad Shah & Ors. v. State of Bihar and Ors. (1999) 7 SCC 569, wherein it was observed that whether disobedience is wilful in a particular case depends on the facts and circumstances of that case. It was further observed that judicial orders are to be properly understood and complied with. Even negligence and carelessness can amount to disobedience particularly when the attention of the person is drawn to the court's orders and its implications. It was emphasized that the power to punish for contempt is necessary for the maintenance of effective legal system. Referring to a famous passage of Lord Diplock in Attorney General v. Times Newspapers Ltd., the Supreme Court observed that jurisdiction to punish for contempt exists to provide ultimate sanction against the person who refuses to comply with the order of the court or disregards the order continuously.

8.Mr. Talsania, the learned Advocate for the respondents on the other hand took me through the affidavit of respondent No. 2 and several documents and tried to point out how sincere and bona fide efforts were made by the respondents to revive the manufacturing activity of their factory and how at every stage the petitioner union opposed the respondents and frustrated their efforts. Shri Talsania blamed the petitioner union as being responsible for the whole situation. He pointed out that the petitioner union did not allow the respondents to lease part of the premises to the suppliers for ensuring a regular supply of raw material. He further pointed out that the petitioner Union also opposed the attempt of the respondents to dispose of the plant and machinery to raise the fund to pay the dues of the workers. Mr. Talsania also highlighted how the conducting agreement was frustrated due to coercive and non-cooperative activities of the petitioner union and the workers. He therefore, submitted that taking into consideration all these facts it cannot be concluded that the respondents have committed wilful disobedience of the court's order. He further submitted that contempt is not a remedy where there is a bonafide dispute. Mr. Talsania relied upon the decision of learned single Judge, Dr. D.Y. Chandrachud, J., in Contempt Petition No. 23 of 2000 delivered on 22nd August, 2000.

9.The facts which respondent No. 2 has stated in his affidavit, relate to a period prior to the passing of the order dated 18th April, 2000 in respect of which the breach is alleged to have been committed. However, the same cannot be totally ignored if they can show that right from the beginning the respondent had made sincere efforts to restart the factory and to pay to its workers their legitimate dues. There is no dispute of the fact that the order dated 18th April, 2000 passed by this Court has not been complied with fully by the respondents. It may be recalled that as per the said orders, the respondents have been directed to pay to their workers all the wages and other benefits in accordance with the MOUs dated 24th September, 1998 and 29th April, 1999. Under the first MOU, respondent No.1 agreed to pay 60% of the wages for the period, commencing from 5th June, 1998 till the date of starting of the factory in five equal instalments of Rs.1000/- each. Under the second MOU respondent No.1 withdrew the closure notice dated 1st December, 1998 and agreed to continue all the 67 workers in its employment.

10.It was further agreed that the workers will be paid 50% of their wages for the period commencing from 1st October, 1998 to 31st January, 1999 and that the said payment would be made in three equal instalments. It was also agreed that each worker will be entitled to Rs. 5000/- on the date of the opening of the factory and the balance amount arising out of the earlier MOU, would be paid on or before 5th June, 1999. The factory was to re-open on or before 6th May, 1999. It appears that there is a dispute between the parties regarding the quantum of wages due to the workers. According to the petitioner union, the wages due are Rs.29,75,150/-. Whereas according to the respondents, the said figure are inflated. I do not wish to enter into this aspect of the controversy but it may be pointed out that the offer was to deposit in the Court a sum of Rs.5 lakh in two instalments for being paid to the workers. There is also no dispute of the fact that the manufacturing activity of respondent No.1 has started and the respondents have engaged 46 workers in their employment. This is clear from the order dated 15th December, 2000 passed by this Court. It is further necessary to point out that by subsequent order dated 27th July, 2001, respondent No. 2 was directed to deposit Rs.50,000/- per month in 16 instalments in this Court towards the payments of the workers and the workers were given liberty to withdraw the said amount from the Court. It is pointed out that since thereafter, the respondent No. 2 has been regularly depositing Rs. 50,000/- in the Court and so far he has deposited six of such instalments. Having regard to the fact which respondent No.2 has stated in his affidavit and his subsequent conduct in making deposits of the dues in the Court, it is difficult to hold that he does not intend to obey the Court's order dated 18th April, 2000. It is material to note that a mere failure to obey the court's order is not tantamount to disobedience of the court's order. Disobedience contemplates a neglect or failure with the intention of not obeying the order. Therefore, even though the defendant No.2 could not honour his commitment as per the above mentioned two MOUs and clear the dues of all the workers, still the aforementioned facts clearly indicate that he has been trying to fulfill his duty and has in fact fulfilled it in part. He has managed to restart the factory and engaged 46 workers out of 67 workers. He has been further regularly depositing the amounts of instalments towards the dues of the workers. Taking these facts into consideration, it cannot be said that the respondents have wilfully disobeyed the court's order. It is not mere failure to comply with the court's order which amounts to contempt but it is a wilful disobedience which amounts to contempt. The efforts made by respondent No. 2 in complying with the court's order and in the compliance which he has so far made, persuade me to believe that there is absence of any mala fide or contaminous behaviour on his part. I am, therefore, not inclined to hold the respondents guilty for committing the alleged contempt.

11.The conduct of the petitioner union on the other hand is found to be callus and non-cooperative. The additional affidavit filed by respondent No.2 on 26th April 2001 shows that during the pendency of this petition the respondents offered to make the payment of the entire outstanding dues by selling idle machinery lying in the factory premises. Accordingly, this Court by its order dated 28th June, 2000 directed the valuation of the said machinery to be made by appointing valuer. The additional affidavit of respondent No.2 shows that he was required to deposit Rs. 25,000/- towards as fees of the valuer but the petitioner approached the Industrial Court and obtained an order, restraining the respondents from selling plant and machinery. It will thus be seen that on one hand they allowed the respondent to spend sum of Rs.25,000/- for making valuation of the plant and machinery and on the other hand they opposed the proposed move of the respondents to sell the plant and machinery. In view of this conduct of the petitioner union, there appears to be much substance in the submission of Mr. Talsania that it is the petitioner union who is responsible for the situation.

12.Mr. Talsania further submitted that the contempt is not a remedy where the compliance of the order in question can be obtained by adopting execution proceedings. In this respect, he relied upon the judgment of the Supreme Court in R.N. Dev v. Bhagvabati Pramanik (2000) 4 SCC 400, wherein it was observed that the weapon of contempt is not

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to be used in abundance or misused. Normally, it cannot be used for execution of the decree or implementation of an order for which alternative remedy in law is provided for. It was further observed that the discretion given to the Court is to be exercised for maintenance of the Court's dignity and majesty of law and aggrieved party has no right to insist that the Court should exercise such jurisdiction as contempt is a matter between the contemner and the Court. The same view has been followed by two Learned Single Judges of this Court in Contempt Petition No.23 of 2000 decided by Dr. Chandrachud. J. and in a matter arising under the Maharashtra Employees of Private Schools (Conditions of Service) Regulation Act, 1977 by D.K. Deshmukh, J. I have already pointed out that the Respondent has been making compliance of the order which is alleged to have been breached. If the petitioners are keen on getting the compliance done immediately, then it is open for them to resort to the remedy of executing the order. 13.For the aforesaid reason, I do not find any merit in this petition and I, therefore, dismissed the same. 14.Before concluding it is necessary to refer to the request made by Mr. Parmar with regard to the withdrawal of the amounts deposited by the respondents with the Prothonotary and Senior Master. It appears that the workers have not withdrawn any amount as per the order dated 27th July, 2000 as the respondents did not file a list of the workers whom the payment are to be made. Shri Talsania made a statement that the respondents would file such a list in the office of the Prothonotary and Senior Master immediately. Shri Parmar pointed out that the amounts payable to some of the workers are very small and that it would be inconvenient for them to attend the Court more than once for withdrawing the said small amounts. Moreover it will cost them a great hardship and required them to incur expenses of transport in coming to the Court. Therefore, he suggested that the workers should be paid their dues in the ascending manner as per the payment list submitted by him. Shri Talsania has no objection to this suggestion. The list filed by Shri Parmar is taken on record and marked 'X'. The Prothonotary and Senior Master is directed to make payment to the workers of the petitioner union as per this payment list in the ascending manner. 15.In the result the contempt petition is dismissed. Ordinary copy duly authenticated by the Chamber Registrar is allowed. C.C. expedited.