R.M. Doshit, J.@mdashThis Appeal preferred u/s 483 of the Companies Act. 1956 (hereinafter referred to as, "the Act of 1956") arises from the judgment and order dated 20th/23rd/31st July 2007 passed by the learned Company Judge in above Company Application No. 621/2006. The appellant is the Maharashtra General Kamgar Union, a labour union which represents the workmen of the Ahmedabad Manufacturing and Calico Printing Mills Company Limited (hereinafter referred to as "the CALICO") (now in the process of winding up) in its Bombay unit. The CALICO had, in the year 1958, set-up a chemical and plastic division at Bombay. The ILAC Limited (hereinafter referred to as "the ILAC") (now in the process of winding up) was a Company incorporated under the Act of 1956 as wholly owned subsidiary of the CALICO. The ILAC looked after the retail business of the CALICO. In the year 1964, the workmen of the Bombay unit of the CALICO raised a charter of demands which came to be decided by the Industrial Tribunal. Bombay by its award passed in 1972. The said award was confirmed by the Bombay High Court on 21st August 1973 and after a round of litigation before the Hon''ble Supreme Court, it was again confirmed by the Bombay High Court, with certain modifications, on 26th February 1982. Pending the said proceedings, a settlement was arrived at on 6th September 1980. The ''aforesaid settlement dated 6th September 1980 was challenged by the CALICO before the Bombay High Court in Appeal Nos. 424/1981 and 505/1981. The Bombay High Court, by its judgment and order dated 26th February 1982, ruled against the CALICO and held that the settlement dated 6th September 1980 was binding to the CALICO.
2. The CALICO, however, did not implement the said settlement. Instead, in an extraordinary General Meeting held on 30th March 1983 the CALICO decided to transfer its chemical and plastic division at Bombay with its assets and liabilities to the ILAC along with its employees. Pursuant to the said decision, on 29th June 1983, the CALICO transferred the aforesaid chemical and plastic division at Bombay and its employees to the ILAC. The CALICO, however, did not transfer the immovable assets i.e. the land and the buildings. Nor did the ILAC pay for the said assets. The workmen continued to receive the pay and other service benefits as before, without any change.
3. Since the aforesaid judgment dated 26th February 1982 and since the transfer of the Bombay unit to the ILAC, the attempt on the part of the ILAC; first, to close the unit and then to lay off the workmen failed. The ILAC, then declared a lockout. That action also has been set-aside by the Bombay High Court by its judgment and order dated 4th August 2006 passed in writ petition No. 1595/1986.
4. Pending the above proceedings, by order dated 15th July 1998 made by the Company Court at Ahmedabad in Company Petition Nos. 157/1995 and 157A/1995, both, the CALICO and the ILAC are ordered to be wound up.
5. In the aforesaid winding up proceedings, the appellant filed the above Company Application No. 621/ 2006 to lodge the claim of the above referred erstwhile workmen of the CALICO transferred to the ILAC in June 1983. The appellant claimed that though in its resolution passed on 30th March 1983 the CALICO had decided to transfer its chemical and plastic division lock-stock and barrel to the ILAC; what was transferred was the operations and the workmen. The immovable assets like land and buildings were never transferred to the ILAC. The transferred workmen were treated as the employees of the ILAC. As the immovable assets were not transferred to the ILAC, it had no assets to satisfy the legal dues of the workmen. The CALICO has the property worth hundreds of crores. The transferred workmen, though are entitled to the legal dues from the sale proceeds of the assets of the CALICO, are treated as the employees of the ILAC and are denied their legal dues. The appellant, therefore, claimed that those workmen be treated at par with the other workmen of the CALICO and be paid their legal dues out of the sale proceeds of the assets of the CALICO.
6. The learned Company Judge has rejected the claim of the appellant. The learned Company Judge was pleased to hold that the workmen of the CALICO accepted the order of transfer without demur. Since their transfer to the ILAC, they were the employees of the ILAC and were treated as such. The declaration now sought for was barred by law of limitation and by acquiescence. Though the said workmen were before the Bombay High Court against the order of lockout declared by the ILAC, the workmen did not claim to be the workmen of the CALICO. Therefore, the present Appeal.
7. Learned Advocate Mr. Pungalia has appeared for the appellant union. He has submitted that the transfer of the Bombay unit of the CALICO made in 1983 was ex-facie fraudulent, sham and bogus. It is evident that the CALICO never wanted to meet with the demands made by its workmen in Bombay unit. When its challenge to the award passed by the Tribunal failed, the CALICO settled the disputes, but instead of implementing the settlement, it challenged the settlement before the Bombay High Court. When that challenge failed, the CALICO transferred the Bombay unit to the JLAC without transferring the immovable assets. The conduct of the CALICO suggests that the attempt was to get rid of the work force. After transfer of workmen to the ILAC; first, the attempt was to close down the unit. On failure to obtain permission for closure, it was followed by an attempt to lay off and then lockout. Though it was agreed to transfer the assets to the ILAC, under the guise that permission under the Urban Land (Ceiling and Regulation) Act, 1976 was required, the land and buildings which made the substantial assets of the unit were not transferred. It is not known whether the CALICO ever applied for permission, for transfer of the land and buildings. Mr. Pungalia has also submitted that under the terms and conditions of their service, the workmen were transferable to any of the units of the CALICO. On their transfer to the ILAC, they continued to enjoy the same service benefits, pay. etc. They continued to work in the same unit; they had no occasion to challenge the order of transfer. The cause of action to challenge the transfer of the workmen to the ILAC arose only after the ILAC declared lockout and after the CALICO and the ILAC were ordered to be wound up. In any view of the matter, in case of welfare legislation like the Labour Laws, the law of limitation does not apply. Nor would the principles of delay, laches or acquiescence defeat the workmen''s legal rights.
8. Mr. Pungalia has also pointed out that though the CALICO had decided to transfer its Bombay unit to the ILAC. not only the assets were not transferred, the import licence or the manufacturing licence also were not transferred to the ILAC. The depreciation was also claimed by the CALICO. If. in fact, any transfer took place, it was without the consideration as no money passed from the ILAC to the CALICO.
9. In support of his submission, Mr. Pungalia has relied upon the judgments in the matters of
10. Learned Advocate Mr. A.L. Shah has appeared for the Official Liquidator. He has submitted that the claim of the appellant is untenable. He has submitted that the fraud is required to be specifically averred and proved. In the application before the learned Company Judge, the appellant has neither alleged fraud nor it has produced any evidence to prove the alleged fraud. In support of his submissions, Mr. Shah has relied upon the judgment in the matter of Walnut Packaging Private Limited v. The Sirpur Paper Mills Limited and another [ (2008)144 CC 454 (AP)].
11. Learned Advocate Mr. Parikh has appeared for the Bank of India. Ahmedabad, a secured creditor. He has relied upon the counter-affidavit filed by the bank. He has drawn our attention to the annual report of the CALICO. He has submitted that by the aforesaid transfer the CALICO had divested its assets to three of its subsidiaries: one of them being the ILAC. He has also drawn our attention that since the aforesaid transfer the share price of the CALICO had come down from Rs. 631=00 per share to Rs. 485=00 per share. He has submitted that the challenge to the transfer or the present application for declaration is barred by the law of limitation. He has relied upon Articles 56, 57 and 58 of the Schedule to the Limitation Act. He has relied upon the judgment in the matter of E. Hill and Co. Ltd. v. State of U.P. and Others [2002-III-LLJ 524 (Patna)].
12. We have earnestly considered the submissions made before us and the abovereferred case law.
13. We are unable to agree with the learned Single Judge that the claim of the appellant is barred by limitation or by acquiescence. As recorded hereinabove, since the transfer of their service to ILAC, the workmen continued to work at the same place, in the same manner with the same service benefits, under the same superiors and practically under the same employer. They had no occasion to challenge their transfer until their interest was adversely affected. Besides, the law of limitation does not apply to the matter on hand.
14. We do agree with Mr. Pungalia that not in .all cases, the Court is required to accept the facts as they are projected. There are cases where the employer or the corporate houses device ingenious ways to defeat the legislation. The matter on hand is the one. where the Court is required to lift the corporate veil and to get to the reality.
15. In the present case, we find that after the establishment of its chemical and plastic division at Bombay some time in the year 1958. the CALICO did not want to submit to the demands of the workmen. Particularly, the demands made by the workers in the year 1964 did not suit the CALICO. Though there was an award of the Industrial Tribunal as early as in the year 1971, the same was not implemented until the year 1982 and the CALICO continued to litigate till then. Once, the CALICO also settled the disputes with the workmen. Nevertheless, it did not implement the terms of the settlement. It was only after the High Court ruled that the settlement was binding to the CALICO, the CALICO started attempts to shake off the liability of its division at Bombay, particularly the workmen. First came the transfer of the Bombay unit to the ILAC. Though apparently it was transfer of the whole of the unit, in reality only workmen were transferred. Almost immediately, the transfer was followed by an attempt to close down the unit, then the lay-off and then the lockout.
16. It is evident that the CALICO was bent upon getting rid of the huge liability of some 1600 workmen working in its Bombay Unit. Indisputably, the ILAC was never a manufacturing Company. Nevertheless, by passing a resolution at the General Meeting as envisaged by Section 293(1) of the Companies Act, 1956, it was resolved to transfer the Bombay unit to the 1LAC. Though the resolution was to transfer the whole of the unit, what was transferred was the workmen alone without-the immovable assets of the Company i.e. the lands and the buildings. Shelter was taken under then prevalent Urban Lands (Ceiling & Regulation) Act, 1976 (hereinafter referred to as "the Act of 1976"). We believe the CALICO took undue advantage of the prohibition of transfer of the surplus vacant land imposed under the Act of 1976 to get rid of its huge workforce. It is also note worthy that at the relevant time, the CALICO and its subsidiary-lLAC both were sailing in the rough waters and were ultimately ordered to be wound up. It is not possible to believe that at the relevant time, the Board of Directors of the CALICO were not aware of its financial condition or could not foresee the eventual winding up. We firmly believe thai the aforesaid transfer of the workmen in the year 1983 was an ingenious way devised by the CALICO not only to get rid of the work force but also to deprive them of their legal dues when the time came -which foreseeably was not far away.
17. For the aforesaid reasons, we hold that the transfer of some 1600 workmen of the Bombay unit of the CALICO lo ILAC in the year 1983 was not a genuine transfer. The said workmen have a right to claim to be the workmen of the CALICO and to claim terminal benefits arising from the winding up of the CALICO. The said workmen have a share along with the other employees of the CALICO in the sale proceeds of the assets of the CALICO.
18. For the aforesaid reasons, this Appeal is allowed. The impugned judgment and order dated 20th/23rd/ 31st July 2007 passed by the learned Company Judge in Company Application No. 621 of 2006 is set-aside. The Company Application No. 621 of 2006 is allowed. It is declared that the workmen of the Bombay unit of the Ahmedabad Manufacturing & Calico Printing Mills Company Limited transferred to the ILAC are the workmen of the CALICO. They be paid their dues from the proceeds realized by the sale of the assets of the CALICO at par with the other employees of the CALICO.
19. Learned Advocate Mr. Parikh has appeared for the Bank of India. Ahmedabad. He requests that the implementation of this Order be stayed for a period of two months. He has informed us that pending this Appeal, by judgment and order dated 8th/l0th September 2009. the Company Court has decided the matters pending before it. By the said order, several directions have been issued for disbursement of the amount realized from the sale of movable and immovable assets of the CALICO. Considering the pending claim of the workmen of the ILAC, sum of Rs. 87 crores is set apart - in case the said workmen succeed. The request is granted. Considering the calculation made and directions issued by the learned Company Judge in respect of the disbursement of the amount to various claimants, we direct a sum of Rs. 60 crores be set apart for disbursement to the workmen of the ILAC Limited; in the event they finally succeed. No payment be made to the said workmen till 1st March 2010.
