JUDGMENT
R.M.S. Khandeparkar, J.
1. Rule. By consent, the rule is made returnable forthwith. Heard the learned advocates for the parties. Perused the records.
2. The petitioner challenges the order dated 4th September, 2004 passed by the Industrial Court at Thane in Complaint (ULP) No. 139 of 2004. By the impugned order, the Industrial Court has allowed the application filed by the Respondent No. 1 and has directed the petitioner either to deposit in the Court or to hand over to the respondent No. 2-company the share certificates in relation to 470,000/- equity shares of VIP Industries Limited and 189,300 equity shares of Blow Plast Limited within 15 days from the said order and further has directed the respondent No. 2 company and its General Manager (HRD) and the Managing Director to take immediate steps for sale of the said shares and to settle the claim of the workers in full and final out of sale proceeds of the said shares as per the agreement between the company and the respondent No. 1 union.
3. The facts which are relevant for the decision in the matter are that, sometimes in the year 1997, the respondent No. 2-company availed loan facility to the extent of Rs. 5 crores from the petitioner on deposit of the said shares towards the security for repayment of the said loan. Further in the year 1999, on account of some difficulties faced by the respondent No. 2-company, it approached the petitioner for structured interest bearing loan of Rs. 31 crores by which the company sought to clear its earlier liabilities including the repayment of loan of Rs. 5 crores granted in the year 1997 and accordingly, the said loan of Rs. 31 crores was granted to the said company under the loan agreement dated 14th June, 2000. By virtue of the said loan of Rs. 31 crores, the liabilities of the respondent No. 2 company in relation to the loan amount of Rs. 5 crores granted in the year 1997 stood discharged. However, even thereafter, the said shares continued to be in the custody of the petitioner. It appears that the correspondence was exchanged between the parties in relation to the said shares whereas, the petitioner insisted upon the retaining of the custody of the said shares towards the security for the loan granted in the year 2000 under the agreement dated 14th June, 2000. Factually the said shares continued to be under the custody and in possession of the petitioner. A notice came to be issued to the petitioner in June, 2004 by the Industrial Court requiring it to show cause on the application filed by the respondent No. 1-union for the direction to the respondent No. 2 to deposit the shares of three other companies along with the shares in question. The said notice was accompanied by the order dated 24th May, 2004 directing the petitioner to ensure that the shares were not disposed of. A further application came to be filed by the respondent No. 1 on 24th June, 2004 for direction to the respondent No. 2 to deposit the said share certificates lying in the custody of the petitioner by withdrawing the same from the petitioner. The reply and counter affidavit came to be filed in the matter before the Industrial Court. On 3rd September, 2004 the petitioner sought leave to produce on record the rejoinder which was rejected by the Industrial Court and after hearing the parties, the impugned order was passed.
4. The impugned order is sought to be challenged on the ground that the Industrial Court dealing with the complaint under the provisions of the M.R.T.U. and P.U.L.P. Act, 1971, hereinafter called as “the said Act” has no jurisdiction to pass the impugned order. The contention relating to the absence of jurisdiction is sought to be canvassed on two grounds. Firstly that the Court dealing with such complaint has limited jurisdiction in terms of the said Act to deal with the issues in relation to the dispute between the employer and employee and not with the third party. It is the contention of the petitioner that the orders, which can be passed under Section 30 of the said Act, are essentially on account of the unfair labour practice adopted by the employer or any other person on his behalf or at his instance and there is no such case pleaded or proved in the matter as against the petitioner, and therefore, the impugned order is without jurisdiction. Secondly it is sought to be argued that there was no cause of action as such to seek relief granted in the absence of subsisting liability in the form of dues to the workers as the claim in relation to the arrears by the workers has neither been adjudicated upon by the competent authority nor there is any clear agreement in that regard between the parties and merely there is an agreement to agree for such dues and/or liabilities. It is also the contention of the petitioner that the Court below failed to take note of the law relating to the banker’s lien in terms of the provisions of Section 171 of the Contract Act as well as the law relating to the priority on par with that of the dues payable to the workers in terms of Section 529-A of the Companies Act, and therefore, the Court below erred in granting the relief under the impugned order. It is also sought to be argued on behalf of the petitioner that the Industrial Court erred in granting the relief on the basis of the judgment of the Apex Court in Workers of Rohtas Industries Ltd. v. Rohtas Industries Ltd., ignoring the clarification made by the Apex Court in relation to the said decision in its order reported in 1987 (Supp) SCC 462. Reliance is also placed in the decision in Textile Labour Association and Anr. v. Official Liquidator and Anr., as also in Johnson & Johnson Employees’ Union and Ors. v. Johnson & Johnson Ltd. and Ors., reported in 2004 III CLR 577, in Textile Labour Association and Anr. v. Official Liquidator and Anr., reported in 2004 II LLJ 760, State Bank of India v. The Podar Mills Limited and Ors., , Sarva Shramik Sangh v. Indian Smelting & Refining Co. Ltd. and Ors., , Syndicate Bank v. Vijay Kumar and Ors., reported in (1992) 2 SCC 330, Board of Trustees of the Port of Bombay and Ors. v. Sriyanesh Knitters, .
5. The learned advocate appearing for the respondents, on the other hand, has sought to justify the impugned order while submitting that the order in question is in exercise of incidental and ancillary powers available to the Industrial Court while dealing with a matter under the said Act. While countering the argument regarding absence of an agreement in relation to the dues payable to the workers by the company and the agreement in question being a mere understanding to agree about dues as sought to be alleged by the petitioner, it was submitted that proper reading of the agreement would disclose that there is a clear admission regarding the liability towards the labour dues by the company which has been confirmed by the union – respondent No. 1 and further there is approval of such agreement by the Industrial Court. It is the contention on behalf of the respondent that the grievance pertains to non-payment of the labour dues by the company-management and therefore, there is unfair labour practice on the part of the management against the workers, and considering the same it cannot be said that the Industrial Court has either acted without jurisdiction or even exceeded its jurisdiction in passing the impugned order. Referring to the clarification by the Apex Court in relation to the Rohtas Industries case (supra), it was the contention of the learned advocate for the respondents that, undoubtedly it clarifies the earlier decision but nowhere the proposition of law laid down therein has been diluted in any manner and the facts of the case in hand being similar to those facts in respect of the workers dues, the said decision is squarely applicable to the case in hand, and therefore, no fault can be found with the order passed by the Industrial Court based on the said decision. Referring to Section 529-A of the Companies Act, it was submitted on behalf of the respondents that proper reading of the said provision would disclose that though the claim by the workers and the financial institution may stand on equal footing, while discharging the liability in that regard, the labour dues will have priority and in that connection, an attention is drawn to the decision in the matter of Allahabad Bank v. Canara Bank and Anr., to be considered along with the decision in Rohtas Industries case (supra). Referring to the contract pertaining to the grant of loan in the year 2000 and the clause thereof in relation to the requirement of security to be provided by the respondent-company to the petitioner, according to the learned advocate for the respondents, the said agreement by itself does not create any lien in relation to the said shares in the absence of specific agreement for the said shares being continued to remain in custody of the petitioner towards the security for repayment of loan granted in the year 2004. Merely because the shares continued to be in the custody and without the consent of the company and having withheld the same illegally by the petitioner, the same by itself would not create a security for repayment of the loan granted in the year 2000 in the absence of specific agreement in relation to those shares between the parties. A general lien contemplated under Section 171 of the Contract Act cannot have overriding effect over and above the priority of the labour dues considering the decision of the Apex Court in Rohtas Industries case (supra) read with the decision of Allahabad Bank’s case (supra). There being no case made out of collusion between the respondent No. 1 and the respondent No. 2 to secure the custody of the shares from the petitioner to meet the demand in relation to the labour dues, according to the learned advocate for the respondents, there is no case made out for interference in the impugned order. Reliance is also placed in the decision in the matter of Akhil Bharatiya Shramik Kamgar Union v. Buildtech Construction and Ors., reported in 2004 II CLR 179, of Savitri w/o. Govind Singh Rawat v. Govind Singh Rawat, , and of Ceat Limited (Electronics Division), Mumbai v. Anand Aba Saheb Hawaldar and Ors., reported in 2001 III CLR 434.
6. Perusal of the impugned order discloses that the Industrial Court has proceeded to issue direction for production of the shares after having held that :-
(i) The Apex Court in Rohtas Industries case has ruled that the payment of unpaid salary and wages of the workers will have the higher priority.
(ii) The document Exhibit C-8 discloses that the loan of Rs. 5 crores was fully repaid and consequently the security in the form of the said share certificates given to the petitioner by the respondent company stood discharged.
(iii) In view of the discharge of the said liability of the respondent company, the petitioner has no legal right to withhold the said share certificates.
(iv) Agreement dated 14th June, 2000 does not disclose the said share certificates having been continued with the petitioner towards the security for subsequent loan and therefore the petitioner has no right over the said certificates.
(v) The correspondence between the parties does not disclose any encumbrance in favour of the petitioner over the said share certificates, nor does show that there is any loan obtained by the respondent company against the security of the said share certificates and therefore, the petitioner has no right to claim lien over the said share certificates.
(vi) The respondent company has clearly admitted that it has agreed for payment of legal dues.
(vii) The respondent company has failed to comply with its commitment and has failed to pay legal dues to the workers and therefore adopted the unfair labour practice.
(viii) To meet the ends of justice, it is necessary to direct the petitioner to deposit the said share certificates in the Court or to hand over the same to the respondent. No. 2 company with a direction to take immediate steps for sale proceeds thereof towards the payment of loan.
7. Undoubtedly, Chapter VI of the said Act deal with the unfair labour practice whereas Chapter VII deals with the powers of Courts dealing with the unfair labour practice. Section 29 under Chapter VI relates to the parties on whom order of Court dealing with the complaint under the said Act can be binding. In terms of the Clause (a) thereof, any such order would bind all the parties to the complaint before the Court. In terms of Clause (b) thereof, which would bind to all those who appeared pursuant to the notice issued by the Court unless the Court specifically opines that they have been brought before the Court improperly. In the case in hand, undisputedly, the petitioner was issued notice to putforth its say in the matter and the impugned order has been passed after hearing the petitioner. Undoubtedly, the notice was issued in relation to the grievance made by the respondent No. 1 union regarding adoption of unfair labour practice by the respondent company in relation to the labour dues. The respondent union had sought direction for production of the said share certificates in order to enable to meet the liability of the company towards the labour dues. Such labour dues are admitted by the company without any reservation. Undisputedly the said shares form part of the assets of the respondent No. 2.
8. Section 30 of the said Act deals with the powers of Courts and Sub-section (1) thereof specifically provides that the complaint may be decided (a) by declaring that an unfair labour practice has been engaged in or is being engaged in by the person against whom the complaint is filed and also may specify any other person who has engaged in, or is engaging in the unfair labour practice, (b) by directing all such persons to cease and desist from such unfair labour practice, and take such affirmative action including payment of reasonable compensation to the employee or employees affected by the unfair labour practice, or reinstatement of the employee or employees with or without backwages, or the payment of reasonable compensation, as may in the opinion of the Court be necessary to effectuate the policy of the Act and (c) where a recognized union has engaged in or is engaging in, any unfair labour practice, direct that its recognition shall be cancelled or that all or any of its rights under Sub-section (1) of Section 20 or its right under Section 23 shall be suspended.
9. Sub-section (2) of Section 30 of the said Act which is very relevant in the case in hand as the impugned order has been passed in exercise of the powers under the said provision of law which provides that “in any proceeding before it under the said Act, the Court, may pass such interim order including any temporary relief of restraining order as it deems just and proper including directions to the person to withdraw temporarily the practice complained of, which is an issue in such proceeding, pending final decision, provided that, the Court may, on an application in that behalf, review any interim order passed by it.”
10. Sub-section (3) empowers the Court while dealing with such complaint to hold inquiry as well as to exercise other powers vested in other courts like, (a) proof of facts by affidavit, (b) summoning and enforcing the attendance of any person, and examining him on oath, (c) compelling the production of documents, and (d) issuing commissions for the examination of witnesses.” Under Sub-section (4), the Court is empowered to call upon any of the parties to proceeding before it to furnish in writing any such information, which is considered relevant for the purpose of any proceedings before the Court. Section 32 of the said Act deals with the powers and Court to decide all connected matters. It provides “notwithstanding anything contained in this Act, the Court shall have the power to decide all matters arising out of any application or a complaint referred to it for the decision under any of the provisions of this Act.”
11. While Sub-section (2) of Section 30 empowers the Court to pass interim order as it deems just and proper, pending final decision of the complaint which power includes to grant temporary relief in the nature of injunction, Section 32 empowers the Court to deal with the matters connected with the main matter which would obviously include incidental matters.
12. In a case where the grievance relating to the adoption of unfair labour practice by the employer relates to the non-payment of labour dues, while there being a clear admission about such dues by the employer, certainly any act on the part of a third person either at the instance of the employer or for the benefit of the employer or in any manner in collusion with the employer would amount to an act of unfair labour practice at the instance of or on behalf of or in collusion with the employer, as the case may be. Any matter in relation to such acts by third person would therefore necessarily be an act of unfair labour practice on the part of the employer and would be within jurisdiction of the Court to deal with the same, while adjudicating the complaint under the said Act. Considering the same, when the grievance is made on behalf of the workmen that a third party either at the instance of or for the benefit of or in collusion with the employer is acting in such a manner as to deny the wages which are undisputedly admitted by the employer, it can amount to an act of unfair labour practice at the instance of or on behalf of or in collusion with the employer, and therefore, any order in relation to such grievance being made, if passed by the Court, it would be within the jurisdiction of such Court. Bearing in mind the same, it would be necessary to ascertain whether in the matter in hand, the impugned order can be said to be either without jurisdiction as sought to be contended on behalf of the petitioner.
13. As already observed above, the impugned order has been passed on the basis of the findings which are enumerated hereinabove in paragraph No. 6. The same undoubtedly discloses a specific finding to the effect about the agreement between the company and the workmen in relation to the workers dues, legally payable by the company and yet failure on the part of the company to discharge its liability and therefore, there is an adoption of the unfair labour practice by the company in that regard. The finding also discloses that to meet the ends of justice, it is necessary to direct the petitioner to deposit the said share certificates in the Court so that on sale of the said shares, the proceeds thereof could be appropriated for discharge of the liability of the company towards the dues of the workmen. In other words, the Industrial Court has clearly held that for discharge of the liability of the company towards the dues payable to its workmen, the disposal of the shares, which are in possession of the petitioner, is necessary. At the same time, it has also been held that the custody of those shares with the petitioner is without any authority of law. However, it is pertinent to note that it is neither the case of the respondent nor there is any finding to the effect that there has been any collusion as such between the petitioner and the respondent No. 2-company in relation to the withholding of the said share certificates by the petitioner. It is not also the case nor there is any finding that such withholding of the shares is being done at the instance of or on behalf of the respondent No. 2-company. The point then remains as to whether the act on the part of the petitioner in withholding those share certificates is essentially for the benefit of the respondent company.
14. As already observed above, there is neither the case pleaded nor the finding to the effect disclosed that there is any collusion between the petitioner and the respondent No. 2 company. It is also not the case pleaded nor found on analysis of the materials by the Court below that the acts on the part of the petitioner in withholding the shares are for the benefit of the company. However, the finding does disclose that the petitioner has no authority to retain those shares. In these circumstances, though there is no clear finding arrived at by the Industrial Court about the possibility of the benefit to the company on account of such withholding, considering the fact that the matter relates to the labour dues, it would be appropriate and necessary to ascertain the same by referring not only to the impugned order but also to the materials on record, even in exercise of the powers under Article 227 of the Constitution of India.
15. As stated above, the Industrial Court has found that withholding of the share certificates by the petitioner is without any authority of law. The documentary evidence produced on record, as has been found by the Industrial Court, does not disclose any right in favour of the petitioner to retain the said share certificates in relation to the loan advanced under the agreement dated 14th June, 2000. The contention of the learned advocate for the petitioner however is that the Court below ignored the provision of Section 171 of the Indian Contract Act which assures the petitioner to have general lien over whatever the assts of the respondent company available to the petitioner and considering the same, the continuation of custody of those shares with the petitioner was fully justified and it cannot be said to be without authority. It cannot be disputed that Section 171 of the Indian Contract Act does provide for general lien in favour of the bankers. It provides that “bankers, factors, wharfingers, attorneys and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them, but no other persons have a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.” Undoubtedly, therefore, in clear and specific terms, Section 171 assures the bankers right of lien over the goods bailed to them in the form of general security as such for the purpose of assuring the repayment of loan by such persons who bails the goods with the bankers unless there is a specific contract to the contrary. The findings arrived at by the Industrial Court disclose that the shares in question were deposited with the petitioner as security towards the repayment of loan of Rs. 5 crores which was granted in the year 1997. The findings and the materials on record also further disclose that there was structured interest bearing loan of Rs. 31 crores granted to the petitioner under the agreement dated 14th June, 2000 and on grant of such loan, the liability in relation to the loan of Rs. 5 crores granted in 1997 stood discharged and yet the said share certificates continued to remain in the custody of the petitioner. The correspondence between the parties which followed thereafter reveals the insistence on the part of the company for release of those share certificates whereas the refusal to oblige to the respondent company in that regard by the petitioner. At the same time, there is nothing on record to reveal that apart from the correspondence with the petitioner in that regard, there was any other proceedings being taken through the Court or other competent authority in that regard to get the share certificates released from the custody of the petitioner by the respondent No. 2-company. In the background of these facts, can it be said that the act on the part of the petitioner in retaining custody of the said share certificates is for the benefit of of the respondent No. 2-company. It is pertinent to note that the Industrial Court has not arrived at any specific finding about the involvement of the petitioner in any manner in the unfair labour practice stated to have been adopted by the respondent No. 2-company in relation to the denial of discharge of its liability towards the payment of labour dues. It is well settled that for the purpose of grant of any relief either under Section 31 or Section 32 of the said Act in favour of the complainant, the adoption of the unfair labour practice by the respondent or against whom any such order to be passed in exercise of the powers under the said Section, is must, and the decision, if any, in that regard, one can safely refer to the decision of the Division Bench of this Court in the matter of B.S.E.S. Limited v. Bombay Electric Workers’ Union and Ors., reported in 2004 III CLR 470. The whole basis to seek relief in exercise of the powers under Section 30 of the said Act being adoption of unfair labour practice on the part of the respondent company or any person acting on its behalf or under him. The requirement of finding regarding unfair labour practice is primary necessity for the Court to exercise the powers under the said provisions of law. Once it is shown that the petitioner did not disclose to have either acted for the respondent No. 2 company nor has acted on behalf of the respondent No. 2-company nor has withheld the share certificates for the benefit of the respondent No. 2 but essentially in exercise of the bankers lien on account of the dues pursuant to the loan amount granted to the respondent No. 2, and the Industrial Court even otherwise has not been able to arrive at the finding about the unfair labour practice by the petitioner, the learned advocate for the petitioner is justified in contending that the impugned order has been passed by the Industrial Court without jurisdiction. The fact disclosing adoption of unfair labour practice is a jurisdictional fact which would entitle the Industrial Court to exercise the powers and to issue necessary directions either in terms of Section 31 or even in terms of Section 32 of the said Act during the pendency of the complaint. Neither the Industrial Court has been able to arrive at a prima facie finding about the adoption of unfair labour practice by the petitioner either on behalf of or in collusion with the Respondent No. 2 or for the benefit of the respondent No. 2, nor there was any occasion for the Industrial Court to issue any direction for production of the shares in custody of the petitioner and more so, when the specific case in relation to the bankers lien was being revealed in the matter in relation to the subsisting loan liability of the respondent No. 2 to the petitioner.
16. In the facts and circumstances stated above, all other points sought to be raised in the matter in fact do not arise for consideration and therefore, it is not necessary for me to consider all other issues sought to be raised nor to refer to the various decisions sought to be relied upon by the learned advocates for the parties.
17. In the result, therefore, for the reasons stated above, the petition succeeds. The impugned order is hereby quashed and set aside. The rule is made absolute in above terms with no order as to costs.