- (1.) A Limited Company "rivers Steam Navigation Co. Ltd. ": (hereinafter referred to as the 'the Company') operated a river service from West Bengal to Assam with a personnel of about 8,000 including clerical staff, Part of its operations was through East Pakistan. On account of armed conflict in 1965 with Pakistan, the Company had to suspend a major part of its operation. Retrenchment was done on a large scale as the Company had been incurring heavy losses for several years in spite of Government of India acquiring a controlling interest in it to prevent its liquidation. In the course of conciliation proceedings, the Management of the Company arrived at a settlement with the appellant Union on August 26, 1965. However, the Company could not carry on profitably and, therefore, on account of its bankruptcy various creditors, the Union of India and several banks filed a petition in the Calcutta High Court for winding up of the Company. After protracted proceedings in the High Court, an application was filed under Sections 391 to 394 of the Companies Act, 1956 for sanctioning a Scheme of Arrangement and Compromise between the company and the Central Inland Water Transport Corporation Ltd. (hereinafter referred to as 'the Corporation'). When the Scheme was sanctioned, the appellant Union had appeared before the Court to protect the Interests of the workmen. The appellant Union in fact filed an appeal to the Division Bench of the High Court which, however, was dismissed upholding the order of the learned Single Judge sanctioning the scheme.
(2.) In brief, the Scheme provided, inter alia, that all the properties and assets but only some of the liabilities would vest in the Corporation. It was agreed that the Corporation would take over as many of the members of the staff and work force of the Company as was possible under the circumstances but the number to be employed would be in its discretion. Those employees who were not taken over by the Corporation were to be paid compensation by the Company out of the funds the Government of India agreed to supply. Upon the approval of the Scheme the Company would be closed and on payment of all creditors it would stand dissolved without winding up. In the course of the order made by the Company Court certain questions were left open for consideration and they are : 1. Whether there is a closure of the Company within the meaning of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the ID Act') ; 2. whether the agreement dated 25.8.1965 is capable of enforcement; 3. whether the workers are workmen or entitled to prefer any claim on the basis of the agreement dated 25.8.1965; and 4. whether the transferor Company or the transferee Company can assert that there has been closure and further that agreement is not capable of enforcement.
(3.) The scheme was in fact sanctioned by an order made on 3.5.1967 and on that very day, the Company issued a notice of closure. Thereafter, the Corporation issued fresh letters of appointment and out of 8,000 employees of the Company, the Corporation is stated to have employed about 5,173 workers. Thus, a large number of employees of the former company stood unemployed.;