New Delhi, April 5
In yet another case of the closure of a government-promoted company, due to the financial crunch, the Supreme Court has laid down that the state was not liable to pay the salary to the employees of the closing unit even if the Chief Minister had made a promise to them unless there was a clear order to this effect.
Allowing an appeal of Punjab State Industrial Development Corporation (PSIDC), a state government undertaking established to promote industries, against the order of the Punjab and Haryana High Court, holding that it was liable to pay the salary of the Punjab National Fertiliser and Chemical (PNFC) Ltd, a company promoted by the corporation, the apex court said the workers were not “entitled” to such claim from government.
The High Court Division Bench had ruled that a company court had power to issue a direction to the PSIDC under Section 446(2) of the Companies Act to pay the salary to the PNFC employees without adverting to the question whether the former had liability in law as the Chief Minister had promised the workers to pay them six months’ salary.
The dispute arose with the closure of PNFC, in which PSIDC had 46.13 per cent stake, in July 2001 after it was declared a sick industrial unit. The then Chief Minister Parkash Singh Badal on August 25, 2001, had put a note to the department concerned that employees were entitled to pay and emoluments till the actual winding up of PNFC and the PSIDC would raise funds from market to pay them six months’ salary.
Since the Congress government headed by Capt Amarinder Singh took over in 2002 and the employees were not paid the salary, they moved the company court, which directed the PSIDC to release the funds to the sick company to enable it to pay the wages of its workers in terms of Chief Minister’s directive.
A Bench of Mr Justice Arun Kumar and Mr Justice R V Raveendran, while setting aside the High Court order, held that the Chief Minister’s “note cannot be said to be an order of the state government and, therefore is not binding on the PSIDC.”
“The orders of the state government are issued in a prescribed manner and the note of August 25, 2001 cannot be treated as one,” it ruled, rejecting the contention of the counsel for PNFC Employees Union that the Chief Minister’s note was order.
The court was of the view that PSIDC and PNFC were two independent legal entities and one company could not be made liable to the obligations of the other.
Though the court held that the workers could not claim the pay legally, it left it to the wisdom of the state government whether a “sympathetic view” could be taken in the case of the employees in the light of Chief Minister’s promise and see if some relief could be given to them.
