In Civil Writ Petition No.22159 of 2020 (O&M)-PUNJ HC- P&H HC dismisses plea of erstwhile employees of Sugar Mill challenging State Govt.’s permission to remove clauses from agreement to sell mandating respondent to rehabilitate employees after it purchased mill in auction Justices Ravi Shanker Jha & Arun Palli [18-05-2022]

Read Order: Karnal Singh and Others v. State of Haryana and others

Monika Rahar

Chandigarh, June 7, 2022: While dealing with a petition filed by the erstwhile employees of Bhuna Cooperative Sugar Mills Ltd.,who were aggrieved by the the approval given by the State Government to the third respondent (which took the reign of the Mills after its auction) to remove clause 8(b) and 8(k) of the agreement to sell which mandated the third respondent to continue to operate the sugar mill under any circumstances and rehabilitate the employees, the Punjab and Haryana High Court has dismissed the petition without finding any illegality in the impugned order.  

The Bench of Chief Justice Ravi Shanker Jha and Justice Arun Palli was dealing with a petition filed by the petitioner being aggrieved by an order of the respondent-authorities by which Haryana State Federation of Cooperative Sugar Mills Ltd. (fourth respondent) with the approval of the State Government permitted the third respondent to remove clause 8(b) and 8(k) of the agreement to sell dated January 19, 2007. 

In this case, the State Government placed Bhuna Cooperative Sugar Mills Ltd. Bhuna, Tehsil and District Fatehabad under liquidation after it suffered perpetual losses. Some persons aggrieved by the said decision of the State Government to close down the mill filed a Civil Writ Petition before the High Court itself which was eventually dismissed in 2006. 

The mill was purchased by the third respondent who also remained unsuccessful to run the mill, and eventually, it was shut down. Therefore, all the employees of the mill filed Civil Writ Petition seeking reappointment/readjustment/resettlement, which was disposed of on in view of the statement made by counsel for the respondents that all the employees of the mill as also the other casual employees were either adjusted by the State Government in other sugar mills/cooperative societies or granted voluntary retirement by paying them the requisite amount. 

Also, a dispute arose between the third respondent and the State Government because the Government was demanding a certain extra amount which was outstanding. The matter was referred to the sole arbitrator and against the award passed by the arbitrator, the Official Liquidator filed objections under section 34 of the Arbitration and Conciliation Act, 1996 before the District Court at Panchkula which were dismissed. 

The third Respondent filed an execution petition before the Executing Court of Additional District Judge, Panchkula seeking execution of the award as well as direction to the Official Liquidator to transfer the mill in terms of the award passed by the arbitrator as the necessary amount had been deposited by the third respondent-purchaser. 

The matter was considered at length as the petitioner objected to clauses 8(b) and 8(k) contained in the sale agreement of January 2007 wherein there was a mandate requiring the third respondent to continue to operate the sugar mill under any circumstances and also to rehabilitate the employees. The Executing Court decided the execution application in terms of the award. 

Pursuant to the aforesaid order of the Executing Court, the third respondent initially filed an undertaking in terms of the award and the order of the Executing Court, upon which the sale deed was executed in 2019. The third Respondent thereafter filed a representation in 2020 before the authorities for waiving of conditions contained in clauses 8(b) and 8(k) of the sale agreement of 2007 in terms of the liberty granted by the Executing Court. 

The request made by the third respondent was duly considered and examined by several authorities where after necessary approvals were granted by the State Government, whereupon Haryana State Federation Cooperative Sugar Mills Ltd. vide the impugned order conveyed the approvals granted by the State Government to the third respondent. Being aggrieved by the said order, the present petition was filed by the petitioners.

At the very outset, this Court questioned the maintainability of the petition at the behest of the petitioners. The counsel for the petitioners submitted that one of the petitioners was an erstwhile employee of the Bhuna Cooperative Sugar Mills Ltd. and the other petitioners were the farmers whose land was acquired for the purposes of setting up the aforesaid sugar mill. 

It was submitted that Mill was under liquidation and therefore, it was sold to the third respondent with specific conditions contained in clauses 8(b) and 8(k) of the sale agreement that respondent the third shall run and operate the mill. 

In return, the respondents pointed out that the third petitioner was one of the employees of erstwhile Bhuna Cooperative Sugar Mills Ltd., who had opted for voluntary retirement in 2009 and had even received an amount of Rs.3,66,954/- and executed the necessary documents in this regard. 

After considering the fact that the decision of the State Government to sell the mill was previously upheld by the High Court coupled with the fact that all the employees of the Government sugar mills working with the third respondent were resettled/reappointed or granted voluntary retirement by the authorities after making due payments, the Court did not find that the petitioners were able to establish any right or any cause of action to assail the 2020 order of the State Government. 

However, it was noted, 

“… we may take note of the fact that this Court only for the purposes of satisfying itself had directed the State Government as well as Haryana State Federation of Cooperative Sugar Mills Ltd. as well as the petitioners to file affidavits in respect of the conditions and the facts leading to waiver of clauses 8(b) and 8(k) of the agreement to sell dated 19.01.2007.”

In view of the aforesaid facts and circumstances, the Court did not find any illegality in the order passed by the respondent-authorities communicating the decision of the State Government to the third respondent regarding the removal of clauses 8(b) and 8(k) of the 2007 agreement to sell. Accordingly, the petition filed by the petitioners was dismissed.