A) ABSTRACT / HEADNOTE

The Supreme Court of India in S.K.G. Sugar Ltd. v. Sri Ali Hassan, Chairman, Industrial Tribunal, Bihar & Others dealt with the complex interplay between the Indian Companies Act, 1913 and the Industrial Disputes Act, 1947, focusing on the definition of “employer” in the context of industrial disputes arising during company liquidation. The case arose from a dispute where S.K.G. Sugar Ltd., a lessee of Gaya Sugar Mills (under liquidation), faced proceedings before the Industrial Tribunal, Bihar, initiated by workers discharged during the pendency of an industrial dispute reference under Section 10 of the Industrial Disputes Act. The Court analyzed whether S.K.G. Sugar Ltd., being a new lessee post reference, could be classified as an “employer” under Sections 33 and 33A of the Industrial Disputes Act, and whether prior leave under Section 171 of the Indian Companies Act was mandatory for the State to initiate such reference. The Court ultimately held that S.K.G. Sugar Ltd. was not the employer concerned in the original industrial dispute and thus could not be subjected to the provisions of Section 33 and 33A of the Industrial Disputes Act. The proceedings against it were declared void for want of jurisdiction.

Keywords: Employer definition, Industrial Disputes Act 1947, Indian Companies Act 1913, liquidation, Industrial Tribunal jurisdiction, successor employer.

B) CASE DETAILS

i) Judgement Cause Title:
S.K.G. Sugar Ltd. v. Sri Ali Hassan, Chairman, Industrial Tribunal, Bihar & Others

ii) Case Number:
Civil Appeal No. 793 of 1957

iii) Judgement Date:
November 4, 1958

iv) Court:
Supreme Court of India

v) Quorum:
S.R. Das (C.J.), N.H. Bhagwati, B.P. Sinha, K. Subba Rao, K.N. Wanchoo, JJ.

vi) Author:
N.H. Bhagwati, J.

vii) Citation:
(1959) Supp. SCR 254

viii) Legal Provisions Involved:

• Section 10(1), 18(3)(c), 33, 33A, 20(3) of Industrial Disputes Act, 1947

• Section 171 of Indian Companies Act, 1913

• Articles 226 and 227 of Constitution of India

ix) Judgments overruled by the Case (if any):
None

x) Case is Related to which Law Subjects:
Industrial Law, Company Law, Constitutional Law

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute traces back to the winding up of Gaya Sugar Mills Ltd., incorporated in 1934, operating a sugar factory in Guraru, Bihar. Following liquidation in 1951, the liquidator obtained court permission to lease the factory. On December 6, 1954, S.K.G. Sugar Ltd. became the lessee. Four days prior, the Bihar Government had referred an industrial dispute concerning Gaya Sugar Mills to the Industrial Tribunal under Section 10(1) of the Industrial Disputes Act, 1947.

No notice was issued to the new lessee, S.K.G. Sugar Ltd., which later faced complaints under Section 33A for allegedly discharging workers and altering service conditions during the reference period without Tribunal permission. The litigation raised intricate questions about the definition of “employer,” application of Industrial Disputes Act provisions to successors, and whether the Government required leave of the Company Court under Section 171 of the Indian Companies Act before referring disputes during liquidation.

D) FACTS OF THE CASE

The Gaya Sugar Mills Ltd. entered compulsory winding up in 1951, and the Court appointed a liquidator. With Court’s sanction under Section 171(b) of the Indian Companies Act, 1913, the liquidator leased the factory to S.K.G. Sugar Ltd. starting December 6, 1954.

On December 2, 1954, prior to lease execution, the Bihar Government issued a reference under Section 10(1) of the Industrial Disputes Act concerning 28 sugar factories, including Gaya Sugar Mills, to the Industrial Tribunal headed by Sri Ali Hassan. The disputes referred included retaining allowance, leave and holiday entitlements, and deductions from leave wages.

S.K.G. Sugar Ltd., upon taking possession, terminated several workers and altered service conditions. Two groups of workers filed complaints under Section 33A alleging these actions occurred without Tribunal permission during the dispute pendency. The Tribunal issued notices to S.K.G. Sugar Ltd. on March 25, 1955. The lessee contended it was not bound by the reference or Tribunal’s jurisdiction since it was not in management when the reference was made.

S.K.G. Sugar Ltd. filed a writ petition before Patna High Court under Articles 226 and 227 seeking to quash Tribunal proceedings. The High Court dismissed the petition, ruling the company was an “employer” under Sections 33 and 33A. S.K.G. Sugar Ltd. obtained special leave to appeal before the Supreme Court.

E) LEGAL ISSUES RAISED

i) Whether the Government of Bihar required leave under Section 171 of the Indian Companies Act before referring disputes to the Industrial Tribunal.

ii) Whether S.K.G. Sugar Ltd., as a lessee post-reference, was an “employer” under Sections 33 and 33A of the Industrial Disputes Act, 1947.

F) PETITIONER/ APPELLANT’S ARGUMENTS

i) The counsels for Petitioner / Appellant submitted that:

The Bihar Government’s reference violated Section 171 of the Indian Companies Act, 1913, which prohibited legal proceedings against a company in liquidation without prior Court leave. The Government failed to seek Court permission before making the reference, rendering the proceedings illegal.

S.K.G. Sugar Ltd. was not in management when the Government referred the dispute. The term “employer” under Sections 33 and 33A referred to the employer involved in the original industrial dispute at reference initiation. Since the appellant acquired possession after the reference date, it bore no legal relationship with the workers involved in the pending dispute.

The complaints under Section 33A were unsustainable because no permission under Section 33 was required by S.K.G. Sugar Ltd., which was not party to the reference. Thus, the Industrial Tribunal lacked jurisdiction over the appellant.

G) RESPONDENT’S ARGUMENTS

i) The counsels for Respondent submitted that:

The term “employer” under Sections 33 and 33A applied broadly to include any entity having employer-employee relationship with workmen at the time of discharge or service alteration, regardless of whether they were party to the pending reference.

The Industrial Tribunal’s jurisdiction extended to S.K.G. Sugar Ltd. as it managed the factory during the dispute pendency. The purpose of Sections 33 and 33A was to prevent unfair labor practices and ensure industrial peace during dispute adjudication.

The reference by the Bihar Government did not amount to a legal proceeding against the company in liquidation, thus Section 171 of the Indian Companies Act did not apply.

H) RELATED LEGAL PROVISIONS

i) Indian Companies Act, 1913 – Section 171
Read here

ii) Industrial Disputes Act, 1947 – Sections 10(1), 18(3)(c), 33, 33A, 20(3)
Read here

iii) Constitution of India – Articles 226, 227
Read here

I) JUDGEMENT

a. RATIO DECIDENDI

The Court held that S.K.G. Sugar Ltd. was not party to the original dispute referred on December 2, 1954. The Government’s reference was against the “management” as it existed on the reference date, not the company itself or future lessees.

The Court clarified that the definition of “employer” under Sections 33 and 33A required continuity of the employer involved in the reference dispute. Since S.K.G. Sugar Ltd. came into possession post reference, it lacked this continuity.

The Tribunal’s failure to issue notice to S.K.G. Sugar Ltd. further indicated it was not considered a party. Thus, the Tribunal lacked jurisdiction to entertain complaints under Section 33A.

The Court emphasized that fresh industrial disputes could still be raised against S.K.G. Sugar Ltd. under Section 10, but complaints under Section 33A were not maintainable.

b. OBITER DICTA 

The Court remarked that involving every successive lessee automatically in pending references would require repeated notices, fresh pleadings, and new hearings, which the Industrial Disputes Act did not envisage.

c. GUIDELINES 

• The identity of the employer under Sections 33 and 33A must link directly to the employer involved at the dispute’s inception.

• Successive lessees are not automatically bound unless shown to be nominees, heirs, successors, or assigns of the earlier employer under Section 18(3)(c).

J) CONCLUSION & COMMENTS

The Supreme Court’s ruling clarified the application of labor law in contexts where businesses under liquidation change management. The judgment protects new management from inheriting undisclosed liabilities arising from prior disputes, unless statutory continuity under Section 18(3)(c) exists. This ensures fairness to bona fide transferees while preserving workmen’s right to initiate fresh disputes. The ruling remains a seminal authority on the scope of employer obligations under Sections 33 and 33A of the Industrial Disputes Act.

K) REFERENCES

a. Important Cases Referred:

• Automobile Products of India Ltd. v. Rukmaji Bala [1955] 1 SCR 1241

• Atherton West & Co. Ltd. v. Suti Mill Mazdoor Union [1953] SCR 780

b. Important Statutes Referred:

• Indian Companies Act, 1913

• Industrial Disputes Act, 1947

• Constitution of India, 1950