Holding

A successor‑in‑interest steps into the shoes of the transferor and is bound by the proceedings already conducted; it cannot reopen the case or recall witnesses absent exceptional circumstances.

Summary

Bhagwan Dass Chopra, a former clerk of Narang Bank of India Ltd., was terminated in February 1975 and raised an industrial dispute before the Central Government Industrial Tribunal. While the case was pending, Narang Bank merged into United Bank of India (UBI) on 1 August 1976, and UBI was impleaded as the successor in place of Narang Bank. UBI sought to recall the appellant for further cross‑examination of his testimony, which had been closed in May 1976, but the Tribunal refused. The Tribunal later awarded reinstatement and back wages to the appellant. The Delhi High Court set aside the award on the ground of natural justice, directing a rehearing, but the Division Bench upheld the award, holding that UBI could cross‑examine. The Supreme Court allowed the appeal, holding that a transferee steps into the shoes of the transferor and is bound by the proceedings already conducted; it cannot reopen the case or recall witnesses absent exceptional circumstances, and thus no violation of natural justice occurred. The case was remanded to the High Court Single Judge to consider any other grounds raised by UBI.

Issues considered

Whether a party that acquires the rights and liabilities of a party to an industrial tribunal proceeding is entitled to reopen the proceedings, including recalling witnesses for cross‑examination, under the Industrial Disputes Act, 1947 and the Civil Procedure Code, 1908.
Whether principles of natural justice require the successor‑in‑interest to be given an opportunity to cross‑examine witnesses whose evidence has already been recorded.
Whether the provisions of Order 22 Rule 10 of the CPC are applicable to proceedings before an industrial tribunal.

Legislation cited

Code of Civil Procedure, 1908s. Order 22 Rule 10
Industrial Disputes Act, 1947s. 18

Subjects

industrial disputemergersuccessor-in-interestnatural justicecross‑examinationCPC Order 22Industrial Disputes Acttribunal proceedingsevidence reopening

Judgment

A
BHAGWAN DASS CHOPRA ·r-
v.
UNITED BANK OF INDIA & ORS.

NOVEMBER 17, 1987

B [E.S. VENKATARAMIAH AND K.N. SINGH, JJ.]
't
Industrial Disputes Act, 1947: Section 18--Labour Court'lndust-
rial Tribunal-Pending Proceedings-Whether party to proceedings -:...
entitled to re-open proceedings on being impleaded in place of party
whose rights/liabilities have been taken over.
.A
c Civil Procedure Code, 1908: Order 20 Rule JO-Applicability to
/ "'"'~--

proceedings pending before Labour Court Industrial Tribunal.

The appellant joined the service of a Commercial Bank on
July 12, 1974 and was confirmed on October 1, 1974. His services were
D terminated by the Bank on February 10, 1975 without assigning any
reason. On an industrial dispute being raised, the Central Government,
by its order dated July 9, 1975 referred the dispute, as to whether the Bank
was justified in terminating his services and if not, what relief the
workman was entitled to, to the Central Government Industrial
Tribunal for adjudication. The claim made by the appellant was dis- ¥
E puted by the management. In the course of the trial, the appellant
examined himself and was cross-examined. His evidence was closed on
21.5.76.

On July 25, 1976 the Bank entered into an agreement with the
---
first respondent Bank where under all the assets and liabilities of the erst-
F while Bank were taken over by the respondent Bank. The employees of the
erstwhile Bank became the employees of the first respondent Bank by ,-<.
virtue of cl. 20 of the said agreement. On August 1, 1976 the erstwhile
Bank totally merged with the first respondent Bank. Thereafter, on
behalf of the former Bank, five witnesses were examined.

G On an application made by the appellant, first respondent Bank
was imp leaded as a party, in view of the merger which had taken place.
Thereafter, the first respondent Bank examined its Personnel Officer f-
and formally closed the evidence.

On October 3, 1978 the first respondent Bank submitted an appli·
H cation for cross-examining the appellant whose evidence bad been
1088
B.D. CHOPRA v. UNITED BANK OF INDIA 1089

..j closed on May 21, 1976. The Tribunal dismissed the application on the A
ground that since no new plea had been taken there was no ground to
recall the appellant and subject him to further cross-examination.

The Tribunal made the award on January 30, 1981 holding that
the termination of the service of the appellant was not justified and was
bad, illegal and not enforceable. B

The first respondent Bank filed a writ petition before the High
Court. A Single Judge set aside the award on the ground that when once
a person was impleaded as a party to the proceedings, principles of
natural justice required that he should be given an opportunity to cross-
--4 , examine those witnesses whose evidence had been recorded earlier and c
since the Tribunal had rejected first respondent Bank's prayer to cross-
examine the appellant whose evidence had been closed on May 21, 1976,
the award was liable to be quashed. It, however, remanded the case to
the Industrial Tribunal to decide the case again after giving an
opportunity to the first respondent Bank to cross-examine the appellant
and other witnesses. The Letters Patent Appeal filed by the appellant D
was dismissed by the Division Bench holding that the first respondent
Bank had the right to cross-examine the appellant on the sole ground
that it had been impleaded as a party after the merger of the erstwhile
Bank with the first respondent Bank.
• "'f
Allowing the appeal, E

-- HELD: 1.1 There is no express provision, corresponding to Rule
10 Order 22 of the Code of Civil Procedure, 1908 providing that in cases
of an assignment, creation or devolution of any interest during the
pendency of a suit, the suit may, by leave of the court, be continued by
or against the person who or upon whom such interest has come or F
devolved, which is applicable to the proceedings before the Industrial
Tribunal. [1095B-C]

1.2 In every case of transfer, merger, takeover or scheme of
amalgamation, tm rights and liabilities of the transferee Company or
Corporation shall be the same as that of the tansferor company or G
corporation, and subject to the terms and conditions of the contract of
transfer or merger, the scheme of amalgamation and the legal provi-
sions as the case may be under which such a transaction may have taken
place, the transferee company or corporation becomes liable to be imp-
leaded or becomes entitled to be impleaded in place of or in addition to
the transferor company or corporation in any action, suit or proceeding H
1090 SUPREME COURT REPORTS [ 1988) l S.C.R.
A filed against or by the transferor company or corporation by or against
a third party, and that whatever steps have already taken place in those
proceedings will continue to operate against and be binding on such
parties in any of the ways mentioned in Rule 10 Order 22 of the Code of
Civil Procedure, 1908. [1095F-H, 1096A-B)
B
1.3 Generally speaking, an assignee cannot set up a case incon-
sistent with the one put forward by his assignor and it is only
in exceptional cases that an assignee could be permitted to raise
any new plea and that too only for avoiding multiplicity of the
proceedings. [1097B)

c In the instant case, by reason of impleading the first respon-
dent as a party there was no change in the character of the proceedings
pending before the Tribunal. The respondent Bank only stepped
into the shoes of the erstwhile Bank and all the proceedings that
had gone· on till the date on which the respondent Bank was so
D impleaded were binding on the respondent Bank. It was bound by
the proceedings which had taken place till then and could not
go back on the proceedings. [1096G-H; 1097A)

The Single Judge was in error in taking the view that the first
respondent Bank was appearing before the Tribunal in its own right
E and was entitled to protect its own interest. The proceeding pending y "
before the Tribunal on the date of merger could not be considered as a
new proceeding instituted against the respondent Bank, on its being
impleaded. It was the same old proceeding to which the erstwhile Bank
was a party and the rights of the respondent Bank in the conduct of the
proceedings could not be larger than the rights which the erstwhile
p Bank itself possessed. [10970-E)

There were no such exceptional circumstances which entitled
the respondent Bank to put up a plea different from the pleas
which had already been taken up by the erstwhile Bank and there
was also no need. to permit it to reopen the proceedings which had
G gone on till then. Therefore, in the absence of any exceptional circums-
tances which would have entitled the party to a proceeding to recall
a witness whose evidence had already been completed for further
cross-examination, the first respondent Bank could not make such
a claim at all. The Single Judge who set aside the award and the
Division Bench, which merely affirmed the decision, have erred in
H overlooking the true legal position. [1097B,Gt
B.D.CHOPRAv. UNITEDBANKOFINDIA[VENKATARAMIAH,J.] 1091

On the facts and in the circumstances of the case the respon-
A
dent Bank was, therefore, not ejltitled to recall any of the witnes~s
examined on behalf of the appellant for fnrther cross-examination,
particularly after both the parties had closed their respective cases
before the Tribunal. The dismissal of the application made by the
respondent for recalling the appellant for further cross-examination,
in the absence of any exceptional circumstances, could not be considered B
as a ground for setting aside the award. The principles of natural
justice had not, therefore, been violated.by the Tribunal in passing
the award. [1097H, 1098A-B]

The judgment of the Division Bench as also of the Single
Judge set aside. However, as the respondent Bank had some other C
grounds to urge before the Single Judge, the case is remanded
to the Single Judge to "'consider any other relevant ground that
may be urged by the respondent Bank and to dispose of the writ
petition. [1098B-C]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2984 D
of 1987.

From the Judgment and Order dated 30.3.1987 of the Delhi High
Court in L.P.A. No. 67 of 1987.

M.K. Ramamurthi, Mrs. C. Ramamurthi and M.A. Krish- E
namoorthy for the Appellant.

-- Dr. Y.S. Chitale, Ms. M. Roy, H.K. Puri and H.K. Dutt for the
Respondents.

The Judgment of the Court was delivered by F

VENKATARAMIAH, J. The appellant joined the service of the
Narang Bank of India Ltd., New Delhi on July 12, 1974 as a Clerk-
cum-Typist and was confirmed in his service on October 1, 1974. The
Narang Bank of India Ltd., however, terminated his services on
February IO, 1975 without assigning any reason. On an industrial dis- G
pute being raised the Central Government by its order dated July 9,
1975 referred the following dispute to the Central Government Indust-
rial Tribunal for adjudication:

"Whether the action of the management of the
Narang Bank of India, New Delhi in terminating the H
1092 SUPREME COURT REPORTS I 1988) I S.C.R.
services of Shri Bhagwan Dass Chopra w.e.f. 10.2.1975 is
A
justified? If not, what relief is the said workman entitled?

The claim made by the appellant was disputed by the manage-
ment. On the basis of the pleadings filed by the parties the Industrial
Tribunal framed issues and directed the parties to lead evidence. In
B the course of the trial the appellant examined himself and he was
cross-examined by the representative of the Narang Bank of India Ltd.
Thereafter the evidence of the appellant was closed on 21.5.1976. On
July 25, 1976 the Narang Bank of India Ltd. entered into an agreement
with the United Bank of India, respondent No. 1 herein, whereunder
all the assets and liabilities of the Narang Bank of India Ltd. were
C taken over by the United Bank of India, respondent No. 1. The emp-
.loyees of the erstwhile Narang Bank of India Ltd. became the emp-
loyees of the United Bank of India, respondent No. 1 by virtue of
clause 20 of the said agreement. The relevant part of clause 20 read
thus:

D "20. (a) The Transferee shall be under an obligation
to take over and absorb and retain with effect from 1st
August, 1976 in its employment such staff, employees and
assistants (hereinafter called "the said employees") of the
Transferor or employed by the Transferor in relation to or
in connection with the said banking business intended to be
taken over or acquired by the Transferee as aforesaid who
were permanent employees of the Transferor on the said
date and on the same terms and conditions including the
remuneration and wages and/or other lawful claims as were
or are applicable or payable to them on the said date sub-
ject to the terms and conditions as contained in the Third
Schedule hereto PROVIDED ALWAYS that_such taking over or
absorption of the staff and employees of the Transferor by
the Transferee on the same terms and conditions as
hereinbefore mentioned and/or also referred to or
otherwise mentioned in the Third Schedule hereto shall not
however be so construed as to include or extend to their or
G each of their rank and status.

(b) The Transferee shall not, however, be bound to
take over or absorb in their employment-(i) all such staff,
assistants and employees against whom any show cause
notice or any action (penal or otherwise) or any enquiry or
H any actions and/or proceedings whatsoever are pending on
B.D.CHOPRAv. UNITEDBANKOFINDIA(VENKATARAMIAH,J.I 1093

the said date by the Management or by any Tribunal Court
or otherwise and/or who are on the said date involved or A
figuring in any such enquiries, actions and/or proceedings
and against whom any adverse or suspension order finding
or decision has beeu-passed or is likely to be passed prior or
subsequent to the said date. (ii) Any such staff employees
and assistants of the Transferor whose services have been B
terminated by the Transferor on or before the said date
and.lor against whom any adverse or suspension order find-
ing or decision has been passed by any person holding any
enquiry andlor Management of the Transferor and or by
any court, Tribunal or otherwise subsequent to the said
date but prior to the formal taking over of the said business C
or assets or properties of the Transferor by the Transferee
on the basis of this Agreement.

PROVIDED NEVERTHELESS the Transferee
shall take over suspended employee, if any, of the Trans-
feror relating to the said business with effect from the said D
date and 'or condition as hereinbefore mentioned in clause
20( a) above in so far as the same shall be applicable if and
only if such employee Iemployees is .or are finally and ulti-
mately absolvedlexonerated or acquitted from or of all the
charges levelled against himlthem.
E
On August l, 1976 the Narang Bank of India Ltd. was totally
merged with the United Bank of India. On August 2, 1976 three
witness.es gave evidence on behalf of the former Narang Bank of India
Ltd., two of whom were employees of the United Bank of India Ltd.
by virtue of the agreement of merger referred to above. On September
20, 1976 two more witnesses were examined of whom one witness was F
a former officer of the Narang Bank of India Ltd. On that date the
appellant made an application for permission to implead the United
Bank of India also as a party in view of the merger which had taken
place. The United Bank of India took time till November 5, 1976 to
file its reply to the application made by the appellant. The evidence of
the Narang Bank of India Ltd. was, however, closed on November 5, G
1976. The United Bank of India sought further time to file a reply to
the .appellant's application. That reply was filed ~n November 10,
1976. After hearing arguments on the apphcat10n the Tnbunal
directed that the United Bank of India should be impleaded as a party
and also gave time to the appellant to file an amended statement of
claim. The term of the Presiding Officer having expired on December, Ii
1094 SUPREME COURT REPORTS [ 1988] 1 S.C.R.

A 1, 1976, a new Presiding Officer was appointed in July, 1977. On
December l, 1977 the United Bank of India filed its written statement.
On January 25, 1978 the United Bank of India offered to reinstate the
appellant but without backwages and the case was adjourned for some
time. But no compromise was reached. On August 23, 1978 the United
Bank of India examined its Personnel Officer Shri R.B. Ray and for-
B mally closed the evidence. The case was thereafter adjourned to
October 3, 1978 for arguments. On that date the United Bank of India
submitted an application praying that the Bank should be allowed to
cross-examine the appellant whose evidence had been closed on May
21, 1976. By its order dated October 17, 1978 the Tribunal dismissed
the application of the United Bank of India on the ground that since no
new plea had been taken there was no ground to recall the appellant
C and subject him for further cross-examination. The arguments were
heard by the Tribunal on November 2, 1978 and an award was given on
January 30, 1981 holding that the termination of the services of the
appellant was not justified and was bad, illegal, and unenforceable.
The Tribunal also held that the appellant should be deemed to be in
D continuous service of the Narang Bank of India Ltd., New Delhi on
and after the 10th February, 1975 and consequently of the United
Bank of India on the date of the award. The Tribunal directed that the
appellant should be paid his full bac]< wages upto the' da;e of his
reinstatement. It also awarded costs of Rs.1,000 to the appellant.
Aggrieved by the said award the United Bank of India filed a writ
E petition before the High Court of Delhi in Civil Writ Petition No. 928
of 1981. That petition was heard and disposed of by the learned Single
Judge of the High Court on February 24, 1987. The learned Single
Judge set aside the award made by the Tribunal on the ground that
when once a person was impleaded as a party to the proceedings,
principles of natural justice required that he should be given an op-
F portunity to cross-examine those witnesses whose evidence had been
recorded earlier and since the Tribunal had declined to grant permis-
sion to the United Bank of India to cross-examine the appellant whose
evidence had been closed on May 21, 1976 the award was liable to be
quashed. The learned Single Judge, however, remanded the case to
the Industrial Tribunal to decide the case again after giving an
G opportunity to the United Bank of India to cross examine the appel-
lant and other witnesses. Aggrieved by the judgment of the learned
Single Judge the appellant filed Letters Patent Appeal No. 67 of 1987
before the Division Bench of the High Court. That appeal was dismis-
sed by the Division Bench of the High Court holding that the United
Bank of India had the right to cross-examine the appellant on the sole
H ground that it had been impleaded as a party after the merger of the
B.D. CHOPRA v. UNITED BANK OF INDIA [VENKATARAMIAH,J.] 1095
'
.#'. Narang Bank of India Ltd. with the United Bank of India. Aggrieved
by the decision of the Division Bench of the High Court the appellant
A
has filed this appeal by special leave.

The question for consideration in this case is whether a party
who acquires the rights and liabilities of a party to a proceeding is
entitled to reopen as a matter of course the proceedings on being B
1 impleaded as a party in the place of the party whose rights and
liabilities he had taken over. No express provision corresponding to

l,
rule 10 order 22 of the Code of Civil Procedure, 1908, which provides
that in cases of an assignment, creation or devolution of any interest
during the pendency of a suit other than those cases dealt with earlier
in order 22 of the Code of Civil Procedure, I908, the suit may by leave
of the court, be continued by or against the person to or upon whom
c
such interest has come or devolved is applicable to the proceedings
before the Industrial Tribunal has been brought to our notice. Section
18 of the Industrial Disputes Act, 1947, however, provides that an
award of a Labour Court, Tribunal or N ationaI Tribunal which has
become enforceable shall be binding on all parties to the industrial D
dispute; all other parties summoned to appear in the proceedings as
parties to the dispute, unless the Labour Court, Tribunal or National
Tribunal as the case may be records the opinion that they were so
summoned without proper cause; and where a party referred to above
'-<{ is an employer, his heirs, successors or assigns in respect of the
establishment to which the dispute relates. E

It is, however, necessary to evolve a reasonable procedure to
deal with cases where a devolution of interest takes place during the
pendency of a proceeding arising under the Industrial Disputes Act,
1947. In the circumstances it is reasonable to hold that in every case of
transfer, devolution, merger, takeover or a scheme of amalgamation F
';-- under which the rights and liabilities of one company or corporation
stand transferred to or devolve upon another company or corporation
either under a private treaty, or a judicial order or under a law the
transferee company or corporation as a successor-in-interest becomes
subject to all the liabilities of the transferor company or corporation
and becomes entitled to all the rights of the transferor company or G
corporation subject to the terms and conditions of the contract of
transfer or merger, the scheme of amalgamation and the legal provi-
~ sions as the case may be under which such transfer, devolution,
merger, takeover or amalgamation as the case may be may have taken
place. It follows that subject to such terms it becomes liable to be
impleaded or becomes entitled to be impleaded in the place of or in H
1096 SUPREME COURT REPORTS [ 1988] 1 S.C.R.

addition to the transferor company or corporation in any action, suit )"
A or proceeding filed against the transferor company or corporation by a
third party or filed by the transferor company or corporation against a
third party and that whatever steps have already taken place in those
proceedings will continue to operate against and be binding on the
transferee company or corporation in the same way in which they
a operate against a person on whom any interest has devolved in any of
the ways mentioned in rule 10 of order 22 of the Code of Civil Proce- ~
dure, 1908 subject of course to any terms in the contract of transfer or
merger, scheme of amalgamation or other relevant legal provisions

c
governing the transaction under which the transferee company or
corporation has become the successor-in-interest of the transferor
company or corporation.
j
In the instant case admittedly all the rights and liabilities of the
Narang Bank of India Ltd. in its banking busi11.ess were taken over by
the United Bank of India under the agreement of merger dated July
25, 1976. Clause 22 of the agreement of merger provides as follows:
D
"22. The Transferee shall be substituted in place of
the Transferor in respect of all Court or Tribunal proceed-
ings cases, suits and Government and Municipal and
records and shall apply to the authorities, court, Tribunal
or otherwise for being added as the parties hereto and the
\.-
E benefits of all orders, directions, decrees and award or
judgment if and when issued will pass on to the Transferee,
who shall be bound or abide by the same subject to the
liabilities not taken over by the Transferee including those
in respect of staff assistants and employees concerned of
the Transferor as mentioned in clause 20 hereof. All legal
costs for such substitution and 'or prosectuion or contesting
F
the said action and proceedings existing or binding on the -<
said date shall be borne by the Transferee."

In view of the terms of the agreement of merger and in particular
clause 22 thereof the United Bank of India was rightly impleadcd as a
G party to the proceedings before the Tribunal in the place of the Narang
Bank of India Ltd. By reason of impleading of the United Bank of
India as a party there was no change in the character of the proceed- ~
ings pending before the Tribunal. The United Bank of India only
stepped into the shoes of the Narang Bank of India Ltd. and all pro-
ceedings that had gone on till the date on which the United Bank of
H India was so impleaded were binding on the United Bank of India.
B.D.CHOPRAv. UNITEDBANKOFINDIA[VENKATARAMIAH,J.] · 1()97

~
The proceedings before the Tribunal could thereafter be continued A
against the United Bank of India. The United Bank of India could
thereafter take part in the further proceedings before the Tribunal
in the same capacity in which the N arang Bank of India Ltd. was
appearing in the case. It was bound by all proceedings which had taken
place till then. It could not go back on the proceedings. Generally
"'r speaking an assignee cannot set up a case inconsistent with the one put B
forward by his assignor and it is only in exceptional cases an assignee
could be permitted to raise any new plea and that too only for avoiding
c multiplicity of the proceedings. In the instant case there was no such
t exceptional circumstance which entitled the United Bank of India to
.-4' take up a plea different from the pleas which had already been taken
· up by the Narang Bank of India Ltd and there was also no need to
permit it to reopen the proceedings which had gone on till then. The C
High Court has not adverted to any such exceptional circumstance.
The learned Single Judge has not set out any justifiable reason for
observing that the principles of natural justice demanded that all those
witnesses whose evidence had been recorded earlier could be recalled
at the instance of the United. Bank of India and opportunity afforded D
to the United Bank of India to cross-examine them. The learned Single
Judge was in error in observing that the United Bank of India was
appearing before the Tribunal in its own right and was entitled to
'-..., protect its own interest. As already observed by us the proceeding
pending before the Tribunal on the date of merger could not be con-
sidered as a new proceeding instituted against the United Bank of E
India on its being impleaded. It was the same old proceeding to which
the Narang Bank of India Ltd. was a party and the rights of the United
Bank of India in the conduct of the proceedings could not be larger than
the rights which the Narang Bank of India Ltd. itself possessed. If the
Narang Bank of India Ltd. had no right to recall the witnesses who had
,__, been examined on behalf of the appellant for cross-examination on the F
1
date on which the United Bank of India made such prayer before the
Tribunal, the United Bank of India also could not be granted permis-
sion to do so. In the absence of any exceptional circumstance which
would have entitled in the ordinary course a party to a proceeding to
recall a witness whose evidence had already been completed for
further cross-examination the United Bank of India could not make G
such a claim at all. The learned Single Judge who set aside the award in
-1· the first instance and the Division Bench which merely affirmed the
decision of the learned Single Judge have erred in overlooking the true
legal position explained above by us. On the facts and in the circumst-
ances of the case the United Bank of India was not entitled to recall
any of the witnesses examined on behalf of the appellant for further H
1098 SUPREME COURT REPORTS [ 1988] I S.C.R.

A cross-examination particularly after both the parties had closed their ~-:
respective cases b~fore the Tribunal. The dismissal of the application
made by the United Bank of India for recalling the appellant for
further cross-examination, in the absence of any exceptional circumst-
ance, could not be considered as a ground for setting aside the award.
B The principles of natural justice had not, therefore, been violated by
the Tribunal in passing the award. We, therefore, set aside the judg- 't
ment of the Division Bench of the High Court and also of the learned
Single Judge. It is, however, mentioned before us that the United
Bank of India had some other grounds to urge before the learned 'lo
Single Judge and the case may be remanded to the learned Single
Judge for considering those grounds. We, therefore, remand this case
C to the learned Single Judge to consider any other relevant ground that'~
may be urged by the United Bank of India and to dispose of the writ
petition in accordance with law. This appeal is accordingly allowed.
The United Bank oflndia is directed to pay the costs of the appellant.

D N.P.V. Appeal allowed.

v

....