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Zia Fertilizer Company Limited Workers and Employees Union Vs. Government of People's Republic of Bangladesh and Ors.

Citation: 2014 BLD 1

IN THE SUPREME COURT OF BANGLADESH (HIGH COURT DIVISION)

Writ Petition No. 1834 of 2009

Decided On: 14.11.2009

Appellants: Zia Fertilizer Company Limited Workers and Employees Union Vs. Respondent: Government of People’s Republic of Bangladesh and Ors.

Hon’ble Judges/Coram: Syed Mahmud Hossain and Quamrul Islam Siddique, JJ.

Counsels: For Appellant/Petitioner/Plaintiff: M. Zahir and Muhammad Shafiqur Rahman

JUDGMENT

Quamrul Islam Siddique, J.

  1. In this application under Article 102 of the Constitution of the People’s Republic of Bangladesh, a Rule Nisi was issued calling upon the respondents to show cause as to why the decision of the Board of Directors of respondent No. 2 dated 10.2.2009 as intimated by the Office Order dated 24.2.2009 (Annexure-B) of respondent No. 4 directing preparation of accounts of respondent No. 3 company showing the price of urea at Tk. 4950 per metric ton for 2007-2008 and at Tk. 8,000 per metric ton for 2008-2009 instead of the correct price of Tk. 4,800 per metric ton upto 9.6.2008 and Tk. 10,000 per metric ton from 10.6.2008 should not be declared to have been done without lawful authority and are of no legal effect and/or such other or further order or orders passed as to this Court may seem fit and proper. At the time of issuance of the Rule, the petitioner, however, obtained interim order staying the operation of the order dated 24.2.2009 (Annexure-B) issued by respondent No. 4 for a period of 3(three) months. The order of stay was subsequently extended till disposal of the Rule.

  2. The facts leading to the issuance of the Rule in brief are:

  3. The petitioner is a trade union and collective bargaining agent of Zia Fertilizer Company Limited representing the workers and employees of that company. The petitioner’s union is represented by its General Secretary Md. Farid Uddin being authorised by a resolution of the Executive Committee of the trade union dated 8.3.2009.

  4. The petitioner impugns the office order dated 24.02.2009 issued by respondent No. 4 intimating the decision of the Board of Directors of BCIC dated 10.02.2009 to calculate the price of urea sold at Tk. 4950 per metric ton for 2007-2008 and at Tk. 8,000 per metric ton for 2008-2009 instead of the actual price of urea sold at Tk. 4800 per metric ton in 2007-2008 and at Tk. 10,000 per metric ton in 2008-2009.

  5. The petitioner is aggrieved because calculating the price of urea sold in 2008-2009 at Tk. 8,000 per metric ton instead of actual sale price at Tk. 10,000 per metric ton will show a much reduced net profit for Zia Fertilizer Company Limited (shortly, ZFCL) and this will reduce the amount of participatory contribution earned by the workers and employees of ZFCL. The workers and employees of the ZFCL are entitled to enjoy a portion of the profit from the Workers Participatory Fund under section 234(1)(Kha) of the Labour Act, 2006.

  6. The actual sale price of urea was at Tk. 10,000/- per metric ton but respondent No. 1 fixed the sale price of urea per metric tone at Tk. 8,000/-. The petitioner is aggrieved because calculation of net profit of ZFCL and the participatory contribution on account of artificial calculation of sale price of urea in the profit and loss account do not reflect the actual position of profit and sale price. If the actual sale price of urea is shown, the company earns a profit of Tk. 3,73,83,714.83 in July 2007 - June 2008 and the Workers Fund gets a sum of Tk. 17,80,177 but if the price of urea is calculated at the artificial and false valuation of Tk. 8,000 per metric ton then the profit of ZFCL comes down to Tk. 2,10,90,926.03 for the same period and the Workers Fund gets Tk. 10,04,330 as contribution. This figure substantially changes in 2008-2009 when urea was sold at Tk. 10,000 per metric ton but shown to have been sold at Tk. 8,000 per metric ton in the profit and loss account.

  7. The petitioner Union made representations to respondent No. 3 by memos dated 22.02.2009, 28.02.2009 and 2.3.2009 protesting against this fabricated preparation of accounts with copies to respondent Nos. 1, 2 and 4 but to no avail. The respondents have been acting illegally and preparing accounts for 2007-2008 and 2008-2009 on fictitious sale price of urea depriving the workers of their statutory right to get the contribution from the participatory fund.

  8. Being aggrieved by, and dissatisfied with, the decision of the Board of Directors of BCIC dated 10.02.2009 for artificial calculation of sale price of urea of ZFCL the petitioner moved this Court and obtained the instant Rule Nisi.

  9. Respondent Nos. 2, 3 and 4 entered appearance by filing affidavit-in-opposition controverting all the material statements made in the writ petition.

  10. The case of respondent Nos. 2, 3 and 4, in short, is that Bangladesh Chemical Industries Corporation (BCIC) was established to control, supervise and co-ordinate the urea factories. Zia Fertilizer Company Limited is one such urea fertilizer factories in which Government of Bangladesh has 100% ownership. BCIC is an autonomous body under the control of the Ministry of Industry. The Board of BCIC has been invested with the authority to run and manage the affairs of BCIC. The Chairman of BCIC represents the Government. The total responsibility of running the urea factories is upon the Board of BCIC. From time to time the Board takes important decisions for running the factories smoothly and the decision of the Board is binding upon the factories. There are 6(six) urea factories and the production costs vary from factory to factory depending on consumption of more raw materials, using of primitive and latest technology, investment costs in setting up the factory, the duration and the technology used in the factory concerned etc. But the Government fixes one and uniform sale price of urea for all the factories.

  11. In order to bring economic parity among the factories of higher production cost and lesser production cost, every year the sale price of urea is fixed internally factory wise with the approval of BCIC. In this manner economic benefit is given to the factories incurring losses due to more production costs by the factories making profits due to less production costs. In the past also the Board of Directors of BCIC took such decisions on several occasions.

  12. In order to protect the existence of the factories producing urea fertilizer under the control of BCIC, the Board of Directors of BCIC every year determines the internal sale price of fertilizer. In this mechanism of price fixation and for co-ordination of the 6(six) urea fertilizer factories the sale price and the revenue of the Government remain within the price fixed by the Government.

  13. The accounts of respondent company is audited every year by two reputed chartered accountant firms according to the laws in force in Bangladesh, but till date no objection has been raised by the Audit team of BCIC. The accounts were prepared on the basis of existing accounting principles. There is no scope for preparing fabricated accounts. The petitioner has no reason to feel aggrieved and the grounds taken by the petitioner are not tenable in law and as such, the Rule is liable to be discharged with costs.

  14. Dr. M. Zahir, learned Advocate appearing on behalf of the petitioner, submits that section 185(2) of the Companies Act provides that every profit and loss account of a company shall give a true and fair view of the profit and/or loss of the company for the financial year and that ZFCL being a company is also bound to give a true and fair view of the profit and/or loss of the company based on the actual sale price. He further submits that as urea is sold at Tk. 10,000 per metric ton, the respondents have no lawful authority to calculate and prepare accounts other than the actual sale price of urea. He lastly submits that the arbitrary fixation of the price of urea is illegal and mala fide and that the respondents have fixed the arbitrary price of urea with the mala fide intention to deprive the workers of their statutory right of getting 5% of the amount of net profit of the company.

  15. Mr. Tufailur Rahman, learned Advocate for the respondent Nos. 2, 3 and 4, on the other hand, submits that Bangladesh Chemical Industries Corporation (briefly, BCIC) was established to control, supervise and co-ordinate the urea factories. He also submits that in order to bring economic parity among the factories of higher production costs and lesser production costs, the Board of Directors of BCIC every year fix up the sale price of urea internally factory wise with a view to help survival of the factories incurring loss due to more production costs.

  16. We have perused the writ petition, its annexures, affidavit-in-oppositions submitted by respondent Nos. 2, 3 and 4 and their annexures, the application for vacating the order of stay and its annexures and affidavit-in-opposition against the application for vacating the order of stay filed by’ the petitioner.

  17. It appears from the record that there are 6(six) urea fertilizer factories, namely, (1) Chittagong Urea Fertilizer Limited (CUFL), (2) Jamuna Fertilizer Company Limited (JFCL), (3) Zia Fertilizer Company Limited (ZFCL), (4) Urea Fertilizer Factory Limited (UFFL), (5) Polash Urea Fertilizer Factory Limited (PUFL) and (6) Natural Gas Fertilizer Factory Limited (NGFFL) and all these urea fertilizer factories are controlled and managed by BCIC.

  18. The learned Advocate for respondent Nos. 2, 3 and 4 contends that under the direction and control of the Government, the BCIC controls and maintains all the fertilizer factories. He also contends that in order to bring economic parity of all the factories, the Government fixes the price of the fertilizer of all the factories at the same rate so that he factories incurring losses can survive with the profits of other factories. In fact, the Board of Directors of BCIC under the direction of Government has been adopting this mechanism for a long time.

  19. The main contention of the petitioner is that the Government is selling urea fertilizer at Tk. 10,000 per metric ton whereas BSIC showing the sale price at Tk. 8,000 per metric ton and by doing so BCIC is depriving the workers of getting their due share of profits from the workers participatory fund. Moreover, as per section 185(2) of the Companies Act, the BCIC is supposed to give fair and true accounts of sale proceeds BCIC also must prepare a true balance sheet of the profits and/or of loss of the company. Sub-section (2) of section 185 of the Companies Act is quoted as under:

185(2) “Every profit and loss account of a company shall give a true and fair view of the profit and or loss of the company for the financial year and shall, subject as aforesaid, comply with the requirements of part II of Schedule XI so far as applicable thereto.”

  1. Therefore, it is incumbent upon the company to give a true and fair view of the profit and/or of loss of the company at the time of preparation of the balance sheet. In the instant case, we find that though BCIC is selling the fertilizer at Tk. 10,000 per metric ton it is showing in the balance sheet that the fertilizer is sold at Tk. 8,000 per metric ton. Obviously, the balance sheet does not reflect the true and correct picture of the profit and/or of loss of the company. Therefore, Sub-section (2) of section 185 of the Companies Act is being violated at the time of preparation of the balance sheet.

  2. According to section 234(1)(Kha) of the Labour Act, 2006 the workers are entitled to certain share of profit of the company from their participatory fund. Section 234(1)(Kha) of the Labour Act, 2006 runs as follows:

২৩৪- অংশগ্রহণ তহবিল ও কল্যাণ তহবিল স্থাপন।- (১) এই অধ্যায় প্রযোজ্য হয় এরুপ প্রত্যেক কোম্পানী-

(খ) প্রত্যেক বৎসর উহা শেষ হইবার অন্যুন নয় মাসের মধ্যে, উক্ত বৎসরের নীট মুনাফার পাঁচ শতাংশ অংশগ্রহণ তহবিল ও কল্যাণ তহবিলে ৮০৪২০ অনুপাতে প্রদান করিবে।

  1. Therefore, from the above, it is clear that the employees and workers are entitled to profit from the workers participatory fund. If the BCIC prepares an untrue and unfair balance sheet of Zia Fertilizer Factory, the workers are being deprived of getting their due share from the profit of the workers participatory fund. Above all, BCIC being a statutory body under the Ministry of Industries should not prepare an untrue account of profit and/or of loss of the company. This kind of mechanism being unethical and immoral cannot be accepted.

  2. Considering all the facts and circumstances and the reasons stated hereinbefore, we find substance in this Rule.

  3. Accordingly, the Rule is made absolute.

  4. The impugned decision of the Board of Directors of respondent No. 2 (Bangladesh Chemical Industries Corporation) dated 10.2.2009 as intimated by the office order dated 24.2.2009 (Annexure-B) is declared to have been passed without lawful authority having no legal effect.

  5. The interim order passed at the time of issuance of the Rule is hereby recalled and vacated. No order as to costs.