Writ Petition No. 133 of 2000

9th March, 2001

Petitioner Counsel: Mr. N. M. GANGULI
Respondent Counsel: Mr. P. H. PURAV, Mr. V. P. SAWANT

Cases Cited:
S. G. Chemical & Dyes Trading Employees' Union Vs. S. G. Chemicals & Dyes Trading Ltd., 1986(1) C.L.R. 360 [Para 2]
/s. Tatanagar Foundry Co. Ltd Vs. Their Workmen, SC LJ VOL.2 709 [Para 4]
Indian Hume Pipe Co. Ltd. Vs. Their Workmen, SC LJ Vol.8 183 [Para 4]
The Management of M/s. Town Bidi Factory, Cuttack Vs. Presiding Officer, Labour Court [Para 4]
Walford Transport Ltd. Vs. State of W. Bengal, 1978 II LLJ 110 [Para 4]
Poonvasi Vs. Crown Silk Weaving Industries, 1994 I CLR 1047 [Para 4]

JUDGMENT

JUDGMENT :- The Petitioner Union is aggrieved by the Judgment and Order dated 15.12.1999 passed by the Industrial Court, Maharashtra at Mumbai in Complaint (ULP) No.842 of 1998 filed by the Petitioner against the Respondents alleging an unfair labour practice within the meaning of Item 6 of Schedule II and Item 9 of Schedule IV of the MRTU & PULP Act, 1971. It may be clarified at this stage itself that the Petitioner Union had given up its allegation of unfair labour practice within the meaning of Item 6 of Schedule II of the Act and had confined its case only to Item 9 of Schedule IV of the Act. The grievance of the Petitioner Union was that the Respondent Company had effected closure of its establishment by a notice dated 25.6.1998 in violation of Section 25FFA of the Industrial Disputes Act, 1947. The Petitioner had prayed for an interim order from the Industrial Court but it failed to succeed. It also failed to succeed in its challenge to the interim order of the Industrial Court before this Court. The Industrial court had tried the complaint finally on the basis of the pleadings and evidence adduced by both the parties. By the impugned judgment and order the Industrial Court had dismissed the complaint on merits.

2. Shri. Ganguli, the learned advocate for the Petitioner Union has pointed out that there was a settlement between the Respondent Company and the Engineering and Metal Workers Union, which was functioning at that time. Under the said settlement it was agreed that the number of workmen employed would be reduced in three phrases by 25. This settlement was arrived at to make the unit economically viable and to reduce the cost. Under the settlement the outgoing workmen were paid 60 days wages per completed year of service including gratuity and pension. As a result of the aforesaid settlement the number of workmen employed was reduced from 69 to 44. The last batch of the out going workmen was of 23.4.1998. According to Shri. Ganguli, as soon as the number of workmen employed was reduced below 50 i.e. to the number of 44 the Respondent Company gave a notice on 25.6.1998 to close down its establishment permanently and irrevocably, as stated in the said notice. Shri. Ganguli has therefore submitted that the closure is not only malafide and motivated but was also in violation of Section 25FFA of the I.D.Act. Shri. Ganguli has submitted that the act of closure amounted to victimise the workmen as after the settlement they had joined the Petitioner Union and the Respondents did not like the said decision of the workmen joining the Petitioner Union. The second ground of attack by the learned advocate is violation of Section 25FFA of the I.D. Act. It was pointed out by the learned Advocate that though on the date of the closure the figure was reduced to less than 50 on an average in the preceding 12 months from the date of notice of closure the employment was 53 and therefore, it was obligatory for the Respondent Company, to have complied with Section 25FFA of the Act. Shri. Ganguli has relied on the Judgment of the Supreme Court in the case of S.G. Chemical & Dyes Trading Employees' Union vs. S. G. Chemicals & Dyes Trading Ltd. & Anr. reported in 1986 (1) C.L.R. 360. According to him, in view of the said judgment violation of Section 25FFA amounts to an unfair labour practice within the meaning of Item 9 of Schedule IV of the MRTU & PULP Act and therefore, the Petitioners are entitled to the whole relief of a direction to the Respondent Company to lift the closure and restart the company and reinstate all the workmen who were in employment on the date of the closure with full back wages and all other consequential benefits.

3. Shri. Purav, the learned counsel for the Respondents has submitted that the Industrial Court has recorded facts on the basis of the evidence and material on record. According to the learned counsel, this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India should not interfere with the judgment of the Industrial Court which is based on the facts found by the Industrial Court. Shri. Purav has pointed out that as far as the question of motive of the closure is concerned it is well established that when the factum of closure is established there is no scrutiny or enquiry permitted to find out the motive of the closure. It was submitted by the learned Counsel that the closure has been a permanent and irrevocable closure. It was further pointed out by Shri. Purav that the industrial court has held as a matter of fact that there was no question of victimisation of the workmen and no such case was proved by the union. The Industrial Court has categorically come to the conclusion that he did not find any ulterior motive of the Respondent Company to victimise the workmen for their trade union activities. Shri. Purav further pointed out that there is no violation of Section 25FFA of the Act as on the date of the closure the number of workmen employed were less than 50 and therefore, the said provisions were not attracted to the establishment of the Respondent Company. According to Shri. Purav, there was no case of unfair labour practice and therefore the Industrial Court has rightly dismissed the complaint.

4. Shri. Purav has relied on the following judgments in support of his submissions.

(a) SCLJ VOL.2 PAGE 709 [M/s. Tatanagar Foundry Co. Ltd Vs. Their Workmen]

The Supreme Court has observed as under :

"In our opinion the finding of the Tribunal on this point is defective in law. It is now well established that in the case of closure the employer does not merely close down the place of business but he closes the business finally and irrevocably. The closure has to be genuine and bona fide in the sense that it should be a closure in fact and not a mere pretence of closure. (See the decision of this Court in Tea District Labour Association v. Ex Employees of Tea District Labour Association(2). The motive behind the closure is immaterial and what is to be seen is whether it is an effective one. (See the decision of this Court in Andhra Prabha Ltd. v. Secretary Madras Union of Journalists (3) and Kalinga Tubes Ltd. v. Their Workmen (4). Taking into account the entire set of circumstances and facts in the present case we are of opinion that there has been in fact a closure of the Jamshedpur business and the finding of the Tribunal that there was a lock out is defective in law and must be set aside."

(b) SCLJ Vol.8 page 183 [INDIAN HUME PIPE CO.LTD. Vs. THEIR WORKMEN.]

The Supreme Court has categorically laid down as under :-

"Is our opinion, it was not open to the Tribunal to go into the question as to the motive of the appellant in closing down its factory of Barakar and to enquire whether it was bona fide or mala fide with some oblique purpose, namely, to punish the workmen for the union activities in fighting the appellant. It has been laid down by this Court in a series of decisions that it is not for Industrial Tribunals to enquire into the motive to find out whether the closure is justified or not."

(c) 1990 CLR page 358 [The Management of M/s. Town Bidi Factory, Cuttack vs. Presiding Officer, Labour Court & Anr] The Division Bench of Orissa High Court (G.B. Patnaik & A.K. Padhi, JJ.) in paragraph 10 held as under in the context of the Application of Section 25FFA of the I.D.Act, which reads as under :

"10. The next finding of the Labour Court that the notice, Ext.1 is non-est for non-compliance of the provisions of Section 25-FFA of the Industrial Disputes Act cannot be sustained. As it appears, Section 25-FFA of the Industrial Disputes Act does not purport to take away the right of any employer to carry on or not to carry on of his business, as it does not seek to prohibit closure. It only calls for a notice to the Government and failure of such notice is made punishable under Section 30-A of the Industrial Disputes Act. The object of Section 25FFA is to prevent sudden closure. Statute requires notice to the Government, so that Government may take any measure in respect of intended closure. Where closure raises an industrial dispute, the Government may initiate conciliation proceeding and then make a reference for determining whether closure was genuine or camouflage to retrench, so that appropriate relief can be given on the findings of the Tribunal. In our opinion, failure to comply with the provisions of Section 25-FFA of the Industrial Disputes Act does not make the closure illegal or non-est. This view of ours finds support from 1978 II LLJ 110 Walford Transport Ltd. v. State of W. Bengal and Ors."

(d) 1994 I CLR page 1047 [Poonvasi & Ors. vs. Crown Silk Weaving Industries & Ors.]

Dr. Justice B.P. Saraf has analysed the provisions of Section 25FFA of the Act and has categorically observed as under in the judgment as summarised in the Head Note of the Judgment:

"Held: The interpretation that notice under S.25-FFA is not a condition precedent for closure of an undertaking gets support from the language of S.25-F which lays down the condition precedent for retrenchment. S.25-F-1 of the Act which was inserted with effect from 27.10.1981 also supports the above interpretation. This section gives an indication in regard to legal position prior to its incorporation. Prior to insertion of S.25-O, the only requirement for closure was contained in S.25-FFA which does not require an employer to apply for permission of the appropriate Government to close down its undertaking. What is required in that case is only to give sixty days notice to appropriate Government of the employer's intention to close down an undertaking. No consequences of failure to give such a notice has been set out in S.25-FFA as has been done in Sub-section (7) of S.25-O of the Act. This distinction in these two Sections (S.25-FFA and S.25-O as applicable in Maharashtra) is perceptible and material. Unlike S.25-O, the requirements of S.25-FFA are mandatory. The power of the employer to close down an undertaking is not subject to prior permission of the appropriate Government. It simply requires the employer to give 60 days notice of the intended closure to the appropriate Government. Failure to do so would not render the closure illegal from its inception. It may render the employer liable to pay wages of 60 days to the workman. Non compliance with the requirements of this section therefore cannot be equated with non-fulfilment of a condition precedent to the passing of an order."

5. I am unable to agree with the submission of Shri. Ganguli the learned Advocate for the Petitioner Union that there was a case of malafide and motivated closure to victimise the workmen as they had joined the Petitioner Union. We can not forget a crucial fact that the Respondent Company has no grudge against any trade union. In fact it had settled with the earlier bona fide Trade Union in its efforts to make the union (sic unit) viable with the co-operation of that Union. According to me, the findings recorded by the Industrial Court that there was no case of victimisation of the workmen or ulterior motive on the part of the management of the Respondent Company to take such a decision to close down the entire undertaking cannot be faulted with. For the sake of teaching a lesson to the workmen because they joined the Petitioner Union, beyond making the allegations there is absolutely no evidence on record to show or even to indicate that the Respondents had not liked the Petitioner Union or had not approved of the workmen joining the Petitioner Union. The charge of victimisation and malafide or ulterior motive is a very serious charge and it should be seriously pleaded and should be proved with equal seriousness. In the present case there is absolutely no material to even draw an inference that the Respondents had closed down the undertaking to victimise the workmen.

6. As far as the second contention of Shri. Ganguli is concerned I am also not able to agree with the learned advocate that while reading Section 25-FFA the average of total employment per working day in the preceding 12 months must be taken as a condition precedent. It is not possible for me to take the average of 53 workmen employed on an average per working day in the preceding 12 months from the date of the closure. The Industrial Court itself has done the said exercise and has found as a matter of fact that such average was 44 and therefore, the said section was not attracted at all. Shri. Purav is right in his submission that the Industrial Court has found as a matter of fact that the total employment on the date of closure as 38 and therefore, as the number of workmen employed was less than 50 in that case the Section 25-FFA had no application at all. It is significant to note that there were 38 workmen working on the date of the closure. It is further pertinent to note that the Petitioner Union itself had given the list of 38 workmen in employment on the date of the closure. On the basis of the said material on record it is not possible for me to question the findings recorded by the Industrial Court that the number of employment was less than 50. The Industrial Court was right in concluding that in view of the number of workmen being less than 50 the said Section was not attracted.

7. Besides, it is now well established that failure to comply with the provisions of Section 25-FFA of the Act does not make closure illegal or non-est. In the present case there is no serious dispute that the Respondent company had offered legal dues to the workmen but they had refused to accept the same. The letters addressed to all of them containing such payment by cheques were returned by the Postal Authorities to the Respondent company with the remark "not accepted/not claimed". The Industrial Court has categorically held that the non acceptance of the said envelopes by the workmen was intentional. The Industrial Court has therefore come to a positive conclusion that the Respondents have complied with the provisions of Section 25-FFA of the I.D. Act relating to the closure of their factory. It is on record that the Respondents had offered one month's wages in lieu of notice and the closure compensation in accordance with the provisions of Section 25-FFF of the Act. The respondents cannot be blamed if the workmen refused to accept the dues. In my opinion the Respondents have not violated any provisions of law and there was no unfair labour practice on the part of the Respondents. There is no substance in the Petition and the same is therefore dismissed. No order as to costs. Rule is discharged.

8. Shri. Purav the learned Counsel for the Respondents has offered to pay all the legal dues to the workmen if they were ready and willing to accept the same. It will be open to the workmen to approach the Management to receive their legal dues.

9. Parties to act on an ordinary copy of this order duly authenticated by the Associate of this Court.

Petition dismissed.