Writ Petition No.3853 of 2000

8th June, 2009

Petitioner Counsel: Shri. A. R. ATRE
Respondent Counsel: Shri. ANOOP PARIHAR,Shri. S. D. THAKUR

Cases Cited:
Ghatge & Patil Concerns' Employees' Union Vs. Ghatge & Patil (Transports) (Private), Ltd., 1968(1) L.L.J. 566 [Para 13]
M/s. Parry and Co. Ltd. Vs. P. C. Pal, 1970(II) L.L.J. 429 [Para 14]
Excel Wear Vs. Union of India, 1978 Lab.I.C. 1537 [Para 15]
M/s. Tata Iron and Steel Co. Ltd. Vs. The Workmen, (1972)2 SCC 383 [Para 16]
The Management of Indian Oil Corporation Ltd. Vs. Its Workmen, (1976)1 SCC 63 [Para 16]
Monthly rated Workmen at the Wadala Factory of the Indian Hume Pipe Co. Ltd. Vs. Indian Hume Pipe Co. Ltd., Bombay, 1986 (Supp) SCC 79 [Para 16]
Gulf Air, Bombay Vs. S. M. Vaze, Member, Industrial Court, Maharashtra, Bombay, 1994(II) CLR 292 [Para 17]
The Associated Cement Companies Ltd., Chaibasa Cement Works, Jhinkpani Vs. Their Workmen, AIR 1960 SC 56 [Para 22]
Management of Pratap Press, New Delhi Vs. Secretary, Delhi Press Workers' Union Delhi, AIR 1960 SC 1213 [Para 24]
M/s. Ebrahim Currin & Sons Vs. The Regional Provident Fund Commissioner, Maharashtra and Goa, 1993 Lab.I.C. 1740 [Para 25]
Workmen of the Straw Board Manufacturing Co., Ltd. Vs. M/s. Straw Board Manufacturing Co. Ltd., 1974 Lab.I.C. 730 [Para 26]
Sarva Shramik Sanghatana (KV), Mumbai Vs. State of Maharashtra, 2008(2) ALL MR 314 (S.C.)=(2008)1 SCC 494 [Para 27]

JUDGMENT

JUDGMENT :- This petition by Management takes exception to award by the learned Presiding Officer, Industrial Tribunal, Nagpur, in Reference No.(IT) 5 of 1983 before him, whereby he upheld the demand of workmen for reclassification of the establishment in Class-II for the purpose of determining service conditions of workmen as per Palekar award.

2. Facts, which are material for deciding this petition, are as under :

In 1937, Late Ramgopal Maheshwari started daily newspaper "Navbharat" at Nagpur as proprietory concern. By 1960, he was printing and publishing the newspaper from Nagpur, Jabalpur, Bhopal, Raipur and Indore, as also an English daily "Madhya Pradesh Chronicle" from Bhopal and Raipur as Karta of a H.U.F. comprising of himself and his three sons. This was converted into a registered partnership of the four members of H.U.F. on 1-4-1963, which continued till 31-12-1982, after addition of a fifth partner M/s. Nav Bharat Press Pvt. Ltd. on 27-10-1982.

3. Palekar Award for newspaper industry came into force on 1-10-1979, which classified newspapers on the basis of their gross revenue into nine classes. Since petitioner's gross revenue was more than Rs.1 crore but less than Rs.2 crores, it was classified as a Class III establishment. Under the Award, it was open to the parties to seek reclassification after the accounting year 1982 on the basis of gross revenue for the preceding three years. Challenge to Palekar Award by the Management became infructuous.

4. It cannot be disputed as a fact that average gross revenue of the entity as it existed on 31-12-1982 for the years 1980, 1981 and 1982 was Rs.2,71,54,000/-, i.e. above Rs.2 crores which would have brought the establishment in Class II as per Palekar Award.

5. The registered partnership firm which had come into being on 1-4-1963 was dissolved by the partners by mutual consent at the close of business on 31-12-1982, through the dissolution-deed was registered on 3-1-1983 (possibly in view of intervening holidays). On the same day, a new partnership between Vinod Maheshwari, to whose share "Nav Bharat" published from Nagpur had come, and M/s. Nav Bharat Press Pvt. Ltd. was formed and registered, Vinod being also the Managing Director of M/s. Nav Bharat Press Pvt. Ltd..

6. Workmen of Nav Bharat at Nagpur, through their Union sought reclassification of the establishment to Class II on the basis of average gross revenue of the Firm which brought out all editions of Nav Bharat and Madhya Pradesh Chronicle from several places.

7. The Management opposed the claim on the ground that average gross revenue of Nav Bharat published from Nagpur for three years preceding 1-1-1983 was only Rs.82.22 lakhs and, therefore, the establishment fell in Class IV.

8. By his impugned award, the learned Member, Industrial Court, held that average gross revenue of all establishments taken together would have to be considered and hence he classified the establishment in Class II, which has led the Management to file this petition.

9. I have heard Shri. A. R. Atrey, learned counsel for the petitioner, and Shri. S. D. Thakur, learned counsel for the respondent-workmen at length. Both the learned counsel, by their well crafted arguments, illuminated all aspects of the point involved.

10. The learned counsel for the petitioner submitted that on the basis of gross revenue of Nav Bharat Hindi Daily published from Nagpur, a reference has been made on 23-8-2006 for reclassifying the established as Class IV with effect from 1-1-1983. He submitted that since the question of classification from the same date is pending before the Tribunal, a decision in the present petition would foreclose the arguments available in the said reference. First, it has to be seen that if the petitioner did want to rake up the question of classification with reference to the same date, it could have done so when Reference (IT) No.5 of 1983 was pending. After its decision on 24-12-1999, making a further reference for reclassification with effect from the same date was obviously meaningless. In any case, the petitioner had itself relied on the deed of dissolution of partnership, which is annexed to the petition as Annexure 2. Clause 10(b) of the deed of dissolution was pressed in aid by the petitioner to submit that the interests of employees have been protected. Clause 10(b) reads as under :

"10. As regards the workmen employed by the dissolved firm of Nav Bharat Press, it is agreed that the workmen attached to be various business which are vested in the parties hereto by virtue of this deed of dissolution shall continue to be employed by them in their respective business subject to the following conditions:

(a) ...

(b) The terms and conditions of service applicable to workmen shall not be in any way less favourable than those applicable to them before 31.12.1982, and

(c) ..."

11. The learned counsel for the respondent-workmen, therefore, rightly submitted that the claim of the petitioner to have protected the interests of the workmen by Clause 10(b) of the deed of dissolution is debunked by making a reference for down grading the classification of establishment to Class IV with effect from 1-1-1983 which would adversely affect the workmen. The learned counsel for the respondent-workmen rightly submitted that this amounts to blowing hot and cold in the same breath. Also according to the learned counsel, whatever may be the terms of dissolution settled amongst the partners, the workmen cannot be bound by those terms, since they are not parties to such terms.

12. The learned counsel for the petitioner next submitted that upon dissolution with effect from the close of business on 31-12-1982, the establishment, revenues whereof have been relied on by the Industrial Tribunal, did not at all exist. He submitted that the Firm before its dissolution had been keeping separate accounts of each establishment at various places like Nagpur, Raipur, Indore and Bhopal and, therefore, the accounts of the establishment at Nagpur would alone be relevant for the purpose of deciding classification of the establishment at Nagpur. He submitted that it was not open to the workmen, or even for the Management, to seek reclassification prior to 1-1-1983, since in terms of Palekar Award itself, the parties were entitled to reclassification after accounting year 1982, that is obviously after 31-12-1982. Therefore, according to the learned counsel, first, since on 1-1-1983, the unified establishment did not exist, and secondly, as on 1-1-1983, the accounts of the preceding three years of the split unit at Nagpur did not warrant classification of the establishment in Class II, the impugned order would have to be set aside.

13. The learned counsel for the petitioner submitted that an establishment could not be forced to continue with a partnership simply in order to facilitate workmen getting particular benefits. He submitted that an establishment has a freedom to arrange its business according to its own priorities. For this purpose, he relied on the judgment in Ghatge & Patil Concerns' Employees' Union Vs. Ghatge & Patil (Transports) (Private), Ltd., and another, reported at 1968(1) L.L.J. 566. In that case, the Transport Company, which previously employed 70 drivers and equal number of cleaners, introduced a new contract system for running of vehicles, under which the former drivers entered into voluntary agreement to hire a vehicle each for their own operation, agreeing to pay a fixed hire per mile from their earnings to the company. The Union complained that this amounted to unfair labour practice and this dispute eventually landed in the Supreme Court. The Court held that a person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has, without the arrangement, no proper means of obeying, and he is entitled to do so long as he does not break any law. The Court also observed that the Parliament had not chosen to say that transport trucks will be run only through paid employees and not independent operators.

14. In M/s. Parry and Co. Ltd. Vs. P. C. Pal and others, reported at 1970(II) L.L.J. 429, the Supreme Court similarly upheld the freedom of businessman to rearrange his business. The Court observed that an Industrial Tribunal, considering the issue relating to retrenchment, should not attach any importance to the consequences of reorganization. The resulting discharge and retrenchment would have to be considered as an inevitable, though unfortunate, consequence of such a scheme of reorganization. The Court held that it was well established that it is within the managerial discretion of an employer to organise and arrange his business in the manner he considers best. So long as that is done bona fide it is not competent to a Tribunal to question its propriety. It is obvious that while reorganising its business, it is not incumbent on the company to develop its manufacturing side at the very place where it had surrendered its agencies.

15. In Excel Wear Vs. Union of India and others, reported at 1978 Lab.I.C. 1537, the Court was considering the right to carry on business as also the right to close it down. In para 29, the Court had observed that it is not always easy to strike a balance between the parallel and conflicting interests and yet it was not fair to unreasonably tilt the balance in favour of one interest by ignoring the other. In para 30, the Court observed that nobody has got a right to carry on the business if he cannot pay even the minimum wages to the labour. He must then retire from business. The Court observed that but to tell him to pay and not to retire even if he cannot pay is pushing the matter to the extreme.

16. The learned counsel for the respondent-workmen submitted that there could be no doubt that a businessman would be free to re-arrange his business so as to avoid regulatory rigours, so long as this is done bona fide. He submitted that the exercise in this case was not bona fide and was aimed at scuttling the gains to which workmen were entitled. He submitted that had there been some genuine differences in partners leading to dissolution, then, may be, the question of protection of workmen's rights would have to be looked into differently. As rightly pointed out by the learned counsel for workmen, the true intention in re-organising business has come out in ground 'I' of the petition where the petitioner-Firm has unabashedly claimed that they were entitled to arrange their affairs in such a way as to reduce their liabilities. The date of this re-arrangement - 1-1-1983 - too, therefore, is significant. The learned counsel for workmen submitted that had the re-organisation not affected fortunes of workmen, no objection could have been taken. But since it was specifically aimed at reducing burden on employer at the cost of workmen, by bringing about a change in their service conditions, it was necessary for the management to follow the procedure prescribed in Section 9-A of the Industrial Disputes Act. For this purpose, he relied on judgments in M/s. Tata Iron and Steel Co. Ltd. Vs. The Workmen and others, reported at (1972)2 SCC 383; The Management of Indian Oil Corporation Ltd. Vs. Its Workmen, reported at (1976)1 SCC 63; and Monthly rated Workmen at the Wadala Factory of the Indian Hume Pipe Co. Ltd. Vs. Indian Hume Pipe Co. Ltd., Bombay, reported at 1986 (Supp) SCC 79.

17. Even in Gulf Air, Bombay Vs. S. M. Vaze, Member, Industrial Court, Maharashtra, Bombay and others, reported at 1994(II) CLR 292, on which the learned counsel for the petitioner placed reliance, while considering rationalization, the Court observed in para 10 as under :

"10. ... Evidently, the emphasis is not on rationalisation but on its likely effect on employment. This interpretation also gets support from Section 9-A of the Act which requires a notice to be given to "the workmen likely to be affected by such change". If there is no likelihood of retrenchment, there will be no workman who is likely to be affected by such change and no question of serving any notice under Section 9-A would arise. The question that falls for determination is how to decide whether a particular measure of rationalisation is likely to lead to retrenchment or not. ..."

18. The learned counsel for the petitioner submitted that in view of Item 10 in the deed of dissolution of partnership, the interest of workmen have been duly protected and, therefore, reorganization of business by the petitioner should not be ignored.

19. Since the procedure for effecting a change as warranted under Section 9A of the Industrial Disputes Act is admittedly not followed and the change would adversely affect service conditions of the workmen, to that extent re-organisation will have to be ignored. Awareness of this requirement possibly led the Management to introduce Clause 10(b) in the deed of dissolution to pay lip service to interests of workmen. I say lip service, because the Management had no compunction in getting a reference made to Industrial Court to down-grade establishment to Class IV.

20. The learned counsel for workmen submitted that the establishment had been treated as one by Palekar Award. The definition of "newspaper establishment" in Clause (d) of Section 2 of The Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955, reads as under :

"Clause 2(d) : "newspaper establishment" means an establishment under the control of any person or body of persons, whether incorporated or not, for the production or publication of one or more newspapers or for conducting any news agency or syndicate and includes newspaper establishments specified as one establishment under the schedule."

The schedule reads as under :

"THE SCHEDULE

[See section 2(d)]

1. For the purposes of clause (d) of section 2,-

(1) two or more newspaper establishments under common control shall be deemed to be one newspaper establishment;

(2) two or more newspaper establishments owned by an individual and his or her spouse shall be deemed to be one newspaper establishment unless it is shown that such spouse is a sole proprietor or partner or a shareholder of a corporate body on the basis of his or her own individual funds;

(3) two or more newspaper establishments publishing newspapers bearing the same or similar title and in the same language in any place in India or bearing the same or similar title but in different languages in the same State or Union territory shall be deemed to be one newspaper establishment.

2. For the purposes of paragraph 1(1), two or more establishments shall be deemed to be under common control-

(a)(i) where the newspaper establishments are owned by a common individual or individuals;

(ii) where the newspaper establishments are owned by firms, if such firms have a substantial number of common partners;

(iii) where the newspaper establishments are owned by bodies corporate, if one body corporate is a subsidiary of the other body corporate, or both are subsidiaries of a common holding company or a substantial number of their equity shares are owned by the same person or group of persons, whether incorporated or not;

(iv) where one establishment is owned by a body corporate and the other is owned by a firm, if a substantial number of partners of the firm together hold a substantial number of equity shares of the body corporate;

(v) where one is owned by a body corporate and the other is owned by a firm having bodies corporate as its partners if a substantial number of equity shares of such bodies corporate are owned, directly or indirectly, by the same person or group of persons, whether incorporated or not, or

(b) where there is functional integrality between concerned newspaper establishments."

Clause 1(3) of the Schedule mandates that all establishments bringing out newspapers by name "Nav Bharat" from any place would be deemed to be one establishment. Therefore, according to the learned counsel for workmen, dissolution deed did not matter.

21. The recitals in Clause 2(d) of the said Act relating to the establishment were brought into force from 28-8-1989. Therefore, according to the learned counsel for the petitioner, on the relevant date whether the provisions of the schedule could be invoked or not would be a matter of doubt. The learned counsel for workmen submitted that it would be anachronistic to treat all establishments as one at a later point of time i.e. 28-8-1989 but to treat them as separate on 1-1-1983. Whether it sounds anachronistic or not, it may be impermissible to read in a statute a clause that did not exist on the relevant date. Therefore, sans the inclusive definition added in Section 2(d) of The Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, it would have to be found out if the establishments at various places could still be considered as one establishment.

22. In The Associated Cement Companies Ltd., Chaibasa Cement Works, Jhinkpani Vs. Their Workmen, reported at AIR 1960 SC 56, the question was as to whether an establishment could be considered one unit, in paras 11 and 12 of the judgment, the Court observed as under :

"11. ... It is, perhaps, impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units, etc. If in their true relation they constitute one integrated whole, we say that the establishment is one; if on the contrary they do not constitute one integrated whole, each unit is then a separate unit. How, the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes a disqualification therefor. Thus, in one case the unity of ownership, management and control may be the important test; in another case functional integrality or general unit may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases, several tests may fall for consideration at the same time. The difficulty of applying these tests arises because of complexities of modern industrial organisation : may enterprises may have functional integrality between factories which are separately owned; some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned. In the midst of all these complexities, it may be difficult to discover the real thread of unit. ..."

"12. ... There are supervision and control, unity of finance and employment, unity of labour and conditions of service of workmen, functional integrality, general unity of purpose and geographical proximity. ..."

23. The learned counsel for the petitioner submitted that applying these tests, the unit at Nagpur could not be considered to continue to be a part of establishment having units at several other places.

24. In Management of Pratap Press, New Delhi Vs. Secretary, Delhi Press Workers' Union Delhi, reported at AIR 1960 SC 1213, the Supreme Court was specifically considering the question of various units in the context of a press. In para 9, the Court held as under :

"9. The position therefore is that the activities of the press unit are independent of the activities of the paper unit and there is no record from which it can be ascertained how the employer himself treated these two units. When in this position of things we find the employer himself making a statement that "there are two institutions, the Vir Arjun and the press, the account books are kept separately" and that "there are two cashiers", the conclusion reached by the Tribunal that the Press and the Vir Arjun paper are distinct and separate industrial units appears to be reasonable and cannot be successfully challenged."

25. In M/s. Ebrahim Currin & Sons Vs. The Regional Provident Fund Commissioner, Maharashtra and Goa and another, reported at 1993 Lab.I.C. 1740, this Court was considering the question of functional integrality between the two units in the context of applicability of the provisions of the Provident Fund Act. In para 8, the Court observed as under :

"8. ... The Hon'ble Division Bench of our High Court considered the test of dependency of the subsequent unit on the first unit as an important test for purpose of deciding and applying the test of "functional integrality". The relevant criteria formulated by the Hon'ble Division Bench for consideration of the issue involved was as to whether the second unit was liable to be considered as a mere branch or a department of the first unit or whether the second unit could survive on first unit being closed ? After referring to the judgment of the Hon'ble Supreme Court in the case of Associated Cement Co. and Management of Pratap Press and several other cases, the Division Bench of our High Court observed that the question required to be determined was as to whether the Aurangabad unit was a separate establishment or merely as a branch or department of an earlier establishment and whether the said unit could survive if the earlier unit were to close."

26. In Workmen of the Straw Board Manufacturing Co., Ltd. Vs. M/s. Straw Board Manufacturing Co. Ltd., reported at 1974 Lab.I.C. 730, the Court was considering whether two establishments constituted one unit and in this context, quoted from the judgment in The Associated Cement Co. Ltd., as also another judgment in South India Mill Owners Association. The Court was of the view that the significance of several relevant factors would not be the same in each case and the tests would be different depending upon the facts of each case.

27. The learned counsel for workmen drew my attention to paras 14 to 18 in judgment of the Supreme Court in Sarva Shramik Sanghatana (KV), Mumbai Vs. State of Maharashtra and others, reported at (2008)1 SCC 494 : [2008(2) ALL MR 314 (S.C.)], to highlight the manner in which judgments may be followed. Considering the observations therein, it would follow from the preceding judgments on which the learned counsel for the petitioner relied for the purpose of finding out whether all the units of Nav Bharat formed one establishment or not, that :

1. There can be no one absolute or invariable test to determine integrality between various units, etc.;

2. Significance of relevant factors would not be the same in each case and the tests would be different depending upon facts of each case.

28. In the case at hand, there is no doubt that till 31-12-1982 all the units formed one establishment. Separation after the close of business is with the avowed purpose of reducing burden an euphemism for avoiding implications of Palekar Award. Therefore, in these circumstances, the dissolution would have to be ignored for the purpose of ascertaining the entitlement of workmen and all the units would have to be treated as one establishment.

29. In view of this, the view taken by the learned Member, Industrial Court, cannot be faulted. The petition is, therefore, dismissed with no order as to costs.

Petition dismissed.