WP/2988/1998
１
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.2988 OF 1998
S.B. Patole & Ors. ... Petitioners
V/s.
Fujitsu ICIM Ltd., Pune & Ors. ... Respondents
Ms. N.D. Buch with Mr. H.D. Buch and
Mr. S.K. More for the Petitioners.
Mr. K.S. Bapat with Mr. T.R. Yadav
for Respondent No.1.
ig CORAM :SMT. NISHITA MHATRE, J.
RESERVED ON :15TH SEPTEMBER, 2010.
PRONOUNCED ON:29TH OCTOBER, 2010.
JUDGMENT:
1. This Writ Petition has been filed by 24 workmen who are employed with the respondent No.1-Company. However, out of these 24 workmen, most of the workmen have settled their disputes with the respondent No.1-Company. The Writ Petition is now prosecuted only by petitioner Nos.1, 3, 4 and 17 to
24. Aggrieved by the order dated 5th May, 1998 of the Industrial Court, Pune in dismissing the Complaint (ULP) No. 165 of 1997 filed by the petitioners, (hereinafter referred to as the workmen), under Section 28 read with Items 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, (for short ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 ２ "the MRTU & PULP Act"), the workmen filed the present Writ Petition.
2. The respondent No.1, (hereinafter referred to as "the Company"), manufactures computers, printers, fax machines etc. It is also engaged in software development and has several Divisions including the Manufacturing and Supply Division (MSD), National Software Division (NSD), Engineering Support Division (ESD) etc. According to the workmen, there were 1200 employees totally in all the Divisions which are part and parcel of the Company, registered under the Companies Act, 1956. In 1994, the Company floated a Voluntary Retirement Scheme, (for short "VRS"), for the MSD and not for the workers in any other Division. This was because certain activities of the MSD were transferred to Pondicherry. 125 employees accepted the VRS, while 117 employees continued to work with the Company in that Division in Pune. On 15th October, 1996, the Company issued a notice of suspension of operations on the ground that work orders were not available with the Company. In 1997, a second VRS was offered by the Company to the employees working in the MSD. 82 employees accepted this scheme, while 24 employees continued in employment.
::: Downloaded on - 09/06/2013 16:35:25 :::WP/2988/1998 ３
3. Complaint (ULP) No.165 of 1997 was filed by five workmen for themselves and 20 other workmen, who had authorized them to file the said complaint under Item 9 of Schedule IV of the MRTU & PULP Act. The workmen contended that they apprehended a closure of the Company and, therefore, filed the said complaint. It was pleaded that the MSD and other Divisions were an integral part of the Company and that they had functional integrality with the Company.
The workers pleaded that most of the divisions/companies mentioned in the complaint were being run from the factory premises. It was contended that the closure was likely to be effected without following the provisions of law which would amount to an unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act. They sought an injunction against the Company restraining it from closing the MSD during the pendency of the Complaint (ULP) No.165 of 1997.
4. A written statement was filed by the Company. It was contended that the Company had decided to close down the manufacturing activities in Pune by following the provisions of law. The Company pleaded that there were less than 100 workmen employed and therefore the provisions of Section 25 O ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 ４ of the the Industrial Disputes Act, 1947, (for short "the I.D. Act)", did not apply to the facts in the present case.
However, while dealing with the contention in the complaint that the Divisions of the Company were integrated, the Company pleaded that the companies and Divisions mentioned in the complaint were "independent Companies having separate legal entities". As regards the Engineering Division, the Company has pleadedig that it has nothing to do with the factory in which premises the MSD was situated.
5. An application for amending the complaint was filed by the workmen after the closure of the manufacturing activities in Pune from 24th July, 1997. Although the application was opposed by the Company, the Industrial Court has allowed the application. By this amendment the workers had pleaded that the closure effected from 24th July, 1997 was illegal and that the Company had committed an unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act by declaring such a closure.
6. On 5th December, 1997, the workmen submitted an application before the Industrial Court seeking a direction ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 ５ against the Company for production of certain documents. The documents related to both, the Company as well as, more specifically, the Central Engineering Service Division / Engineering Service Division and the International Software Division. These documents included the muster roll/pay roll, a consolidated statement of the annual contribution to the Provident Fund Authority, Bonus Registers, transfer orders issued during the periods ig from 1993 to 1997. Certain documents were produced by the Company pursuant to the order passed by the Industrial Court on 1st January, 1998. The Industrial Court had directed the workmen to submit the inspection reports of these documents. Accordingly, inspection was given of those documents which, according to the Company, were traceable. Admittedly, the muster roll for the period from August, 1996 to October, 1996 was not produced at the time when inspection was given, but was produced later. Instead of producing the muster roll for the period from April, 1996 to July, 1996, the Company had produced the pay slips for the non-management staff of the Manufacturing and Supply Division from April, 1996 to July, 1996 for inspection. From the documents furnished for inspection, the workmen prepared a chart indicating the ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 ６ number of workmen employed in the MSD and ESD besides those working in the International Software Division. On the basis of the information furnished, it was found that the number of workers employed was more than 100 from August, 1996 when 248 workers were employed, till March, 1997, when 161 workers were working. The strength dwindled thereafter to less than 100 workers by July, 1997. These figures included persons working in both the MSD and the ESD. The statements filed before the Court included the name of each individual workman and his category. A consolidated statement was also prepared and filed in Court. These statements were filed as an inspection report by the workmen on 21st February, 1998.
7. The workmen led evidence by examining Shri. Sudhakar Patole, i.e. Petitioner No.1 herein, who was working in the Computer Assembly Department, and Shri. Satish Sakpal, who was working as 'Accounts Assistant'. The Company did not lead any oral evidence, but sought to rely on the admissions elicited from the witnesses of the workmen in their cross-
examinations.
::: Downloaded on - 09/06/2013 16:35:25 :::WP/2988/1998 ７
8. The Industrial Court dismissed the complaint by concluding that there were less than 100 employees working in the Concern on 31st July, 1997, on which date the Company had closed down. The Industrial Court concluded that the termination of services of the workmen pursuant to the letter dated 24th July, 1997 could not be faulted. The Industrial Court further held that the amendment to the complaint did not in any manner prove the case of the workmen that, the Company had flouted the provisions of Section 25 O of the the Act, 1947, by closing down the Concern on 31st July, 1997. The Industrial Court held that the MSD could function without any other Division as there was no functional integrality between it and any other Division of the Company. Based on the evidence on record, the Court observed that "all the Departments were having separate functional integrality and MSD was independent from other Departments." The Court came to this conclusion because there were separate agreements covering the service conditions of the workmen in the ESD and the MSD and the witness of the workmen had admitted that he had not been transferred out of the MSD during his tenure of service with the Company. The Court then concluded that it was a general principle and rule that when a majority of the ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 ８ employees accepted "one thing", the minority should accept the same. The Court was of the view that when admittedly the VRS had been accepted by 325 employees, the 25 employees, who remained in employment at the time of closure, could not contend that their termination from service was illegal. As regards the question as to whether five employees, who represented 20 others, could file the complaint, the Court concluded that the igworkmen ought to have withdrawn the present complaint which was filed in apprehension of a closure and then filed fresh complaints in respect of the termination of services of the employees due to the closure by filing individual complaints under Item 9 of Schedule IV of the MRTU & PULP Act. The Court did not draw an adverse inference against the Company although it had not produced all the documents, which were directed to be produced by the Court. The Court was of the opinion that the documents which were filed on record were sufficient to decide the issue in the complaint.
9. Ms. Buch, the learned Advocate appearing for the workmen, submitted that the inspection report which was based on the information culled out from the documents on record indicates that there were 117 workmen employed in October, ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 ９ 1996 when there was a suspension of operations. She submitted that admittedly the employer has not produced the muster rolls for the entire period that was sought. According to her, an adverse inference ought to have been drawn by the Industrial Court for non production of these documents despite orders of the Court. She submitted that from the evidence on record, i.e. the muster rolls and the Provident Fund Registers, the workmen were able to prove that the average strength of workmen for the 12 months prior to the date of closure was more than 100. Ms. Buch pointed out that the employer chose not to lead any evidence. She submitted that the MSD could not have been considered as a separate independent entity as there was no evidence to that effect.
According to her, there was conclusive evidence on record to indicate that the Company had flouted the provisions of Section 25 O of the the Act and had thereby committed an unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act. She pointed out that when the employer had chosen not to lead any evidence, the Industrial Court could not have held that the MSD was a separate independent unit having an independent existence or identity from the Company.
The learned Advocate pointed out that assuming there were ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 １０ separate Divisions like MSD, ESD etc. they were formed only for administrative reasons and Management exigencies. She relied on the judgement of the Supreme Court in the case of S.G. Chemicals and Dyes Trading Employees Union vs. S.G.
Chemicals and Dyes Trading Ltd. and Anr., reported in 1986 1 LLJ 490 and of the Division Bench of this Court in the case of R.K. Shinde & Ors. vs. Shekoba Auto Pvt. Ltd. & Anr., reported in 2008 (1) ALL MR 277, in support of her contention that where as a result of a breach of Section 25 O of the the Act the services of the workmen are terminated, a complaint is maintainable under Item 9 of Schedule IV of the MRTU & PULP Act.
10. The learned Counsel further submitted that in any event the onus of proving that the employer had not employed more than 100 workers at the time of closure was on the employer and not the workmen. In support of this proposition Ms. Buch relied on the judgement of the learned Single Judge of this Court in the case of Varsha Vishwanath Kolambkar v/s.
Ravindra Hindustan Platinum Pvt Ltd. and Ors., reported in 1987 1 CLR 3.
::: Downloaded on - 09/06/2013 16:35:25 :::WP/2988/1998 １１
11. On the other hand, Mr. Bapat, the learned Advocate appearing for the Company, submitted that the complaint itself was not maintainable in respect of all 24 workmen; at best, it could have been confined to those five workmen, who had filed the same. Therefore, submitted Mr. Bapat, even if the Writ Petition is to be allowed, the relief can only be granted to the five workmen who had actually signed the complaint. He then pointed out that the MSD is a separate entity which was closed down on 24th July, 1997 and the fact that the Company continued to operate even after the closure of MSD showed that there was no functional integrality between the MSD and the other Divisions of the Company or the Company itself. He pointed out that the separate agreements were executed between the workmen employed in each of the Divisions and the Company and the service conditions applicable to the workmen in each division were different.
According to him, this fact is one of the indicia for concluding that the MSD is not functionally integrated with other Divisions of the Company. He submitted that the MSD manufactured Hardware, while the ESD, was servicing components. He then submitted that the evidence on record established that the inspection report filed by the workmen ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 １２ included persons who were not workmen, as defined under Section 2(s) of the I.D. Act, to make up the complement of 100 workmen. According to him, while considering whether there was any need for issuing a notice under Section 25 O of the I.D. Act, only those who are "workmen" as defined under Section 2(s) of the I.D. Act, need to be reckoned. The learned advocate drew my attention to the admission of the witness of the workmen, i.e. the Accounts Assistant, who had prepared the inspection report, that the list included those who were not workmen. He then submitted that Section 25 O of the I.D. Act contemplates "closure of an undertaking"
although the word "undertaking" has not been defined under the Act. What is defined is an "Industrial Establishment" or "Undertaking" under Section 2(ka) of the I.D. Act. He submitted, therefore, that considering the procedure required for closing an "undertaking" or an "industrial establishment", what needs to be ascertained is whether the MSD forms an "undertaking" within the meaning of Section 2(ka) of the I.D. Act. He submitted that it is well settled that a part of an "undertaking" or an "industrial establishment" or a "Division" can always be closed without following the procedure under Section 25 O of the I.D. Act, ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 １３ if there are less than 100 workmen employed on an average per working day for the preceding 12 calendar months. He submitted further that the judgment in the case of S.G.
Chemicals and Dyes Trading Employees Union (supra) if interpreted in its proper perspective cannot support the case of the workers. He relied on the judgment of the Division Bench of this Court in the case of Yeshwant G. Chikhalkar & Ors. v/s. Killick Nixon Ltd. & Ors., reported in 1999 II LLJ 998, and of the learned Single Judge of this Court in the case of Maharashtra General Kamgar Union vs. Indian Gum Industrial Ltd. & Ors., reported in 2000 II CLR 509, in support of his contention that where a Company has several activities which are separate from each other, unless it is shown that these activities are functionally integrated, the Divisions cannot be clubbed together for ascertaining whether there are more than 100 workmen employed at the time of closure. He then pointed out that the observations made in the case of Varsha Vishwanath Kolambkar (supra) regarding the burden of proof on the issue of the number of workmen employed have been noted as observations made in passing by the Division Bench of this Court in the case of Arvind Anand Gaikwad vs. Uni Abex Alloy Products Ltd. & Ors., reported in ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 １４ 1988 1 CLR 26. The learned Advocate urged that when there is a closure in fact, which results in automatic termination of the service of the workmen employed in the Unit which is closed, the workmen could only be entitled to compensation, as payable under Section 25FFF of the I.D. Act and there can be no direction to restart the Company. According to him, assuming it is held that there is a violation of provisions of Section 25 O of the I.D. Act, each workman must discharge the burden of examining himself regarding the back-wages payable to him. In any event, submitted Mr. Bapat, an issue regarding the illegal termination of service on account of an illegal closure can only be decided by the Labour Court and not the Industrial Court.
12. The first issue which I will consider is whether a complaint can be filed by five workmen on behalf of several other workmen. As stated earlier, the contention on behalf of the Company is that such a complaint is not maintainable and if at all relief is to be granted, it must be limited only to the five complainants. The complaint has been filed alleging that the Company had committed unfair labour practices under Items 9 and 10 of Schedule IV of the MRTU & PULP Act. The complainants have pleaded in the complaint itself that they ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 １５ are filing the same in their representative capacity for and on behalf of 20 other workmen similarly situated.
13. The Industrial Court Regulations, 1975 framed under Section 33 of the MRTU & PULP Act permit the filing of a complaint in a representative capacity. Therefore, merely because a complaint has been signed by five workmen and the subject matter concerns several other workmen, whose names have been mentioned in the annexure to the complaint, it cannot be said that the reliefs, if any, granted in the complaint have to be restricted only to those five workmen.
Furthermore, under Section 29 of the MRTU & PULP Act, an order of the Industrial Court would be binding on all persons who on the date of filing of the complaint are employed in the undertaking to which the complaint relates and all persons who may be subsequently employed in the undertaking.
Thus, the submission of the learned Advocate for the Company that the complaint has to be limited only to those workmen who had signed the complaint is without merit.
14. In the case of Ceat Ltd. (Electronics Division), Mumbai vs. Anand Aba Saheb Hawaldar & Ors., reported in 2003 (3) L.L.J. 268, the Division Bench of this Court considered a ::: Downloaded on - 09/06/2013 16:35:25 ::: WP/2988/1998 １６ similar objection raised by the employer. It was contended on behalf of the employer that though the relief sought was for 337 employers, it could not be granted since the complaint under Section 28 of the MRTU & PULP Act had been filed only by 6 employees. The Division Bench accepted the contention advanced on behalf of the workmen that the order or judgement in such a case would be in rem and would apply to the undertaking to which the complaint relates. The judgement of the Division Bench was set aside by the Supreme Court in the case of Ceat Ltd. vs. Anand Abasaheb Hawaldar & Ors., reported in 2006 (1) L.L.J. 1096, considering the factual position. In view of this, the Supreme Court did not enter into the controversy whether the complaint was maintainable.
15. The second issue is whether the complaint under Item 9 of Schedule IV of the MRTU & PULP Act is maintainable. It has been argued on behalf of the Company that no relief can be given to the workmen since their services were terminated as a consequence of the closure and therefore they ought to have filed complaints under Item 1 of Schedule IV of the MRTU & PULP Act. A similar contention was raised by the employer in the case of S.G. Chemicals and Dyes Trading Employees Union (supra). The Supreme Court observed thus :
::: Downloaded on - 09/06/2013 16:35:26 :::WP/2988/1998 １７ "Under sub-section (6) of Section 25-O, where no application for permission under sub-section (1) of Section 25-O is made, the closure of the undertaking is to be deemed to be illegal from the date of the closure and the workmen are to be entitled to all the benefits under any law for the time being in force, as if the undertaking had not been closed down.
The eighty-four workmen were, therefore, in law entitled to receive from September 18, 1984, onwards their salary and all other benefits payable to them under the settlement dated February 1, 1979. These not having been paid to them, there was a failure on the part of the Company to implement the said settlement and consequently the Company was guilty of the unfair labour practice specified in Item 9 of Schedule IV to the Maharashtra Act, and the Union was justified in filing the complaint under Section 28 of ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 １８ the Maharashtra Act complaining of such unfair labour practice."
16. Similarly in the case of R.K. Shinde & Ors. (supra), the Division Bench of this Court has held that a complaint under Item 9 of Schedule IV of the MRTU & PULP Act would be maintainable before the Industrial Court after an illegal retrenchment of the workmen as a consequence of the failure to comply with the provisions of Section 25 O of the I.D.
Act. Where there is a breach of a provision of law which has resulted in the termination of service, a complaint under Item 9 of Schedule IV of the MRTU & PULP Act would be maintainable in view of the aforesaid judgement. Therefore the contentions that a complaint under Item 9 was not maintainable and that relief could be granted only in a complaint filed under Item 1 of Schedule IV is without merit.
17. With these preliminaries out of the way, I will now consider the third issue i.e. whether it is necessary to club all the Divisions of the Company together for the purposes of ascertaining if there were 100 or more workmen employed in the Company on the date the notice of closure was issued. It has been contended on behalf of the Company that each ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 １９ Division of the Company is an independent Unit and has no functional integrality with the other Divisions. It is further submitted that while deciding whether the closure of the MSD was legal and proper, the number of employees working in the MSD must be considered and not those in the other Divisions. It is axiomatic that when the functional integrality between two Units is to be ascertained, those Units must appear to be separate or distinguishable and have an independent existence. The registration of such Units would therefore have to be distinct. But where two Divisions or Departments or Sections of one Company are working under the umbrella of the Company which is registered under the Companies Act, 1956, the question of considering the functional integrality between such Divisions or Departments or Sections does not arise. They exist together, functioning as one Company, as a whole. The necessity of considering the functional integrality in such a situation does not arise.
Therefore, while ascertaining whether there are 100 or more employees working in a Company of which a Division or Department or Section is to be closed, it would be necessary to consider the number of employees working in the entire Company. Section 2(cc) of the I.D. Act defines closure to be ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２０ the permanent closing down of a place of employment or a part thereof. Chapter V-B of the the Act contains special provisions relating to closure in certain establishments.
Section 25K contained in Chapter V-B of the I.D. Act provides that the rigors of the Chapter apply to those industrial establishments in which not less than 100 workmen were employed on an average, per working day, for the preceding twelve months. An "industrial establishment" for the purposes of Chapter V-B of the I.D. Act has been defined to include a "factory" as defined in Clause (m) of Section 2 of the Factories Act. Therefore, once a factory which has several Divisions employing more than 100 employees is to be closed down, permission for the closure must be obtained under Section 25 O of the I.D. Act.
18. Under Section 25 O of the I.D. Act, which is also contained in Chapter VB of the I.D. Act, an employer must take prior permission from the appropriate Government for closing down an industrial establishment to which the chapter applies. Therefore, before the closure of an industrial establishment employing more than 100 workers is brought into effect, permission must be sought mandatorily from the ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２１ appropriate Government by the employer. The closure which is declared by the employer without such permission is illegal.
The consequences of such an illegal closure have been delineated in Section 25 O of the I.D. Act. Undisputedly, the closure of a part of an industrial establishment can be effected. Thus a Division or a Department or a Section of a factory can always be closed down. However, if such a factory employes more than 100 workmen, permission of the appropriate Government must be obtained prior to the closure even when a part of the factory is to be closed. The Act does not in any manner make any distinction between one or the other Divisions of an industrial establishment. The industrial establishment for the purposes of closure and for considering whether 100 workmen were employed in the previous twelve calendar months must be considered as a whole. In the present case, the MSD and the ESD are integral parts of the industrial establishment of the respondent No.1-Company.
There is no material on record to indicate that they have any independent existence as a legal entity. It may be that the closure of one Division or Department or Section of the undertaking or the industrial establishment would not lead to the closure of the industrial establishment. However, this ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２２ does not mean that the division which is closed is not an integral part of the industrial establishment.
19. The evidence on record points out to the fact that there were more than 100 workers working in the industrial establishment in the 12 calendar months prior to the date of closure which was 24th July, 1997. This information has been culled out from the documents which were placed on record by the Company as well as the Provident Fund Authorities before the Labour Court. The employer has chosen not to lead any evidence to the contrary.
20. In the case of Varsha Vishwanath Kolambkar (supra), it has been held that it is for the employer to prove that he employs less than 100 workmen. A learned Single Judge of this Court (Bharucha, J., as he then was), has observed as follows:
"6. The Model Standing Orders apply "to every industrial establishment wherein 100 or more workmen are employed or were employed on any day of the preceding 12 months". A workman-complainant before the Industrial Court would, ordinarily, have no knowledge ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２３ and would find it well-nigh impossible to prove that on any day or days in the preceding 12 months his employer had employed more than 100 employees. It is unlikely that the workman-complainant would know the definition of a workman under the Industrial Disputes Act. Even if he did, he could not reasonably be expected to depose to the functions of all his co-employees so as to establish that the they were workmen under the definition in Industrial Disputes Act. How many employees are employed at any given point of time, whether on permanent or temporary basis, is within the special knowledge of the employer. What their functions are is also within the special knowledge of the employer. It is for the employer to satisfy the Industrial Court that it did not at the relevant times employ 100 workmen, (emphasis added)."
21. The Division Bench of this Court in the case of Arvind Anand Gaikwad (supra) has considered these observations made in the case of Varsha Vishwanath Kolambkar (supra). The Division Bench of this Court has held that the aforesaid conclusion of the learned Single Judge to the effect that it is for the employer to satisfy the Industrial Court about the ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２４ number of workmen engaged, is a passing observation. In the facts and circumstances of the case before it, the Division Bench observed that the workmen before them had not sought the documents or record from the employer and they had not bothered to cross examine the witness of the employer in respect of number of workers employed on the relevant date.
The Court observed that the workman being an active member of the Union was conscious of the record maintained by the Company and that nothing prohibited him from demanding the production of that record before the Labour Court.
22. In the present case, the workmen have sought production of the muster rolls for the years 1993 to 1997. Admittedly, the muster rolls for all the years were not produced and only those which the Company claimed were traceable have been placed on record by the Company. On inspection, the workman had filed a report which indicated that on an average, during the twelve months from August, 1996 to July, 1997, i.e. the date of closure, the number of workmen employed in the establishment i.e. the Company was well over 100. Thus, the workmen have established, through evidence led by them, that there were more than 100 workmen working in the Company at the relevant time. None of the judgments cited at the Bar ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２５ pronounce that the complement of workmen at the time of closure should be considered of the undertaking, i.e. the section, department or division, which is to be closed and not on the entire Company. In these circumstances, in my opinion, the submission of Mr. Bapat that there were less than 100 workmen cannot be accepted. He has also attempted to submit that since the inspection record included the workmen from the MSD as well as the ESD, it was necessary for the workmen to indicate how many workmen were employed in each of the Divisions. In my opinion, this is not necessary as what is relevant is the number of workmen in an industrial establishment of which a part is to be closed. Apart from this, as held in the case of Varsha Vishwanath Kolambkar (supra), which has not been overruled by the Division Bench of this Court in the case of Arvind Anand Gaikwad (supra), it would be well-nigh impossible for a workman to depose to the functions of all his co-employees so as to establish that they were workmen under the Act or that they were employed in either one of those Divisions. What their functions are and whether they were employed in the MSD or the ESD would be within the special knowledge of the employer. The employer in this case has not led any evidence. The workmen have ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２６ discharged their burden of proving that there were 100 workmen employed in the industrial establishment i.e. the Company of which a part, namely the MSD was to be closed down.
23. In the case of S.G. Chemicals and Dyes Trading Employees Union (supra), the Union contended that the aggregate number of workmen employed in the three Divisions of the Company exceeded 100 and therefore for the purposes of Section 25 O of the I.D. Act, it was the aggregate strength of the workmen of the Company employed in all three Divisions which should be taken into account. Each Division was registered separately. The Trombay factory was registered under the Factories Act whereas the offices at Churchgate and Worli were registered under the Bombay Shops and Establishment Act.
The Court observed that merely because the registration of a particular Unit is obtained under a particular Statute, it did not make the business or undertaking or industry so registered as a separate legal entity except where a registration or incorporation is obtained under the Companies Act.
::: Downloaded on - 09/06/2013 16:35:26 :::WP/2988/1998 ２７
24. The Supreme Court, while considering the implications of the words "Industrial Establishment" and "an Undertaking of an Industrial Establishment" in S.G. Chemicals (supra) has observed thus:
"15. Section 25-O applies to the closure of "an undertaking of an industrial establishment" and not to the closure of "an industrial establishment". Section 25-
L, however, defines only the expression "industrial establishment" and not the expression "an undertaking of an industrial establishment". It also does not define the term "undertaking". Section 25-L does not require that "an undertaking of an industrial establishment should also be an "industrial establishment" or that it should be located in the same premises as the "industrial establishment". The term "undertaking" though it occurs in several sections of the Industrial Disputes Act, as for instance. Sections 25-FF, 25-FFA and 25-FFF, is not defined anywhere in the Act. Even the new clause (ka) which was inserted in Section 2 by the Amendment Act, 1982, defines the expression "industrial establishment or undertaking" and not the term ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２８ "undertaking" simpliciter. It would appear from the opening words of clause (ka), namely, "'industrial establishment or undertaking' means an establishment or undertaking in which any industry is carried on", that the term "undertaking"
in that definition applies to an
industrial undertaking. It would thus
appear that the word "undertaking"
wherever it occurs in the Industrial
given to
Disputes Act, unless a specific meaning is that term by that particular provision, is to be understood in its ordinary meaning and sense. The term "undertaking" occurring in Section 25-FFF fell for interpretation by this Court in Hindustan Steel Ltd. v. Workmen3. In that case, this Court held (at p. 310 of the Reports): (SCC p. 570, para 10) "The word undertaking as used in Section 25-FFF seems to us to have been used in its ordinary sense connoting thereby any work, enterprise, project or business undertaking. It is not intended to cover the entire industry or business of the employer as was suggested on behalf of the respondent. Even ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ２９ closure or stoppage of a part of the business or activities of the employer would seem in law to be covered by this sub-
section. The question has indeed to be decided on the facts of each case."
16. It is thus clear that the word
"undertaking" ig in the expression "an
undertaking of an industrial
establishment" in Section 25-O means an undertaking in its ordinary meaning and sense as defined by this Court in the case of Hindustan Steel Ltd.3 If an undertaking in its ordinary meaning and sense is a part of an industrial establishment so that both taken together constitute one establishment, Section 25-O would apply to the closure of the undertaking provided the condition laid down in Section 25-K is fulfilled. The tests to determine what constitutes one establishment were laid down by this Court in Associated Cement Company case2. The relevant passage is as follows:
::: Downloaded on - 09/06/2013 16:35:26 :::WP/2988/1998 ３０ "What then is 'one establishment' in the ordinary industrial or business sense?
The question of unity or oneness
presents difficulties when the
industrial establishment
consists of parts, units,
departments, branches etc. If it
is strictly unitary in the sense
of having one location and one
unit
only there
difficulty in saying that it is
is little
one establishment. Where,
however, the industrial
undertaking has parts, branches,
departments, units etc. with
different locations, near or
distant, the question arises
what tests should be applied for
determining what constitutes
'one establishment'. Several
tests were referred to in the
course of arguments before
us, such as geographical
proximity, unity of ownership,
management and control, unity of
employment and conditions of
service, functional integrality,
general unity of purpose etc....
It is, perhaps, impossible to
::: Downloaded on - 09/06/2013 16:35:26 :::
WP/2988/1998
３１
lay down any one test as an
absolute 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
each
constitute one integrated whole,
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
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 unity 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
::: Downloaded on - 09/06/2013 16:35:26 :::
WP/2988/1998
３２
tests may fall for consideration
at the same time."
These tests have been accepted and applied by this Court in different cases, for instance, in South India Millowners' Association v. Coimbatore District Textile Workers' Union5, Western India Match Co.
Ltd. v. Workmen6 and Workmen v. Straw Board Manufacturing Co. Ltd.4 In Western India Match Co. case6 the court held on the facts that there was functional integrality and interdependence or community of financial control and management of the sales office and the factory in the appellant company and that the two must be considered part of one and the same unit of industrial production. In the Straw Board Manufacturing Co. Ltd.
case4 the court held (at p. 713): (SCC p.
689, para 18)
"The most important aspect in
this particular case relating to
closure, in our opinion, is
whether one unit has such
componental relation that
closing of one must lead to the
::: Downloaded on - 09/06/2013 16:35:26 :::
WP/2988/1998
３３
closing of the other or the one
cannot reasonably exist without
the other. Functional
integrality will assume an added
significance in a case of
closure of a branch or unit."
22. The error made by the Industrial Court was in considering that an undertaking of an industrial establishment should itself be an industrial establishment, that is, a factory as defined in Cl.(m) of S.2 of the Factories Act. This supposition is not correct for, as already pointed out, there is no requirement contained in the Industrial Disputes Act that an undertaking of an industrial establishment should also be an industrial establishment."
25. In the present case, the MSD is not a separate legal entity as there is no registration or incorporation of that Division under the Companies Act. Therefore, the submission of Mr. Bapat that it would be necessary for the workmen to show functional integrality between the ESD and the MSD is without merit. Functional integrality would have to be considered in respect of the two separate legal entities.
::: Downloaded on - 09/06/2013 16:35:26 :::WP/2988/1998 ３４ There can be no need to consider the functional integrality between these two Divisions of the Company since they are a part of one integrated whole which is the registered company i.e. respondent No.1. Closure of a part of that Company i.e. the MSD would not in my view require the workmen to establish that there is functional integrality between that Division and the other Divisions of the Company because the Company may function through various Divisions. In a given case, a Company may have a Finance Division, a Maintenance Division, an Administrative Division, a Sales Division, a Marketing Division etc. all situated in the same place. Merely because one of these Divisions is to be closed down, it is not necessary for the workmen in such a case to establish that that Division had functional integrality with all the other Divisions. The Division which is to be closed down would be a part of the Company. Undisputedly, a part of a Company which is an industrial establishment can always be closed down and while considering the number of employees working at the relevant time, it is necessary to consider the aggregate strength of the workforce in the Company as a whole.
::: Downloaded on - 09/06/2013 16:35:26 :::WP/2988/1998 ３５
26. Apart from this, the submission of Mr. Bapat that it was necessary to ascertain whether the MSD was an industrial undertaking, as defined in Section 2(ka) of the I.D. Act, is fallacious. Once it is established that the aggregate number of employees is 100, as in this case, the definition of 'Industrial Establishment' as contained under Section 25L of the I.D. Act would have to be reckoned. In my opinion, therefore, the closure of the MSD was effected in breach of the provisions of Section 25 O of the I.D. Act. The Company has thus committed an unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act.
27. It will now be necessary to consider what relief can be granted to the workmen. Once it is held that the closure of the undertaking is bad in law since the prerequisite of obtaining permission from the appropriate Government has not been followed, the consequence would be that the workmen would be entitled to full wages during the period of unemployment. When no application for permission under sub-
section (1) of Section 25 O of the I.D. Act has been made, the closure of the undertaking is deemed to be illegal from the date of closure and the workmen are entitled to all benefits as if the undertaking had not been closed down.
::: Downloaded on - 09/06/2013 16:35:26 :::WP/2988/1998 ３６ Thus, in my opinion, the workmen would be entitled to back-
wages for this entire period. According to Mr. Bapat, several employees have settled their disputes with the Company and the remaining workmen may have taken alternative employment during the intervening period between the date of closure of the MSD and the decision in the complaint and in any case after the Petition was admitted in 1998. He submitted that therefore an enquiry should be directed to be made into the amounts received by them from such employment. In the case of S.G. Chemicals and Dyes Trading Employees Union (supra), a similar argument was advanced on behalf of the employer.
However, the Supreme Court observed thus :
"24. It is difficult to see why these eighty-
four workmen should be put to further
harassment for wrongful act of the
Company. It is possible that rather than starve while awaiting the final decision on their Complaint some of these workmen may have taken alternative employment. The period which has elapsed is, however, too short for the moneys received by such workmen from the alternative employment taken by them to aggregate to any sizeable amount, and it would be fair to let the workmen retain such amount by way of ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ３７ solatium for the shock of having their services terminated, the anxiety and agony caused thereby, and the endeavours, perhaps often fruitless, to find alternative employment."
28. The period which had elapsed from the date of the notice of closure upto the date of the decision of the Supreme Court in the aforesaid case was less than 2 years. In the present case, the notice of closure is of the year 1996. The present Writ Petition has been pending for over 12 years. Therefore, in my opinion, it would be necessary to remand the complaint to the Industrial Court only to consider whether the workmen would be entitled to full wages during this period i.e. from October, 1997 till today.
29. The impugned order dated 5th May, 1998 passed by the Industrial Court, Pune, in Complaint (ULP) No.165 of 1997, is set aside. The Writ Petition is, therefore, allowed.
30. Rule made absolute accordingly.
31. The Complaint (ULP) No.165 of 1997 is remanded to the Industrial Court, Pune only for the purposes of considering ::: Downloaded on - 09/06/2013 16:35:26 ::: WP/2988/1998 ３８ whether the workmen would be entitled to full wages from 31st July, 1997 upto today. Parties are permitted to lead evidence on this issue. The Industrial Court, Pune, shall decide this issue within six months from today.
::: Downloaded on - 09/06/2013 16:35:26 :::