Bombay High Court

S.B. Patole & Ors vs Fujitsu Icim Ltd. on 29 October, 2010

Bench: Nishita Mhatre

                                                                            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

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"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.

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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

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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

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

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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.

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

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,

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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

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.

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

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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,

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

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

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

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 :

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

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

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

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

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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

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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

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

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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

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

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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.

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

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

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:

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





                                                                      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





                                                                     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





                                                                          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.

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.

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.

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

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.