Bombay High Court
M/S. Standard Mills vs Shri Ashok Bhargav Jadhav And 10 ... on 9 June, 2016
Bench: V.M. Kanade
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WP/1588/2013
BDPPS
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1588 OF 2013
M/s. Standard Mills )
Textile Division of Standard Industries Ltd. )
being a company incorporated under )
Companies act, 1956 having its office at )
59, "The Arcade", First Floor, World Trade )
Centre, Cuffe Parade, Mumbai - 400005 ) .... Petitioner.
V/s
1.
Shri Ashok Bhargav Jadhav )
2. Shri Mahadeo R. Toke )
3. Shri Satyawan Ganpati Joil )
4. Shri Dattatray Domodar Kalambekar )
5. Shri T. Murugan Nadar )
6. Shri Baburao Narayan Rawool )
7. Shri Vikas Waman Walawalkar )
8. Shri Chandrakant Bhisaji Gaokar )
9. Shri Narendra Chandra Mouji )
10. Shri Satyanarayan J. Pande )
All C/o. Shri Chandrakant B. )
Gaokar, 2/3 Ganesh Krupa )
Chawl, Ram Nagar Kandalkar )
Compound, Bhandup, )
Mumbai - 400 708 )
)
11. Rashtriya Mill Mazdoor Sangh )
Mazdoor Manjil, Parel. )
Mumbai - 400 012 ) .....Respondents.
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WP/1588/2013
Mr. Sudhir Talsania, Senior Counsel with Mr. Vishal Talsania, Ms.
Pooja Kothari i/b Federal & Rashmikant for the Petitioner.
Mr. Arshad Shaikh with Mr. Hemant Ingale for Respondent Nos. 1 to
9.
Mr. Satyanarayan J. Pande - Respondent No.10, party in person,
present.
Mr. S. S. Pathak for Respondent No.11
----
igCORAM: V. M. KANADE &
REVATI MOHITE DERE, JJ.
RESERVED ON : 23/02/2016
PRONOUNCED ON : 09/06/2016
JUDGMENT (Per V.M. Kanade, J.)
1. Heard.
2. Rule. Rule is made returnable forthwith. Respondents waive
service. Matter is taken up for final hearing by consent of parties.
3. Petitioner - Company was in the Textile Industry for more than
100 years. At one time, it was operating four Mills in different parts of
the Country. On account of various factors, from 1989 the Company
started incurring heavy losses over a period of years. Petitioner,
ultimately, had to dispose of its assets for generating funds for the
operation of the Company. It was compelled to shut down two Mills
which were situated outside Maharashtra. Thereafter, only two Mills
in the city were operational, namely, at Sewree and at Prabhadevi.
Petitioner - Company therefore had no other option but to file an
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application under Section 250 of the Industrial Disputes Act
(hereinafter referred to as "IDA") for the closure of the Plant at
Sewree. This application was filed on 21/09/1999. The matter was
thereafter referred for adjudication. Petitioner thereafter made second
application dated 06/11/2000 for closure of the Mill at Prabhadevi
under Section 250 of the IDA.
4. Several efforts were made by the Company and by the
Representative Union to workout a strategy to restructure and
rationalize the activities of the Company. Finally, an agreement was
executed between the Representative Union and the Company dated
23/11/2000 in which it was agreed (i) that the Company would offer
VRS to all the employees and staff members of both the Mills,
(ii) those workers who were not interested in accepting the VRS
compensation, would be assigned to the Sewree Mill, (iii) the
Company would be permitted to sell the unusable plant and machinery
as well as land in order to raise funds to tide over the liquidity crunch
faced by the Company and (iv) that the workmen had agreed to give
their support and co-operation and they had agreed to accept any job
which may be given to them at Sewree Mill.
5. The said Agreement was registered under the provisions of the
Bombay Industrial Relations Act, 1946 ("BIR Act") and registration
certificate dated 23/02/2001 came to be issued.
6. In view of the agreement between the parties, References under
Section 250 of the IDA made in respect of both, Sewree Mill and
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Prabhadevi Mill were withdrawn.
7. Out of total number of 2115 employees employed in Prabhadevi
Unit, 2105 employees accepted VRS compensation and left services of
the Petitioner - Company and remaining 10 employees were assigned
to Sewree Mill. So far as Sewree Mill is concerned, out of 1436
employees, 1366 employees accepted VRS compensation and left the
services of the Petitioner - Company. Thus, only 70 employees from
Sewree Mill remained on the pay-roll of the Company. Thus, total 80
(70 + 10) workmen remained on the pay-roll of the Company.
8. Some of the workmen filed Writ Petition No.1679 of 2001
challenging the registration of Agrement dated 23/11/2000. It was
inter alia prayed that the Company should be restrained from shifting,
dismantling, selling any machine/parts and from alienating its assets
and for a direction to provide regular work to the workers. This Writ
Petition, however, was dismissed.
9. Simultaneously, some of the workmen filed Complaint (ULP)
No.1285 of 2000 under the provisions of ULP Act challenging the
legality and validity of the Agreement dated 23/11/2000. Some other
workmen also joined in the said complaint. Subsequently, the
complaint was amended and even the closure of Sewree Unit was
challenged. Interim relief was not granted by the Industrial Court.
10. In the meantime, however, several other events took place and it
would be relevant to make a reference to these events which
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transpired during pendency of the said Complaint (ULP) No.1285 of
2000.
11. The Company transferred remaining 10 employees of Prabhadevi
Unit by Transfer Order dated 28/02/2001 to Sewree Unit as per terms
and conditions of the Agreement dated 23/11/2000.
12. Transfer Orders were also challenged by Respondent Nos. 1 to
10 by filing Complaint (ULP) No.309 of 2001 before the Industrial
Court and no interim relief was granted in the said complaint in favour
of the workers.
13. According to the Company, they tried to restart the Unit.
However, Respondent Nos. 1 to 10 did not cooperate and refused to
carry out the job of oiling and cleaning of the machines which was
assigned to them. According to the Company, they took various steps
to restart the factory. However, on account of non-cooperation by the
workers and in view of independent report received by the Company,
they took a decision to close Sewree Mill permanently. Accordingly,
the Company issued 60 days' notice on 01/02/2002 under section
25-FFA of the IDA to the Government of Maharashtra conveying its
intention to close down Sewree Mill with effect from 05/04/2002.
Similar notice was also given in respect of Prabhadevi Mill.
14. The third complaint was filed, challenging the closure notice
dated 01/02/2002 by filing Complaint (ULP) No.267 of 2002 before
the Industrial Court under Items 9 & 10 of Schedule IV of the ULP Act
WP/1588/2013
on the ground that same was in violation of the Agreement dated
23/11/2000 and for non-compliance of the IDA and BIR Act.
Petitioner - Company filed its Written Statement. Application was
made by Respondent Nos. 1 to 10 for being impleaded in the
complaint filed by the Representative Union.
15. The said application was allowed and all the workmen were
impleaded in the complaint filed by the Representative Union. After
being impleaded, Respondent Nos. 1 to 10 filed an additional affidavit
by taking several additional grounds.
16. Application moved by the Representative Union seeking various
interim reliefs was rejected by the Industrial Court by an order dated
23/03/2002 by passing a reasoned order. This order was challenged
by the Union in the High Court in Writ Petition No.2101 of 2002. This
Writ Petition, however, was dismissed in limine by an order dated
16/04/2002. This order was challenged in Appeal Nos.190 of 2002
and 191 of 2002 and these Appeals also came to be dismissed by an
order dated 06/06/2002.
17. No stay was granted to the closure of Sewree Unit. The
Company gave a notice informing all workmen that Sewree Mill will
be closed from 20/02/2003.
18. Respondent Nos. 1 to 10 filed Contempt Petition No.36 of 2003
alleging that the said notice was in violation of the order dated
12/09/2001 passed in Writ Petition No.1279 of 2001. This Contempt
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Petition was also dismissed by an order dated 10/04/2003.
19. In the meantime, Complaint (ULP) No.267 of 2002 filed by the
Representative Union was partly allowed by an order dated
20/03/2003.
20. Respondent Nos. 1 to 10 filed Review Application No.14 of 2003
during pendency of the Complaint (ULP) No.267 of 2002, which was
disposed of by an order dated 20/03/2002. During the pendency of
the said complaint, Respondent Nos. 1 to 9 filed Complaint (ULP) No.
771 of 2002 on the same grounds which were agitated in Complaint
(ULP) No.267 of 2002.
21. According to the Petitioner - Company, though dispute between
the parties was finally concluded by an order dated 20/03/2003, the
Complaint (ULP) No.1285 of 2000 challenging the Agreement dated
23/11/2000 and Complaint (ULP) No. 309 of 2001, challenging the
Transfer Order dated 28/02/2001 and the Complaint (ULP) No.771 of
2002, challenging closure of the Sewree Mill were still pending in the
Industrial Court.
22. In the year 2004, Respondent Nos. 5 to 10 made an application
for being impleaded in Complaint (ULP) No.1285 of 2000, which was
allowed. The Company amended its Written Statement to bring on
record the subsequent events that have transpired after filing of the
Complaint (ULP) No.1285 of 2000. Additional issues were framed
regarding maintainability of the complaint.
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23. All the three complaints were clubbed together and entire
evidence led in Complaint (ULP) No.1285 of 2000 was treated as
evidence in all the complaints.
24. Industrial Court allowed the said Complaint (ULP) No.1285 of
2000 by the impugned Order dated 20/03/2013. By the said order, it
held as under:-
(i) Petitioner - Company was not guilty of the
alleged violation of ID Act and BIR Act.
(ii) Agreement dated 23/11/2000 was valid
and proper.
(iii) Transfer Order dated 28/02/2001 as
well as closure of Sewree Mill were legal and
proper.
(iv) Petitioner - Company had committed
unfair labour practice under Items 9 and 10 of
Schedule IV of the IDA and directed to
continue Respondent Nos. 1 to 10 in their
employment till their date of retirement.
25. Being aggrieved by the said Judgment and Order, Petitioner -
Company has preferred this Writ Petition under Article 226 of the
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Constitution of India.
26. Mr. Talsania, the learned Senior Counsel appearing on behalf of
the Petitioner challenged the impugned order on the following
grounds viz (i) the impugned order was ex facie perverse and
completely unsustainable in law; (ii) that there was no breach of
agreement dated 23/11/2000; (iii) that the impugned order was
barred by principles of res judicata and the principles analogous to the
principles of res judicata; and (iv) that the Petitioner had not
committed any fraud on anybody while closing down the Mill or
disposing of the lands as alleged. He has taken us through the
impugned Judgment and Order and the various earlier orders which
have been passed in Complaint (ULP) No.267 of 2002 which was
disposed of by judgment and order dated 20/03/2003 as also
judgment and orders passed by the High Court in various Petitions
which were filed by the Respondents from time to time. He also
invited our attention to the order of dismissal of Contempt Petition
passed by this Court. In support of the said submission, he has argued
in detail on each of these points. He submitted that therefore the
impugned Judgment and Order was liable to be set aside since it was
perverse and unsustainable.
27. On the other hand, Mr. Shaikh, the learned Counsel
appearing on behalf of Respondent Nos. 1 to 9 and Mr. Pandey, who
is appearing in person, submitted that the Company had agreed to
pay salary to workers who had not accepted VRS till they attained the
age of superannuation. Secondly, the Company also agreed not to
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close down the Sewree Mill till then. However, the Company had
played fraud on the workers by selling land of the Mill and by stopping
payment of salary to the remaining workmen though they had
expressly agreed to do so till the age of their superannuation. He
contended that initially the Company had represented that they would
not close down the Mill but, at the same time, they had represented to
various authorities including the Urban Secretary that the factory has
been closed down and on that basis obtained orders for sale of the
factory. It was, therefore, contended that the Company had played
fraud not only on the workers but also on all authorities including the
High Court and only because of the representations made by them that
the Mill would not be closed down, the Petitions filed by Respondent
Nos. 1 to 10 were disposed of.
28. Mr. Shaikh, the learned Counsel appearing on behalf of
Respondent Nos. 1 to 9 relied on the Judgment of the Apex Court in
Workmen Employed in Associated Rubber Ltd vs Associated Rubber
Industry Ltd. & Anr.1 He also relied upon the Judgment of the Apex
Court in S.P. Chengalvaraya Naidu (dead) by L.Rs. vs. Jagannath (dead
by L.Rs. and Others2
29. In support of his submissions that the Petitioner - Company
had committed fraud, Mr. Shaikh the learned Counsel for the
Petitioner relied on number of documents which are annexed to Writ
Petition No.2886 of 2015. He relied on following 16 documents.
1 AIR 1986 SC 1
2 AIR 1994 SC 853
WP/1588/2013
(i) Notice of Change dated 14.11.2000 - Page 75
of Writ Petition No.2886 of 2015.
(ii) Agreement dated 23.11.2000 which is at Page
82.
(iii) Format of VRS which is at Page 94.
(iv) Company's Affidavit dated 14.12.2000 which
is at Page 102. The reliance is on the portion
where it is stated on Page 104 "Company shall
abide by the same...."
(v) Copy of reply dated 30.04.2001 filed by the
Company which is at Page 142.
The relevant portion being on Page 147.
(vi) Order of the Industrial Court dated
11.06.2001 in Complaint (ULP) No.1285 of 2000
which is at Page 159.
The relevant portion being on page 173.
(vii) Order below Exhibit U-2 dated 14.08.2001 in
Complaint (ULP) No.309 of 2001 which is page
204.
The relevant portion being on Page 212.
(viii) Affidavit in reply dated 30.07.2001 in Writ
Petition No.1679 of 2001 which is at page 221.
(ix) Order of the Learned Division Bench dated
12.09.2001 in Writ Petition No.1679 of 2001
which is at Page 245. The relevant portion being
on page 251, 252, 254 and 255.
(x) Letter from the State Minister to Labour, Law
and Judiciary dated 03.04.2002, the Marathi
document at Page 296 and the English Translation
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at Page 297.
(xi) Letter dated 08.04.2002 from the office of
the Labour Commissioner, the Marathi document
at Page 298 and the English Translation at Page
(xii) Letter dated 20.06.2002 from the Ministry
of State to Labour, Law and Judiciary, the Marathi
document at Page 320 and the English Translation
at Page 321.
(xiii) Letter dated 19/02/2003 to the Senior
Inspector of Police which is at Page 327.
(xiv) Notice of closure of Sewree Textile Unit
which is at Page 328.
(xv) The Order impugned herein dated
20.03.2013 in Complaint (ULP) Nos. 1285 of 2000,
309 of 2001 and 771 of 2002 which is at Page 348
(xvi) Order in Complaint (ULP) No. 267 of 2002
dated 20.03.2003 which is at page 333 of the
Company's Petition .
(xvii) Copy of Letter of Intent dated 10.03.2004
between M/s Standard Industries Ltd and M/s
Dosti Corporation.
(xviii) Letter dated 20.10.2001 from the Urban
Development Department to the MD of Standard
Industries Ltd.
He also submitted synopsis of arguments and further arguments
relying on dates and documents which indicated the manner in which
the workers and other authorities including the Courts were defrauded
by the Company.
WP/1588/2013
30. We have heard both the Counsels and Respondent No.10 - Mr.
Satyanarayan J. Pande at great length.
31. After having heard all of them and after having gone trough the
orders passed by the Industrial Court as well as the other proceedings
which were initiated at the instance of the Representative Union and
also the agreement executed between the parties, we are of the view
that there is much substance in the submissions made by the learned
Senior Counsel appearing on behalf of the Petitioner. We have
already narrated brief facts but for the purpose of giving our opinion
on the submissions made, we are of the view that it will be necessary
again to briefly refer to certain chronology of events.
32. It is not in dispute that the Company was suffering losses since
1982. It is also not in dispute that several efforts were made by the
Company and the Representative Union to find out ways and means
to restructure the activities of the Company. It is a matter of record
that an agreement was executed between the Representative Union
and the Company dated 23/11/2000. In the said agreement, four
salient points which were agreed between the parties were (i) that the
Company would offer VRS to all employees and staff members of both
the Unions, (ii) those workers who were not interested in accepting
VRS compensation would be assigned to Sewree Mill, (iii) Company
would be permitted to sell unusable plant and machinery as well as
land in order to raise funds to tide over liquidity crunch faced by the
Company and (iv) workmen had agreed to give their support and
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co-operation and had agreed to accept any job which may be given at
Sewree Mill.
33. It is also not in dispute that the Union had filed complaint
before the Industrial Court in which all allegations have been made by
the Representative Union and in all those proceedings, contention of
the workmen was not accepted by the Courts. Whereas, in the
complaint filed by the Respondents herein i.e. in second round of
litigation, Industrial Court, while giving finding in favour of all other
points, has given a finding that the Company is liable to pay salary of
these Respondents till they attain the age of superannuation.
34. The principal contention of the Respondents/workers is that the
Petitioner - M/s Standard Mills had committed a fraud on the
workmen by promising on the one hand that they would give salary
and wages to the workmen who had not accepted VRS till they attain
the age of superannuation by providing them work at Sewree Mill. On
the other hand, the Company was constantly taking steps to close
down the factory. The contention of the workmen is that the
Petitioner - Company had obtained various orders from authorities
and courts on the basis of misrepresentation that they propose to give
work to workmen who were transferred to Sewree Mill by reviving
management of the Company and at the same time, Company was
taking steps for closure of the Mill and lastly that since solemn
assurance was given in the agreement dated 23/11/2000 that the
Petitioner - Company would pay the Respondents/workmen salary
and wages till they attain the age of superannuation, it was not open
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for the Petitioner - Company to resile from the said promise and pay
VRS compensation to the Respondents/workmen.
35. In our view, the entire submission of the Respondents/workmen
proceeds on the basis of the clauses in the agreement which show that
the Petitioner - Company was paying wages and salary to the
Respondents/workmen till they attained the age of superannuation. It
is not in dispute that the Company has nowhere in the said agreement
mentioned that under no circumstances, the Company would be closed
down. The Respondents/workmen are now relying on various
documents such as document presented before the Urban Land Ceiling
Department, seeking permission for sale of the Mill's land and other
orders which were passed by this Court viz the order passed in
Contempt Petition and certain observations made by the Court in the
said contempt Petition.
36. This submission made by the Respondents/workmen is without
any substance. Perusal of the agreement itself clearly indicates that
the Company in the said agreement had clearly expressed its intention
of selling the Mill's land for the purpose of paying dues of the
workmen and, accordingly, Petitioner - Company has sold this Mill's
land for the purpose of payment of dues of workmen. The submission
of the Respondents/workmen that the Company had committed fraud
by selling Mill's land is baseless and contrary to the terms and
conditions of the agreement dated 23/11/2000. Perusal of the
agreement indicates that it is in terms stated in the agreement that the
Company would be permitted to sell unusable plant and machinery as
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well as land to raise funds to tide over the liquidity crunch faced by
the Company. Merely because the Company in the said agreement
stated that those workmen who had not obtained VRS would be paid
salary and wages till they attain the age of superannuation does not
mean and cannot be construed to mean that even though the entire
Company is shut down, the Company would still be liable to pay
wages and salary to these workmen till they attain the age of
superannuation. It is an admitted position that all other workmen
except the 10 Respondents/workmen had accepted VRS compensation
long time ago and out of 10 Respondents/workmen except
Respondent No.10 - Shri Satyanarayan J. Pande, 9 Respondents
accepted VRS compensation without prejudice to their rights and
contentions raised in their Petition filed by them and by the Company.
The Industrial Court has given all findings in favour of the Petitioner -
Company. However, without assigning proper reasons, it has held that
in view of the clauses in the agreement, Company was liable to pay
wages and salary to the Respondents/workers till they attain the age
of superannuation. It is a settled position in law that despite any
agreement between the parties, if a party is legally entitled to take
steps then the clauses in the agreement would not bind the party in
doing so.
37. In the present case, there is no clause in the agreement which
says that under no circumstances, the Petitioner - Company would be
entitled to close down the factory at Sewree. The chronology of events
clearly indicates that the Company had no other option but to close
down the said factory after obtaining permission from the Court. The
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Industrial Court has, in fact, given a finding that the Company had
legally closed down the factory. In view of this finding given by the
Industrial Court, it is not open now for the Respondents/workmen to
say that the Petitioner - Company had committed a fraud on the
workers and on the Union. The judgment on which reliance is placed
by the learned Counsel appearing on behalf of Respondents/workmen
in The Workmen Employed in Associated Rubber Industry Ltd.,
Bhavnagar V/s. The Associated Rubber Industry Ltd., Bhavnagar and
another1 was in the context of cases in relation to taxing statute. The
said judgment, in our view, has no application to the facts of the
present case. The entire thrust of the workmen is that by virtue of
bringing in VRS, Petitioner - Company had fraudulently reduced
number of workmen and brought it below 100 in order to defeat right
of the workmen to get wages and salary till they attain the age of
superannuation. Petitioner, in the present case, has taken legal steps
for the purpose of closing down the business at Sewree. Lastly, it has
to be noted that the Respondents had never made an allegation of
fraud in any of the complaints made to the Industrial Court. There are
no pleadings to that effect in the complaint or in the evidence which
has been led. The Respondents/workmen on the basis of letter dated
31/08/2001 addressed by the Company to the Urban Development
Department have sought to contend that the Petitioner - Company
committed fraud. It has to be noted that the Petitioner - Company
had not made any agreement or assured not to close down the Mill by
following due process of law. Secondly, all documents including the
agreement dated 23/11/2000 specifically refers to the intention of the
1 AIR 1986 SC 1
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Petitioner to sell both the Mills' land to meet the financial liabilities
including VRS compensation. Petitioner had filed an application
under section 25-O of the Industrial Disputes Act, 1947, seeking
permission to close down both the Mills. The submissions made by
Mr. Sahikh, the learned Counsel appearing on behalf of Respondent
Nos. 1 to 9 and Shri Satyanarayan J. Pande - Respondent No.10 are
therefore without any substance and liable to be rejected.
38. We have perused the findings which are given by the Industrial
Court. The Industrial Court has nowhere given any reasons as to why
claim of the Respondents/workmen claiming payment of salary and
wages till they attain the age of superannuation would not be hit by
the principle of res judicata or the principles analogous to the principle
of res judicata, after all the Courts in the first round of litigation had in
terms held that workmen were not entitled to get wages till they attain
the age of superannuation. The Industrial Court has merely brushed
aside the objection taken by the Petitioner - Company that the relief
claimed for wages and salary were barred by the principle of res
judicat. We are of the view that the Order of the Industrial Court
dated 20th March, 2013 in so far as it directs the Petitioners to
continue the Respondent Nos. 1 to 10 in service till the date of
retirement, provide them work and pay them their wages and to pay
them their full back wages for the intervening period and all attendant
benefits is liable to be quashed and set aside.
39. We therefore allow the Writ Petition No.1588 of 2013 in terms
of prayer clause (a) with the following directions.
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40. All the Respondents have been paid VRS compensation.
However, Shri Satyanarayan J. Pande - Respondent No.10 refused to
accept the VRS compensation. Since the Petition filed by the
Petitioner - Company is allowed, we direct the Company to pay to
Shri Satyanarayan J. Pande - Respondent No.10 VRS compensation
which has been paid to all the Respondents alongwith interest @ 12%
per annum from the date on which other workmen accepted the VRS
till the date amount is actually paid.
41. Writ Petition is disposed of in the aforesaid terms and the rule is
made absolute accordingly.
(REVATI MOHITE DERE, J.) (V.M. KANADE, J.)
