Pritam S/O Balkrushna Raibole And ... vs M/S. Simplex Mills Com. Ltd., ...
2017 Latest Caselaw 6902 Bom

 Judgment                                            1                                wp1149.15.odt




                IN THE HIGH COURT OF JUDICATURE AT BOMBAY,
                 

                          NAGPUR BENCH, NAGPUR.

                           WRIT PETITION NO. 1149 OF 2015

 1.    Pritam S/o. Balkrishna Raibole,
       R/o. Shivni, Akola.

 2.    Krushna S/o.Laxman Dabhade,
       R/o.Shivar, Distt. Akola.

 3.    Keshav S/o. Motiram Ingle,

 4.    Bhimrao S/o.Vishwanath Khandare,
       Nos.3 & 4 R/o. Shivni, Dist. Akola.
                                                                       ....  PETITIONERS.
                                      //  VERSUS //

 1. M/s. Simplex Mills Company Ltd.
    Shivani, Tq. And Distt. Akola,
    through its General Manager, 

 2. Textiles Workers Union, Jijaji
    Sabha Gruha, Old City, Akola-
    444002. 

 3. The Maharashtra Samartha Kamgar   (Dismissed in default)

 4. The Hon'ble Member, Industrial
    Court, Maharashtra, Akola, Bench,
    Akola.
                                                   .... RESPONDENTS
                                                                     .
  ___________________________________________________________________
 Shri A.S.Dhore, Advocate for Petitioners. 
 Shri R.B.Puranik, Advocate for Respondent No.1.
 Shri Sagar Katkar, Advocate for Respondent No.2. 
 ___________________________________________________________________

                              CORAM : S.C.GUPTE, J.

DATED : SEPTEMBER 07, 2017.

ORAL JUDGMENT:

1. Heard learned counsel for the parties.

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2. This petition challenges an award passed by Industrial Court,

Akola in a reference. The subject matter of the reference concerns closure of

respondent No.1 company and permission granted for such closure by the

State Government.

3. Respondent No.1 is a company governed by the Bombay

Industrial Relations Act, 1946, running textile mills at Shivni in Akola. By its

application dated 29th April, 2008, respondent No.1 sought permission under

Section 25-O of the Industrial Disputes Act, 1971 (hereinafter referred as

"the Act" for brevity) to effect closure of its undertaking. The application

was opposed by respondent No.2 - recognized union and respondent No.3-

Maharashtra Samarth Kamgar Sanghtana. By his order dated 25 th

September, 2008, the Commissioner of Labour, Maharashtra State, Mumbai

allowed the application and permitted respondent No.1 to permanently close

its industry at village Shivni in Akola. Respondent No.2, which is a

recognized union of workmen of respondent No.1, thereupon challenged the

permission for closure under sub-section (5) of Section 25-O of the Act. The

challenge was registered as a reference before the Industrial Court, Akola on

an order passed by the Commissioner of Labour. On 12 th August, 2009, the

Industrial Court framed issues in the reference and fixed the matter for

evidence. The reference was adjourned from time to time. On 27 th January,

2012, whilst the reference was pending, respondent No.1 filed an application

for allowing it to close the undertaking subject to the final decision of the

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Industrial Court in the reference. On 14 th September, 2012, that application

was allowed by the Industrial Court. This order was challenged by

respondent No.3 before this Court in Writ Petition No. 4931 of 2012. Rule

was issued by this Court on the petition and the impugned order of 14 th

September, 2012 was stayed with directions to the Industrial Court to decide

the reference as expeditiously as possible. Whilst the reference was thus

pending adjudication and the respondent continued to carry on its

undertaking, on 5th April, 2014, respondent No.1 and the recognized union,

i.e. respondent No.2, entered into an agreement of settlement, agreeing to

the closure of the company with effect from 9 th April, 2014. On 7th April,

2014, respondent No.2 filed an application before the Industrial Court for

passing appropriate orders in terms of this settlement. This application was

opposed by the petitioners along with some other employees through

respondent No.3 union. On 9 th April, 2014, the Industrial Court pronounced

the operative part of the award, answering the reference in terms of the

settlement arrived at between respondent Nos. 1 and 2. This pronouncement

was initially challenged by petitioner Nos. 3 and 4 herein before this Court in

Writ Petition No. 2038 of 2014. This Court, by its order dated 29 th April,

2014, disposed of that writ petition with liberty to petitioner Nos. 3 and 4 to

file a fresh petition after publication of the award. The award was declared

on 27th May, 2014. The present petition is filed in pursuance of the liberty

reserved.

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4. Learned counsel for the petitioners submits, at the outset, that

the reference pending before the Industrial Court could not have been

disposed of by it simply on the basis of a settlement between respondent Nos.

1 and 2; the Court was duty bound to decide the reference on merits as

ordered by this Court in its order dated 22 nd October, 2012. Learned counsel

relies on the judgment of a Division Bench of our Court in the case of N.R.C.

Employees' Union Vs. Government of Maharashtra, reported in 2012(4)

Bom.C.R.197 in support of his contentions. Relying on the decision of the

Supreme Court in Oswal Agro Furane Ltd. Vs. Workers Union, reported in

(2005) 3 SCC 224, learned counsel submits that a settlement arrived at

between the employer and the union cannot override the mandatory

requirements of Section 25-O of the Act.

5. Before we take up the contentions raised by the petitioners in

this behalf, it will be pertinent to note the following few salient facts :

The textile mill run by respondent No.1 was suffering from

heavy losses due to various reasons including, uneconomical size of the mill,

low productivity of labour etc. In the premises, in September, 2008, it made

an application for closure to the appropriate Government. After considering

the propriety of such closure, the Government granted permission to effect

closure under Section 25-O of the Act. The challenge to this permission on

the part of the Union resulted into the present reference. The permission to

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effect closure during the pendency of the reference having been stayed by

this Court, respondent No.1 continued to run the undertaking and claims to

have incurred further losses. It is submitted that due to its inability to

purchase raw material, its production came to a standstill on 13 th December,

2013 and even the power supply was disconnected on account of its inability

to pay the power bills. With no production activity, respondent No.1

continued to run its undertaking, paying wages to its employees upto

February, 2014. In the circumstances, respondent No.1 negotiated a

settlement with the recognized union and finally entered into an agreement

on 5th April, 2014. The agreement specifically provides that all employees of

respondent No.1 shall be paid gratuity as per the provisions of the Payment

of Gratuity Act as also closure compensation at the rate of 15 days' wages

and ex-gratia payment at the rate of 11 days wages, for every completed year

of service. The agreement also provides for payment of 18 days' wages for

each remaining year of service upto the dates of the respective retirements of

all employees. Out of 278 employees of respondent No.1, 228 signed the

settlement agreement in addition to the recognized union. These employees

have been duly paid all benefits in accordance with the settlement agreement

including closure compensation, gratuity and ex-gratia payment. Thereafter,

26 more employees of respondent No.1, including petitioner Nos. 3 and 4

herein, made a joint request on 13 th May, 2014 for payment of compensation

in accordance with the award incorporating the settlement agreement.

Relying on this representation, all these employees were paid compensation

Judgment 6 wp1149.15.odt

and gratuity in installments by post-dated cheques. These amounts have

been duly received by the employees including petitioner Nos. 3 and 4

herein. (As far as petitioner Nos. 1 and 2 are concerned, they had already

ceased to be in the employment of the company, respectively, from 31 st

January, 2008 and 5th January, 2008). After the undertaking was

permanently and irrevocably closed with effect from 27 th June, 2014 in

accordance with the award, the Board of Directors of the respondent

company passed a resolution on 27 th August, 2014, authorizing the sale of

the entire plant and machinery of the undertaking of respondent No.1 at

Akola. The sale of machinery started from 31 st August, 2014 and the last lot

of machinery was sold on 2nd March, 2015. It is submitted by respondent

No.1 that except one transformer and some machinery which was already

scrapped, all other machineries have been sold and delivered to the

respective buyers. Only thereafter the present petition has been filed before

the Court. (It was filed on 7th January, 2015).

6. The Industrial Court, whilst passing the impugned award, noted

that the reference was made to it after the appropriate government had

granted permission of closure under Section 25-O of the Act and on an

application of the recognized union under sub-section (5) thereof. The Court

took into account the various reasons for closure indicated by respondent

No.1 and the evidence led by it in support of its claim for closure. The Court

also considered the submission of the recognized union that the matter was

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principally settled between respondent No.1 and itself and, accordingly, it

was not pressing its application under sub-section(5) of Section 25-O of the

Act. The recognized union, in other words, had no objection to effect being

given to the permission granted by the Commissioner of Labour under

Section 25-O in September, 2008. As far as the other union, namely,

respondent No.3 is concerned, the Court noted that admittedly this union

had its address in Mumbai; it had never claimed to be the recognized union

for the undertaking of respondent No.1 at Shivni in Akola; it had not

examined any of its officials or members / employees working at the

undertaking at Shivni, Akola; and its reply indicated that it had the support

of only about 16 members/ employees as against 228 workmen who had

accepted the terms and conditions of the settlement. On these facts and

considering the material placed before it, the Court came to the conclusion

that the settlement arrived at between respondent Nos. 1 and 2, which had

the overwhelming support of about 228 out of 278 workmen of respondent

No.1, was in the interest of the workmen and by far, the objection raised by

the rival union had no merits. The Industrial Court, in the premises,

answered the reference in accordance with the terms of settlement forming

part of the application of the recognized union dated 7 th April, 2014. (This

application was stated to be a part of the award.)

7. No doubt, our Court in the case of N.R.C. Employees Union

(supra) has held that the provisions of Section 25-O of the Act are mandatory

Judgment 8 wp1149.15.odt

and cannot be overridden by any settlement to the contrary. The Court

relied on the judgment in the case of Oswal Agro (supra), where the Supreme

Court had laid down this proposition, holding that no settlement to the

contrary would be binding on the workmen. The law laid down by the

Supreme Court in Oswal Agro (supra) is on the footing that any settlement

within the meaning of Section 2(p) read with Section 18(3) of the Act would

undisputedly bind the workmen, but the question to be considered in the

case of a closure is whether the provisions of Section 25-O of the Act have

nevertheless been complied with. The Court observed that a settlement

could be arrived at between the employer and his workmen in the case of an

industrial dispute; Such industrial dispute might even arise as regards the

validity of the closure. A settlement, however, as regards the closure can be

arrived at provided such closure has been effected in accordance with law.

The requirements of issuance of a notice in terms of Section 25-O and a

decision thereon by the appropriate government were suggestive of the fact

that the law in this behalf has laid down a public policy. The State

Government, before granting or refusing such permission, was required to

comply with the principles of natural justice by giving an opportunity of

hearing both to the employer and the workmen and thereafter pass an order

assigning reasons, having regard to the several factors bearing on the subject,

one of the important factors being the interest of the workmen. These

provisions, being imperative in character, would prevail over the right of the

parties to arrive at a settlement. Such settlement must nevertheless conform

Judgment 9 wp1149.15.odt

to the statutory conditions laying down a public policy. The dicta of the

Supreme Court in Oswal Agro (supra) are based on a well-known principle of

public law, namely, that whenever the law makes a provision to protect the

public interest, the parties cannot contract out of such provision by a private

treaty.

8. Let us now examine the facts of the present case in the light of

this law. In the present case, the notice of closure was duly issued and when

the State Government was duly approached with an application for

permission of closure. On this application, the State Government did grant

opportunity of hearing to all the stakeholders. The order of the State

Government granting permission of closure was passed with reasons assigned

in support thereof and having regard to the various factors bearing on the

subject. It was this permission which was challenged before the Industrial

Court in the reference. The recognized union, which was one of the main

protagonists of this challenge, entered into a settlement with the respondent

company during the pendency of this reference, and withdrew its challenge

to the settlement. The very fact that the recognized union, with the support

of an overwhelming majority of workmen of respondent No.1, accepted the

terms of settlement indicates at least prima-facie that the settlement was

indeed in the interest of workmen. Nothing is shown to the contrary by the

opponents of the settlement.

Judgment 10 wp1149.15.odt

9. Learned counsel for the petitioners tried to make out certain

personal grievances on the part of individual workmen, claiming that they

were prejudiced by this bargain. The propriety of the settlement has to be

viewed from a holistic standpoint, keeping the overall interest of workmen in

mind and cannot be vitiated by individual grievances of a minuscule

minority of the workman. Nothing is pointed out to the Court to show that

this settlement was in a broad sense and from a holistic standpoint, opposed

to the interest of the body of workmen or that any better settlement could

have been arrived at in the facts and circumstances of the case. The closure,

in other words, being shown prima-facie in compliance with the provisions of

Section 25-O of the Act and the challenge laid by the recognized union not

being pressed and there being no concrete material before the Court to show

that the settlement was not in the interest of the general body of workmen,

the Industrial Court really had no option but to accept the settlement and

make an award in terms thereof. It nevertheless considered the material

placed before it before coming to the conclusion that the settlement was

indeed in the interest of the workmen.

10. In Shivanand Gaurishankar Baswanti vs. Laxmi Vishnu Textile

Mills, reported in (2008) 13 SCC 323, the Supreme Court considered the

status and position of the representative union, particularly in the context of

the Bombay Industrial Relations Act, 1946. The Court held that the decision

taken by such representative union was final and binding. The Court

Judgment 11 wp1149.15.odt

particularly considered the question as to whether acceptance of this status

and position on the part of the representative union leads to a case of

tyranny of the representative union. The Court held that the intention of the

legislature was clear and unambiguous, and it was the representative union,

who alone could protect the interest of the workmen. Though we are here

concerned with a settlement within the meaning of the Industrial Disputes

Act and its efficacy in a reference challenging the permission of the

appropriate government under Section 25-O, the broad considerations

regarding weightage to be assigned to the settlement signed by a

representative union cannot be lost sight of. Besides, as noted above, the

settlement arrived at by the union has an overwhelming support, it having,

in fact, been signed specially by 228 out of 278 workmen of respondent No.1.

Even out of the workmen who did not sign the settlement, nearly 26 of them

finally accepted payment of closure compensation in terms of the award.

11. In the premises, there is no merit in the challenge to the award.

The writ petition is, accordingly, dismissed. No order as to costs.

JUDGE

RRaut..