Sh. Massod Ahmed Khan & Ors. vs Hamdard Dawakhana ...
2012 Latest Caselaw 2381 Del

           *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Date of decision:13th April, 2012

+                          WP(C) NO.3223/1989

SH. MASSOD AHMED KHAN & ORS.             ..... Petitioners
                Through: Mr. Sanjay Kumar and Mr. Ajay
                         Kumar Talesara, Advocates.

                                    Versus

HAMDARD DAWAKHANA (WAKF)/HAMDARD (WAKF)
LABORATORIES & ORS.                        ..... Respondents
                Through: Mr. Amit Seth Advocate.

CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. The six petitioners impugn the award dated 13th July, 1989 of the

Industrial Adjudicator on the following reference-

"Whether the services of Shri Masood Ahmad, Shakeel Ahmad, Bashir Ahmad, Salar Bux, Mohd. Zakir Qureshi and Bhagat Singh have been terminated illegally and/or unjustifiably and if so, to what relief are they entitled and what directions are necessary in this respect?"

and holding the respondent no.3 M/s Hamdard Research Clinic and

Nursing Home (HRC Nursing Home) having effected „closure‟ and further

holding HRC Nursing Home to be not part and parcel of respondent no.2

M/s Hamdard National Foundation (India) (Foundation) or respondent no.5

M/s Majidia Hospital (Hospital) or respondent no. 4 M/s Institute of History

of Medicine and Medical Research (Institute) and finding the petitioners to

be entitled only to compensation as provided under Section 25F of the

Industrial Disputes Act, 1947 minus the amount already received. The

petitioners also seek declaration that the closure notice dated 16 th June, 1982

is illegal and claim the relief of reinstatement in service with back wages.

2. Rule was issued. During the pendency of the petition, the petitioners

applied for subsistence allowance under Section 10(4) of the Act and which

application was dismissed vide order dated 10 th July, 1992. The counsel for

the parties have been heard. The synopsis of submissions filed by the

counsel for the petitioners as well as the counsel for the respondents have

also been perused.

3. It was the case of the petitioners before the Industrial Adjudicator, that

they had been employed with the respondent no.3 HRC Nursing Home for

the periods ranging from 10-17 years; that the HRC Nursing Home was a

part and parcel of the Foundation and was started as stepping stone for a

hospital i.e. the Institute; that the Hospital was also a part and parcel of the

Institute; that their services were terminated vide notice dated 16 th June,

1982; that individual notices terminating their services w.e.f. 18 th June, 1982

were also served on them; that they had served a charter of demands dated

26th March, 1982 on the management demanding revision of pay scales etc.

and upon the management not conceding thereto had approached the Labour

Department; that owing to their said action they were victimized; that on 16 th

June, 1982, the Management put up notice of closure of HRC Nursing

Home; that the closure notice was contrary to law; that HRC Nursing Home

alone could not be shut; that the nursing home activities, being carried on by

HRC Nursing Home were continued at the Hospital and the equipment was

also shifted there and some of the employees who were the puppets of the

Management had also been absorbed therein; that there was thus no closure

in law and the veil thereof was used to victimize the agitating workmen;

mandatory provision of Section 25 FFA had not been complied with.

4. The Management, before the Industrial Adjudicator pleaded that it

was not an industry; that the dispute raised was not an industrial dispute; that

the reference was bad; it was denied that HRC Nursing Home was a part and

parcel of the Foundation; it was contended that the Foundation, Hospital

and Institute were not necessary parties and had been impleaded only to

harass and no relief could be granted thereagainst; that each of the said was

an independent legal entity; that the petitioners had already filed claim for

payment of gratuity based on closure of establishment and consequential

termination of service and had already been paid gratuity on the said basis

and thus were not entitled to challenge the closure; that the establishment of

HRC Nursing Home was lying closed and was not functioning and no staff

was employed therein; it was denied that the equipment was shifted to the

Hospital or that any employee of HRC Nursing Home had been shifted to

the Hospital; it was however stated that if the Hospital had on its own

employed any ex employees of HRC Nursing Home, the nursing home was

not concerned therewith; that the petitioners could also apply for

appointment with the Hospital.

5. The Industrial Adjudicator in the face of the aforesaid pleadings

framed the following issues:

1. Whether there is closure of Hamdard Research Training and Nursing Home? If so, its effect?

2. Whether respondent no.1 is part and parcel of respondent nos. 2 to 4? If so, its effect?

3. Whether the services of S/Shri Masood Ahmad, Shakeel Ahmad, Bashir Ahmad, Salar Bux, Mohd. Sakir Qureshi and Bhagat Singh have been terminated illegally and / or unjustifiably and if so what relief are they entitled?

6. The Industrial Adjudicator in the impugned award has

found/observed/held -

(i) that each of the petitioners had applied for and received gratuity on the premise of the closure of HRC Nursing Home; though they claimed to have received the said gratuity under protest but could not establish the same;

(ii) that the petitioners admitted that according to the petitioners also the HRC Nursing Home functioned till January, 1983 and did not function thereafter; they could not however explain as to how the work was going on till January, 1983 though they admitted that no patient was admitted in the nursing home after 18 June, 1982;

(iii) that the entire grant for running the HRC Nursing Home were paid by the Foundation and for this reason the equipment and building of the HRC Nursing Home on closure, were surrendered to the Foundation;

(iv) that 80 workers of HRC Nursing Home, upon closure had been paid their dues in full and final settlement including closure compensation;

(v) that though the petitioners had contended that the closure was of a part of the „management‟ but they admitted that HRC Nursing Home was a separate unit although controlled by the Foundation;

(vi) the Supreme Court in Hindustan Steel Ltd. vs. Their Workmen 1973 (43) FJR 192 held that separate unit can be closed;

(vii) motive for closure is not relevant for testing whether the closure is bonafide or not;

(viii) what is to be adjudicated is whether the establishment has closed down in fact;

(ix) The management had succeeded in proving that the establishment of HRC Nursing Home had been closed down definitely and as a matter of fact and that no activity was going on there since then;

(x) that since no unavoidable circumstances beyond the control of the Management for closure had been proved, the petitioners were entitled to retrenchment compensation of one month‟s pay in lieu of the notice, compensation equivalent to 15 days average pay for every completed year of service or any part thereof in excess of six months;

(xi) that payment/tender of such compensation was not a condition precedent for closure and the compensation could be paid subsequently also.

Accordingly, the petitioners were held entitled to closure compensation only.

7. The challenge by the petitioners to the award aforesaid is on the

ground that the Industrial Adjudicator erred in holding the HRC Nursing

Home and the other establishments aforesaid to be separate and independent.

The counsel for the petitioners has invited attention to the Personnel

Regulations of the HRC Nursing Home to contend that under clause 8

thereof the employees of HRC Nursing Home were liable to transfer to any

sister organization under or financed by the Foundation. He has further

contended that the other establishments aforesaid were/are carrying on the

same business and thus it was not a case of closure of business but of closure

of a unit. Reliance is placed on M/s Biddle Sawyer Ltd. Vs. Chemical

Employees Union 2007 LAB. I.C. (NOC) 452 (BOM) where a Division

Bench of the Bombay High Court held that a closure of a place of business

would not amount to closure if the same business is re-started at another

place or transferred to another employer; that the business in such case

remains alive and the source of employment continues to exist. It is further

argued that the HRC Nursing Home, Institute and Hospital were/are all run

by the Foundation and which in turn is controlled by Hamdard Dawakhana

(Wakf) / Hamdard (Wakf) Laboratories. Attention is also invited to the

documents annexed to the writ petition to buttress the said point. It is further

argued that Section 25 FFA was not complied with and only two days notice

was given. Reliance is placed on Maharashtra General Kamgar Union Vs.

Glass Containers Pvt. Ltd 1983 (I) LLJ 326 (Bom) in this regard. Attention

is also invited to Hamdard (Wakf) Laboratory (India) Vs. K.L. Sehgal,

Regional Provident Fund Commissioner 2003 (68) DRJ 567 to show inter-

dependence between the various units aforesaid. Attention is also invited

to the affidavit by way of evidence of the witnesses of the management

before the Industrial Adjudicator to show that only the petitioners have been

victimized. It is contended that in the premises of the HRC Nursing Home,

now the Foundation is carrying on the same business and at other places

also.

8. The counsel for the respondents has invited attention to Poonvasi Vs.

Crown Silk Weaving Industries MANU/MH/0422/1994 laying down that

notice under Section 25 FFA is not a condition precedent for closure and

non- compliance therewith cannot have the effect of rendering the closure

illegal and non-est from its very commencement. It is contended that for

non- compliance, the only liability is for wages for 60 days. I may however

record that the said judgment does not notice the earlier judgment of the

Bombay High Court in Maharashtra General Kamgar Union (supra). The

counsel for the respondents has next contended that since each of the

petitioners had applied for gratuity and received the same on the basis of

closure, they are not entitled to challenge the closure now. It is contended

that the Industrial Adjudicator has taken note of the argument under Section

25 FFA. It is further argued that the surrender of the equipment of the HRC

Nursing Home to the Foundation which was the owner of the equipment, is

of no avail. It is further argued that the judgment supra though relating to

Hamdard but qua the Employee‟s Provident Fund and Miscellaneous

Provisions Act, 1952 is also not relevant since the test applied therein is that

provided under Section 7A of that Act and which has no relevance here. It

is argued that merely because the two units are of the same group is

immaterial. With reference to Section 2 (cc) of ID Act it is contended that

the same admits of part closure also. Attention is invited to Section 2(ka) of

ID Act to contend that an undertaking is severable from the industrial

establishment. Reliance is placed on Workmen of ILTD Company Vs.

ILTD Company AIR 1970 SC 860 in this regard. It is contended that the

only test to be applied is of whether the closure is real and genuine or not;

that a closure would not be genuine where the unit is found to be open and

functional. It is argued that in the judgments cited by the counsel for the

petitioners, the business had been re-started and which is not so in the

present case. It is yet further contended that the test of inter-dependence

under the Provident Fund Act does not apply to closure. It is yet further

contended that the fresh employment even if any in other establishments

aforesaid, does not entitle continuity of employment. Attention is also

invited to Hindustan Steel Ltd Vs. Their Workmen AIR 1973 SC 878 on

what is „undertaking‟. Reference is next invited to Indian Hume Pipe

Company Ltd Vs. Their Workmen AIR 1968 SC 1002 to contend that the

motive of closure is not relevant. It is yet further urged that the argument of

the petitioners that the HRC Nursing Home was closed down merely

because of the petitioners having raised a dispute and the matter being

before the Conciliation Officer is unbelievable.

9. The counsel for the petitioners in rejoinder has sought to distinguish

the judgments relied upon by the counsel for the respondents by contending

that each of them are on a finding of the closure being genuine. He has

contended that the challenge by the petitioners to the award is on the ground

of the closure being not genuine.

10. Though that is the challenge by the petitioners before this Court but

the petitioners have been unable to prove such a case before the Industrial

Adjudicator. The questions aforesaid raised by the petitioners are factual in

nature. This Court is exercising power, not of appeal but of judicial review

over the award of the Industrial Adjudicator. The findings of fact are not to

be interfered with unless shown to be perverse i.e. based on no evidence or

in ignorance of material evidence on record. The onus was on the

petitioners to establish before the Industrial Adjudicator that the closure was

not genuine. The petitioners, now in this petition have to establish that the

Industrial Adjudicator has ignored the relevant evidence in this regard, in

rendering the award. However, no such effort has been made by the

petitioners. The petitioners are unable to show any evidence to the said

effect. The annexures to the writ petition are not shown to have been proved

before the Industrial Adjudicator. This Court cannot appraise evidence

afresh or arrive at its own findings.

11. Be that as it may, I have independently also considered the matter,

including on the basis of the documents annexed to the writ petition. The

factum of closure of business of HRC Nursing Home in which the

petitioners were employed, is not in dispute. The only two questions for

adjudication are, firstly, whether for the reason of HRC Nursing Home being

under the aegis of the Foundation, which under its aegis, also had/has the

Hospital and the Institute, engaged in same / similar activities as the HRC

Nursing Home, it can be said that there is no closure in law; secondly, the

effect of notice of two days only, of closure having been given.

12. As aforesaid, the petitioners also admit the business/activity of HRC

Nursing Home to have closed/shut down. The annexures to the writ petition

show the HRC Nursing Home, Hospital and the Institute, though all under

the aegis of the Foundation, to be separate legal entities having their own

independent business/activity, even though of same/similar nature. The

Personnel Regulations referred to, are of the HRC Nursing Home only and

show that HRC Nursing Home had its own rules/regulations/terms of

employment; it is not as if the terms/conditions of employment were the

same or common in HRC Nursing Home, Hospital and the Institute. Rather,

the annexures to the writ petition show that HRC Nursing Home was set up

with twenty beds only, for carrying out clinical research in specified

diseases. Though the said annexures show that the HRC Nursing Home

was a stepping stone for the Hospital but it is not as if the HRC Nursing

Home was converted into or at any time intended to be converted into

Hospital or Institute. In fact, when the HRC Nursing Home was established,

the Hospital and the Institute were already in existence and building thereof

under construction. A right reserved by an employer to transfer an employee

to another concern, cannot confer any right in the employee to seek

continuity of employment in that concern after closure of business of its

employer.

13. Section 25FFF speaks of closure of business of an „undertaking‟. The

word „undertaking‟ connotes „work‟, „enterprise‟, „project‟ or business

undertaking and is not intended to cover the entire industry or business of

the employer. Even a branch office, project, part of business, department,

depots, division of business, workshop have been held to be „undertaking‟.

The petitioners have not led any evidence of any functional integrity

between the HRC Nursing Home on the one hand and Hospital or Institute

on the other hand. The arguments now even, of the petitioners, are at best

of, each of the HRC Nursing Home, Hospital and Institute being separate

units/undertakings of the Foundation. Even in that case, closure of HRC

Nursing Home would be valid. The findings of the Industrial Adjudicator,

thus cannot be faulted with or interfered in exercise of powers under Article

226 of the Constitution of India.

14. I find the matter to be no longer res-integra. The Supreme Court in

District Red Cross Society vs. Babita Arora AIR 2007 SC 2879 held closure

of the Maternity Hospital, being one of the units of the Red Cross Society, to

be valid, even when the same was challenged on the ground inter alia of

other units viz drug de-addiction center, family planning centre and vikalang

centre of the society continuing to operate. It was held that in the absence of

any functional integrity among units the word „undertaking‟ in Section 25

FFF does not cover the entire business/industry of the employer and covers

an independent unit.

15. As far as the second question aforesaid is concerned, though

undoubtedly there is a conflict between the two judgments of Bombay High

Court i.e., Maharashtra General Kamgar Union (supra) cited by the

counsel for the petitioners and Poonvasi (supra) cited by the counsel for the

respondents but Section 25FFA providing for 60 days notice to the

appropriate Government does not apply to undertakings in which less than

50 workmen are employed. There is no finding of HRC Nursing Home

employing more than 50 workmen. Even before this Court, no material has

been shown in this regard. Even otherwise now after nearly three decades

of closure, it would not be prudent to interfere on the said ground.

16. No merit is thus found in the petition. The same is dismissed. No

order as to costs.

RAJIV SAHAI ENDLAW, J

APRIL 13th, 2012 „M‟.