[Cites 26, Cited by 0]
Kerala High Court
Viking Rubbers vs State Of Kerala on 30 January, 2026
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
FRIDAY, THE 30TH DAY OF JANUARY 2026 / 10TH MAGHA, 1947
WP(C) NO. 1003 OF 2020
PETITIONER/S:
LUNAR RUBBERS,
OLAMATTOM, THODUPUZHA- 685 584, IDUKKI ,REPRESENTED
BY ITS MANAGING DIRECTOR ISAC JOSEPH
BY ADVS.
SRI.E.K.NANDAKUMAR (SR.)
SHRI.K.JOHN MATHAI
SRI.JOSON MANAVALAN
SRI.KURYAN THOMAS
SHRI.PAULOSE C. ABRAHAM
SHRI.M.GOPIKRISHNAN NAMBIAR
RESPONDENT/S:
1 KERALA HEAD LOAD AND TIMBER WORKERS AND FACTORY
WORKERS UNION (KTUC),THODUPUZHA- 685 581, IDUKKI,
REPRESENTED BY THE SECRETARY
2 SABU THOMAS,
NADUPPARAMBIL, KALAKETTY P.O, PINNAKKANADU, KOTTAYAM
-686 508
3 MADHU P.C,
PUTHENPURACKAL, PUTHENPURACKAL, PUTHUPPARIYARAM P.O,
CHITTOOR, THODUPUZHA- 685 581, IDUKKI
4 GEORGE MATHEW,
ONIVELIL, ELAMDHESHAM P.O, THODUPUZHA- 685 581,
IDUKKI
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 2
5 SURESH S KADHALIKKATTU,
MADAKKATHANAM P.O, KAPPU- 686 670, IDUKKI
6 JOSE GEORGE,
KUNNEL, KALAYANTHANI P.O, ALAKKOODU- 685 588 , IDUKKI
7 LABOUR COURT,
ERNAKULAM- 682 031
BY ADVS.
SHRI.TOM MATHEW- R2 to R6
SMT.T.P.RASHMY
SRI.SAJEN THAMPAN
SHRI.DEEPU ANIL
SMT.SAJANA P.S.
SHRI.JOYCE PAUL
SMT.MARY SWEETY PAIVA
SMT.K.N.RAJANI
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
17.12.2025, ALONG WITH WP(C).5381/2020, THE COURT ON 30.01.2026
DELIVERED THE FOLLOWING:
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE MOHAMMED NIAS C.P.
FRIDAY, THE 30TH DAY OF JANUARY 2026 / 10TH MAGHA, 1947
WP(C) NO. 5381 OF 2020
PETITIONER/S:
VIKING RUBBERS,
OLAMATTOM, THODUPUZHA-685584, REPRESENTED BY ITS
MANAGING DIRECTOR JESS ISSAC.
BY ADVS.
SRI.P.RAMAKRISHNAN
SMT.PREETHI RAMAKRISHNAN (P-212)
SMT.ASHA K.SHENOY
SRI.PRATAP ABRAHAM VARGHESE
SRI.C.ANIL KUMAR
RESPONDENT/S:
1 STATE OF KERALA,
REPRESENTED BY THE SECRETARY, DEPARTMENT OF LABOUR
AND SKILLS(A), GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695001.
2 LABOUR COURT,
ERNAKULAM, KOCHI-682031.
3 SECRETARY, KERALA HEAD LOAD AND TIMBER WORKERS AND
FACTORY WORKERS UNION (KTUC),
THODUPUZHA, IDUKKI-685584.
4 SAJU JOSE,
KAITHAVELI HOUSE, MOOLAKKAD PO, THODUPUZHA, IDUKKI-
685595.
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 4
5 SHIBU GEORGE,
THODUKAYIL, KALAKETTY PO, PINNAKKANAD, KOTTAYAM-
685510.
SRI.SREEJITH V.S., SR.GOVT. PLEADER FOR R1
BY ADVS.
SHRI.TOM MATHEW -R4 AND R5
SRI.SAJEN THAMPAN
SHRI.DEEPU ANIL
SHRI.JOYCE PAUL
SMT.K.N.RAJANI
SMT.SAJANA P.S.
SMT.MARY SWEETY PAIVA
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
17.12.2025, ALONG WITH WP(C).1003/2020, THE COURT ON 30.01.2026
DELIVERED THE FOLLOWING:
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 5
"C.R."
MOHAMMED NIAS C.P., J.
.............................................................
W.P(C) Nos.1003 & 5381 of 2020
.............................................................
Dated this the 30th day of January, 2026
JUDGMENT
The petitioners in W.P(C) No.1003/2020, Lunar Rubbers, and
W.P(C) No.5381/2020, Viking Rubbers Pvt. Limited, are private limited
companies engaged in the manufacture of hawai sheets and hawai straps
used in the production of hawai chappals. They contend that the Labour
Union submitted a fresh charter of demands seeking an exorbitant wage
hike amounting to nearly 75% of the existing wages. Though the
petitioners were willing to consider a reasonable increase, repeated
settlement discussions with respondents did not yield any result. It is
contended that certain workmen thereafter resorted to a 'go slow'
agitation, which continued for more than a month and seriously affected
the functioning and viability of the unit.
2. The petitioners in W.P(C) No.1003/2020 submit that during
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 6
the relevant period, the total workforce consisted of only 27 workmen,
out of whom 18 voluntarily resigned from service. With only nine
workmen remaining, who were comparatively inexperienced, it became
impracticable to continue manufacturing operations. Likewise, in W.P(C)
No. 5381/2020 the petitioners submitted that 4 out of 13 workers
employed resigned from service. In these circumstances, and in the
absence of any other viable option, the petitioners decided to close down
the unit with effect from 26.04.2016.
2.1. It is contended that closure notices were issued to the
remaining nine workmen. Out of them, four workmen accepted the
closure compensation and gratuity without raising any objection. In
respect of the remaining workmen, closure compensation under the
provisions of the Industrial Disputes Act, treating them as retrenched for
the limited purpose of compensation, and gratuity were duly offered by
cheques, which were returned through the Union. The petitioners assert
that all statutory authorities were duly informed of the closure of the
factory.
2.2. The petitioners further contend that the first respondent
thereafter raised an industrial dispute alleging that the petitioners had a
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 7
larger workforce at the time of closure and that certain workmen were
illegally terminated under the guise of closure. On failure of conciliation,
the dispute was referred for adjudication, culminating in an award of the
Labour Court dated 04.09.2019, by which the Court held that the
termination of respondents was unjustified and directed their
reinstatement in any of the business units of the petitioners with 50%
back wages, continuity of service, and all consequential benefits.
2.3. The petitioners contend that the Labour Court has arrived at
the above conclusion on an erroneous interpretation of the provisions of
the Industrial Disputes Act, 1947, particularly Sections 2(cc), 25F, and
25FFF. It is submitted that once the factum of closure of an establishment
is admitted or established, the question of retrenchment does not arise at
all. In cases of closure, the only entitlement of the workmen is to closure
compensation as provided under Section 25FFF, and no further relief can
be granted.
2.4. The petitioners submit that the factory licence stood
cancelled, clearly evidencing the closure of the undertaking, and that the
right of an owner to close down an enterprise on account of losses or
non-viability is a recognised statutory and constitutional right. Reliance
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 8
is placed on judicial precedents to contend that when closure is
established, it is not open to the Tribunal to examine the motives of the
management or interfere with the decision to close down the
establishment.
2.5. It is further contended that the distinction between
"closure" and "retrenchment" is well settled. While retrenchment
requires strict compliance with the conditions prescribed under Section
25F, closure under Section 25FFF entitles the workmen only to notice and
compensation as if they were retrenched. The validity of closure does not
depend upon payment of compensation or service of notice. In the
present case, the respondents 2 to 6 were issued closure notices
informing them of the decision to close the establishment with effect
from 26.04.2016, and therefore, there was no retrenchment but only a
lawful closure.
2.6. The petitioners further contend that during closure, the
workmen are not entitled to any relief beyond closure compensation and
gratuity, both of which were duly offered. It is urged that the Tribunal
failed to appreciate that the other establishments referred to in the claim
statement are distinct legal entities, separately registered under the
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 9
applicable enactments, and that there is no functional integrality
between the closed unit and those establishments.
2.7. It is also contended that the other establishments were not
parties to the industrial dispute, and therefore, no direction could have
been issued to reinstate respondents 2 to 6 in those establishments.
Reliance is placed on Section 18 of the Industrial Disputes Act to contend
that awards are binding only on the parties specified therein.
2.8. The petitioners submit that even if the management owns or
controls other establishments, there is no provision in the Industrial
Disputes Act creating a legal obligation to provide employment to
workmen of a closed establishment in another unit of the same
management. In the absence of such a statutory mandate, the direction
for reinstatement issued by the Tribunal is contended to be wholly
without jurisdiction and unsustainable in law.
3. The respondents Nos 2 to 6, in the counter affidavit filed in
W.P(C) No. 1003/2020 contend that the petitioner company, founded in
the year 1982, is only one among several interconnected establishments
run by the same family members, including Lunar Rubbers, Viking
Rubbers, Neo Rubbers, Polymer Kerala Private Limited, Manacaud Rubber
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 10
Industries, Vijay Polymer Industries, Amala Polymers and Mountain View
Industries. It is asserted that all these establishments are under common
ownership, management, and control, with a common head office, and
that workers were routinely transferred from one unit to another
depending upon the managerial requirements. The respondents allege
that the formation of multiple entities was intended to avoid statutory
and financial liabilities, and that the petitioner has taken inconsistent
and contradictory stands regarding its relationship with these sister
concerns solely to evade responsibility towards the workmen.
3.1. The respondents further contend that they were members
of a recognised trade union and that their service conditions were
governed by long-term settlements. Upon the expiry of the last
settlement on 31.03.2015, the union sought revision of wages and
benefits, which was rejected by the management. When conciliation
proceedings were initiated before the Regional Joint Labour
Commissioner, the petitioner, during the pendency of such proceedings,
abruptly issued a closure notice with effect from 26.04.2016. It is pointed
out that the closure notice issued to the workmen did not disclose any
reason, while the notice sent to the Government cited "stiff and
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 11
unhealthy competition" as the reason, thereby exposing the lack of bona
fides and the contradictory nature of the alleged closure.
3.2. The respondents contend that the so-called closure was
never genuine or bona fide. They assert that at the time of the alleged
closure, there were 37 workmen and not 27 as claimed by the petitioner.
Of them, only nine workmen, including the respondents, who were union
members, were selectively targeted and retrenched, while the remaining
workers were retained and transferred to the petitioner's sister concerns.
The respondents maintain that the retrenchment was a colourable
exercise of power intended to victimise union members who resisted the
arbitrary dictates of the management.
3.3. The respondents deny the petitioner's allegation that
statutory compensation was refused without justification, contending
that the very retrenchment was illegal, mala fide, and vitiated by non-
compliance with the mandatory provisions of Chapters VA and VB of the
Industrial Disputes Act. They assert that the Labour Court, after
considering both oral and documentary evidence, rightly concluded that
the establishments were interconnected and that the plea of closure was
a sham, and consequently directed reinstatement with continuity of
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 12
service, 50% back wages, and consequential benefits.
3.4. The respondents further contend that the petitioner never,
in fact, ceased its activities. Reliance is placed on official records from the
Ministry of Corporate Affairs, proceedings of local authorities, rent
agreements, balance sheets, auditor reports, and affidavits sworn by the
Managing Director, all of which, according to the respondents,
conclusively demonstrate that business operations continued even after
the alleged date of closure. These documents are relied upon to contend
that the plea of closure is demonstrably false and that the petitioner has
suppressed material facts before this Court.
3.5. It is also contended that the petitioner company has always
been financially viable and profitable, and that the plea of loss or
inability to continue business is entirely fabricated. The respondents
submit that they have been unemployed for several years as a result of
the petitioner's illegal actions, that they are facing severe economic
hardship, and that the writ petition is a vexatious attempt to delay
implementation of a just and lawful award.
4. Heard Sri. E.K Nandakumar, the learned Senior Counsel
appearing for the petitioners, instructed by Sri. Jai Mohan in W.P(C)
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 13
No.1003/2020 and Sri. P. Ramakrishnan in W.P(C) No. 5381/2020 and
Sri.Sreejith V.S., the learned Senior Government Pleader and Sri. Tom
Mathew for the party respondents in both cases.
5. It is contended on behalf of the petitioners that the Tribunal's
order to reinstate the respondents in other units is not proper as it is well
settled that if the entire establishment of the employer is not closed
down but only a unit or undertaking is closed down which has no
functional integrity with other units or undertaking the provisions of
Section 25FFF of the Industrial Disputes Act will get attracted and the
workmen are only entitled to compensation as provided in Section 25FFF
of the Act which has to be calculated in accordance with Section 25F of
the Act.
5.1. It is also argued that a plain reading of the provisions
contained in Section 25 FF and Section 25FFF of the 1947 Act leaves no
manner of doubt that Section 25F thereof is to apply only for the purpose
of computation of compensation and for no other. The expression, as
used in these sections, merely envisages computation or compensation in
terms of Section 25F of the 1947 Act and not other consequences flowing
therefrom. Once a valid transfer or a valid closure comes into effect, the
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 14
relationship of employer and employee does not survive and ceases to
exist. It is also asserted that once it is held that Section 25FFF will have no
application in a case of transfer of an undertaking or closure thereof as
contemplated in Sections 25F and 25FFF of the 1947 Act, the logical
corollary would be that in such an event, Section 25H will have no
application. The distinction is that in the case of retrenchment
simpliciter, a person loses his job as he becomes surplus and in case of
revival of the chance of employment, is given preference in case new
persons are proposed to be employed by the said undertaking, but in the
case of transfer or closure of the undertaking, the workman concerned is
entitled to receive compensation only.
5.2. It is also argued that where the factum of closure is admitted
or established, it is not for the Tribunal to go into the question as to the
motive of the management to close down the establishment. The Hon'ble
Apex Court has clearly held in Workmen of the Straw Board
Manufacturing Co. Ltd v. Straw Board Manufacturing Co. Limited ((1974
KHC 711):1974 (1) Lab LJ (499)) that the workmen cannot question the
motive of the closure once closure has taken place unless the
establishment is working in some shape or form or at a different place
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 15
and the closure is only a ruse or pretence. Once the court comes to the
conclusion that there is closure of an undertaking, the motive of the
employer ordinarily ceases to be relevant. It is also held in Indian Hume
Pipe Co. v. Their Workmen (1969 (1) Lab LJ 242) that such a closure cannot
give rise to an industrial dispute.
5.3. Another argument raised by the learned counsel for the
petitioner is that the reference is made to decide on whether the
retrenchment is justifiable or not, and the Tribunal thereby has no power
to consider the legality of the closure. It is held by the Hon'ble Supreme
Court in Pottery Mazdoor Panchayat v. Perfect Pottery Co. Ltd and
Another (1979 3 SCC 762) that the Tribunal has no power to go behind the
reference and inquire into the question whether the closure of business
which was in fact effected was decided upon for reasons which were
proper and justifiable.
6. Therefore, the central issue that arises for consideration is
whether the reference made under Section 10 of the Industrial Disputes
Act, 1947, was properly framed, having regard to the true nature of the
dispute, and whether the Labour Court/Tribunal acted within the limits
of the reference while passing the impugned award.
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 16
7. The question for reference in the subject matter of W.P(C)
No.1003/2020 is (i) whether the retrenchment of Sri Suresh, Sri. Madhu,
Sri. Jose George, Sri. Sabu Thomas and Sri. George Mathew by the
management is justifiable? (ii) If not, what is the remedy the workers are
entitled to?
8. The question for reference in W.P(C) No.5381/2020 is (i)
whether the retrenchment of Sri. Saju Jose, Sri. Shibu George, by the
management of Viking Rubbers (P) Ltd., legal and justifiable? (ii) If not,
what is the remedy the workers are entitled to?
9. It was averred in the claim statement filed before the Labour
Court by the respondent Union that while settlements on hiking wages
and other benefits were ongoing, the Lunar Rubbers Limited and Viking
Rubbers Pvt. Limited were declared as closed with effect from 26.04.2016,
and the closure notice was issued on 23.03.2016. It is their specific case
that the closure of the establishment was not bona fide, and only 9
employees were terminated, and others were transferred and posted at
the Management's unit at Manacaud.
10. It is the consistent case of the Management that the unit was
closed and the compensations were awarded, but only a few employees
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 17
acknowledged it, and the reference was wrongly made by the
Government as retrenchment, whereas there is no retrenchment but only
closure, and since the real dispute is not referred, the Court is not
competent to adjudicate the same. The Labour Court decided upon
retrenchment by considering the closure as an incidental matter and
concluded that there were unfair labour practices and that the closure
was a sham, and ordered the management to reinstate them in service in
any of the units of the management establishment.
11. It is primarily important to look into the scheme of Section
10 which makes it clear that the function of the appropriate Government
in making a reference is purely administrative in character and not
judicial or quasi-judicial. As held by the Patna High Court in S.K.G. Sugar
Ltd. v. Ali Hassan (1956 Supreme (Pat) 137):1957 (2) LLJ 513) that the only
condition imposed by the Act for making the reference is the opinion of
the appropriate Government that an industrial dispute exists or is
apprehended. No other condition is imposed for the exercise of the
statutory power. The same view was later reiterated in Western India
Match Co. Ltd. v. Western India Match Co. Workers' Union (AIR 1970 SC
1205). The sole statutory precondition for a valid reference is the
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 18
formation of an opinion by the appropriate Government that an
industrial dispute exists or is apprehended; the actual existence of such a
dispute is not required to be conclusively established at that stage.
However, while the Government is not expected to adjudicate upon the
merits of the dispute, it is nevertheless incumbent that the reference
correctly encapsulates the real and foundational controversy between
the parties. Where the core dispute pleaded by the workmen is that the
alleged closure of the establishment is sham, colourable or illusory, but
the reference is framed on a different and narrower premise, on
retrenchment and its remedy, the reference fails to reflect the true lis
and suffers from a jurisdictional defect going to its root. A sham closure
raises serious and complex questions of fact and law, requiring
adjudication by a competent Tribunal, and such questions cannot be
presumed away or indirectly answered under the guise of a differently
framed reference. As held in M/s. Ariane Organochem Pvt. Ltd. v. Wyeth
Employees Union [(2015) 7 SCC 561):(2015 (145) FLR 985 (SC)], the question
whether a closure or transfer is genuine or sham cannot be determined
by the administrative authority while exercising power under Section 10,
and must necessarily be left for adjudication by the Tribunal.
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 19
12. Once a reference is made, the jurisdiction of the Labour
Court or Industrial Tribunal is strictly confined to the points of dispute
specifically referred and matters incidental thereto, and the Tribunal is
not free to enlarge, amend, substitute, or re-characterise the dispute on
its own assessment of the pleadings or evidence. This limitation flows
directly from Section 10(4) of the Act, which mandates that the Labour
Court or Tribunal "shall confine its adjudication to those points and matters
incidental thereto". The position laid down in Delhi Cloth and General Mills
Co. Ltd. v. Workmen and Others (1966 SCC OnLine SC 83) and reiterated in
Tata Iron and Steel Co. Ltd. v. State of Jharkhand (2013 IV LLJ 431 SC)
Rajya Gramin Vikash Sansthan Adhartal v. State of M.P. (1991 (63) FLR
222), Indo-Graphic Art & Machinery Co. v. Presiding Officer, Labour Court
(1991 (78) FJR 67: 1990 Supreme (P&H) 845), makes it abundantly clear
that an adjudicating authority cannot enlarge the scope of the reference
or decide foundational issues in a manner that cuts at the root of the
dispute as referred. "Incidental matters" cannot cut at the root of the
principal dispute nor substitute it altogether.
13. In the present case, the Labour Court, instead of confining
itself to the reference as made, proceeded to adjudicate upon questions of
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 20
reinstatement and continuity of service, thereby implicitly deciding
issues relating to sham closure which were never referred for
adjudication. This amounts to the Labour Court substituting its own
formulation of the dispute in place of that of the appropriate
Government, which is wholly impermissible. Jurisdiction cannot be
conferred by consent, acquiescence, or by the Labour Court's or
Tribunal's perception of substantial justice, as held by the Rajasthan High
Court in Suresh Chandra v. General Manager, RSBC Corporation (2002 (94)
FLR 843:2002 SCC ONLINE RAJ). The Labour Court, being a creature of the
statute, any adjudication beyond the reference is coram non judice. It is
trite law that the Labour Court or Industrial Tribunal derives its
jurisdiction strictly from the terms of reference and cannot travel beyond
or correct a defective reference; consequently, once the reference itself
was non est in law, the Labour Court lacked inherent jurisdiction to
adjudicate upon the matter. In Sindhu Resettlement Corporation Ltd. v.
Industrial Tribunal of Gujarat (1968 AIR (SC) 529), the Supreme Court
held that where reinstatement was never the subject of demand, a
reference touching reinstatement itself would be incompetent. Similarly,
where the dispute relates to closure or alleged sham closure, but the
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 21
reference is limited to the justification of termination, the Labour Court
has no jurisdiction to go behind the factum of closure unless the
reference so permits. The distinction between the existence of
jurisdiction and the exercise of jurisdiction is crucial; once jurisdiction is
absent, the entire adjudicatory exercise becomes futile. This principle has
been consistently reiterated in cases relating to closure, lock-out and
retrenchment, including Workmen of Indian Leaf Tobacco Development
Co. Ltd. v. Indian Leaf Development Co. Ltd. (1970 (1) LLJ 34 3: 1970 AIR
(SC) 860) and Walford Transport Ltd. v. State of West Bengal (1977 (35) FLR
373: 1961 SCC ONLINE CAL 111).
14. The argument advanced on behalf of the respondents that
the Labour Court was entitled to examine whether the closure was a
"scam" or a sham also does not advance their case in the context of the
present reference. As held in Pottery Mazdoor Panchayat (supra), unless
the reference itself calls upon the Tribunal to decide whether there was
in fact a closure or whether the alleged closure was only a lockout or
pretence, the Tribunal has no jurisdiction to travel beyond the admitted
or established fact of closure and to adjudicate upon its propriety or bona
fides. The proper course in cases where workmen allege that there was in
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 22
fact no closure, but only an illegal lockout or retrenchment, is for the
dispute to be appropriately framed and referred by the Government.
15. A consistent line of precedents as in Workmen of Straw Board
Manufacturing Co. Ltd. (supra), Pottery Mazdoor Panchayat (supra), The
Tata Oil Mills Co. Ltd. v. The Workmen of the Kanitta Establishment (1980
LAB I.C. 355) (Kerala High Court), and in Maruti Udyog Ltd. v. Ram Lal
[(2005) 2 SCC 638] and District Red Cross Society v. Babita Arora [(2007) 7
SCC 366], clearly demarcates the distinction between "retrenchment" and
"closure" under the Industrial Disputes Act. Once the factum of closure of
an undertaking, or of a unit lacking functional integrality with other
units, is admitted or established, the employer-employee relationship
comes to an end by operation of law. In such a situation, the only
statutory entitlement of the workmen is to notice and compensation
under Section 25-FFF, computed "as if" retrenched, solely for the purpose
of quantification and not for importing the substantive incidents of
retrenchment such as reinstatement, continuity of service, back wages or
preferential re-employment.
16. Equally well settled is the principle that, where a closure is
real and genuine, the Tribunal/Labour Court has no jurisdiction to sit in
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 23
judgment over the propriety, justification or wisdom of the employer's
decision to close down the undertaking. As laid down in Pottery Mazdoor
Panchayat (supra) and Tata Oil Mills (supra) and reaffirmed in Workmen
of Straw Board Manufacturing Co. Ltd., (supra) the motive of the
employer ordinarily ceases to be relevant once closure in fact is
established, unless it is shown that the so-called closure is a mere
pretence and that the establishment continues to function in some form
or at another place. Even in such cases, the Tribunal's jurisdiction is
circumscribed by the terms of reference.
17. The award passed pursuant to such a defective and
jurisdictionally infirm reference is therefore a nullity, being one
rendered without authority of law, irrespective of the merits of the
findings recorded therein. In exercise of jurisdiction under Article 226 of
the Constitution of India, the High Court is entitled to examine not
merely the correctness of the award but the very validity of the
reference, and where it is found that the question referred was not
proper in the facts of the case and the consequential award are liable to
be quashed as illegal.
18. In Indian Tourism Development Corporation v. Delhi
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 24
Administration and Others (MANU/DE/0297/1982), a Full Bench of the
Delhi High Court held that where the order of reference proceeds on an
assumption, such as the existence of a lockout, and confines the
adjudication to the entitlement of wages for the alleged period of lockout,
the Industrial Tribunal has no jurisdiction to enlarge the scope of the
reference and decide the foundational question whether there was in fact
a closure and not a lockout. The Court categorically ruled that deciding
whether the establishment was closed or whether there was a lockout
would amount to deciding the very foundation of the dispute mentioned
in the order of reference, a jurisdiction not vested in the Tribunal under
the Industrial Disputes Act. The Full Bench further held that even by
consent or concession of parties, the Tribunal cannot assume such
jurisdiction, as its authority is strictly confined to the terms of reference
under Section 10(4) of the Act. Where the real and predominant dispute,
namely, whether there was at all a lockout or a closure, has not been
referred, the order of reference itself becomes vulnerable and is liable to
be quashed, leaving it open to the appropriate Government to make a
fresh reference properly reflecting the true dispute.
19. Similarly, in Organon India Limited v. State of West Bengal
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 25
and Others ((2003 (99) FLR 888 (Cal):(MANU/WB/0168/2003), the Calcutta
High Court reiterated that the Industrial Tribunal is a creature of statute
with limited jurisdiction and is not free to frame issues dehors or beyond
the order of reference. It was held that where the reference presupposes
termination by the management, the Tribunal cannot substitute its own
view by introducing a fundamentally different issue such as
abandonment of service, as such an issue cannot be treated as incidental
to termination. The Court emphasized that when the order of reference
does not accommodate the real controversy between the parties and is
wrongly framed, the Tribunal's attempt to adjudicate by recasting the
dispute amounts to a clear jurisdictional error. The High Court further
held that a defect of this nature goes to the root of the matter and
renders the proceedings a nullity, entitling the affected party to invoke
writ jurisdiction at any stage, even during the pendency of proceedings
or after the passing of the award. In such circumstances, the proper and
legally permissible course is not for the High Court to reframe or enlarge
the reference itself, but to strike down the defective order of reference
and the consequential award, and to remit the matter to the appropriate
Government for reframing the issues in a manner that truly reflects the
2026:KER:7635
real dispute, thereby keeping the field of adjudication open and ensuring
substantial justice.
20. The manner in which the Calcutta High Court addressed and
rejected the objection of prejudice to workmen while interfering with a
fundamentally misconceived reference, and the reasoning that equitable
considerations cannot override jurisdictional defects in the framing of a
reference, is lucidly explained in paragraphs 16 to 18 of Organon India
Limited v. State of West Bengal and Others (supra) which are extracted
hereunder:
"16. He lastly cited 1993(2) CHN 266 (Aviquipo of India v. State
of West Bengal and Ors.) to establish that if the Interference is
caused by the Writ Court it will cause injustice to the workmen
as against the management who are not in equal bargaining
position. I am sorry to say that such submission cannot be
accepted on a question of framing issues and particularly when
the 'management' itself took the pain of bringing the cause
before the Writ Court during the pendency of the proceeding
without waiting for final disposal giving clear explanation
about the fate of the result either way. Therefore, such action
on the part of the 'management' is tested as bonafide by the
Writ Court. The Tribunal cannot substitute its view holding that
there was an abandonment of service by the 'workman' in the
place and instead of order of reference that termination of
service by the management was Justified or not would have
obviously been a jurisdictional error which is the basic issue of
consideration by this Court.
17. Hence, balance of convenience will be sub-served if the order
2026:KER:7635
of reference is striked out by giving direction upon the
appropriate Government to refer the matter back keeping the
rooms open for adjudication by the Tribunal in respect of
abandonment of service vis-a-vis the termination by the
management and that too within a specified period so that the
Tribunal will be in a position to proceed with the substantial
justice without any wastage of time as expeditiously as
possible.
18. Thus, order of reference is striked out by this Court with a
direction upon the tribunal to return the file to the appropriate
Government to reframe the issues at par with the judgment and
order passed by this Court within a period of one month from
the date of communication of this order positively and send the
matter to the Industrial Tribunal forthwith thereafter and in
such case it is expected that the Tribunal will proceed as
expeditiously as possible with this matter immediately after
getting the order of reference without allowing unnecessary
adjournments for the sake of justice."
Given the above positions of law, the order of references in the
instant cases are quashed. The impugned award passed pursuant to such
defective reference is also set aside. The Labour Court/Tribunal is
directed to forthwith return the entire records of the case to the
appropriate Government. The appropriate Government shall, within a
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 28
period of two months from the date of receipt of a copy of this judgment,
reconsider the matter and reframe the reference so as to reflect the real
dispute between the parties, in accordance with law and in the light of
the observations contained herein, and thereafter forward the same to
the competent Industrial Tribunal. Upon receipt of the fresh order of
reference, the Tribunal shall proceed with the adjudication expeditiously
and pass orders within three months from the date of receipt of the
reference.
The writ petitions are allowed.
Sd/-
MOHAMMED NIAS C.P.
JUDGE
okb/
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 29
APPENDIX OF WP(C) NO. 1003 OF 2020
RESPONDENT EXHIBITS
EXHIBIT R2(a) The true copy of the Closure Notice sends
to the 3rd Respondent by the petitioner
dated 23/03/2016
EXHIBIT R2(b) The true copy of the Closure Notice sends
to The Secretary to Government, Labour and
Skills Department , Government of Kerala by
the petitioner dated 23/03/2016
EXHIBIT R2(c) The screenshot available from the
petitioner company's website showing the
different sister establishments of the
Petitioner Company
Exhibit R2(e) True copy of the minutes of Thodupuzha
Municipality bearing file number T4/1063/17
dated 03.02.2017
Exhibit R2(f) True copy of the rent agreement entered
into between the Managing Director of Lunar
Rubbers Private Limited to 10.05.2017
Exhibit R2(g) True copy of the Balance Sheet along with
other statements of Lunar Rubbers Private
Limited dated 31.03.2017
Exhibit R2(h) True copy of the Independent Auditors'
Report and Balance Sheet along with other
statements of Lunar Rubbers Private Limited
dated 31.03.2018
Exhibit R2(i) True copy of the Affidavit sworn by the
Managing Director of Lunar Rubbers Private
Limited dated 12.11.2020
Exhibit R2(d) True copy of the Company Information data
obtained from the Ministry of Corporate
Affairs dated 10.12.2025
PETITIONER EXHIBITS
EXHIBIT P5 TRUE COPY OF THE AWARD PASSED BY THE 7TH
RESPONDENT DATED 4-9-2019 IN I.D NO.
31/2016.
EXHIBIT P4 TRUE COPY OF THE WRITTEN STATEMENT DATED
20-06-2017 FILED BY THE PETITIONER BEFORE
THE 7TH RESPONDENT IN I.D NO. 31/2016
EXHIBIT P3 TRUE COPY OF THE CLAIM STATEMENT DATED 21-
03-2017 FILED BY THE RESPONDENT2 TO 6
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 30
BEFORE THE 7TH RESPONDENT IN I.D NO.
EXHIBIT P2 TRUE COPY OF THE ORDER OF THE DIRECTOR OF
FACTORIES AND BOILERS THODUPUZHA CANCELLING
THE FACTORY LICENCE ISSUED TO THE
PETITIONER (DATED 3-2-2017)
EXHIBIT P1 TRUE COPY OF THE CLOSURE NOTICE AND CHEQUE
OFFERING CLOSURE COMPENSATION TO THE 3RD
RESPONDENT WAS MARKED AS EXT M 49 BEFORE
THE 7TH RESPONDENT(DATED 23-3-2016
2026:KER:7635
W.P(C) Nos.1003 & 5381 of 2020 31
APPENDIX OF WP(C) NO. 5381 OF 2020
RESPONDENT EXHIBITS
EXHIBIT R4(c) True copy of the Balance Sheet along with
other statements of Viking Rubbers Private
Limited dated 31.03.2017
EXHIBIT R4(a) True copy of the Company Information data
obtained from the Ministry of Corporate
Affairs dated 15.12.2025
EXHIBIT R4(b) True copy of the closure notice issued by
the Petitioner to the 5th Respondent dated
22.03.2016
EXHIBIT R4(d) True copy of the Independent Auditors'
Report and Balance Sheet along with other
statements of Viking Rubbers Private
Limited dated 31.03.2018
PETITIONER EXHIBITS
EXHIBIT P5 TRUE COPY OF PROOF AFFIDAVIT DATED
25.9.2018 SUBMITTED BY SRI.JACOB P.P. IN
I.D.NO.42/2016.
EXHIBIT P1 TRUE COPY OF ORDER DATED 03.02.2017 ISSUED
BY THE DIRECTOR OF FACTORIES & BOILERS.
EXHIBIT P7 TRUE COPY OF AWARD DATED 4.9.2019 PASSED BY
THE LABOUR COURT, ERNAKULAM IN
I.D.NO.42/2016.
EXHIBIT P6 TRUE COPY OF AFFIDAVIT DATED 26.2.2018
FILED BY THE 4TH RESPONDENT IN
I.D.NO.42/2016.
EXHIBIT P2 TRUE COPY OF GOVERNMENT ORDER DATED
26.11.2016 ISSUED BY THE 1ST RESPONDENT.
EXHIBIT P3 TRUE COPY OF CLAIM STATEMENT DATED
11.5.2017 FILED BY THE WORKMEN IN
I.D.NO.42/2016.
EXHIBIT P4 TRUE COPY OF WRITTEN STATEMENT DATED
20.9.2017 FILED IN I.D.NO.42/2016.
