Madras High Court
Unknown vs The Additional Chief Secretary To ... on 24 January, 2025
2025:MHC:232
W.P.No.6019 of 2023 etc
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on 29.10.2024
Pronounced on 24.01.2025
CORAM
THE HONOURABLE MS.JUSTICE R.N.MANJULA
W.P.Nos.6019 of 2023, 29623, 29626, 29628, 29631, 30786, 29746,
29766, 24683, 24684, 27669, 27671, 27674, 27676, 27679, 28122,
28124, 28125, 28126, 28129, 28130, 28132, 28133, 28141, 28145,
28146, 28527, 28529, 28533, 28535, 28537, 28540, 29210, 29211,
29212, 29213, 29215, 29217, 29220, 29221, 29224, 29229, 29400,
29466, 29469, 29479, 29482, 29483, 29490, 29492, 29555, 29611,
29616, 29618, 29620, 29621 and 29622 of 2024 and
W.M.P.Nos.6037, 6039 and 6040 of 2023
W.P.No.6019 of 2023
1.K.Kumar
2.P.Suresh
3.G.Latchumi Narayanan
4.K.Boopal
5.K.Kalaiyarasan
6.M.Saminathan
7.A.Ranjith Ramaraj
8.Palani Muthu
9.R.Manikandan
10.R.Arun Kumar
11.B.Saminathan
12.M.Tamizh Vendhan
13.R.Dinesh Kumar
Page No.1 of 48
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14.M.K.Karthikeyan
15.S.Lingeswaran
16.V.Dhana Sekaran
17.V.Venkateshwaran
18.M.Arulmani
19.P.Karthi
20.R.Govindaraju
21.S.M.Shahul Hameed Badusha
22.L.Velavan
23.N.Venkatesan
24.S.Dinesh Babu
25.A.Jamal Mohideen
26.S.Annamalai
27.N.Sudalaimani
28.M.Nagapandiyan
29.N.Balaji
30.G.Madasamy
31.A.Ramesh
32.A.Anbu
33.R.Rukmangathan
34.M.Krishna Moorthy
35.K.Madhan Mohan
36.M.Mohanraj
37.C.Samuel Billikiraham
38.E.Ramesh
39.P.Gopala Krishnan
40.R.Selvakumar
41.A.Ajay Stalin Prabu
42.S.Gopalakrishnan
43.I.Ezhil Selvan
44.T.Hariharan
45.M.Nalayiram
46.G.Shanmugavel
47.R.Ravichandran
48.M.Gopinath
Page No.2 of 48
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49.K.Manikandan
50.G.Arun
51.B.Shankar
52.G.Dhivakar
53.K.Bala Krishnan
54.K.Manikandan
55.K.Thangaraja
56.S.Ganesh
57.S.Kumar
58.E.Raghuram
59.R.Soundrapandi
... Petitioners
Vs.
1.The Additional Chief Secretary to Government,
Labour Welfare and Skill Development (A2)
Department,
Government of Tamil Nadu,
Fort St.George, Chennai - 600 009.
2.The Management,
Ford India Private Limited,
S.P.Kovil Post,
Maraimalai Nagar,
Chengalpattu 603 204. ... Respondents
Prayer: Writ Petition filed under Article 226 of the Constitution of India,
to issue a Writ of Certiorarified Mandamus, to call for the records of the
1st respondent in G.O.Ms.No.171 dated 28.12.2022 and quash the same
and direct the 2nd respondent to pay wages and other benefits to the
petitioners as if there is no closure and as if they are continuing in service
till the disposal of the Writ Petition.
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For Petitioners : Mr.S.Kumaraswamy
For Respondents : Mr.P.Kumaresan, AAG, assisted by
Mrs.M.Jayanthi, AGP for R1
Mr.S.Ravi, Senior Counsel for
Mr.Vinodkumar for R2
COMMON ORDER
The Writ Petition in W.P.No.6019 of 2023 has been filed
challenging the Government Order issued by the first respondent in
G.O.Ms.No.171, Labour Welfare and Skill Development (A2)
Department dated 28.12.2022, through which, permission was given by
the Government to close down the second respondent's Chennai Plant of
Ford India Private Limited with effect from 31.01.2023 and quash the
same.
2. The rest of the Writ Petitions have been filed challenging the
order passed by the learned Presiding Officer of the Labour Court,
Kanchipuram made in I.A.Nos.1 to 1 of 2024 dated 26.06.2024 in the
industrial dispute filed by the workmen and quash the same.
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3. Heard Mr.S.Kumaraswamy, learned counsel for the petitioners,
Mr.P.Kumaresan, learned Additional Advocate General, assisted by
Mrs.M.Jayanthi, learned Additional Government Pleader for R1 and
Mr.S.Ravi, learned Senior Counsel for R2 in all the Writ Petitions and
perused the materials available on record.
4. The case of the petitioners are as follows:
The petitioners who were working under the second respondent
Company have alleged that they have been illegally retrenched by the
second respondent and the Government has issued the impugned
Government Order permitting the second respondent to close down the
Chennai Plant without following the due procedure and without giving a
due opportunity of hearing to the petitioners who are the workers of the
second respondent. It is further alleged that the Government Order is
unjust and illegal and it is contrary to Section 25(O) (1 & 2) of the
Industrial Disputes Act r/w Rule 61(B)(2) of the Industrial Disputes
Rules. Since proper notice has not been given in a prescribed manner,
there is a violation of principles of natural justice.
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4.1. The petitioners were served with the copy of the application
seeking permission itself only on 19.12.2022 on which date, they were
given with personal hearing. Without hearing the petitioners on the
papers submitted by the second respondent to the first respondent, it has
been wrongly stated that the petitioners' submissions were heard on
19.12.2022. In fact on 19.12.2022 nothing had taken place because the
petitioners were given with the copy of the application seeking
permission for closure itself only on the said date.
4.2. The Government Order relied upon the settlement dated
30.09.2022 and its acceptance of 97% of the workers. But, the same was
contrary to the law on hands. Hence, the ratio decidendi laid down in the
case of M/s.Oswal Agro Furane Ltd., Vs. Oswal Agro Furane Workers
Union and Ors, reported in 2005 (3) SCC 224 should be followed in
order to hold that the petitioners were illegally retrenched. The
petitioners are entitled to the wages and other benefits as per Section
25(O)(6) of the Act.
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5. Mr.S.Kumaraswamy, the learned counsel for the petitioners
submitted that the second respondent Management did not give any
notice for closure to the employees. On the notice given by the
Government, the petitioners went and participated in the proceedings
seeking permission for closure. The petitioners had raised a 2A dispute
before the Labour Court and the same is pending. The R4 application
filed by the second respondent seeking permission for closure of the
Chennai Plant did not have the signature of the second respondent and
the said fact is revealed through a copy furnished to the petitioners. This
is in violation of the Rules.
5.1. The petitioners and 58 others have not given any authorisation
to the Union to conclude the settlement. So the settlement dated
30.09.2022 is not in accordance with Rule 25 of the Act. The settlement
under Section 18(1) of the Act would only bind the parties to the
agreement. The settlement under Section 12(3) of the Act was
deliberately avoided as the Government could not endorse the terms of
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the settlement as fair and just and it is not in compliance with Chapter
V(B) of the Act.
5.2. On 05.09.2022, the Management wanted the petitioners and
others to give resignation letters by consenting to the severance
settlement package. By letter dated 17.10.2022, the petitioners and others
requested the Management to provide employment by stating that they
did not accept the severance package. On 19.10.2022 the Management
informed that they have signed the settlement dated 30.09.2022 and
asked the petitioners to collect the dues as per the settlement. On
27.10.2022 the Management wrote a letter to the petitioners stating that
the settlement will bind on them. As the Management has not complied
Chapter V(B) of the Act, the Government Order permitting closure is not
legal.
5.3. Even in the reply given by the Management on 24.11.2022, for
the petition filed by the petitioners on 10.11.2022 nothing has been stated
about the application submitted for closure. The procedure contemplated
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under Section 25(O) has not been complied properly. The application
submitted by the second respondent did not even contain the date of
submission and the settlement dated 30.09.2022 has been made even
prior to obtaining permission for closure. The petitioners have returned
the settlement towards gratuity through a Demand Draft. When the
petitioners were asked to appear for personal hearing on 19.12.2022, they
were served with undated R4 application with an annexure running 358
pages. Hence, they could not effectively participate in the hearing.
5.4. On 22.12.2022, the petitioners have written a letter seeking
further time. But without providing any opportunity, the Government
Order has been passed on 28.12.2022. As the notice was given to the
petitioners about R4 application only on 19.12.2022, the date of the
application should be considered as 19.12.2022 and so, the application
itself has not been filed within the prescribed time as per Section 25(O)
of the Act. When the petitioners had challenged the non-employment as
early as on 10.11.2022 and the conciliation proceedings were held in this
connection, they ought to have served with notice about the closure
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application. R4 form submitted should be in compliance with Section
61(B) (2). But, the same was not done.
5.5. The petitioners' non-employment is contrary to Section 25(O)
and Section 25(N) of the Act. Hence, the petitioners are deemed to be in
employment as per Section 25(O)(6) of the Act and they are entitled to
the wages and other benefits as though the factory has not been closed.
Despite in R4 application in column No.26 it has been stated that the
office bearers of the Union should have their exit and the date for the
same has been extended to 31.12.2022, the said fact was not stated in the
application dated 30.09.2022. Hence, in all fairness, the Government
Order in G.O.Ms.No.171 dated 28.12.2022 is liable to be set aside.
5.6. The learned Presiding Officer of the Labour Court,
Kanchipuram, ought to have found the termination dated 30.09.2022 is
retrenchment and it is contrary to Section 25(N) of the Act. Chapter V(B)
of the Act is applicable to the present case and the termination contrary to
Section 25(N) is illegal. The settlement has been arrived under Section
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18(1) and not under Section 12(3). The issue which has to be given with
final determination cannot be taken as preliminary issue. Even in the
worst scenario, the petitioners are entitled to claim wages for the period
from 30.09.2022 to 30.01.2023. The petitioners were not aware of the
application seeking permission for closure. Hence, the impugned order of
the Labour Court along with the Government Order should be set aside.
6. Mr.P.Kumaresan, learned Additional Advocate General
appearing for the first respondent submitted that the first respondent on
careful consideration of the application made by the second respondent
for closure of its Chennai Plant, had given reasonable opportunity to the
Management and the Trade Union / workmen and after hearing them, had
accorded permission to close the second respondent’s Chennai Plant by
issuing G.O.Ms.No.171, Labour Welfare and Skill Development (A2)
Department dated 28.12.2022.
6.1. The application of the second respondent was scrutinized by
the first respondent with relevant Acts and Rules and in fact, a meeting
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was conducted with the Management, representatives of the Union /
workmen on 19.12.2022. After hearing their views, the following facts
were elucidated:
(I) Out of 2592 workers, 97.5% workers have accepted the
severance package through 18(1) settlement under Industrial
Disputes Act, 1947 with the only Union functioning at the Company
viz., Chennai Ford Employees Union (hereinafter referred to as
CFEU) on 30.09.2022.
(II) After having entered into a settlement as stated above, 63
workers did not accept the severance package and raised 2A dispute.
(III) On the date of signing the settlement, the above 63
workers were the members of the Chennai Ford Employees Union
and they have resigned their membership only on 16.11.2022.
(IV) The Management had assured to give severance package
to the 63 workers also when they approached the Management.
(V) In the settlement dated 30.09.2022, it has been agreed
between the Management and CFEU that in the event of revival of
the Company within three years from the date of the settlement, the
existing employees will have the option to apply for relevant job and
in case they apply, the Company shall explore the feasibility of
giving opportunity to such employees on terms and conditions.
(VI) Apart from 63 workers, there are three workers who
neither opted for severance package nor filed 2A petition under the
Industrial Disputes Act, 1947.
(VII) The Management stated that 97.5% of workers had
already received the severance package and left the Company and
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there is no production at Chennai Plant and requested to grant
permission for closure of the Company.
6.2. After considering the merits of the matter and considering the
submissions of the second respondent that they are suffering continuous
loss, the Government has accorded permission. In fact, 63 workers who
stated that they belonged to Uzhaipor Urimai Iyakkam had only sought
time for filing reply. However, the bilateral settlement has already been
arrived on 30.09.2022 with the sole Union functioning in the
establishment and even the workers who attended the hearing on
19.12.2022 were also the members of the same Union at the time when
the settlement was arrived. As the petitioners have sought extension of
time only as an after thought and it is devoid of merits and on careful
consideration of the application after conducting enquiry by affording a
reasonable opportunity to both the Management and the representative of
the workmen, the Government has issued the order.
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7. Mr.S.Ravi, learned Senior Counsel for the second respondent
submitted that the sole Union which was recognised by the second
respondent was the CFEU. The petitioners who have filed petitions were
also the members of CFEU. Hence, they cannot make any individual
claim. The second respondent announced that it would cease the vehicle
manufacturing activity and there was labour unrest at the Plant. The
Deputy Commissioner of Labour / Additional Commissioner of Labour
had intervened to bring the normalcy. During the negotiations and the
meetings, CFEU negotiated on behalf of the employees including the
petitioners and finally the terms of the settlement were agreed, which
ensured that the workmen will get a severance package with a minimum
of Rs.35,00,000/- to Rs.87,00,000/- which is on an average equivalent to
140 days of average pay for every completed year of continuous service.
Additionally, each employee was entitled to a special one-time lumpsum
amount of Rs.1,50,000/- and a family medical insurance coverage of
Rs,2,50,000/- upto March 2024. The above facts are more than the
statutory compensation payable under Section 25(O) of the Act. Apart
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from that, they were also paid with the applicable leave encashment,
gratuity and prorated bonus.
7.1. Even on 10.11.2022, the petitioners who were said to have
raised the industrial dispute under Section 2(A) were the members of
CFEU. The second respondent filed his application seeking permission
under Section 25(O) of the Act on 31.10.2022. In compliance with the
Tamil Nadu Industrial Dispute Rules, the copy of the application was
served on CFEU and the notice was also displayed conspicuously on the
notice board informing the employees about the filing of the application
under Section 25(O) of the Act. Hence, the petitioners were also aware of
the said fact. After knowing about filing of the application, they have
filed an industrial dispute under Section 2(A) which is untenable and not
maintainable. So it is false to state that the petitioners came to know
about the application seeking permission for closure only on 31.10.2022.
No prejudice whatsoever has been caused to the petitioners. For the
industrial dispute raised by the petitioners, the second respondent raised
the maintainability point and filed an Interlocutary Application. Section
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25(N) of the Industrial Disputes Act is not applicable to the facts of the
case.
7.2. The Labour Court has rightly relied on the decision rendered
in the case of Management of Holwart Engineering Company Vs.
S.Dhanasekar and another, reported in 2012 SCC Online Mad 5425
and concluded that the petition filed by the petitioners is not
maintainable. The Labour Court has observed that once permission is
granted under Section 25(O), there is no question of any deemed
employment. Section 25(N) of the Industrial Disputes Act is not
applicable to the case of closure and it is a well settled principle of law.
Hence, the petitioners are not entitled to seek any reinstatement or back
wages. The Labour Court has taken up a preliminary issue of
maintainability of the industrial dispute raised by the petitioners and had
rightly held that the industrial dispute itself is not maintainable.
7.3. When no production activities are being carried in the Plant, it
is not possible to provide any employment. The application has been
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filed on 31.10.2022 in due compliance of the requirement of 61(B)(2) of
the Rules. The Government has passed the order duly considering the
circumstances that the second respondent has been incurring significant
losses for the last several years despite making significant investment.
There is an unviability in the second respondent's car manufacturing
business and there was a low capacity utilisation at the Plant. Measures
taken to improve the business did not yield any positive results.
7.4. The interest of the employees had been taken care of by
paying the severance package. Unless there is any compelling and
overwhelming reasons of the general public interest justifying the
refusal, permission to closure would be granted. After the impugned
order has been passed, the petitioners received compensation and other
payments ranging from Rs.35,00,112/- to Rs.57,79,548/-, which is
exclusive of leave encashment and prorated bonus and in accordance
with the terms of settlement dated 30.09.2022. The petitioners were also
paid with gratuity and medical insurance to the family members to the
tune of Rs.2,50,000/- till March 2024. These Petitions have been filed by
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suppressing the relevant facts. Hence, the Writ Petitions should be
dismissed.
8. The petitioners are the individual employees and the erstwhile
workmen of the second respondent Company. Though the petitioners
have raised an industrial dispute on the allegation that the mandatory
procedure has not been followed under Section 25(O) of the Industrial
Disputes Act r/w Rule 61(B) of the Tamil Nadu Industrial Dispute Rules,
the fact that the factory was closed is not denied. The second respondent
who is a Car Manufacturing Plant at Maraimalai Nagar, Chengalpet, is
said to have taken a compulsive decision in view of the significant loss in
the business during the consecutive financial years and due to poor take
of the products in the market.
9. The petitioners did not attack the reasons why the second
respondent Management had chosen to close the Unit and all along they
have stated that they were not the parties to the severance agreement
which was entered into between CFEU and the Management on
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30.09.2022. It is further contended that the factory has been closed
without following the essential procedure for closure and hence, the
deemed fiction of continuation of employment under Section 25(O)(6)
has to be presumed and hence, the petitioners should be reinstated into
service. While appreciating the merits and other technicalities of the
matter, I feel it is essential also to understand Section 25(O)(6) of the
Industrial Disputes Act relative to the facts of the case and the events
attacked by the petitioners.
10. The term 'closure' as defined under Section 2(cc) of the
Industrial Disputes Act would mean permanent closing down of the
place of the employment or part thereof. The special provisions relating
to lay off, retrenchment and closure in certain industrial establishments
falling within the ambit of Industrial Disputes Act have been placed
under Chapter V (B) of the Industrial Disputes Act. There is no dispute
about the fact that the second respondent Car Manufacturing Plant has
employed more than 100 workers and that they fall under the purview of
Chapter V of the Act.
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11. Section 25(N) states about the conditions attached to
retrenchment that the workmen in the industrial establishment should had
been in continuous service of not less than one year. So far as Section
25(N) is concerned, it is retrenchment of some other nature not relating
to closing down of the business. Even though the petitioners did not
dispute about the closure, they pleaded to consider their termination of
employment as retrenchment within the meaning of Section 25(N) and
claimed that the conditions stated in Section 25(N) has not been
followed.
12. As the factory has been closed, the procedure laid down under
Section 25(O) and Section 25(N) is not applicable. However it is insisted
by the petitioners that any violation of procedure contemplated under
Section 25(O) would result in deemed employment and in such case, the
petitioners' out of employment should be considered as retrenchment and
hence, Section 25(N) is applicable to them.
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13. Section 25(O)(6) which states about the illegal closure and
deemed continuation of employment reads as under:
"25(O)(6) --- Where no application for permission under
sub-section (1) is made within the period specified therein,
or where the permission for closure has been refused, the
closure of the undertaking shall be deemed to be illegal
from the date of closure and the workmen shall be entitled
to all the benefits under any law for the time being in force
as if the undertaking had not been closed down."
14. The employer is expected to file an application in a prescribed
manner for seeking prior permission for closure atleast 90 days before
the date on which the intended closure has become effective to the
appropriate Government by setting out the reasons for the intended
closure of undertaking. The copy of the application should also be
served upon the representatives of the workmen in a prescribed manner
and thereafter, the appropriate Government shall make an enquiry after
giving a reasonable opportunity of hearing to the employees or the
representatives of the workmen and such persons interested in the closure
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with regard to the genuineness and the adequacy of the reasons stated by
the employer and the interest of the general public and all other factors.
After making the enquiry in the above said manner, the appropriate
Government shall refuse permission and the copy of the order shall be
communicated to both the employer and the workmen. In the event of
refusal of closure, the employer shall not close the establishment and if
closure is effected without permission that will be deemed as illegal.
15. In the instant case, the application has been filed by the second
respondent to the appropriate Government requesting permission for
closure. Even before that, the second respondent has taken pro-active
steps for negotiation with the Union representatives with the assistance
of the Deputy Commissioner of Labour and Additional Commissioner of
Labour. The above fact was also not denied by the petitioners. In fact, the
petitioners themselves were members of CFEU which was the only
recognised Trade Union of the second respondent establishment.
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16. The Union is not a party to any of the disputes revolving
closure and it has signed Section 18(1) settlement on 30.09.2022. Even
though the petitioners were also members of CFEU at the relevant point
of time more specifically when the negotiations were made between the
Management and the Union for nearly one year, they have shifted to
some other Union subsequently. The petitioners submitted that they did
not give any authorisation to the Union in any general body meeting of
the Union to conclude the settlement. But the petitioners have received
severance compensation which has been in the range of Rs.35,00,112/- to
Rs.57,79,548/- in addition to special one time lumpsum amount of
Rs.1,50,000/- and family insurance coverage of Rs.2,50,000/- till March
2024. Apart from that, they have also given with the leave encashment,
prorata bonus along with gratuity.
17. 97.5% of the workers did not object to the terms of the
settlement and hence, the settlement is no doubt made in accordance with
the principles of collective bargaining. The petitioners have not stated
any allegations of malafides, fraud, corruption or other inducements on
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the part of the Union leaders who had represented and participated in the
negotiations which had culminated into settlement under Section 18(1) of
the Act on 30.09.2022. While making negotiations of this nature between
the Management on one side and the representatives of the Union on the
other side, the negotiations would be revolving around the genuineness
of the reasons for closure, reasonable protection given to the workmen
against the loss of employment and the impact of closure on the public
interest.
18. When an application is made to the Government seeking
permission for closure, the Government has got an obligation to
scrutinise whether the reasons given by the employer for closure are
correct, adequate and sufficient. The financial difficulties including the
financial losses or accumulation of undisposed stocks are beyond the
control of the employer and in such case, the remedy open to the
workmen is reasonable compensation and not anything else.
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19. The recitals of the settlement dated 30.09.2022 are as follows:
(i) The Company has announced its decision to cease the vehicle
manufacturing operation in India from 09.09.2021.
(ii) Manufacturing itself has been stopped from 20.07.2022.
(iii) Production of service parts has also been stopped from
26.08.2022.
(iv) The Company received no manufacturing order after
26.08.2022.
20. The negotiations concluded in respect of severance package
payable to the employees and they would get a respectable exit. The
severance package concluded in respect of the agreement in pursuant to
the agreed advice on 20.09.2022. It is just for the terms of settlement.
The settlement has been signed by the Union and the employer on
30.09.2022. It has also been agreed between the Management and the
Union that there cannot be any employee - employer relationship
between the Management and the workmen from 1st October 2022.
Hence, the Management will not be responsible for payment of wages or
any statutory benefits to any employees post September 30, 2022 and the
exit process should be completed on or before 14.10.2022.
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21. As it is collective bargaining, the settlement has been arrived
under Section 18(1). The petitioners who were all along kept their
membership with CFEU, have changed their stand subsequently by
stating that they have joined some other Union. Once the Union enters
into the settlement by making several round talks with the Management
and the terms of settlement is agreed by the majority of the members of
the Union and it is reduced into writing and signed by both Union
representatives and the employer, such settlement will not only for the
benefit of the members of the Union who stood in majority, but that will
also bind the other minority members who opposed it. Hence, there is no
question of holding any individual settlement with the individual
workman and it is impractical to hold the closure settlement with a
individual workman without such collective interest is addressed by the
Trade Union which has been very much recognised by the Management.
22. During the course of negotiations, the Additional
Commissioner of Labour has also issued an agreed advice on 20.09.2022,
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wherein, it has been specifically stated that the sales of the Company has
come down globally. Hence, the Management has decided to close the
factory. In fact, the manufacturing itself has been stopped. Such an act on
the part of the Management would only show that there are some
compelling circumstances which had forced the second respondent to
take an ultimate decision of closing down the factory.
23. The employer cannot be expected to continue an unviable
business and sustain loss. Public interest involves not only the interest of
the workmen but also the interest of the Company. Because a sick
industry which has sustained loss in the business cannot help to the
growth of the Nation's economy. If the employer gives bonafide reasons,
permission to closure has to be granted. In fact, in the case of Associated
Cement Companies Limited and Another Vs. Union of India and
Others, reported in 1988 (2) LLN 1089, the High Court of Gujarat has
dealt four necessary situations that have to be considered as essential in
the matter of granting permission for closure and they are as follows:
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(i)Which reasons can be regarded as genuine or
adequate?
(ii)What is meant by the interests of the general
public?
(iii)Which other relevant factors are to be
considered? and
(iv)What weight is required to be given to the
interests of the general public and other relevant factors?
24. By making reference to various decisions of the Hon'ble
Supreme Court and other Courts, the following answers have been given
for the questions formulated by the Court. In the context of genuine and
adequate reasons, the Hon'ble Supreme Court has held in the case of
Excel Wear Vs. Union of India, reported in (1978) 4 SCC 224, that the
financial difficulties including the financial losses can be considered as
unavoidable circumstances beyond the control of the employer.
25. In Associated Cement Companies Limited and Another Vs.
Union of India and Others, it is held that the appropriate Government
cannot refuse permission on the ground that the employer should have
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managed his affairs in a better manner so as to avoid the compelling
situation of closure. Unless there are compelling and overwhelming
reasons of general public interest justifying refusal in serious issues like
financial or commercial compulsions, which are serious Management
issues, the authorities concerned will have to grant permission for
closure. So the above situation can be considered as genuine and for
adequate reasons.
26. While adverting to find out the meaning of general interest, the
interest of the labour alone cannot be the sole criteria. The interest of the
labour and other members of the public have to be considered to a
reasonable extent. In other words, only if the interest of the labour is
substantially ignored that can be reasons for considering the interest of
labour as part of public interest. In any context, it is unreasonable and
impractical to expect the company which is incurring loss and facing
unreserved suppressing issues bothering the growth of business, to
continue its business.
27. If prevention of unemployment is regarded as the sole basis or
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paramount consideration, no closure permission can be granted and that
would render the restriction as unreasonable and ultravires to Article
19(1)(g) of the Constitution of India. In the case in hand, the loss
incurred by the second respondent was huge and without demand for the
goods manufactured by the second respondent, the company cannot be
compelled to dwell in perennial loss by continuing the business. The
reasons stated by the second respondent to close the business are not
trivial or minor issues that are manageable with some meticulous plans
by effecting certain changes. The public interest would also include the
interest of the Company and hence, the appropriate authority has to take
that also into consideration while granting permission.
28. The next aspect which is relevant for consideration is the
opportunity of hearing to be given to the workmen. The appropriate
Government has to make sure whether the reasons stated by the
Management for closure is genuine and adequate and at the same time,
the workmen were also informed about the situation and understand the
consequences.
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29. If an employer wants to close his business bonafidely for
genuine and adequate reasons, permission shall not be refused. Unless
for some special reasons or extraordinary circumstances where the
refusal is regarded as reasonable on the ground of interest of the general
public or other weighty reasons.
30. As stated already, in the instant case, the interest of the
workmen has been represented by the Trade Union recognised by the
second respondent Company even before the application for closure has
been made and after several rounds of talks, the Management and the
Trade Union had arrived at an amicable terms and signed 18(1)
settlement. The efforts taken in the above manner before the closure
would show that the Company had best interest of the workmen also in
mind and worked out the feasibility of better settlement in the form of
compensation to the workers, as they would become unemployed at the
closure of the Company.
31. The comprehensive reading of the petitioners' demand and the
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concerns would only show that they tried to stand on certain
technicalities and not on the substantive matrix of the facts which led to
the closure. In other words, the petitioners did not have any serious
objection as to the genuineness and adequate reasons for closure. The
quantum of compensation and all other terms have been worked out in
favour of the workmen. Even while stating about the denial of adequate
opportunity for representation, the petitioners could not say whether such
negotiations would have guaranteed the sustenance of the Company or
whether any prejudice has been caused to the petitioners in view of the
terms agreed by the Trade Union on behalf of the workers.
32. The primary contention of the petitioners is that they came to
know about the submission of the application for closure by the second
respondent after they have raised objection and more particularly on
19.12.2022, when they appeared for hearing in pursuant to the notice
given by the first respondent. The petitioners tried to make out a case that
prior to 19.12.2022, the closure proposal was not within their knowledge
and they were kept at dark about the closure arrangements. In fact, the
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petitioners themselves have availed the substantial portion of the
settlement package which is the outcome of 18(1) settlement dated
30.09.2022. In fact, it is not even the case of the petitioners that there is
no fairness in the compensation given by the second respondent. The
terms of the settlement would only show that the second respondent has
tried his level best to give a better compensation to the workers by
incorporating better terms under Section 18(1) settlement dated
30.09.2022.
33. When an application for closure is submitted by the second
respondent to the first respondent, a reasonable notice is expected to be
given to the workers. But such reasonable notice cannot be construed as
an individual notice to each of the employees and serve it at their
doorstep. Even though the petitioners were pressing for re-employment
by raising an industrial dispute consequent to the Government Order,
they also received the settlement amount which was a hefty package of
several benefits.
34. The second respondent has filed the application on 31.10.2022,
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after serving the copy of the application to the recognised Trade Union
and notice about it has been displayed consequently on the notice board.
Hence, in all probabilities the petitioners could have had the knowledge
about filing of the application by the second respondent. Even though the
petitioners had pointed out that the application submitted by the second
respondent is without signature, such complaint has not been made by
the first respondent who has the duty to scrutinise the correctness of the
application. Just because the copy does not have the signature of the
applicant, it cannot be presumed that the originals also did not have the
signature of the applicant. The first respondent could not have considered
the application without the signature of the applicant affixed on it and in
fact, the learned Additional Advocate General had submitted that the
application seeking permission for closure submitted to the government
had got the signature of the applicant affixed on it.
35. So far as the reasonable opportunity is concerned, it is for the
first respondent to decide what is reasonable in the existing state of
affairs. The first respondent has stated that the workmen who raised
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objection had resigned their membership from CFEU only on 16.11.2022
which is subsequent to the date of the submission of the application and
the bipartite settlement with regard to severance package dated
30.09.2022. So, in the appreciation of the first respondent, the objection
of the petitioners is considered as an afterthought and just to delay the
proceedings. When there is no malafide intention is seen to be present
either on the part of the Trade Union which made negotiations with the
Management or on the appropriate Government, no prejudice can be
presumed to have caused to the petitioners.
36. As the petitioners have participated in the enquiry called upon
by the first respondent and made their written submissions and the first
respondent has considered and arrived at a conclusion by appraising the
matter in a holistic manner, there is no strength in the argument that the
petitioners were not given with any reasonable opportunity. There cannot
be any quarrel with regard to the principles laid down by the Hon'ble
Supreme Court in the case of Workmen of Meenakshi Mills Limited Vs.
Meenakshi Mills Ltd and Another. However, there is no retrenchment by
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way of victimization and the appropriate Government also did not form
such an opinion after appreciating all the relevant factors for granting
permission for closure.
37. So far as the other judgment submitted by the petitioners
reported in AIR 2002 SC 708 (Orissa Textile and Steel Ltd Vs. State of
Orissa and Ors) about adequacy and sufficiency of reasons in the matter
of closure is based upon the observations made by the Supreme Court in
the case of Meenakshi Mills Limited. So it is not the case where the
Government did not conduct any enquiry or the workmen were not given
with any reasonable compensation. The Government at its discretion had
conducted the enquiry in the nature which it deemed fit and appreciated
the materials also before according permission.
38. A party complaining the denial of opportunity and failure to
adhere to the principles of natural justice has an obligation to prove that
prejudice has been caused to him due to the breech of natural justice. As
regards the principles of natural justice, it has been held time and again
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by the Hon'ble Supreme Court that the natural justice is an acceptable
tool in the hands of the Judge in order to give a suitable remedy. The
words of the Hon'ble Supreme Court held in the case of State of the
Uttar Pradesh Vs. Sudhir Kumar Singh, reported in (2021) 19 SCC
706, as under:
"42. An analysis of the aforesaid judgments thus
reveals:
42.1. Natural justice is a flexible tool in the hands
of the judiciary to reach out in fit cases to remedy
injustice. The breach of the audi alteram partem rule
cannot by itself, without more, lead to the conclusion
that prejudice is thereby caused.
42.2.Where procedural and/or substantive
provisions of law embody the principles of natural
justice, their infraction per se does not lead to invalidity
of the orders passed. Here again, prejudice must be
caused to the litigant, except in the case of a mandatory
provision of law which is conceived not only in
individual interest, but also in public interest.
42.3. No prejudice is caused to the person
complaining of the breach of natural justice where such
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person does not dispute the case against him or it. This
can happen by reason of estoppel, acquiescence, waiver
and by way of non-challenge or non-denial or admission
of facts, in cases in which the Court finds on facts that
no real prejudice can therefore be said to have been
caused to the person complaining of the breach of
natural justice.
42.4. In cases where facts can be stated to be
admitted or indisputable, and only one conclusion is
possible, the Court does not pass futile orders of setting
aside or remand when there is, in fact, no prejudice
caused. This conclusion must be drawn by the Court on
an appraisal of the facts of a case, and not by the
authority who denies natural justice to a person.
42.5. The “prejudice” exception must be more
than a mere apprehension or even a reasonable
suspicion of a litigant. It should exist as a matter of fact,
or be based upon a definite inference of likelihood of
prejudice flowing from the non-observance of natural
justice.
43. Judged by the touchstone of these tests, it is
clear that Respondent No.1 has been completely in the
dark so far as the cancellation of the award of tender in
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his favour is concerned, the audi alteram partem rule
having been breached in its entirety."
39. It is reiterated that the petitioners have not taken out a plea of
malafide, fraud or corruption on the part of any players involved in the
closure. The situation under Section 25(O)(6) would arise only if the
closure is illegal. Hence, there need not be any deemed fiction of
continuance of employment by the workmen with the second respondent
Company.
40. In M/s.Oswal Agro Furane Ltd., Vs. Oswal Agro Furane
Workers Union and Ors, reported in 2005 (3) SCC 224, the Hon’ble
Supreme Court has settled the legal position with regard to the concept of
deemed employment on certain proved circumstances. But in the instant
case no illegality as prescribed under Section 25(O)(6) is proved in order
to presume the deemed fiction of employment. Hence, no question of
retrenchment or illegal retrenchment, as pleaded by the petitioners would
arise. When the majority workers have shown their interest in accepting
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the settlement and the viability of the Company was also questionable
and it was not able to carry out its business activities any further, the
genuineness and the adequateness of the reasons for closure and the due
acceptance of the same by the Government need not be suspected.
41. In this regard, it is worthwhile to cite the decision of the
Hon'ble Supreme Court in the case of Dayakar Reddy Vs. MD, Allwyn
Auto Ltd and Others, reported in (2000) 9 SCC 247, wherein, it is held
when the Government is satisfied that proper procedure has been
followed and it had considered the compliance of all the essential aspects
connected to the closure of the Company, the State is justified in granting
permission to closure. The relevant part of the above judgment is
extracted hereunder:
"4. It was contended by Mr. P.S. Mishra, learned
senior counsel for the-petitioner that in this case the
State had suggested that the company should be closed
down and it was the same State which then decided
under Section 25(O) to grant permission for closure. In a
case where the company is a State Government
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Undertaking, such a situation may arise. It has to take
an administrative decision first and then a quasi judicial
decision under Section 25(O). What we find is that while
exercising its power under Section 25(O) it did follow the
proper procedure and consider all the relevant aspects.
It is not possible to find any fault with the decision of the
State Government. The facts of this case are very
eloquent. However, by the time the Government took the
decision, out of 1800 workers. 1200 workers had shown
their willingness to accept the Voluntary Retirement
Scheme. The G.O. dated 16.6.97 clearly discloses the
reasons why the company had become unviable and why
it was not able to carry on its activity any further. The
reasons appear to be genuine and adequate and
therefore the Government was justified in granting
permission for closure of the company. This special
leave petition is therefore dismissed."
42. In the judgment of the Hon'ble Supreme Court in the case of
Navneet Kaur Harbhajansing Vs. State of Maharashtra and Others,
reported in 2024 SCC Online SC 494, it is held that in the absence of
any allegation of malafide and perversity, the Writ jurisdiction of the
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High Court shall not be invoked for mere asking. In the case of
Herbertsons Limited Vs. Workmen of Herbertsons Limited and Others,
reported in (1976) 4 SCC 736, the Hon'ble Supreme Court has held when
a recognised Union negotiates with an employer, the workers as
individuals can raise objection only in exceptional circumstances like
malafides or fraud. The relevant part of the above judgment is extracted
as under:
"18. When a recognised union negotiates with an
employer the workers as individuals do not come into
the picture. It is not necessary that each individual
worker should know the implications of the settlement
since a recognised union, which is expected to protect
the legitimate interests of labour, enters into a settlement
in the best interests of labour. This would be the normal
rule. We cannot altogether rule out exceptional cases
where there may be allegations of malafides, fraud or
even corruption or other inducements. Nothing of that
kind has been suggested against the President of the 3rd
respondent in this case. That being the position, prima
facie, this is a settlement in the course of collective
bargaining and, therefore, is entitled to due weight and
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consideration."
43. The Hon'ble Supreme Court has held in various decisions
including the case involving Excel Wear (cited supra) that the order
issued by the Government under Section 25(O)(2) does not require
reasons to be stated. It only means that if the appropriate Government
gets satisfied by making its own enquiry about the appropriateness and
the necessity to accord permission, that itself is sufficient.
44. When a settlement has been arrived during the course of the
collective bargaining with the help of the Deputy Commissioner /
Additional Commissioner and the settlement has been arrived at with the
recognised majority Union members, its obligation would be extended to
all the workmen of the establishment including those belonging to the
minority Union which had objected the same.
45. While disclosing the above principle, the Hon'ble Supreme
Court in the case of Barauni Refinery Pragatisheel Shramik Parishad
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Vs. Indian Oil Corporation Limited, reported in 3 (1991) 1 SCC 4, it is
observed that such settlement to the extent of making it applicable to the
minority Union members also departs from the ordinary law of contract.
It is on the belief that any settlement so made with the help of
Conciliation Officer must be fair and reasonable and hence, it would bind
not only the workmen belonging to the said Union but also others who
do not belong to that Union.
46. In the instant case, the petitioners were very much the members
of the Union which had negotiated the settlement and they continued to
be so till 30.09.2022, on which date the Union had signed the settlement.
After the Government Order was passed, the petitioners had chosen to
receive severance package also.
47. As the petitioners had filed and brought an industrial dispute
which is not maintainable, the learned Trial Judge cannot be expected to
take it a full trial without deciding its maintainability. Hence, it is
appropriate on the part of the Presiding Officer of the Labour Court,
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Kanchipuram, in the special circumstances as explained above, to take up
the maintainability question as a preliminary issue and render a finding
that the industrial dispute is not maintainable. The Labour Court has
rightly understood the principles governing non-employment arising out
of closure and other retrenchment coming under Section 25(N) and the
difference between two and had rightly given a finding that the
petitioners' case will not fall under Section 25(N) of the Act.
48. The judgment relied on by the learned Presiding Officer of the
Labour Court, Kanchipuram held by this Court in the case of
Management of Holwart Engineering Company Vs. Dhanasekar and
Another, reported in 2012 SCC Online Mad 5425 is also appropriate to
the issue at hand. In the above case, this Court has held that there cannot
be any individual employment issue in the event of closure in order to
raise an industrial dispute under Section 2(A) of the Industrial Disputes
Act and that too, when the workmen have been paid with full and final
settlement. The relevant part of the above judgment holding the above
view has been brought out hereunder:
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"In the light of the above legal precedents, the
dispute raised by the workmen are not maintainable for
more than one reason. The first reason being there cannot
individual non-employment issue in case of closure
covered by Section 2-A of the I.D.Act, especially when the
workmen have demanded their legal dues to be paid and
have accepted and passed on a full and final settlement
receipt not to claim any reinstatement or re-employment.
The Labour Court did not find any answer either to the
letter written by the workers or the subsequent payment
of compensation. Even otherwise when a closure covered
by Section 2(cc) of the I.D.Act is under challenge, it has to
be done only in terms of a collective dispute under Section
2(k) of the I.D.Act as held by the Supreme Court referred
to above. The only exception is the industrial
establishment covered by Chapter V-B of the I.D.Act."
49. In fine, the discussions only gives an inference that the first
respondent appropriate Government has scrupulously followed the
mandates of Section 25(O) before according permission for closure under
Section 25(O)(2) and hence, there is no illegality as alleged by the
petitioners. Hence the Government Order passed in G.O.Ms.No.171,
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Labour Welfare and Skill Development (A2) Department dated
28.12.2022 issued in this regard by the first respondent does not warrant
any interference. I also hold that the order of the Labour Court made in
I.A.Nos.1 to 1 of 2024, dated 26.06.2024 in the industrial dispute raised
by the workmen also does not suffer from factual or legal infirmity
calling for any inference.
50. In the result, these batch of Writ Petitions filed challenging the
Government Order issued in G.O.Ms.No.171 dated 28.12.2022 and the
order passed by the learned Presiding Officer of the Labour Court,
Kanchipuram made in I.A.Nos.1 to 1 of 2024 dated 26.06.2024 are
dismissed. No costs. Consequently, connected miscellaneous petitions
are closed.
Index : Yes 24.01.2025
Speaking
Neutral Citation : Yes
gsk
R.N.MANJULA, J.
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gsk
To
1.The Additional Chief Secretary to Government,
Labour Welfare and Skill Development (A2)
Department,Government of Tamil Nadu,
Fort St.George, Chennai - 600 009.
2.The Management,
Ford India Private Limited,
S.P.Kovil Post, Maraimalai Nagar,
Chengalpattu 603 204.
W.P.Nos.6019 of 2023, 29623, 29626, 29628, 29631, 30786, 29746,
29766, 24683, 24684, 27669, 27671, 27674, 27676, 27679, 28122,
28124, 28125, 28126, 28129, 28130, 28132, 28133, 28141, 28145,
28146, 28527, 28529, 28533, 28535, 28537, 28540, 29210, 29211,
29212, 29213, 29215, 29217, 29220, 29221, 29224, 29229, 29400,
29466, 29469, 29479, 29482, 29483, 29490, 29492, 29555, 29611,
29616, 29618, 29620, 29621 and 29622 of 2024 and
W.M.P.Nos.6037, 6039 and 6040 of 2023
24.01.2025
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