9911796707
TMI Blog1986 (4) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... d Dyes Trading Limited (hereinafter referred to as "the Company") is a wholly owned subsidiary of Ambalal Sarabhai Enterprises Limited and carries on the business of pharmaceuticals, pigments and chemicals. The Second Respondent is the General Manager (Marketing) of the Company. The Appellant Union, S.G. Chemicals and Dyes Trading Employees' Union (hereinafter referred to as "the Union") is a trade union registered under the Trade Unions Act, 1926 (Act No. 16 of 1926) representing the employees of the Company. In 1984 the Company was operating in Bombay through three Divisions, namely, the Pharmaceuticals Division at Worli, the Laboratory and Dyes Division at Trombay and the Marketing and Sales Division at Express Building, Churchgate. The Registered Office of the Company was also situate in the same place as the Marketing Division, namely, in Express Building. Ambalal Sarabhai Enterprises Limited is also the owner of a chemicals and dyes factory called S.G. Chemicals and Dyes, situate at Ranoli in Baroda District in the state of Gujarat. By a notice dated July 16, 1984, given in Form XXIV-B prescribed by Rule 82-A of the Industrial Disputes (Bombay) Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the said notice dated July 16, 1984. The Company none the less closed down the said Division at Churchgate with effect from September 17, 1984. The Company retained only six employees who, according to it, were to attend to the work consequent upon such closure. The Company did not pay to the eighty-four employees whose services were terminated any salary after September 17, 1984. According to its counter affidavit filed in reply to the Petition for Special Leave to Appeal, the Company has, however, offered to these eighty-four employees retrenchment compensation under section 25FFF of the Industrial Disputes Act aggregating to ₹ 22,02,670 and eighty-two out of these eighty-four employees have accepted such compensation aggregating to ₹ 22,00,162. The Union filed on October 8, 1984, before the Industrial Court Maharashtra, Bombay, a Complaint, being Complaint (ULP) No. 1273 of 1984, under section 28 of the Maharashtra Act read with Item 9 of Schedule IV thereto. The contention of the Union in the said Complaint was that the closure of the Churchgate Division was contrary to the provisions of section 25-O of the Industrial Disputes Act and, therefore, the employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the work done at the head office at Churchgate was in connection with or incidental to the Trombay factory and there does appear some functional integrality between the factory and the head office, but in my view, this fact is irrelevant in this complaint." The reason why the Industrial Court considered the functional integrality between the Trombay factory and the Churchgate office as irrelevant was that according to it before section 25-O could apply, the number of workmen employed in an industrial establishment as defined by section 25-L of the Industrial Disputes Act should not be less than one hundred and that admittedly at no time had the number of workmen at the Trombay Factory been one hundred or more. The Industrial Court further held that the Churchgate office was not in legal parlance a part of the Trombay factory and the Company was not bound to follow the procedure prescribed by section 25-O for by no stretch of imagination could the Churchgate Division be held to be "an undertaking of an industrial establishment" within the meaning of Chapter V-B of the Industrial Disputes Act. The Industrial Court also held that the Head Office of the Company loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. and another if a writ petition were filed in the High Court, it would certainly have been dismissed, forcing the employees through the Union to come to this Court in appeal against the order of the High Court. When we consider that here are eighty-four workmen who have been thrown out of employment and can ill- afford the luxury of fighting from court to court and that some of the questions arising in the case are of considerable importance both to the employers and the employees, the reason given for directly coming to this Court must be held to be valid and this must be considered to be a fit case for this Court to exercise its discretion and grant Special Leave to Appeal. Turning now to the merits of this Appeal, the first question which falls to be considered is whether section 25- 0 of the Industrial Disputes Act applied to the closure of the Churchgate Office. According to the Union, the case was governed by section 25-O while according to the Company, it was section 25FFA which applied to the case. Under section 25FFA(1), an employer who intends to close down an undertaking is to give, at least sixty days before the date on which the intended closure is to become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the said Act. By Ministry of Labour and Rehabilitation (Department of Labour) Notification No. S.O. 605(E), dated August 18, 1984, published in the Gazette of India Extraordinary, Part II, Section 3(ii), dated August 18, 1984, at page 2, the whole of the Amendment Act, 1984, was brought into force with effect from August 18, 1984. By Ministry of Labour and Rehabilitation (Department of Labour) Notification No. S.O. 606(E), dated August 21, 1984, published in the Gazette of India Extraordinary, Part II, Section 3(ii) dated August 21, 1984, at page 2, several sections of the Amendment Act, 1982, including section 14 which substituted section 25-O of the Industrial Disputes Act, were brought into force on August 21, 1984. Sub-section (1) of section 25-O as substituted provides as follows : "25-O. Procedure for closing down an undertaking.- (1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior. permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies the industrial establishments to which Chapter V-B applies. Section 25K(1) is as follows : "25K. Application of Chapter V-B. - (1) The provisions of this Chapter shall apply to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only Intermittently) in which not less than one hundred workmen were employed on an average per working day for the preceding twelve months." The words "one hundred" were substituted for the words "three hundred" in section 25K by section 12 of the Amendment Act, 1982, which section was also brought into force on August 21, 1984. Section 25L defines the expression "industrial establishment" for the purposes of Chapter V-B and is in the following terms : "25L. Definitions. - For the purposes of this Chapter, - (a) 'industrial establishment' means - (i) a factory as defined in clause (m) of section 2 of the Factories Act. 1948; (ii) a mine as defined in clause (j) of sub- section (1) of section 2 of the Mines Act, 1952; or (iii) a plantation as defined in clause (f) of section 2 of the Plantations Labour Act, 1951; (b) notwithstanding an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Disputes Act defines the term "industry" as follows : "(J) 'industry' means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen". By clause (c) of section 2 of the Amendment Act, 1982, the definition of "industry" given in clause (j) of section 2 of the Industrial Disputes Act was substituted. Clause (c) of section 2 of the Amendment Act, 1982, does not, however, appear to have been brought into force yet and in any event was not in force when the Company gave the notice of closure as also when it closed down its Churchgate Division. It is, therefore, unnecessary to reproduce the definition of "industry" as substituted by the Amendment Act, 1982. At the date when the Company gave the notice of closure, namely, on July 16, 1984, the section in force was section 25-0 as originally enacted by the Industrial Disputes (Amendment) Act, 1976. In the case of the State of Maharashtra the original section 25-0 was substituted by a new section by the Industrial Disputes (Maharashtra Amendment) Ordinance, 1981 (Mahar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than one hundred workmen. Thus, at the date of closure, which is the material date for the purposes of this Appeal, section 25K as amended by the Amendment Act, 1982, was in force and was applicable to the Company along with section 25-O as substituted by the Amendment Act, 1982. The parties have also gone to trial on the footing that the requirement under section 25-K was "not of less than one hundred workmen". The Trombay factory of the Company carries on the work of manufacturing and processing dyes. It is not disputed that the Trombay factory is an industry within the meaning of that term as defined in clause (j) of section 2 of the Industrial Disputes Act. It is also not disputed that the Trombay factory is a factory as defined by clause (m) of section 2 of the Factories Act and is, therefore, an industrial establishment within the meaning of that expression as defined in section 25L of the Industrial Disputes Act. What was, however, disputed was that the Trombay Factory is an industrial establishment to which Chapter V-B applies because at no time did it employ one hundred workmen. It was also disputed that the Churchgate Division of the Company was an underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewage or any other substance, or (iii) generating, transforming or transmitting power, or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding ; or (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels ; or (vi) preserving or storing any article in cold storage". (Emphasis supplied) Thus, the different processes set out in sub-clause (i) of clause (k) of section 2 must be with a view to the use, sale, manufactured. In the modern industrial world it is often not possible for all processes which ultimately result in the finished product to be carried out at one place and by reason of the complexity and number of such processes and the acute shortage of accommodation in many cities, several of these processes are often carried out in different buildings situate at different places. Further, in many cases these functions are distributed amongst different departments and divisions of a factory and such departments and divisions are housed in different buildings. That a factory can be housed in more than one building is also clear from section 4 of the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the non-supply of limestone due to the strike the management had to close down certain sections of the factory and to lay-off the workers not required during the period of closure of the sections concerned. Subsequently, after the dispute between the management and the workers of the limestone quarry was settled and the strike came to an end, a demand was made on behalf of the workers of the factory who had been laid-off during the strike, for payment of lay- off compensation under section 25-C of the Industrial Disputes Act, but the management refused the demand relying on clause (iii) of section 25E. The Industrial Tribunal took the view that the limestone quarry was not part of the establishment of the cement factory and that the workmen in the factory were not disentitled to lay-off compensation by reason of clause (iii) of section 25E. The company's appeal was allowed by this Court. On behalf of the workmen the Explanation to section 25A was relied upon. With reference to the said Explanation, this Court said (at pages 715-16) : "The Explanation only gives the meaning of the expression 'industrial establishment' for certain sections of the Act; it does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich any industry is carried on", that the term "undertaking" in that definition applies to an industrial undertaking. It would thus appear that the words "undertaking" wherever it occurs in the Industrial Disputes Act, unless a specific meaning is given to that term by that particular provision, is to be understood in its ordinary meaning and sense. The term "undertaking" occurring in section 25FFF fell for interpretation by this Court in Management of Hindustan Steel Limited v. The Workmen & Ors., [1973] 3 S.C.R. 303. In that case, this Court held (at page 310) : "The word undertaking as used in s. 25FFF seems to us to have been used in its ordinary sense connoting thereby any work, enterprise, project or business undertaking. It is not intended to cover the entire industry or business of the employer as was suggested on behalf of the respondent. Even closure or stoppage of a part of the business or activities of the employer would seem in law to be covered by this sub-section. The question has indeed to be decided on the facts of each case." The above passage was cited with approval and reiterated in Workmen of the Straw Board Manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for consideration at the same time." E These tests have been accepted and applied by this Court in different cases, for instance, in South India Millowners'' Association and Ors. v. Coimbatore District Textile Workers' Union & Ors., [1962] 1 Lab. L.J. 223 S.C., Western India Match Co. Ltd. v. Their Workmen, [1964] 3 S.C.R. 560; s.c. [1963] 2 Lab. L.J. 459 and Workmen of the Straw Board Manufacturing Company Limited v. M/s. Straw Board Manufacturing Company Limited. In Western India Match Company's case the Court held on the facts that there was functional integrality and interdependence or community of financial control and management of the sales office and the factory in the appellant company and that the two must be considered part of one and the same unit of industrial production. In the Straw Board Manufacturing Company's case the Court held (at page 713) : "The most important aspect in this particular case relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal work of the Company, namely, productwise sales statistics, industrywise sales statistics, partywise sales statistics, monthly sales performance statistics, sales forecast statistics, collection forcast statistics, sales outstanding statistics and other statistical work, was also done in the Churchgate Division. The orders for processing of dyes and instructions in respect thereof were issued from the Churchgate Division to the Trombay factory. The work of making payment of salaries, overtime, conveyance allowances, medical expenses, leave travel allowance, statutory deductions such as for provident fund, income-tax, professional tax, etc., in respect of the workmen working at the Trombay factory was also done in the Churchgate Division and an employee from the Churchgate Division used to go to the Trombay factory on the last day of each month for actually making payment of the salaries etc. The work of purchasing statutory items, printing forms, etc., for the Trombay factory and the Worli Division was also done by the Churchgate Division and the maintenance of the Express Building at Churchgate and of the factory at Trombay was done by personnel in the Churchgate Division. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing goods unless the goods so manufactured or processed are marketed and sold. The one without the other is a practical impossibility. Similarly, no factory can run unless salaries and other employment benefits are paid to the workmen nor can a factory function without the necessary accounting and statistical data being prepared. These are integral parts of the manufacturing activities of a factory. All these factors existed in the present case and there can be no doubt that the Trombay factory and the Churchgate Division constituted one establishment. me fact that, according to the Company, a major part of the work of the Churchgate Division was that of marketing and selling the products of the Ranoli factory belonging to Ambalal Sarabhai Enterprises Limited is irrelevant. m e Trombay factory could not have conveniently existed and functioned without the Churchgate Division and the evidence shows a complete functional integrality between the Trombay factory and the Churchgate Division of the Company. The total number of workmen employed at the relevant time in the Trombay factory and the Churchgate Division was one hundred and fifty and, therefore, if the Company wanted to close ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is a factory within the meaning of clause (m) of section 2 of the Factories Act, 1948, or which is deemed to be a factory under section 85 of the said Act". The definition of "Commercial establishment" in clause (4) of section 2 clearly shows that a commercial establishment is one of the categories of "establishment". "Establishment" is separately defined in clause (8) of section 2 as follows : "(8) 'Establishment' means a shop, commercial establishment, residential hotel, restaurant, eating house, theatre, or other place of public amusement or entertainment to which this Act applies and includes such other establishment as the State Government may, by notification in the Official Gazette, declare to be an establishment for the purposes of this Act". It will be noticed that the word "factory" does not occur in the definition of "establishment" while a factory is expressly excluded from the definition of "commercial establishment". The reason is obvious. mere are separate Chapters in the Bombay Shops and Establishment Act which provide for various matters such as opening and closing hours, daily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 4, the State Government has the power, by notification published in the Official Gazette, to add to, omit or alter any of the entries in Schedule II. Several of the entries set out in Schedule II show that a number of industrial establishments, using that expression in its ordinary sense, are covered by the term "establishment" such as, ice and ice-fruit manufacturing establishments (Entry 24); any establishment wherein a manufacturing process defined in clause (k) of section 2 of the Factories Act is carried on (Entry 34); dal manufacturing establishments (entry 46); establishments commonly known as general engineering works wherein the manufacturing process is carried on with the aid of power (Entry 54); such establishments manufacturing bricks as open earlier than 5.30 a.m. (Entry 96); establishment of Jayems Chemicals, Nashik Road, Deolali, Nashik (Entry 106); Biotech Laboratories, Poona (Entry 160); employees in Messrs. Manganese Ore (India) Ltd., Nagpur (Entry 183); employees in tanneries and leather manufactory (Entry 187); ILAC Limited, Calico Chemicals Plastics and Fibres Division Premises, Anik Chembur, Bombay - 400074 (Entry 208); flour mills in Greater Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Orders specially framed for that employer and approved in the manner provided under the statute or the rules. This would not imply that provisions such as those contained in s. 25FFA or s. 25-FFF of the Industrial Disputes Act can be held or deemed to be a part of the contract of employment of every employee. Any such interpretation would be stretching the language of item 9 to an extent which is not justified by the language thereof". It is not possible to accept as correct the view taken in the said case. It is an implied condition of every agreement, including a settlement, that the parties thereto will act in conformity with the law. Such a provision is not required to be expressly stated in any contract. If the services of a workman are terminated in violation of any of the provisions of the Industrial Disputes Act, such termination is unlawful and ineffective and the workman would ordinarily be entitled to reinstatement and payment of full back wages. In the present case, there was a Settlement arrived at between the Company and the Union under which certain wages were to be paid by the Company to its workmen. The Company failed to pay such wages from September 18, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rkmen have already accepted the retrenchment compensation offered by the Company and cannot receive full back wages or future salary until the amount of such compensation received by them is adjusted. Learned Counsel for the Union has very fairly conceded that the workmen cannot retain the retrenchment compensation and also claim full back wages as also future salary in full and that the amount of retrenchment compensation received by the workmen should be adjusted against the back wages and future salary. There would be no difficulty in adjusting the amount of back wages against the amount of retrenchment compensation received by the concerned workmen but if thereafter there is still any balance of retrenchment compensation remaining to be adjusted, it would be too harsh to direct that such workmen should continue in service and work for the Company without receiving any salary until the balance of the retrenchment compensation stands fully adjusted; and, therefore, so far as future salary is concerned, only a part of it can be directed to be adjusted against the balance of the retrenchment compensation, provided there is any such balance left after setting off the back wages. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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