9911796707
TMI Blog1968 (5) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... public company having its registered office at Choudwar in the district of Cuttack. It maintains some branch offices at Calcutta and Madras. It carried on the business primarily of manufacturing and selling iron pipes and poles and has been employing a, large number of workmen; their number being 922 on the relevant date. According to the findings of the Tribunal, which have not been questioned, it is a prosperous concern and between the years 1959 and 1964 the appellant paid its employees bonus equivalent to four months' wages every year except in 1961-62. For the subsequent three years bonus was paid at the rate of four per cent under the Payment of Bonus Act, 1965 (Act XXI of 1965). The workmen were not satisfied with the payment at the rate of four per cent and raised a dispute. On August 22, 1965, they made a demand for bonus at the rate of 20% of their annual salary or wages for the accounting year 1966-67. Certain correspondence started between the Assistant Labour Commissioner, the Management and the General Secretary of the Union (Kalinga Tubes Mazdoor Sangh). On September 21 1967, the Manager (Administration) notified that bonus at the rate of 4% for the year 1966-67 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly keeping confined and forcibly resisting the ex it of the staff and some of the officers of the Company in the Administrative Office building from about 2 p.m. of the 1st Oct. 1967 till they were forcibly rescued by the Police authorities at about 5 a.m. on the morning of 2nd October 1967 and thereafter continuing with their illegal trespass into the promises of the Company in the aforesaid Administrative Office, and refusal to allow entry of any of the staff and officers of the Company into the said building, and the consequent refusal by the officers and supervisory staff of the Company to carry on their normal work and discharge their functions being reasonably apprehensive of their safety, it has become impossible to continue to run the, Factory and the subsidiary sections and Departments any further. The Company hereby notifies that there will be a complete closure of the Factory on and with effect from 6 a.m. of the, 3rd October 1967, Before the Tribunal the main controversy centered on the question whether there was a closure of its undertaking by the appellant or whether there was a refusal to employ the workmen which would fall within the expression 'Lock out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of closure dated October 3, 1967 was sent to the Chief Inspector of Factories. It was pointed out to the Tribunal that the employees in the Branch Offices at Calcutta and Madras had already been discharged and the members of the staff at Choudwar had been notified that their services would be terminated within a period of three months after the closure by January 3, 1968. The Tribunal considered that all such action which had been mentioned was taken consistently with the notice of closure. It was held that the Management had in fact declared a lock-out in the guise of a closure. The Tribunal was considerably influenced by the absence of any evidence that the business of the Company was going to be wound up or the Company was going to be dissolved. The Tribunal next proceeded to decide whether the declaration of a lock-out was legal. It was found that two cases relating to gratuity and retrenchment between the same periods were pending adjudication before the Tribunal and therefore a declaration of lock-out contravened the provisions of S. 23 of the Act; such contravention being illegal under s. 24. It was noted that the assertion of the Union that the workmen went to work in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether correct. According to him the essential and basic question was whether the undertaking of the appellant Company had been closed down on October 3, 1967. The question of a lock-out could only arise if the first question was answered in the negative. According to Mr. Chaudhury even if it were to be found that the undertaking had not been closed down it did not necessarily follow that there had been a lock-out. At any rate, the matter of closure had to be decided without mixing it up with considerations relevant for a lockout. Now in the Act S. 25FFF alone contains provisions which relate to closing down of an undertaking. The expression closure which has been frequently used by the Tribunal as also by us is nowhere defined and this expression can only be used for the sake of convenience. In Industrial law, apart from closure, the workers can be put out of action by lay off, defined by s. 2(kkk), lock-out, defined by s. 2(i) and retrenchment, defined by S. 2(oo). Section 25FFF so far as it is material for our purposes reads :- (1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an undertaking only when there are financial difficulties and the undertaking becomes a losing concern. It is dffficult, and indeed no such principle entrenched in Industrial law has been brought to our notice, to accept that the closure of an undertaking can be limited or restricted only to financial, economic or other considerations of a like nature. All that has been laid down is that in case of a closure the employer does not merely close down the place of business but he closes the business itself finally and irrevocably vide Express Newspapers Ltd. v. Their Workers Staff Others([1962] 2 L.L.J. 227, 232). The closure has to be genuine and bona fide in the sense that it should be a closure in fact and not a mere pretence of closure. (Tea Districts Labour Association, Calcutta v. Ex-Employees of Tea District Labour Association Another([1960] 3 S.C.R. 207, 213).The motive behind the closure is immaterial and what has to be seen is whether it was an effective one. vide The Andhra Prabha Ltd. Ors. v. The Secretary Madras Union of Journalists and Ors [1967]3S.C,R.901.) In Andhra Prabha's case the Board of Directors of the Company had passed a resolution to sell items o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory at Barakar and to enquire whether it was bona fide or mala fide with some oblique purpose, namely, to punish the workmen for the Union activities in fighting the appellant . It was emphasised that the expression 'bona fide' used in certain decisions of this Court did not refer to the motive behind the closure but to the fact of the closure. The decision in the Workers of the Pudukottah Textile Mills v. The Management (C.A. No. 1005 of 1963) is quite apposite for the purposes of the present case. The Pudukottah Textile Mills had been working since 1948. By 1959 the financial position of the Mills was in a bad way. The Management had changed hands and the relations between the Union to which the workers belonged and the new Management were not very cordial. The new Management tried to bolster up the rival union which would be amenable to its control. In 1960 a fire broke out in the godown of the Mills which resulted in the destruction of a very large part of the cotton stored in the godown. The new Management gave notice on May 26, 1960 stating that the work would remain suspended until further notice because of the fire. On June 7, 1960, the new Management notified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an undertaking because of financial or purely business reasons. In another case it may decide in favour of closure when faced with a situation in which it is considered either dangerous or hazardous from the point of view of the safety of the Administrative staff or members of the Management or even the employees themselves to carry on the business. The essence of the matter, therefore, is the factum of closure by whatever reasons motivated. There can be no manner of doubt from what has been found by the Tribunal itself that a large number of workers, about 150 of them virtually staged a gherao during the several hours preceding the declaration of closure. If their demand was purely one in respect of bonus there was no justification for keeping about 40 members of the Administrative staff virtually confined inside the building and stopping all ingress and egress as apparently was the case, fill the police came to the rescue. It is in the evidence of Shri Hare krishna Mahapatra who was Officer In- charge of the Police Station Choudwar and whose evidence does not appear to have been fully read by the Tribunal that he arrived at the Administrative office at 4 or 5 p.m. on October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial period and who did not make any effort to persuade the assembled workmen to leave the premises of the Administrative Building. Mr. Govind Das for the respondent workmen has not seriously challenged what he calls the Management's prerogative to close down the undertaking, but according to him the Management is not at liberty to ignore all business reasons which must from the paramount consideration for taking such a decision. He has also emphasised that the closure should be of the entire business which means, according to him, that the Company should have been wound up. He has stressed the various matters which prevailed with the Tribunal about the absence of evidence to show that any decision was taken by the Board of Directors or the shareholders of the Company to close down the undertaking as a whole. It is maintained by him that it was only the manufacturing part of the undertaking which was stopped and this cannot possibly be equated with the closing down of the undertaking itself. It must be remembered that the notice which was served by the Management in the matter of closure contained an affirmative declaration not only about the closing down of the factory bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness itself. The mere statement in the notice, however, cannot be conclusive in the present case and it is the totality of facts and circumstances on which a conclusion has to be reached whether the undertaking was closed down. Ordinarily, as is well known, this Court does not interfere with -findings of fact of a Tribunal, but the question whether the undertaking was closed down or not by means of the notice dated ,October 3, 1967 was not considered in a proper manner by the Tribunal and its approach was erroneous and suffered from a number of infirmities of such a nature that the conclusion arrived at by it cannot be regarded as sacrosanct or final. The entire 'facts and circumstances established in this case impel us to hold -that the Management of the appellant closed down its principal , undertaking viz. of manufacturing and selling iron pipes and poles on October 3, 1967. It may be mentioned that it was and is not the case of the respondent that the continuation of water supply meant continuation of the undertaking of the appellant. The only question which now remains to be determined is whether the undertaking was closed for any reason, whatsoever ,or it was on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse would be circumstances beyond the control of the employer. But the matter did not stop there. The closure must be bona fide and it must not 'be arbitrary. According to him circumstances could not be called unavoidable if the employer by acting in a businesslike way or as a prudent man of business could avoid if. He was not expected to take a negative attitude. But at the same time he was not called upon to make any unusual effort to avoid any particular circumstances necessitating a closure of his business. Reliance was placed on the observations of Tindel C.J., in Granger v. Dent ([1829] 173 E.R. 1229) in which a charter party contained the expression unavoidable impediment . It was found by the learned, Judge that all the instances which had been mentioned showed that the matter had gone out of hand. Undoubtedly, if 'he Management had engaged an army of Darwans they could have restored peace but that was not what the employer could be compelled to do as he was entitled to run his business in a normal manner. The closure had been made bona fide and was real. 5 The company went into liquidation and the excise licences had been surrendered. All this would not have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal to give any other facts and circumstances from which it could be inferred that it appeared to the Management that it was not possible to carry on the business by acting in a business-like way and without unusual exertion. The explanation appearing in the proviso gives some indication of the anxiety of the legislature to expressly rule out certain contingencies which ordinarily could have been pleaded by the employer as unavoidable circumstances beyond his control. In the normal working of business of a commercial undertaking financial losses or accumulation of undisposed of stocks and the expiry of the period of the lease or the licence can ordinarily go a long way in establishing that it has virtually become impossible to carry on the business. For instance, if a company is heading towards liquidation its business will, in normal course, have to be closed down. Similarly if the period of lease of the site on which a factory has been set up has expired and there is no provision for its renewal or extension it would ordinarily present all insurmountable difficulty in the way of the working of an undertaking by a company or a commercial concern. Notwithstanding all this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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