Full Judgment Text
2005:BHC-OS:4387
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O. O. C. J.
WRIT PETITION NO.1495 OF 2002
AngloFrench Drugs & Industries Ltd. ...Petitioner.
Versus
Roche/AngloFrench Employees' Union. ...Respondents.
.......
Mr. C.U. Singh with Ms.Geetanjali Prabhu i/b. Sanjay Udeshi & Co.
for the Petitioner.
Ms.Hutoxi Tavadia for the Respondent.
......
CORAM : DR. D.Y. CHANDRACHUD, J.
April 1, 2005.
ORAL JUDGMENT:
This petition is directed against an order of the Industrial
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Court dated 11 April 2002. The Industrial Court allowed a Revision
Application filed by the Union against the order of the Labour Court.
The Labour Court held that the Petitioner was involved in an unfair
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labour practice in discharging or dismissing the workmen by way of
victimization. The Labour Court held that the termination was not
bona fide but in colourable exercise of the rights of the employer and
in disregard of the principles of natural justice. The Petitioner was
directed to reinstate the workmen with 50% back wages. The
Industrial Court has in revision, directed reinstatement with full back
wages and continuity of service.
2. The Petitioner was established in the then Province of
Bombay in 1923. The Petitioner initially carried on the business of
import and later, the manufacture of pharmaceutical drugs made on
loanlicence basis for Roche Pharmaceutical India Ltd. Sometime in
the year 1959 F. HoffmanLa Roche & Co. of Switzerland acquired a
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majority control over the foreign principal of the Petitioner. On 1 April
1961, Roche Pharmaceutical India Ltd., purchased the Bombay
factory of the Petitioner. Thereafter, for the next fifteen years, the
Petitioner was engaged in trading and marketing drugs and
formulations manufactured at its facility at Prabhadevi, Mumbai.
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Sometime in 1976, the Petitioner established a factory at Bangalore
for the manufacture of bulk drugs and pharmaceutical formulations.
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On 1 August 1980, the factory licence at Prabhadevi came to be
surrendered, after which it has been stated that no manufacturing
activity took place in Mumbai.
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3. On 10 December 1984, a notice was issued by the
Petitioner to all its employees at Mumbai recording that the audited
accounts of the Company showed a loss in 1983 consequent upon
which it was necessary for the management to take immediate
remedial measures. The management, it was stated, had decided to
economize and streamline the expenses of the Company to eliminate
the duplication of certain activities. For the first time, it was decided to
centralise all the activities of the Company at one location by shifting
them to Bangalore where the Company already had manufacturing
and distribution facilities. The management, therefore, communicated
that the workmen employed in the establishment of Mumbai would be
shifted to the establishment at Bangalore in a phased manner
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commencing from March 1985. Consequently all the workmen at the
establishments at Parel and Worli were to stand transferred to
Bangalore from a date which was to be notified independently. The
workmen were informed that on transfer, they would continue to be
governed by the existing terms and conditions of service. The
Company, it may be noted, had establishments at the material time in
Mumbai at Worli and Parel. The Administration, Personnel, Finance
and Distribution Departments and Material Stores were situated at the
relevant time at Parel. The Marketing and Procurement Departments
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were situated at Rajan House, Worli. On 21 December 1984 and
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16 January 1985, individual letters of transfer were addressed to the
workmen informing them of their relocation to the Bangalore Office of
the Company. The workmen were informed that in the event that
they did not accept transfer, the management would proceed to take
appropriate action in accordance with law and would consider the
payment of compensation if the workmen left service of the Company
voluntarily.
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4. On 8 January 1985, a strike notice was issued by the
Respondent Union intimating the management that a strike would
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commence on and from 22 January 1985. According to the
management, an immediate flash strike was, however, launched from
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8 January 1985. On 4 February 1985, the Union raised demands
upon the management seeking the withdrawal of the letters of transfer
and stating that there was no question of any workman complying
with the orders of the transfer. This demand was admitted in
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conciliation on 28 February 1985. On 6 March 1985, a further letter
of demand was issued by the Union demanding that the services of
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the employees affected by the notice of transfer dated 10 December
1984 should not be terminated by way of discharge or dismissal,
retrenchment, closure or shifting as a result of or in consequence of or
in any way in connection with or relating to the dispute concerning
the notice of transfer that was issued by the management. The
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additional demand was admitted in conciliation on 12 March 1985.
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5. On 4 April 1985, a notice of closure was issued by the
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Petitioner of its Bombay establishments under Section 25 FFA of the
Industrial Disputes Act, 1947. The notice of closure recited that the
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closure would be effective from 14 June 1985. The notice recited
that 92 workmen were engaged in the establishments at Mumbai
which were sought to be closed. The reason for the intended closure,
it was stated, was that the Company had a manufacturing unit and
other supportive functional departments at Bangalore and only two
offices and stores in Mumbai. Hence with a view to achieving
economic viability by reducing duplication of activities; for better
coordination between the manufacturing and other departments and
as a measure of business expediency and prudence the Company
decided to consolidate and centralize all activities in one location at
Bangalore.
6. The Deputy Commissioner of Labour issued a notice to
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show cause to the Petitioner on 6 May 1985 to explain why action
should not be taken for an alleged breach of the provisions of Section
33(1) of the Industrial Disputes Act, 1947. The Petitioner submitted a
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reply to the notice on 24 May 1985. In the meantime, on 10 May
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1985, the strike that was commenced by the Union on 8 January
1985 was withdrawn and the management was called upon to allow
all the striking workmen to resume duty. In its reply, the
management stated that the workmen who were engaged in the
establishments at Mumbai had already been transferred to Bangalore
and that the activities of the aforesaid departments were shifted to
Bangalore consequent upon which it would not be possible for the
Company to provide work in the establishments at Parel and Worli.
7. A Petition was filed before this Court by the Respondent
(Writ Petition 905 of 1985) in order to challenge the proposed closure,
inter alia on the ground that there was a violation of the provisions of
Section 33 of the Industrial Disputes Act, 1947. The petition came to
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be dismissed by a judgment and order dated 1 July 1985 of a
Learned Single Judge on grounds of maintainability. The matter was
carried in appeal and the order of the Learned Single Judge was
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confirmed on 13 January 1986. In the meantime, on 3 July 1985,
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after the dismissal of the petition by the Single Judge, a closure of the
Bombay establishments came to be effected and the services of the
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workmen were terminated by orders dated 3 July 1985. The letters
of termination provided that consequent upon the shifting of the
activities of the Company at Bangalore, the establishments at
Bombay shall stand closed and activities discontinued permanently
with effect from the date of the letters. Each of the workmen, it is
admitted, was paid closure compensation and there was compliance
with Section 25FFA of the Act. A circular was issued by the
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Company on 3 July 1985 to its dealers, distributors and other
business associates about the change of its location to Bangalore.
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On 19 July 1985 and 22 July 1985 notices were published in the
daily editions of the Times of India and the Indian Express in regard
to the shifting of the activities to Bangalore.
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8. On 27 December 1985, a complaint of unfair labour
practice under Items 1(a), (b), (d) and (f) of Schedule IV of the
Maharashtra Recognition of Trade Unions and Prevention of Unfair
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Labour Practices Act, 1971, was filed by the RespondentUnion. On
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28 January 1986, the Conciliation Officer recorded a failure of
conciliation. The management filed its Written Statement in the
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complaint on 30 January 1986. On 20 December 1990, this Court
quashed and set aside the criminal complaint filed by the Deputy
Commissioner of Labour for a breach of Section 33(1).
9. Evidence was recorded in the course of the complaint, both
on behalf of the management and on behalf of the Union. After the
Labour Court had decided upon the complaint, there were orders of
remand by the Industrial Court. It is not necessary to burden the
judgment with a copious reference to each of those orders.
10. At this stage, it may be noted that twelve individual
workmen had in 1987 challenged their termination in a separate
complaint (Complaint (ULP) 353 of 1987) before the Industrial Court.
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On 4 July 1994, the Industrial Court rejected that complaint. The
order of the Industrial Court was thereupon challenged before this
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Court in a Petition under Article 226 which was dismissed by a
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judgment and order dated 10 April 1995 of a Learned Single Judge
of this Court, Mr.Justice S.H. Kapadia (as the Learned Judge then
was). Before the Learned Single Judge an attempt was made to
establish that the provisions of Chapter VB of the Industrial Disputes
Act, 1947 would apply. The Learned Single Judge noted that it was
not in dispute that 92 workmen were employed in the establishment at
Mumbai. The Court noted that the evidence on record brought forth
by the management showed that the Industrial Court rightly
proceeded on the basis that 92 persons had been engaged. The
Petition was accordingly dismissed.
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11. By a judgment and order dated 20 November 2001, the
Labour Court granted reinstatement to the workmen together with
50% back wages. The order of the Labour Court was carried in
revision both by the employer and by the Union. The Labour Court
allowed the revision filed by the Union and granted full back wages
together with reinstatement. The Industrial Court has basically
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arrived at three findings. The first is that the termination of the
services of the workmen is illegal since the employer acted in breach
of the provisions of Section 33(1) of the the Industrial Disputes Act,
1947, by resorting to termination during the pendency of conciliation
proceedings. The second finding is that since termination took place
during the pendency of conciliation proceedings, the employer was
guilty of victimization; that the termination was not bona fide but in
colourable exercise of the right of the employer and in disregard of
the principles of natural justice. The third finding was based on an
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advertisement which was published in a daily newspaper on 6
September 2001 by which the employer had convened interviews for
medical representatives at the headquarters at Mumbai. The Court
held that this showed that some work of the Company was still going
on to some extent at Mumbai. Hence, the Court came to the
conclusion that the closure was not justified.
12. The findings which have been arrived at in the judgment of
the Labour Court, which has been confirmed in revision by the
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Industrial Court (subject to the enhancement of wages), have been
assailed on behalf of the management in these proceedings under
Article 226. Counsel appearing on behalf of the management submits
that (i) The finding in regard to the breach of the provisions of Section
33 is exfacie contrary to the law laid down by the Supreme Court in
several decisions; (ii) What Sections 33(1) (a) and Section 33(2)(a)
proscribe is the alteration of conditions of service applicable to the
workmen immediately before the commencement inter alia of
conciliation proceedings; (iii) The termination of service in the present
case was consequent upon closure and once it is established on the
basis of evidence that there was a closure, the provisions of Section
33 would not stand attracted to a termination which was in
accordance with the fundamental right of the employer to close down,
so long as the closure was in compliance with the statutory
provisions of Section 25FFA of the Industrial Disputes Act, 1947; (iv)
The witness who deposed on behalf of the Union specifically admitted
the factum of closure of the departments in Mumbai. Once the factum
of closure was admitted, this could not have been counteracted by a
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stray reference to an advertisement published in the newspapers for
the recruitment of medical representatives in the year 2001; (v) The
closure was never challenged by raising an industrial dispute or by
adopting appropriate proceedings before the Industrial Court under
the Maharashtra Recognition of Trade Unions and Prevention of
Unfair Labour Practices Act, 1971; (vi) The workmen had also not
taken any steps to challenge the orders of transfer. The termination
of service in the present case was brought about by a closure of the
departments in which the workmen were engaged in Mumbai and that
being the position, the findings which are arrived at by the Labour
Court and by the Industrial Court are perverse and warrant
interference under Article 226.
13. On behalf of the Respondent, Counsel urged that (i) There
was no provision for transfer of service in the contract of employment
with the workmen. The establishment at Bangalore came into
existence in 1976 and that therefore, those appointed prior to 1976
could not in any event have been transferred as a condition of
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service.; (ii) The closure of the establishment was a punitive action
for refusal to accept transfer and must be read and treated as a
termination for misconduct; (iii) No disciplinary enquiry was adopted
by the employer against the workmen for disobeying orders of
transfer; (iv) The shifting of departments had begun even prior to the
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effective date of closure which was 3 July 1985 and the reasons
which were advanced on behalf of the management would amount to
rationlisation within the meaning of Section 9A of the Industrial
Disputes Act, 1947 read with the Fourth Schedule; and (vi) Evidence
of the management's witness would show that the shifting to
Bangalore was malafide, because there was no place for absorbing
all the 92 workmen in Mumbai in the establishment at Bangalore.
Consequently, it was urged that no case was made out for the
interference of this Court under Article 226.
14. The first issue which arises before the Court is, the
determination of the question as to whether there was a breach on
the part of the management of the provisions of Section 33 of the
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Industrial Disputes Act, 1947. Sub sections 1 and 2 of Section 33
provide as follows:
“33. Conditions of service, etc., to remain unchanged under
certain circumstances during pendency of proceedings. (1)
During the pendency of any conciliation proceeding before
a conciliation officer or a Board or of any proceeding before
an arbitrator or a Labour Court or Tribunal or National
Tribunal in respect of an industrial dispute, no employer
shall
(a) in regard to any matter connected with the dispute, alter,
to the prejudice of the workmen concerned in such dispute,
the conditions of service applicable to them immediately
before the commencement of such proceeding; or
(b) for any misconduct connected with the dispute,
discharge or punish, whether by dismissal or otherwise, any
workman concerned in such dispute, save with the express
permission in writing of the authority before which the
proceeding is pending.
(2) During the pendency of any such proceeding in respect
of an industrial dispute, the employer may, in accordance
with standing orders applicable to a workman concerned in
such dispute (or, where there are no such standing orders,
in accordance with the terms of the contract, whether
express or implied, between him and the workman
(a) alter, in regard to any matter not connected with the
dispute, the conditions of service applicable to that
workman immediately before the commencement of such
proceeding; or
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(b) for any misconduct not connected with the dispute,
discharge or punish, whether by dismissal or otherwise, that
workman:
Provided that no such workman shall be
discharged or dismissed, unless he has been paid wages
for one month and an application has been made by the
employer to the authority before which the proceeding is
pending for approval of the action taken by the employer.”
15. The embargo in subsection (1) and subsection (2) of
Section 33 is on the employer taking certain measures during the
pendency of any conciliation proceedings or proceedings before an
Arbitrator, Labour Court, Tribunal or National Tribunal in respect of an
industrial dispute. Under clause (a) of subsection (1) of Section 33,
an employer shall not, in regard to any matter connected with the
industrial dispute, alter, to the prejudice of the workmen concerned in
such dispute, the conditions of service applicable to them immediately
before the commencement of such proceedings. Under clause (b) of
subsection (1), the employer is precluded from discharging or
punishing whether by dismissal or otherwise, any workman concerned
in such dispute for any misconduct connected with the dispute. The
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embargo, can be lifted if the employer obtains the express permission
in writing of the authority before which the proceeding is pending.
The provisions of clauses (a) and (b) of subsection (1) of Section 33
would show that they apply in respect of matters which are connected
with the industrial dispute. In contrast, subsection (2) of Section 33
deals with action taken by an employer in matters not connected with
the industrial dispute. Clauses (a) and (b) of subsection (2) are
broadly similar to clauses (a) and (b) of subsection (1), but in so far
as is material for the present purposes, subsection (2) empowers the
employer to take such action as is adverted to in clauses (a) and (b)
subject to the fulfillment of certain conditions. Those conditions, which
are listed in the proviso are that the employee has to be paid wages
for one month and an application for approval has to be filed with the
authority before whom the proceeding is pending.
16. The settled principle of law is that the provisions of Section
33(1) and (2) are mandatory. This is reiterated in the decision of a
Jaipur Zila Sahakari
Constitution Bench of the Supreme Court in
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Bhoomi Vikas Bank Ltd. v. Shri ram Gopal Sharma,
2002(1) CLR
789. The point which arises for consideration in the present case is
as to whether the provisions of Section 33 would stand attracted to a
case where the termination of service is brought about by a closure
of the establishment. This point is no longer res integra. It has been
dealt with as far back as in 1957 in a judgment of the Constitution
Banaras Ice Factory Ltd. vs. Their
Bench of the Supreme Court in
Workmen, 1957 I LLJ 253. The Supreme Court considered in that
case, the provisions of Sections 22 and 23 of the Industrial Disputes
(Appellate Tribunal) Act, 1950 which were pari materia . In clause (a)
of Section 22 of the Act, it was provided that during the period of thirty
days allowed for the filing of an appeal or during the pendency of any
appeal under the Act, no employer shall alter, to the prejudice of the
workmen concerned in such appeal, conditions of service applicable
to them immediately before the filing of such appeal. Similarly, clause
(b) provided that the employer shall not during the aforesaid period
discharge or punish whether by way of dismissal or otherwise, any
workmen concerned in such appeal, save with the express permission
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in writing of the Appellate Tribunal. Clauses (a) and (b) of Section 22
were thus pari materia to clauses (a) and (b) of subsections (1) and
(2) of Section 33 of the Industrial Disputes Act, 1947. The Supreme
Court held that clause (a) applies to a running or existing industry
only; when the industry itself ceases to exist, it is otiose to talk of an
alteration of the conditions of service of the workmen to their
prejudice, because their services have come to an end. In other
words, the alteration referred to in clause (a) must be an alteration in
the conditions of service to the prejudice of the workmen concerned in
an existing and running industry. While referring to the underlying
objects of the statutory provision, the Supreme Court held thus:
“Those objects are capable of fulfillment in a running or
continuing industry only, and not in a dead industry. There
is hardly any occasion for praying for permission to lift the
ban imposed by S.22, when the employer has the right to
close his business and bona fide does so, with the result
that the industry itself ceases to exist. If there is no real
closure but a mere pretence of a closure or it is mala fide,
there is no closure in the eye of law and the workmen can
raise an industrial dispute and may even complain under
S.23 of the Act.”
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Banaras Ice Factory
These observations in the decision in were
explained in the subsequent decision in Tea Districts Labour
Association, Calcutta vs. Exemployees of Tea Districts Labour
Associations , AIR 1960 SC 815. Mr.Justice P.B. Gajendragadkar (as
the Learned Chief Justice then was) held that the observations in
Banaras Ice Factory do not lay down that wherever a closure is
mala fide it must be deemed to be unreal and nonexistent. The
Supreme Court held thus :
“What this Court has said is that in cases of pretence of
closure no closure in fact has taken place and for the
purpose of S.23 of the Act with which the Court was dealing
a mala fide closure may conceivably be treated as falling in
the same class as a pretence of closure. But in the present
case the fact are not in dispute. There has been a closure
and the agencies have been closed and their business has
been wound up. If it is found that the closure was not bona
fide the consequences would be the liability of the employer
to pay the higher compensation under S.25FFF of the the
Industrial Disputes Act, 1947. But it is difficult to see how
when the two agencies have in fact been closed the finding
about mala fides can justify the conclusion that the said two
agencies should be deemed to continue and how the award
can make an order on that basis.” (emphasis supplied).
The provisions of Section 33 of the Industrial Disputes Act, 1947 were
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revisited in a judgment of two Learned Judges of the Supreme Court
in National Engineering Industries Ltd. v. Hanuman, AIR 1968 SC
33. The Standing Order in that case laid down that a workman would
lose his appointment unless he returned within eight days of the
expiry of leave and furnished an explanation to the satisfaction of the
authority. The Tribunal had in a decision which was cited before the
Supreme Court, held that where a Standing Order does provide for
automatic termination of service, Section 23 of the Industrial Disputes
(Appellate Tribunal) Act, 1950 would not apply. The Supreme Court
held that the decision of the Tribunal laid down the correct position in
law and that the position would be the same under Section 33 of the
Industrial Disputes Act, 1947. Hence, if the services of a workman
would stand terminated automatically under a Standing Order in a
given eventuality, there was no question in such a case of the
contravention of Section 33 of the Act. In Kalinga Tubes Ltd.
V.Their Workmen,
AIR 1969 SC 90, a Bench of three Learned
Judges of the Supreme Court held that the closure has to be
genuine and bona fide in the sense that it should be a closure in fact,
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and not a mere pretence of closure; the motive behind the closure
was immaterial and what was required to be scrutinized was whether
the closure was in fact, effective.
17. From the evidence which has emerged on the record, the
basic fact which has been established is the closure of several
departments of the Company in its Mumbai establishment with effect
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from 3 July 1985. The factum of closure stands admitted in the
evidence of the two witnesses who deposed on behalf of the Union.
The evidence of the first witness was to the effect that the
Administration, Personnel and Distribution Departments and the
Material stores were situated at Parel establishment. The witness
himself was working in the Finance Department. The Marketing and
the Material Procurement Departments were situated at Rajan House,
Worli. In the course of his crossexamination, the witness made the
following admissions :
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“It is correct to say after 3 July, 1985 no any employee
was working in the Finance Deptt. I am not aware whether
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Finance Manager was working at Bombay after 3 July
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1985 Administration, Personnel, Distributions Department
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and Material Stores were closed after 3 of July 1985.
Similarly Marketing and Materials procurement department
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were also closed from 3 of July 1985.”
The second witness who deposed on behalf of the Union, similarly
accepted the factum of closure of the Marketing Department in which
he had been engaged as a Junior Clerk. :
“It is true that the Marketing Deptt. Is shifted to Bangalore.
It is also true that the marketing activities at Bombay is
closed. All the activities which were carried out in the Rajan
House were closed, w. e. f. 371985. It is true that in
pursuance of the closure notice our services were
terminated w. e. f. 371985.”
18. On the face of this clear evidence, it was impossible for the
Labour Court to come to any conclusion other than that the closure of
departments in the Mumbai establishments stood established as on
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3 July 1985. The Labour Court placed reliance on a stray
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advertisement which had appeared in the newspapers on 6
September 2001 for the recruitment of Medical Representatives for
which interviews were to be held at the Head Office at Mumbai. The
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Labour Court inferred therefrom that this shows that the working of
the Company was still going on “to some extent” at Mumbai. Purely
on the basis of this, the Labour Court concluded that the closure was
not justified. With respect, the reasoning of the Labour Court suppers
from a clear perversity. For one thing it was not the case of the
Company that all the activities at Mumbai had been closed. The
witness who deposed on behalf of the management stated that the
registered office of the Company continued to remain in Mumbai.
Under Section 2(cc) of the Industrial Disputes Act, 1947 “closure” is
defined to mean the permanent closing down of a place of
employment or part thereof. Second, the workmen who deposed in
evidence, squarely admitted that several departments of the
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Company had been closed at Mumbai and on and from 3 July 1985,
no employee had been engaged in the Finance, Administration,
Personnel and Distribution Departments and that the Material Stores
were closed together with the Marketing and Material Procurement
Departments. That being the position, in the face of the clear
evidence on the record, there was neither any warrant nor any
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justification for the Labour Court to hold that either that there was no
closure or that the closure was not justified. The law on the subject to
which a reference has already been made earlier, is absolutely clear.
What Section 33(1)(a) of the Industrial Disputes Act, 1947 proscribes
is the alteration to the prejudice of the workmen concerned in the
industrial dispute, of the conditions of service applicable to them
immediately before the commencement of such proceedings. The
closure of a place of employment or a part thereof in accordance with
statutory provisions which recognise and regulate the right of the
employer cannot possibly be regarded as an alteration in the
conditions of service applicable immediately before the
commencement of the proceedings. The decision in Banaras Ice
Factory (supra) is an authority for the proposition that an alteration of
the conditions of service presumes the existence of a live industry
and where a closure has taken place there is in such a case, no
question of the conditions of service being altered. This would equally
apply to a closure of a part of a place of employment in view of the
provisions of Section 2(cc). Kalinga Tubes laid down the principle
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that it is the factum of closure and not the motive for the closure that
is relevant. What the decision in Tea Districts Labour Association
emphasies is that the Court must have regard to whether there is a
closure in fact and not a mere presence of closure. Finally, it may be
material to advert to the decision of the Supreme Court in L. Robert
D'souza Vs. Executive Engineer, Southern Railway, (
1982) 1 SCC
645, where the Supreme Court held that when a workman is
retrenched, it cannot be said that a change in his conditions of service
is effected. In the present case, therefore, once the factum of closure
has been established, as it was in view of the clear admissions of the
workmen themselves, there was no occasion for the Industrial or
Labour Courts to hold that the dispensation of the services of the
workmen under and in pursuance of the closure amounted to an
alteration of their conditions of service within the meaning of Section
33 of the Industrial Disputes Act, 1947.
19. Counsel appearing on behalf of the Respondents placed
reliance on the judgment of the Supreme Court in Kundan Sugar
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Mills vs. Ziauddin
, (1960) 18 Factories Journal Reports 108 in
support of the proposition that where there is no express agreement
between the employer and workmen providing for a right of transfer,
it cannot be held that an employer has the inherent or implied right to
transfer his workmen where he chooses to start a business
subsequent to the date of employment, especially when the new
business is treated as a different entity and is governed by different
service conditions. The principle which was laid down in the aforesaid
decision will, however, not advance the case of the Respondent
because the challenge in the course of the proceedings before the
Labour Court was a challenge to the termination of service in a
complaint under Item (1) of Schedule IV of the Maharashtra
Recognition of Trade Unions and Prevention of Unfair Labour
Practices Act, 1971. The orders of transfer had never been
challenged. The contention of Counsel was that the employer ought
to have convened a disciplinary enquiry since the workmen failed to
comply with the orders of transfer, but instead of doing this, a closure
of the establishment was resorted to which was a punitive measure
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against the refusal of the workmen to accept the transfer. There is no
basis in the aforesaid submission. The employer was entitled to
resort to the action of closure so long as the action was consistent
with the statutory provisions which regulated that right. Notice was
th
given by the employer on 4 April 1985 and the establishments at
rd
Mumbai came to be closed with effect from 3 July 1985 after the
st
Learned Single Judge of this Court dismissed on 1 July 1985 a
petition by the Union challenging the closure notice. The Petition was
dismissed on the ground of maintainability. But what is material in the
present case is that despite a failure report, the closure was never
challenged either by raising an industrial dispute or by taking
recourse to the remedies before the Industrial Court under the
Maharashtra Recognition of Trade Unions and Prevention of Unfair
Labour Practices Act, 1971. There was an individual challenge by 12
workmen which failed both in the Industrial Court and in this Court.
Essentially what was challenged was a consequence which arose
upon the closure viz., the termination of service that was brought
about by the closure. Once there was a closure in fact, and the
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29
closure was brought about by due compliance with the relevant
provisions of law, the Labour Court clearly transgressed its jurisdiction
in arriving at a finding which it did. The Labour Court arrived at the
conclusion of victimization based on the evidence of management's
witness in para 10 of the notes of crossexamination. The witness
th
stated therein that on 10 May 1985, the workers had offered
themselves for work and it was true that they were not allowed to
report for duty at Mumbai as by that time the activities of the Bombay
establishments had been shifted to Bangalore. The wages of the staff
in the Administration and Personnel Departments were paid as the
activities of those departments had not been completely shifted. This
part of the evidence does not establish a case of victimization. The
th
workmen had issued a strike notice on 8 January 1985 and had
thereafter proceeded on strike. The management issued a notice of
th
closure under Section 25FFA on 4 April 1985 and it is thereafter on
th
10 May 1985 that the strike was withdrawn and the workers sought
to join duties. At that stage, the process of shifting the departments
of the Company to the establishment at Bangalore had begun since
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30
the work of shifting was carried out phasewise. As the evidence
rd
shows the departments were closed on 3 July 1985. That being the
position, the finding of victimization is not borne out by the evidence
on record and is clearly based on no evidence at all.
20. For all these reasons, I am of the view that the orders of the
Labour Court and of the Industrial Court are unsustainable and that
the Petition has to be allowed. The petition is allowed in terms of
prayer clause (a). There shall be no order as to costs.
......
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1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O. O. C. J.
WRIT PETITION NO.1495 OF 2002
AngloFrench Drugs & Industries Ltd. ...Petitioner.
Versus
Roche/AngloFrench Employees' Union. ...Respondents.
.......
Mr. C.U. Singh with Ms.Geetanjali Prabhu i/b. Sanjay Udeshi & Co.
for the Petitioner.
Ms.Hutoxi Tavadia for the Respondent.
......
CORAM : DR. D.Y. CHANDRACHUD, J.
April 1, 2005.
ORAL JUDGMENT:
This petition is directed against an order of the Industrial
th
Court dated 11 April 2002. The Industrial Court allowed a Revision
Application filed by the Union against the order of the Labour Court.
The Labour Court held that the Petitioner was involved in an unfair
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2
labour practice in discharging or dismissing the workmen by way of
victimization. The Labour Court held that the termination was not
bona fide but in colourable exercise of the rights of the employer and
in disregard of the principles of natural justice. The Petitioner was
directed to reinstate the workmen with 50% back wages. The
Industrial Court has in revision, directed reinstatement with full back
wages and continuity of service.
2. The Petitioner was established in the then Province of
Bombay in 1923. The Petitioner initially carried on the business of
import and later, the manufacture of pharmaceutical drugs made on
loanlicence basis for Roche Pharmaceutical India Ltd. Sometime in
the year 1959 F. HoffmanLa Roche & Co. of Switzerland acquired a
st
majority control over the foreign principal of the Petitioner. On 1 April
1961, Roche Pharmaceutical India Ltd., purchased the Bombay
factory of the Petitioner. Thereafter, for the next fifteen years, the
Petitioner was engaged in trading and marketing drugs and
formulations manufactured at its facility at Prabhadevi, Mumbai.
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3
Sometime in 1976, the Petitioner established a factory at Bangalore
for the manufacture of bulk drugs and pharmaceutical formulations.
st
On 1 August 1980, the factory licence at Prabhadevi came to be
surrendered, after which it has been stated that no manufacturing
activity took place in Mumbai.
th
3. On 10 December 1984, a notice was issued by the
Petitioner to all its employees at Mumbai recording that the audited
accounts of the Company showed a loss in 1983 consequent upon
which it was necessary for the management to take immediate
remedial measures. The management, it was stated, had decided to
economize and streamline the expenses of the Company to eliminate
the duplication of certain activities. For the first time, it was decided to
centralise all the activities of the Company at one location by shifting
them to Bangalore where the Company already had manufacturing
and distribution facilities. The management, therefore, communicated
that the workmen employed in the establishment of Mumbai would be
shifted to the establishment at Bangalore in a phased manner
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4
commencing from March 1985. Consequently all the workmen at the
establishments at Parel and Worli were to stand transferred to
Bangalore from a date which was to be notified independently. The
workmen were informed that on transfer, they would continue to be
governed by the existing terms and conditions of service. The
Company, it may be noted, had establishments at the material time in
Mumbai at Worli and Parel. The Administration, Personnel, Finance
and Distribution Departments and Material Stores were situated at the
relevant time at Parel. The Marketing and Procurement Departments
st
were situated at Rajan House, Worli. On 21 December 1984 and
th
16 January 1985, individual letters of transfer were addressed to the
workmen informing them of their relocation to the Bangalore Office of
the Company. The workmen were informed that in the event that
they did not accept transfer, the management would proceed to take
appropriate action in accordance with law and would consider the
payment of compensation if the workmen left service of the Company
voluntarily.
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5
th
4. On 8 January 1985, a strike notice was issued by the
Respondent Union intimating the management that a strike would
nd
commence on and from 22 January 1985. According to the
management, an immediate flash strike was, however, launched from
th th
8 January 1985. On 4 February 1985, the Union raised demands
upon the management seeking the withdrawal of the letters of transfer
and stating that there was no question of any workman complying
with the orders of the transfer. This demand was admitted in
th th
conciliation on 28 February 1985. On 6 March 1985, a further letter
of demand was issued by the Union demanding that the services of
th
the employees affected by the notice of transfer dated 10 December
1984 should not be terminated by way of discharge or dismissal,
retrenchment, closure or shifting as a result of or in consequence of or
in any way in connection with or relating to the dispute concerning
the notice of transfer that was issued by the management. The
th
additional demand was admitted in conciliation on 12 March 1985.
th
5. On 4 April 1985, a notice of closure was issued by the
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6
Petitioner of its Bombay establishments under Section 25 FFA of the
Industrial Disputes Act, 1947. The notice of closure recited that the
th
closure would be effective from 14 June 1985. The notice recited
that 92 workmen were engaged in the establishments at Mumbai
which were sought to be closed. The reason for the intended closure,
it was stated, was that the Company had a manufacturing unit and
other supportive functional departments at Bangalore and only two
offices and stores in Mumbai. Hence with a view to achieving
economic viability by reducing duplication of activities; for better
coordination between the manufacturing and other departments and
as a measure of business expediency and prudence the Company
decided to consolidate and centralize all activities in one location at
Bangalore.
6. The Deputy Commissioner of Labour issued a notice to
th
show cause to the Petitioner on 6 May 1985 to explain why action
should not be taken for an alleged breach of the provisions of Section
33(1) of the Industrial Disputes Act, 1947. The Petitioner submitted a
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7
th th
reply to the notice on 24 May 1985. In the meantime, on 10 May
th
1985, the strike that was commenced by the Union on 8 January
1985 was withdrawn and the management was called upon to allow
all the striking workmen to resume duty. In its reply, the
management stated that the workmen who were engaged in the
establishments at Mumbai had already been transferred to Bangalore
and that the activities of the aforesaid departments were shifted to
Bangalore consequent upon which it would not be possible for the
Company to provide work in the establishments at Parel and Worli.
7. A Petition was filed before this Court by the Respondent
(Writ Petition 905 of 1985) in order to challenge the proposed closure,
inter alia on the ground that there was a violation of the provisions of
Section 33 of the Industrial Disputes Act, 1947. The petition came to
st
be dismissed by a judgment and order dated 1 July 1985 of a
Learned Single Judge on grounds of maintainability. The matter was
carried in appeal and the order of the Learned Single Judge was
th rd
confirmed on 13 January 1986. In the meantime, on 3 July 1985,
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8
after the dismissal of the petition by the Single Judge, a closure of the
Bombay establishments came to be effected and the services of the
rd
workmen were terminated by orders dated 3 July 1985. The letters
of termination provided that consequent upon the shifting of the
activities of the Company at Bangalore, the establishments at
Bombay shall stand closed and activities discontinued permanently
with effect from the date of the letters. Each of the workmen, it is
admitted, was paid closure compensation and there was compliance
with Section 25FFA of the Act. A circular was issued by the
rd
Company on 3 July 1985 to its dealers, distributors and other
business associates about the change of its location to Bangalore.
th nd
On 19 July 1985 and 22 July 1985 notices were published in the
daily editions of the Times of India and the Indian Express in regard
to the shifting of the activities to Bangalore.
th
8. On 27 December 1985, a complaint of unfair labour
practice under Items 1(a), (b), (d) and (f) of Schedule IV of the
Maharashtra Recognition of Trade Unions and Prevention of Unfair
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9
Labour Practices Act, 1971, was filed by the RespondentUnion. On
th
28 January 1986, the Conciliation Officer recorded a failure of
conciliation. The management filed its Written Statement in the
th th
complaint on 30 January 1986. On 20 December 1990, this Court
quashed and set aside the criminal complaint filed by the Deputy
Commissioner of Labour for a breach of Section 33(1).
9. Evidence was recorded in the course of the complaint, both
on behalf of the management and on behalf of the Union. After the
Labour Court had decided upon the complaint, there were orders of
remand by the Industrial Court. It is not necessary to burden the
judgment with a copious reference to each of those orders.
10. At this stage, it may be noted that twelve individual
workmen had in 1987 challenged their termination in a separate
complaint (Complaint (ULP) 353 of 1987) before the Industrial Court.
th
On 4 July 1994, the Industrial Court rejected that complaint. The
order of the Industrial Court was thereupon challenged before this
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10
Court in a Petition under Article 226 which was dismissed by a
th
judgment and order dated 10 April 1995 of a Learned Single Judge
of this Court, Mr.Justice S.H. Kapadia (as the Learned Judge then
was). Before the Learned Single Judge an attempt was made to
establish that the provisions of Chapter VB of the Industrial Disputes
Act, 1947 would apply. The Learned Single Judge noted that it was
not in dispute that 92 workmen were employed in the establishment at
Mumbai. The Court noted that the evidence on record brought forth
by the management showed that the Industrial Court rightly
proceeded on the basis that 92 persons had been engaged. The
Petition was accordingly dismissed.
th
11. By a judgment and order dated 20 November 2001, the
Labour Court granted reinstatement to the workmen together with
50% back wages. The order of the Labour Court was carried in
revision both by the employer and by the Union. The Labour Court
allowed the revision filed by the Union and granted full back wages
together with reinstatement. The Industrial Court has basically
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11
arrived at three findings. The first is that the termination of the
services of the workmen is illegal since the employer acted in breach
of the provisions of Section 33(1) of the the Industrial Disputes Act,
1947, by resorting to termination during the pendency of conciliation
proceedings. The second finding is that since termination took place
during the pendency of conciliation proceedings, the employer was
guilty of victimization; that the termination was not bona fide but in
colourable exercise of the right of the employer and in disregard of
the principles of natural justice. The third finding was based on an
th
advertisement which was published in a daily newspaper on 6
September 2001 by which the employer had convened interviews for
medical representatives at the headquarters at Mumbai. The Court
held that this showed that some work of the Company was still going
on to some extent at Mumbai. Hence, the Court came to the
conclusion that the closure was not justified.
12. The findings which have been arrived at in the judgment of
the Labour Court, which has been confirmed in revision by the
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12
Industrial Court (subject to the enhancement of wages), have been
assailed on behalf of the management in these proceedings under
Article 226. Counsel appearing on behalf of the management submits
that (i) The finding in regard to the breach of the provisions of Section
33 is exfacie contrary to the law laid down by the Supreme Court in
several decisions; (ii) What Sections 33(1) (a) and Section 33(2)(a)
proscribe is the alteration of conditions of service applicable to the
workmen immediately before the commencement inter alia of
conciliation proceedings; (iii) The termination of service in the present
case was consequent upon closure and once it is established on the
basis of evidence that there was a closure, the provisions of Section
33 would not stand attracted to a termination which was in
accordance with the fundamental right of the employer to close down,
so long as the closure was in compliance with the statutory
provisions of Section 25FFA of the Industrial Disputes Act, 1947; (iv)
The witness who deposed on behalf of the Union specifically admitted
the factum of closure of the departments in Mumbai. Once the factum
of closure was admitted, this could not have been counteracted by a
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13
stray reference to an advertisement published in the newspapers for
the recruitment of medical representatives in the year 2001; (v) The
closure was never challenged by raising an industrial dispute or by
adopting appropriate proceedings before the Industrial Court under
the Maharashtra Recognition of Trade Unions and Prevention of
Unfair Labour Practices Act, 1971; (vi) The workmen had also not
taken any steps to challenge the orders of transfer. The termination
of service in the present case was brought about by a closure of the
departments in which the workmen were engaged in Mumbai and that
being the position, the findings which are arrived at by the Labour
Court and by the Industrial Court are perverse and warrant
interference under Article 226.
13. On behalf of the Respondent, Counsel urged that (i) There
was no provision for transfer of service in the contract of employment
with the workmen. The establishment at Bangalore came into
existence in 1976 and that therefore, those appointed prior to 1976
could not in any event have been transferred as a condition of
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14
service.; (ii) The closure of the establishment was a punitive action
for refusal to accept transfer and must be read and treated as a
termination for misconduct; (iii) No disciplinary enquiry was adopted
by the employer against the workmen for disobeying orders of
transfer; (iv) The shifting of departments had begun even prior to the
rd
effective date of closure which was 3 July 1985 and the reasons
which were advanced on behalf of the management would amount to
rationlisation within the meaning of Section 9A of the Industrial
Disputes Act, 1947 read with the Fourth Schedule; and (vi) Evidence
of the management's witness would show that the shifting to
Bangalore was malafide, because there was no place for absorbing
all the 92 workmen in Mumbai in the establishment at Bangalore.
Consequently, it was urged that no case was made out for the
interference of this Court under Article 226.
14. The first issue which arises before the Court is, the
determination of the question as to whether there was a breach on
the part of the management of the provisions of Section 33 of the
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15
Industrial Disputes Act, 1947. Sub sections 1 and 2 of Section 33
provide as follows:
“33. Conditions of service, etc., to remain unchanged under
certain circumstances during pendency of proceedings. (1)
During the pendency of any conciliation proceeding before
a conciliation officer or a Board or of any proceeding before
an arbitrator or a Labour Court or Tribunal or National
Tribunal in respect of an industrial dispute, no employer
shall
(a) in regard to any matter connected with the dispute, alter,
to the prejudice of the workmen concerned in such dispute,
the conditions of service applicable to them immediately
before the commencement of such proceeding; or
(b) for any misconduct connected with the dispute,
discharge or punish, whether by dismissal or otherwise, any
workman concerned in such dispute, save with the express
permission in writing of the authority before which the
proceeding is pending.
(2) During the pendency of any such proceeding in respect
of an industrial dispute, the employer may, in accordance
with standing orders applicable to a workman concerned in
such dispute (or, where there are no such standing orders,
in accordance with the terms of the contract, whether
express or implied, between him and the workman
(a) alter, in regard to any matter not connected with the
dispute, the conditions of service applicable to that
workman immediately before the commencement of such
proceeding; or
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16
(b) for any misconduct not connected with the dispute,
discharge or punish, whether by dismissal or otherwise, that
workman:
Provided that no such workman shall be
discharged or dismissed, unless he has been paid wages
for one month and an application has been made by the
employer to the authority before which the proceeding is
pending for approval of the action taken by the employer.”
15. The embargo in subsection (1) and subsection (2) of
Section 33 is on the employer taking certain measures during the
pendency of any conciliation proceedings or proceedings before an
Arbitrator, Labour Court, Tribunal or National Tribunal in respect of an
industrial dispute. Under clause (a) of subsection (1) of Section 33,
an employer shall not, in regard to any matter connected with the
industrial dispute, alter, to the prejudice of the workmen concerned in
such dispute, the conditions of service applicable to them immediately
before the commencement of such proceedings. Under clause (b) of
subsection (1), the employer is precluded from discharging or
punishing whether by dismissal or otherwise, any workman concerned
in such dispute for any misconduct connected with the dispute. The
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17
embargo, can be lifted if the employer obtains the express permission
in writing of the authority before which the proceeding is pending.
The provisions of clauses (a) and (b) of subsection (1) of Section 33
would show that they apply in respect of matters which are connected
with the industrial dispute. In contrast, subsection (2) of Section 33
deals with action taken by an employer in matters not connected with
the industrial dispute. Clauses (a) and (b) of subsection (2) are
broadly similar to clauses (a) and (b) of subsection (1), but in so far
as is material for the present purposes, subsection (2) empowers the
employer to take such action as is adverted to in clauses (a) and (b)
subject to the fulfillment of certain conditions. Those conditions, which
are listed in the proviso are that the employee has to be paid wages
for one month and an application for approval has to be filed with the
authority before whom the proceeding is pending.
16. The settled principle of law is that the provisions of Section
33(1) and (2) are mandatory. This is reiterated in the decision of a
Jaipur Zila Sahakari
Constitution Bench of the Supreme Court in
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18
Bhoomi Vikas Bank Ltd. v. Shri ram Gopal Sharma,
2002(1) CLR
789. The point which arises for consideration in the present case is
as to whether the provisions of Section 33 would stand attracted to a
case where the termination of service is brought about by a closure
of the establishment. This point is no longer res integra. It has been
dealt with as far back as in 1957 in a judgment of the Constitution
Banaras Ice Factory Ltd. vs. Their
Bench of the Supreme Court in
Workmen, 1957 I LLJ 253. The Supreme Court considered in that
case, the provisions of Sections 22 and 23 of the Industrial Disputes
(Appellate Tribunal) Act, 1950 which were pari materia . In clause (a)
of Section 22 of the Act, it was provided that during the period of thirty
days allowed for the filing of an appeal or during the pendency of any
appeal under the Act, no employer shall alter, to the prejudice of the
workmen concerned in such appeal, conditions of service applicable
to them immediately before the filing of such appeal. Similarly, clause
(b) provided that the employer shall not during the aforesaid period
discharge or punish whether by way of dismissal or otherwise, any
workmen concerned in such appeal, save with the express permission
::: Downloaded on - 26/06/2024 07:33:17 :::
19
in writing of the Appellate Tribunal. Clauses (a) and (b) of Section 22
were thus pari materia to clauses (a) and (b) of subsections (1) and
(2) of Section 33 of the Industrial Disputes Act, 1947. The Supreme
Court held that clause (a) applies to a running or existing industry
only; when the industry itself ceases to exist, it is otiose to talk of an
alteration of the conditions of service of the workmen to their
prejudice, because their services have come to an end. In other
words, the alteration referred to in clause (a) must be an alteration in
the conditions of service to the prejudice of the workmen concerned in
an existing and running industry. While referring to the underlying
objects of the statutory provision, the Supreme Court held thus:
“Those objects are capable of fulfillment in a running or
continuing industry only, and not in a dead industry. There
is hardly any occasion for praying for permission to lift the
ban imposed by S.22, when the employer has the right to
close his business and bona fide does so, with the result
that the industry itself ceases to exist. If there is no real
closure but a mere pretence of a closure or it is mala fide,
there is no closure in the eye of law and the workmen can
raise an industrial dispute and may even complain under
S.23 of the Act.”
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20
Banaras Ice Factory
These observations in the decision in were
explained in the subsequent decision in Tea Districts Labour
Association, Calcutta vs. Exemployees of Tea Districts Labour
Associations , AIR 1960 SC 815. Mr.Justice P.B. Gajendragadkar (as
the Learned Chief Justice then was) held that the observations in
Banaras Ice Factory do not lay down that wherever a closure is
mala fide it must be deemed to be unreal and nonexistent. The
Supreme Court held thus :
“What this Court has said is that in cases of pretence of
closure no closure in fact has taken place and for the
purpose of S.23 of the Act with which the Court was dealing
a mala fide closure may conceivably be treated as falling in
the same class as a pretence of closure. But in the present
case the fact are not in dispute. There has been a closure
and the agencies have been closed and their business has
been wound up. If it is found that the closure was not bona
fide the consequences would be the liability of the employer
to pay the higher compensation under S.25FFF of the the
Industrial Disputes Act, 1947. But it is difficult to see how
when the two agencies have in fact been closed the finding
about mala fides can justify the conclusion that the said two
agencies should be deemed to continue and how the award
can make an order on that basis.” (emphasis supplied).
The provisions of Section 33 of the Industrial Disputes Act, 1947 were
::: Downloaded on - 26/06/2024 07:33:17 :::
21
revisited in a judgment of two Learned Judges of the Supreme Court
in National Engineering Industries Ltd. v. Hanuman, AIR 1968 SC
33. The Standing Order in that case laid down that a workman would
lose his appointment unless he returned within eight days of the
expiry of leave and furnished an explanation to the satisfaction of the
authority. The Tribunal had in a decision which was cited before the
Supreme Court, held that where a Standing Order does provide for
automatic termination of service, Section 23 of the Industrial Disputes
(Appellate Tribunal) Act, 1950 would not apply. The Supreme Court
held that the decision of the Tribunal laid down the correct position in
law and that the position would be the same under Section 33 of the
Industrial Disputes Act, 1947. Hence, if the services of a workman
would stand terminated automatically under a Standing Order in a
given eventuality, there was no question in such a case of the
contravention of Section 33 of the Act. In Kalinga Tubes Ltd.
V.Their Workmen,
AIR 1969 SC 90, a Bench of three Learned
Judges of the Supreme Court held that the closure has to be
genuine and bona fide in the sense that it should be a closure in fact,
::: Downloaded on - 26/06/2024 07:33:17 :::
22
and not a mere pretence of closure; the motive behind the closure
was immaterial and what was required to be scrutinized was whether
the closure was in fact, effective.
17. From the evidence which has emerged on the record, the
basic fact which has been established is the closure of several
departments of the Company in its Mumbai establishment with effect
rd
from 3 July 1985. The factum of closure stands admitted in the
evidence of the two witnesses who deposed on behalf of the Union.
The evidence of the first witness was to the effect that the
Administration, Personnel and Distribution Departments and the
Material stores were situated at Parel establishment. The witness
himself was working in the Finance Department. The Marketing and
the Material Procurement Departments were situated at Rajan House,
Worli. In the course of his crossexamination, the witness made the
following admissions :
rd
“It is correct to say after 3 July, 1985 no any employee
was working in the Finance Deptt. I am not aware whether
rd
Finance Manager was working at Bombay after 3 July
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23
1985 Administration, Personnel, Distributions Department
rd
and Material Stores were closed after 3 of July 1985.
Similarly Marketing and Materials procurement department
rd
were also closed from 3 of July 1985.”
The second witness who deposed on behalf of the Union, similarly
accepted the factum of closure of the Marketing Department in which
he had been engaged as a Junior Clerk. :
“It is true that the Marketing Deptt. Is shifted to Bangalore.
It is also true that the marketing activities at Bombay is
closed. All the activities which were carried out in the Rajan
House were closed, w. e. f. 371985. It is true that in
pursuance of the closure notice our services were
terminated w. e. f. 371985.”
18. On the face of this clear evidence, it was impossible for the
Labour Court to come to any conclusion other than that the closure of
departments in the Mumbai establishments stood established as on
rd
3 July 1985. The Labour Court placed reliance on a stray
th
advertisement which had appeared in the newspapers on 6
September 2001 for the recruitment of Medical Representatives for
which interviews were to be held at the Head Office at Mumbai. The
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24
Labour Court inferred therefrom that this shows that the working of
the Company was still going on “to some extent” at Mumbai. Purely
on the basis of this, the Labour Court concluded that the closure was
not justified. With respect, the reasoning of the Labour Court suppers
from a clear perversity. For one thing it was not the case of the
Company that all the activities at Mumbai had been closed. The
witness who deposed on behalf of the management stated that the
registered office of the Company continued to remain in Mumbai.
Under Section 2(cc) of the Industrial Disputes Act, 1947 “closure” is
defined to mean the permanent closing down of a place of
employment or part thereof. Second, the workmen who deposed in
evidence, squarely admitted that several departments of the
rd
Company had been closed at Mumbai and on and from 3 July 1985,
no employee had been engaged in the Finance, Administration,
Personnel and Distribution Departments and that the Material Stores
were closed together with the Marketing and Material Procurement
Departments. That being the position, in the face of the clear
evidence on the record, there was neither any warrant nor any
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25
justification for the Labour Court to hold that either that there was no
closure or that the closure was not justified. The law on the subject to
which a reference has already been made earlier, is absolutely clear.
What Section 33(1)(a) of the Industrial Disputes Act, 1947 proscribes
is the alteration to the prejudice of the workmen concerned in the
industrial dispute, of the conditions of service applicable to them
immediately before the commencement of such proceedings. The
closure of a place of employment or a part thereof in accordance with
statutory provisions which recognise and regulate the right of the
employer cannot possibly be regarded as an alteration in the
conditions of service applicable immediately before the
commencement of the proceedings. The decision in Banaras Ice
Factory (supra) is an authority for the proposition that an alteration of
the conditions of service presumes the existence of a live industry
and where a closure has taken place there is in such a case, no
question of the conditions of service being altered. This would equally
apply to a closure of a part of a place of employment in view of the
provisions of Section 2(cc). Kalinga Tubes laid down the principle
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26
that it is the factum of closure and not the motive for the closure that
is relevant. What the decision in Tea Districts Labour Association
emphasies is that the Court must have regard to whether there is a
closure in fact and not a mere presence of closure. Finally, it may be
material to advert to the decision of the Supreme Court in L. Robert
D'souza Vs. Executive Engineer, Southern Railway, (
1982) 1 SCC
645, where the Supreme Court held that when a workman is
retrenched, it cannot be said that a change in his conditions of service
is effected. In the present case, therefore, once the factum of closure
has been established, as it was in view of the clear admissions of the
workmen themselves, there was no occasion for the Industrial or
Labour Courts to hold that the dispensation of the services of the
workmen under and in pursuance of the closure amounted to an
alteration of their conditions of service within the meaning of Section
33 of the Industrial Disputes Act, 1947.
19. Counsel appearing on behalf of the Respondents placed
reliance on the judgment of the Supreme Court in Kundan Sugar
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27
Mills vs. Ziauddin
, (1960) 18 Factories Journal Reports 108 in
support of the proposition that where there is no express agreement
between the employer and workmen providing for a right of transfer,
it cannot be held that an employer has the inherent or implied right to
transfer his workmen where he chooses to start a business
subsequent to the date of employment, especially when the new
business is treated as a different entity and is governed by different
service conditions. The principle which was laid down in the aforesaid
decision will, however, not advance the case of the Respondent
because the challenge in the course of the proceedings before the
Labour Court was a challenge to the termination of service in a
complaint under Item (1) of Schedule IV of the Maharashtra
Recognition of Trade Unions and Prevention of Unfair Labour
Practices Act, 1971. The orders of transfer had never been
challenged. The contention of Counsel was that the employer ought
to have convened a disciplinary enquiry since the workmen failed to
comply with the orders of transfer, but instead of doing this, a closure
of the establishment was resorted to which was a punitive measure
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28
against the refusal of the workmen to accept the transfer. There is no
basis in the aforesaid submission. The employer was entitled to
resort to the action of closure so long as the action was consistent
with the statutory provisions which regulated that right. Notice was
th
given by the employer on 4 April 1985 and the establishments at
rd
Mumbai came to be closed with effect from 3 July 1985 after the
st
Learned Single Judge of this Court dismissed on 1 July 1985 a
petition by the Union challenging the closure notice. The Petition was
dismissed on the ground of maintainability. But what is material in the
present case is that despite a failure report, the closure was never
challenged either by raising an industrial dispute or by taking
recourse to the remedies before the Industrial Court under the
Maharashtra Recognition of Trade Unions and Prevention of Unfair
Labour Practices Act, 1971. There was an individual challenge by 12
workmen which failed both in the Industrial Court and in this Court.
Essentially what was challenged was a consequence which arose
upon the closure viz., the termination of service that was brought
about by the closure. Once there was a closure in fact, and the
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29
closure was brought about by due compliance with the relevant
provisions of law, the Labour Court clearly transgressed its jurisdiction
in arriving at a finding which it did. The Labour Court arrived at the
conclusion of victimization based on the evidence of management's
witness in para 10 of the notes of crossexamination. The witness
th
stated therein that on 10 May 1985, the workers had offered
themselves for work and it was true that they were not allowed to
report for duty at Mumbai as by that time the activities of the Bombay
establishments had been shifted to Bangalore. The wages of the staff
in the Administration and Personnel Departments were paid as the
activities of those departments had not been completely shifted. This
part of the evidence does not establish a case of victimization. The
th
workmen had issued a strike notice on 8 January 1985 and had
thereafter proceeded on strike. The management issued a notice of
th
closure under Section 25FFA on 4 April 1985 and it is thereafter on
th
10 May 1985 that the strike was withdrawn and the workers sought
to join duties. At that stage, the process of shifting the departments
of the Company to the establishment at Bangalore had begun since
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30
the work of shifting was carried out phasewise. As the evidence
rd
shows the departments were closed on 3 July 1985. That being the
position, the finding of victimization is not borne out by the evidence
on record and is clearly based on no evidence at all.
20. For all these reasons, I am of the view that the orders of the
Labour Court and of the Industrial Court are unsustainable and that
the Petition has to be allowed. The petition is allowed in terms of
prayer clause (a). There shall be no order as to costs.
......
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