Full Judgment Text
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PETITIONER:
THE ANDHRA PRABHA LTD. & ORS.
Vs.
RESPONDENT:
SECRETARY, MADRAS UNION OF JOURNALISTS & ORS.
DATE OF JUDGMENT:
04/05/1967
BENCH:
MITTER, G.K.
BENCH:
MITTER, G.K.
WANCHOO, K.N. (CJ)
CITATION:
1967 AIR 1869 1967 SCR (3) 901
CITATOR INFO :
R 1968 SC1002 (8)
R 1969 SC 90 (8)
RF 1970 SC1960 (3)
ACT:
Industrial Disputes-Company publishing newspapers-Sale of
rights of publishing newspapers to other companies-When
amounts to closure.
HEADNOTE:
On April 13, 1959, it was resolved by the Board of Directors
of the Express Newspapers (P) Ltd. that the company should
sell the proprietary rights of printing and publishing its
daily and weekly newspapers to the Indian Express (Madurai)
(P) Ltd., Madurai, and to Andhra Prabha (P) Ltd.,
Vijayawada. In the purchaser-companies, the chairman of the
Board of Directors of the vendor-company and members of his
family held 4000 out of 4200 shares. On April 22, 1959
there was an agreement between Andhra Prabha (P) Ltd. and
the Express Newspapers whereby it was agreed that all the
employees employed by the vendor-company in connection with
the publications purchased by the purchaser-company would be
taken into the service of the purchasercompany without any
change in their conditions of service. The workers of the
Express Newspapers who were protesting against the sale to
the company at Vijayawada on the ground that at an earlier
stage assurance had been given that the publication of the
papers would not be shifted from Madras to Vijayawada, were
informed of the sale to and the agreement with the company
at Vijayawada. They were also informed that the services of
those workers who were not willing to join the purchaser-
company at Vijayawada would be terminated on the usual terms
a.% the Express Newspapers had no work to offer to them.
The workers then gave a notice of strike and struck work
from April 27, 1959. On April 29, 1959 the management of
Express Newspapers gave a notice of closure and closed the
company, and on the next day, the Government of Madras
referred to the Industrial Tribunal the two questions
namely, (1) whether the transfer of the publication of the
news paper and weekly to Vijayawada was justified, and (2)
whether the strike and lock-out Were justified. Though the
company closed its undertaking of publishing the newspapers
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and weeklies on April 29 as it had very valuable property it
retained some persons, one of whom was a reporter. to look
after the property, and the teleprinter service in Madras
continued to be used till the end of October 1959 by the
Madurai and Vijayawada companies.
The Tribunal held that there was no evidence of the alleged
assurance not to shift to Vijayawada and that the strike was
unwarranted. The Tribunal however held, that the suspension
of business at the inception, that is on April 29 was a lock
out, but became a genuine closure only by the end of October
1959.
The workers as well as the Management appealed to this
Court.
HELD : There was a genuine closure even on April 29 and the
scheme of dispersal of the original undertaking was not mala
fide. Ever) if there had been no strike there would ’have
been a closure to give effect to the scheme and the strike
only precipitated matters. [912C-D]
The new company which was an independent legal entity could
not be called a daughter company or benemidar of the older
Organisation,
902
merely because, there was in both companies a person or
family who could guide the destinies of the two companies.
Further, the fact that there was a reporter among the
persons retained to look after the property could not Iea to
the inference that the company did not close down its
business butkept it going to take it up whenever it
wanted. Similarly, the failureto inform the competent
authority under the Employs& ProvidentFund Act of the
termination of the employment of 700 workers was an
omission, but that could not mean that the workers continued
to be in the service of the company. With regard to the
teleprinter service, it had been paid for upto October and
the fact that the Madurai and Vijayawada companies used it
till the end of October, 1959 would not by itself or in
conjunction with other circumstances of the case justify the
conclusion that the company retained the teleprinter service
for its own use. [9t4 B-F]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1078 and
1079 of 1965 and 9 of 1966.
Appeals by special leave from the Award dated July 31, 1963
of the Special Industrial Tribunal, Madras in Industrial
Dispute No. 1 of 1962.
N.C. Chatterjee and R. Ganapathy Iyer, for the appellants
(in C.As. Nos. 1078 and 1079 of 1965) and the respondents
(in C.A. No. 9 of 1966).
S.Mohan Kumarainangalam, M. K. Ramamurthi, Shyamala
pappu, Nagaratnam and Madan Mohan, for the appellant (in
C.A. No. 9 of 1966) and respondents Nos. 1 and 2 (in C.As.
Nos. 1078 and 1079 of 1965).
R.Thiagarajan, for respondent No. 3 (in C.A. No. 9 of
1966).
The Judgement of the Court was delivered by
Mitter, J. These are three appeals front an award dated July
31, 1963 made by the Special Industrial Tribunal, Madras.
At the time when the reference was made, the parties to this
dispute were on the one hand, the workers and the staff and
the working journalists employed under the Express
Newspapers (P) Ltd. and on the other hand, the private
limited company called the Express Newspapers (P) Ltd. The
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latter, hereinafter referred to as the Company, owned and
published newspapers and periodicals from Madras. These may
be split into three groups. The first group comprised of
the Indian Express (daily), Sunday Standard (Weekly) and
Screen (Weekly) : all these were published in English. The
second group consisted of Andhra Prabha (daily) and the
Andhra Prabha Illustrated Weekly (weekly) : these were
published in Telugu language. The third group consisted of
two papers Dinamani (daily) and Dinamani Kadir (Weekly) :
these were in Tamil language. (One Ram nath Goenka was the
Chairman of the Board of Directors of the company
incorporated in 1946. He was also one of the directors of
Express News paper
903
Ltd. which owned and controlled a press and paper at Delhi.
The group of newspapers at Madras does not seem to have
prospered much before 1956. It started making sizable
profits from that year.
The reference which was made by the Government of Madras on
April 30, 1959 under S. 10(1) (d) of the Industrial Disputes
Act contained two questions :
(1)Whether the transfer of the publication of
’Andhra Prabha’ and ’Andhra Prabha Illustrated
Weekly’ to ’Andhra Prabha (P) Ltd.’, in
Vijayawada is justified and to what relief
’the workers and the working journalists are
entitled ?
(2)Whether the strike of the workers and
working journalists from 27th April, 1959 and
the consequent lockout by the management of
the Express Newspapers (P) Ltd. are justified
and to what relief the workers are entitled ?
This was later transferred by an order dated November 3,
1962 to the Special Industrial Tribunal which has made the
award. Before that date however the matter had come up to
this Court in appeal from Writ Petitions filed in the Madras
High Court on the 1st May, 1959 and 5th May, 1959
challenging the validity of the order made under S. 10(3)
and the jurisdiction of the Industrial Tribunal to
adjudicate upon the dispute on the ground that there was no
lockout but a closure of the company’s business. This Court
in the Management of Express News papers Ltd. v. Workers and
Staff (1) held that the preliminary enquiry as to
jurisdiction should be made by the Industrial Tribunal
itself taking into account all facts which are relevant and
material.
On the application of the workmen for addition of parties,
the Andhra Prabha Ltd., the Indian Express Newspapers (Madu-
rai) Ltd. and the Express Newspapers Ltd., a public company
were added as parties before the Special Tribunal.
As the dispute which the Special Tribunal had to adjudicate
upon was not the first of the kind between the company and
it’s workers, it is necessary to take note of a few facts
which are to be found in the judgment of this Court dated
August 2, 1962 mentioned above. This narration, according
to the Court in the former judgment, forms the background of
the present dispute between the parties. In March 1957, a
dispute arose between the parties on certain points
including bonus. This was referred for industrial
adjudication ending in an award in 1957. In March 1958 the
company notified its intention to retrench 69 workmen and
this led to another dispute which was referred for adjudica-
tion. The unions made certain complaints to the State
Govern-
(1) [1963] 3 S. C. R. 540.
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p.167-14
9 04
ment which led to the intervention by the Home Minister of
the State but without any success. On October 30, 1958 the
company gave notice to the workmen and working journalists
that it was going, to close down its business at Madras with
effect from December 1, 1958 on the allegation inter alia
that there were persistent labour troubles and indiscipline
on the part of labour. The Home Minister again intervened
and this time with success. Oil November 6, 1958 a
settlement was arrived at between the Management and the
employees and journalists in the presence of the Labour
Commissioner of Madras. The terms of agreement were reduced
into writing and the only ones which may be noted are:
(1)All the employees retrenched on 30-4-1958
would be reinstated with continuity of
service.
(10)In view of the settlement the Management
would withdraw the notice of closure and
announce the same on the notice board.
The settlement was to be operative for 2 1/2 years.
According to the workers, Mr. Goenka gave an assurance on 6-
11-1958 that he would not shift the publication of any of
the papers mentioned from Madras to Vijayawada during the
said period.
On the former occasion, when the matter was before this
Court reference was made to this assurance and this Court
held that this was a subject which the Industrial court
would have to go into. According to the Management it was
felt in November 1958 that the Telugu papers should be
published from Vijayawada. an additional consideration for
the same being the suggestion, of the Press Commission in
regard to the diffusion of control of newspapers. Leaving
out of consideration the intention of Ram nath Goenka at or
about that time, we may proceed to note the events which
followed thereafter. On January 17, 1959 notice was given
of an extraordinary general meeting of the shareholders of
the company to consider certain resolutions. The meeting
was actually held on February 11, 1959 and one of the
resolutions passed was that the company should cease to
carry on business as proprietors of the various newspapers
and that in pursuance thereof the company would close or
transfer and sell its various publications at Bombay,
Madras, Madurai and Delhi to other parties and sell, hire
out or otherwise dispose of its printing plant and machinery
and equipment and also licence or lease out its premises at
various places. Another resolution authorised the directors
-to take all steps necessary for the closing or sale and
transfer of various publications as they may think fit and
at such and on such terms as they might consider best. The
905
workers must have got scent of this and the Secretary of the
Express Newspapers Employees’ Union (hereinafter referred to
as the Secretary) addressed a letter to the Chairman of the
company on March 31, 1959 to the effect that the employees
had come to learn that four units of the rotary machine at
Madras had ’been dismantled and removed to Vijayawada with a
view to starting an edition of the Andhra Prabha there.
Reference was also made to the assurance alleged to have
been given before the Home Minister to drop the proposal to
shift the Andhra Prabha and a discussion with the addressee
was asked for. It appears that there was a reply to this
letter on 2nd April which is however not included in the
record. On April 13, 1959 the Board of Directors of the
company passed certain resolutions. One of them was that
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the company would sell and transfer and the Indian Express
(Madurai) (P) Ltd. would purchase as a going concern, the
proprietary rights of printing and publishing The Madurai
edition of the English daily newspaper known as the Indian
Express, the Madurai Edition of the English weekly known as
the Sunday Standard and the Madurai edition of the Tamil
daily known as Dinamani (inclusive of the Sunday edition).
Another resolution passed was to the effect that the company
would sell and the Andhra Prabha (P) Ltd. Vijayawada would
purchase as a going concern the proprietary rights of
printing and publishing- Andhra Prabha and Andhra Prabha
Illustrated Weekly together with the option to purchase from
the company the right to print, edit and publish the English
newspaper known as the Sunday Standard for circulation in
the State of Andhra Pradesh only on ’terms and conditions
set out in the draft agreement. A third resolution was to
the effect that the company would sell to% the Andhra Prabha
(P) -Ltd. Vijayawada the items of machinery set out in the
schedule to the draft agreement for a price of Rs.
1,75,000/- on the terms set out in the draft agreement. On
April 15, 1959 an agreement was actually entered into
between the company and the Andhra Prabha (P) Ltd. to the
effect that the vendor had agreed to sell and the purchaser
had agreed to buy the goods set out in the schedule thereto
as soon as convenient and the price payable would be Rs.
1,75,000/- within one week of the purchaser getting the
machinery. On April 20, 1959 the General Secretary of the
Madras Union of Journalists wrote to the Director of the
company complaining that the writer had not heard in regard
to the issue raised in the letter of 31st March. The letter
proceeded to record that the journalists had not been told
exactly what the Management proposed to do but they had
heard that a new company called the Andhra Prabha (P) Ltd.
had, been registered at Vijayawada and arrangements were
being made to split up the other two Madras papers, namely,
the Indian Express and Dinamani into two separate companies.
According to the writer, this had created a state of
tension. 0n, the same
906
day, the Madras Union of Journalists at a meeting passed a
resolution condemning the action of the Management in
announcing and effecting the sale of the Andhra Prabha daily
and the Andhra Prabha Illustrated Weekly to a new company at
Vijayawada which had been done surreptitiously, and as a
result thereof all the employees concerned might not be
absorbed by the new -company. A complaint was also made
that the sale was really benami and a threat was held out
that unless the Management -desisted from the above course
of "mala fide closure and break-up of the Madras
establishment and purported sales to benami companies the
employees would be compelled to go on strike as and from a
date to be fixed by the joint action committee set up under
the resolution." On 21st April a letter was sent to the
Director of the company from the Convener, Joint Action
-Committee in which it was said that unless a satisfactory
reply -was sent regarding the matters mentioned in the
resolution within 72 hours, the joint action committee would
be compelled to carry -out the mandate of the workers
calling for a strike.
On April 22, 1959 there was an agreement in writing between
Andhra Prabha (P) Ltd. and the company to the effect that
the ,first named company had agreed to purchase and the
company had agreed to sell as a going concern the
proprietary rights as ,editors, proprietors etc. of the
Andhra Prabha (Telugu daily) and the Andhra Prabha
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Illustrated Weekly together with the option to purchase from
the vendor the right to print, edit and publish the English
newspapers, the Indian Express and the English weekly, the
Sunday Standard. The consideration for the sale of the
proprietary rights in Andhra Prabha and Andhra Prabha Mus-
trated Weekly was fixed at Rs. 25,000/-. Clause 11 of the
,agreement provided that :
"all employees now employed by the vendor in
connection with the aforesaid two publications
shall be taken over into the service of the
purchaser company as and from the taking over
date."
Clause 12 provided that the transfer of the two undertakings
would ,be on the terms that every workman and employee who
had been in continuous service for not less than one year in
the slid ,undertaking of the vendor immediately before the
taking over date would be taken over by the purchaser as and
from such date -on the terms and conditions that the
services of the workmen and the employees had not been and
would not be deemed to be interrupted by such transfer and
the terms and conditions applicable to the workmen and the
employees after such transfer would not in any way be less
favourable to them than those applicable before the transfer
and the purchaser would be legally liable to pay the workmen
and employees, in the event of retrenchment, ,compensation
on the basis that his or their services had been conti-
907
nuous and uninterrupted by such transfer. On April 23, 1959
the Director of the company wrote a letter to the Joint
Action Committee to the effect that the Management had sold
their right of editing, publishing etc. the Andhra Prabha
daily and the Andhra Prabha Illustrated Weekly to a new
company in Vijayawada assigning the reason therefor that it
was in the interest of the Telugu speaking people that it
should be produced and published from a Telugu centre. The
terms and conditions with regard to the absorption by the
new company of all staff and worker& connected with the
business of the two newspapers were also mentioned therein.
Lastly, it was said that with regard to such of the staff as
were not willing to go to Vijayawada their services with the
company would be terminated as the company bad no work to
offer to them but they would be paid all their dues. On
April 24, 1959 the Convener, Joint Action Committee,
characterised the Director’s reply of the 23rd as highly
unsatisfactory and stated that a resolution had been adopted
to the effect that the workers would go on strike at any
time after the expiry of 24 hours. On the next day the
Director informed the Union that the contemplated strike
would be illegal and unjustified. On 27th April the
Convener wrote to the Director stating that the Management
had rejected their demand to maintain the status quo regard-
ing the publication of the three newspapers from Madras,
specially Andhra Prabha. In addition false charges of
sabotage and threats and arrest had been made and
consequently the workers were compelled to give effect to
the decision of 24th April i.e. to go on strike. The watch
and ward staff were however instructed to stay on duty.
It is necessary to note at this stage that according to the
Management some acts of sabotage and gross indiscipline were
committed on April 26, 1959, namely, the mutilation and des-
truction of one full page and two gallies of Dinamani matter
and removal of switch keys from three motor cars left in
front of the office building. According to the’ statement
of Ramnath Goenka before the Tribunal :
"During the whole of the 28th of April the
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labourers demonstrated before the office and
prevented ingress and egress of staff members
from the office building.
I then decided to close down and issued a
statement through the Hindu informing every
one of this."
A notice to the above effect was published on the notice
board of the company on the 27th and a copy of it was sent
by the Director to the Convener.
The strike of the workers started at 4.30 p.m. on 27th April
and publication of all papers was stopped. Notice to the
above:
908
effect was given in the Hindu regarding the Indian Express
Dinamani and Andhra Prabha. On the 29th of April the
closure notice was published in the Hindu in which it was
mentioned that the Management had intimated the workers by
letter dated 23rd April. that they had sold their right of
editing,, printing and publishing Andhra Prabha and Andhra
Prabha Illustrated Weekly to the Vijayawada company. The
substance of the agreement between the two companies with
regard to the workers was also mentioned in this notice.
The workers had been notified that the Management had
decided to close with immediate effect the undertaking and
publication of all the seven newspapers at Madras and to
dispense with the services of the workmen and the working
Journalists. Notice was also given that they would be paid
their wages for the period during which they had worked,
besides one month’s salary in lieu of notice prescribed
under s. 25F. and compensation as laid down under the Act.
Such ,compensation amounting to one of Rs. 7 lakhs was
actually paid later on.
On the 30th April the Management informed the Commissioner
of Police with regard to the developments and published
another notice in the Hindu regarding the closure stating
that most of the machinery had already been sold for cash
and the building of the company advertised for rent. On the
same day. -the Madras Government issued a notice under S.
10(3) of the Industrial Disputes Act prohibiting the
continuance of the strike ,and the lockout. This was
followed by the two Writ Petitions in the Madras High Court
already mentioned.
After the matter was decided by this Court in August 1962.
the adjudication was taken up by the Special Industrial
Tribunal before which some witnesses including Ramnath
Goenka were examined and a large number of documents
tendered in evidence. The central question with regard to
the first issue was, whether Ramnath Goenka had given a
verbal assurance in November 1958 that there would be no
shifting of the venue of the publication of any of the
papers from Madras to Vijayawada for 2 1/2 years. The
Tribunal scrutinised the evidence both oral and documentary
in great detail and observed that it was not satisfied that
Ramnath Goenka had given any verbal assurance imputed to
him. The Tribunal further held that an assurance of the
nature could not be inferred from the circumstances of the
case with the result that the first part of the first issue
was answered in the affirmative with the necessary
consequence that the workers could not be held entitled to
any relief because of the transfer of these two
publications.
of the three appeals, the first two are by the Andhra Prabha
Ltd. and Indian Express Newspapers (Madurai) Ltd. and the
909
second by the public company styled the Express Newspapers
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Ltd. the third appeal is by the employees of the Express
Newspapers Ltd. against its management.
No attempt was made before us to show that the Tribunals
conclusion about the absence of the verbal assurance or the
conference to be drawn in respect thereof from the
circumstances was wrong. The substance of the argument on
behalf of the employees was that there was really no closure
but the transfer was in effect from a parent company to
daughter companies and in this connection reliance was
placed on the judgment of this court in Kays Constitution
Co. v. Its Workers and the earlier decision in Workmen v.
Dahingeapar Tea Estate (2 ) In the Kay’s Construction
Co.’s(1) case a private limited company was incorporated to
continue and carry on the business activities of a
proprietary concern. The former proprietor, his wife and
the manager employed in the former business were three out
of five directors of the new company. The dispute in regard
to the refusal by the new company to continue some former
employees in service was referred for adjudication to an
industrial tribunal. It was contended on behalf of the
workmen that the alleged closure by the : proprietor was not
genuine or real and that the new company was successor-in-
interest of the proprietor and hence was bound to continue
to employ the former workmen. It was also contended that
there was in effect a lockout and the workmen concerned were
entitled to reinstatement. The tribunal found ’hat the
closure of the former business on the alleged financial
grounds was not genuine, and that the company, though in law
a separate entity, was formed to carry on and continue the
former business under a different name and the refusal by it
to employ some of the old employees amounted to a lockout
with the result that a reinstatement of the workmen was
ordered. The appeal by the company to the Supreme Court was
dismissed. This Court held that a case like the one before
it could not be decided principally on the consideration of
the abstract point of law -as to whether and when a
successor in business is bound to continue in employment the
workmen employed by the former owner and having regard to
the material findings of fact recorded by the tribunal, the
validity of the award could not be questioned on abstract
legal grounds.
In the Dahingeapar Tea Estate case(2 ) there was an agree-
ment between Dahingeapara Tea company (the vendor) and
Nikhli Jute Baling Company Ltd. (the purchaser) whereby the
vendor agreed to sell absolutely and the purchaser -to buy
a,% Ind from January 1, 1954 the entire tea estate known as
Dahingeapar tea estate with all its gardens, bushes,
machinery and appur-
(1) [1958] 2 L.L.J. 669.
(2) [1958] 2 L.L.J. 498.
910
tenances etc. at or for the sum of Rs. 9,50,000/-. The
purchaser was to have the option of taking such members of
the staff as it would in its absolute discretion consider
useful and sufficient for running it. The members of the
staff as would be selected by the purchaser would be given
fresh appointment and any liability whatsoever for their
past services, including bonus, gratuity etc. would be on
the vendor’s account. The dispute which was referred for
adjudication was, whether the transfer of the management
could put an end to the services of the staff of the tea
estate and whether the agreement of transfer would deprive
-the members of the staff of their rights of service under
the original contracts of service and of continuity of their
services. The second question was, whether the outgoing
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management was justified in proposing to terminate the
services of the members of the staff from the time when the
management of the tea estate had changed hands and whether
the incoming management was justified in refusing to
maintain the continuity of service. The tribunal found that
the garden was sold as a going concern, that the services of
the staff continued up to January 4, 1954, that retrenchment
had not been necessitated by or on account of reasons of
trade and that the transfer could not effect a change in the
service conditions of the staff. The result was that the
purchaser was held to be not justified in refusing to
maintain the continuity of service. The award directed that
those of the members of the former staff who had been kept
out of service in the garden in question from the time the
new management had taken over charge but who would be
willing to be reinstated in their former posts on the
previous terms and conditions of their service be reinstated
in their former posts and that those of the members of the
old staff who had been kept out of service in the garden and
had not since taken any employment elsewhere be paid their
salaries for the period of their forced unemployment which
was caused at the instance of the purchaser. The Labour
Appellate Tribunal set aside the award made by the tribunal.
This Court in appeal did not find it necessary to determine
the larger question as to whether, on a transfer of business
as a going concern, the incoming management becomes a
successor to the outgoing management and if so, to what
extent the incoming management must recognise the right of
labour already accrued as to gratuity bonus etc. and to
continuity of service. it was further observed that it was
not the function of the industrial tribunal to decide the
abstract question of law, whether on a transfer of
management consequent on a sale, the services of workmen
were automatically put an end to. But it was held that
there was a dispute which could be referred for-adjudication
and the reference being competent the tribunal had
jurisdiction to go into it and there was no reason for the
Appellate Tribunal displacing the findings of the Industrial
tribunal.
91 1
It will be noticed that these two decisions were given
before the amendment of the Industrial Disputes Act by the
inclusion (of s. 25FF, and s. 25FFF. Now the two sections
govern such cases. Under s. 25FF where the ownership or
management of an undertaking is transferred, whether by
agreement or by operation of law, from the employer in
relation to that undertaking to a new employer, every
workman who has been in continuous service for not less than
one year in that undertaking immediately before such
transfer shall be entitled to notice and compensation in
accordance with the provisions of S. 25F as if the workman
had been retrenched. This section however is not to apply
to a workman if his service had not been interrupted by such
transfer, the terms and conditions of his service after
transfer are not in any way less favourable to him than
those applicable to him immediately before the transfer and
the new employer is, under the terms of such transfer,
legally liable to pay to the workman in the event of his
retrenchment, compensation on the basis that his service has
been continuous and had not been interrupted by the
transfer.
Under s. 25FFF (1) where an undertaking is closed down for
any reason whatsoever, every workman who has been in con-
tinuous service for not less than one year in that
undertaking immediately before such closure shall, subject
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to the provisions of Subsection (2), be entitled to notice
and compensation in accordance with the provisions of s. 25F
as if the workman had been retrenched. We are not concerned
with sub-s. (2) in this case. The result is that if there
is in fact a closure, s. 25FFF will come into play. In this
case, however, it must be stated that the new company,
Andhra Prabha (P) Ltd. agreed to take over all employees at
the time employed by the vendor in connection with the two
publications as and from the date of taking over without any
break in the continuity of their service and on the same
term,,; and conditions as before.
It is impossible to lay one’s finger on the exact cause for
Ramnath Goenka making up his mind to transfer a part of the
undertaking to Vijayawada and another part to Madurai. It
may be because he really felt that the Telugu papers would
do better if printed and published at Vijayawada. It may
also be that he wanted to circumvent the recommendation of
the Press Commission with regard to the wages payable by the
bigger units of newspapers. Again there can be no doubt
that he did not like the agitation of the employees and
probably thought that by the dispersal of the units the
scope for agitation would be minimised. He was undoubtedly
taking all steps in this regard as the resolutions passed by
the shareholders of the company in February 1959, followed
by the resolution of the Board of Directors and the
agreement for sale of some machinery to the Andhra Prabha
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(P)Ltd. on the 15th of April 1959 would show. The workers
probably were nettled by the fact that they had not been
consulted in regard to all this. While it is not possible
to say that the alleged acts of sabotage and indiscipline
said to have taken place on April 26, 1959 were of a very
serious nature, Goenka stated in his evidence before the
tribunal that after the demonstration of the laborers before
his office on the 28th of April and their prevention of
ingress and egress of the members of the staff to and from
the office building he decided to close down his undertaking
at Madras.
On the evidence before the tribunal ’Lo which our attention
was drawn by counsel on both sides, it appears to us that
while the Management might have taken into confidence the
employees and discussed with them the scheme for the
dispersal of the undertaking the decision to co on strike
was unwarranted and disastrous. Even if there had been no
strike on the 27th of April. it seems to us that the scheme
of dispersal would have been given effect to afterwards
although it was the strike which precipitated matters.
The Tribunal has found that there was a closure but that
took place not in April 1959 but in November, 1959. In
arriving at this conclusion the tribunal relied on several
factors. The first of these is that Andhra Prabha
Illustrated Weekly came to be printed at the Dinamani press
by the Indian Express (Madurai) Ltd. and located in the
block of buildings belonging to Express Newspapers Ltd.
situate in Mount Road Madras in pursuance of an agreement
dated 30th September 1960 between the Indian Express Madurai
(P) Ltd. and the Andhra Prabha (P) Ltd. The Tribunal
further found that it was on the 2nd of September 1960 that
the offset rotary press and allied equipment belonging to
Express Newspapers (P) Ltd. and located in the Express
Estate Mount Road Madras were hired to the Indian Express
Madurai (P) Ltd. From this the tribunal concluded that "the
Andhra Prabha daily and the Andhra Prabha Illustrated Weekly
as also the Indian Express Madurai edition and Dinamani
daily edition could have made use of the off-set rotary
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press at the Express Estate Madras on occasions when the use
of the off-set rotary press became necessary till the,
machines were hired to the Madurai company under Ex. M-46".
In our opinion the existence of the off-set rotary press at
the Express Estate Madras until they were hired out to the
Indian Express Madurai (P) Ltd. does not warrant the
conclusion that the company could have made use of the
rotary press when it wanted to. We have got to judge things
by what was done and not by what could have been done.
Again the circumstance that some of these journals came to
be published sometime after May 1959 under new declarations
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made by publishers respectively on behalf of the Andhra
Prabha (P) Ltd. and the Indian Express Madurai (P) Ltd.
cannot be taken into consideration for finding against the
closure of the company’s undertaking in April 1959. The
Tribunal appears to have placed some reliance on the fact
-that Ramnath Goenka admitted having advanced a sum of Rs. 3
lakhs to the Madurai Company as also diverse sums totaling
Rs. 27 lakhs to other companies including the, two daughter
companies (at Vijayawada and Madurai) up to the end of
December 1960. The Tribunal found that (a) ultimately the
Indian Express Bombay Ltd. purchased all the, shares of
Andhra Prabha (P) Ltd. and Indian Express Madurai (P) Ltd.
and became a public company towards the end of 1960 : (’b)
Before the company became a public company, Ramnath Goenka
and the members of his family held 4000 out of 4200 shares :
(c) till May 1959 the company which owned the entire group
of newspapers published by the same Management at three
branch offices one in Delhi, a second in Madurai and the
third in Bombay. As a result of the splitting up, the
position was that the Express Newspapers (P) Ltd. in Delhi
took Lip the Delhi publications, the Indian Express Bombay
(P) Ltd. took up the publications published by the company
from Bombay. the Indian Express Madurai (P) Ltd. took up the
publications issued from Madurai and Andhra Prabha (P) Ltd.
Vijayawada took up the two Telugu publications. According
to the Tribunal "it was only the Madurai company and the
Vijayawada company that relied upon the support of the
parent company after May 1959 for printing and publishing
the papers acquired by them." The Tribunal further found
that this position continued for some time after May 1959
inasmuch as "(1) The teleprinter service installed in the
Express Estate building Mount Road continued to be used till
the end of October 1959 and out of nine circuits comprised
in the teleprinter service, seven were routed through Madras
and these were allotted to the Madurai company for a period
of three months commencing from 1st November 1959. (2)
Photographic materials used in the processing department
maintained by the company up to October 1959 were purchased
by the public company for the benefit of the two daughter
companies; (3) Thirty-two of the former employees of the
company including a reporter were retained in the service of
the company after April 1959; (4) No intimation was sent to
the Commissioner or other competent authority under the
Employees’ Provident Fund Act of the termination of
employment of 700 workmen and working journalists, and (5)
After April 1959 a common advertising department for the two
daughter companies was maintained at the Express Estate
building as could be seen from certain circulars issued in
December 1959".
From all this the Tribunal inferred that the suspension of
the business was a lockout at the inception and became a
genuine
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closure only in October-November, 1959. Before us, reliance
was placed by Mr. Mohan Kumaramangalam on some of the above
factors and the main plank of his argument was that in fact
the parent company launched and financially helped the other
companies which were really benamidars for the parent
company. We do not think that even in Industrial law a new
company which is an independent legal entity can be called a
benamidar for another older Organisation because there was
in both companies a person or family of persons who could
guide the destinies of the two companies. The Express
Newspapers (P) Ltd. was later transformed into a public
company and it would not be proper to describe the
relationship of the Vijayawada and the Madurai companies as
daughter companies or as benamidars of the company. We have
to bear in mind that the company i.e., Express Newspapers
(P) Ltd. did not come to an end in April 1959. It only
closed its undertaking of publishing several newspapers and
weeklies. It had very valuable property on its hands after
April 1959 and some persons had to be retained in service to
look after the property. The fact that one of them was a
reporter cannot lead to the inference that the company did
not close down its business but could take it up whenever it
wanted to. Further, the failure to inform the Provident Fund
authorities was an omission but that cannot mean that the
workers continued to be in the service of the company or
were meant to be taken back into its service as soon as they
became submissive to Ramnath Goenka. With regard to the
teleprinter service, we were told that it had been paid for
up to a certain date and the fact that the Madurai and
Vijayawada companies used the teleprinter service till the
end of October 1959 would not either by itself or taken in
conjunction with the other circumstances, justify the
conclusion that the company retained the teleprinter service
for its own use, if necessary.
To all intents and purposes, the business of the company was
closed from the 29th of April 1959 and whatever might have
been the motive behind the closure it was an effective one
from April 1959 and we see no reason to hold with the
Tribunal that the closure became effective sometime in
November 1959.
On behalf of the employees an application has been made for
leading additional evidence. In this application events
which took place after the publication of the award are
relied on as going to show that the discontinuance of the
publications from Madras was a mere ruse and a device
adopted by the company to coerce and intimidate the
employees and that publication of the newspapers had been
commenced soon after the publication of the award. We do
not think it necessary to go into this matter at any length
because a break of over four years had intervened in between
and what the company does after the lapse of this long
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period cannot and ought not to be taken into consideration
in order to find out whether the closure was a real one or
was a mere device as suggested by the employees. The
evidence on record shows that Ramnath Goenka’s plan was not
to give up the business of newspaper publications altogether
but he wanted to distribute his business to different
places. Whatever may be the motive behind such plan, he had
only carried out that plan into effect after the publication
of the award and this cannot lead us to the conclusion that
the closure was an assumed one.In our view, the strike
was not justified and the Management was entitled to
close the undertaking on 29th April, 1959.
In the result, there will be no order on this
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application.The appeals by the companies are allowed and
the finding onthe second issue and the award set aside.
Appeal No. 9 of 1966 by the workmen will have to be
dismissed in view of the above. There will be no order as
to costs in all the appeals.
V.P.S. Appeal No. 9 of ’66, dismissed and
Nos. 1078 and 1079 of ’65 allowed.
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