Full Judgment Text
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PETITIONER:
WORKMEN OF THE INDIAN LEAF TOBACCO DEVELOPMENT COMPANY
Vs.
RESPONDENT:
MANAGEMENT OF THE INDIAN LEAF TOBACCO DEVELOPMENT CO. LTD.,
DATE OF JUDGMENT:
27/09/1968
BENCH:
BHARGAVA, VISHISHTHA
BENCH:
BHARGAVA, VISHISHTHA
SHELAT, J.M.
VAIDYIALINGAM, C.A.
CITATION:
1970 AIR 860 1969 SCR (2) 282
CITATOR INFO :
F 1973 SC 878 (10)
R 1987 SC1478 (8)
ACT:
Industrial Dispute--Closure of branches or depots--No
closure of business itself--Whether managerial activity,
not referable to industrial tribunals--Rights of workmen in
closed depots.
HEADNOTE:
The respondent was carrying on the business of
purchasing, handling and selling tobacco. In 1962, it was
maintaining 21 depots where the principal work was handling
tobacco and the work of purchasing was done on a small
scale. In 1963, it gave notice that 8 out of the 21 depots
would be closed down. An industrial dispute was raised by
the workmen and the demands off the workmen, namely: (1)
that no depot worked during 1962 should be closed; and (2)
no workman who worked in 1962 should be retrenched, were
referred to the Industrial Tribunal. The Tribunal held
that the stoppage of work at the 8 depots and the closure
was genuine and real, that there was no transfer of the work
that was being carried on at those depots to other buying
points established by the respondent, and repelled the
suggestion of the appellants that it was a mala fide device
adopted for carrying on the same business in a different
manner, and decided both the issues against the workmen.
In appeal to this Court,
HELD’: (1) A genuine closure of depots or branches, even
though it did not amount to. closure of the business could
not be interfered with by an Industrial Tribunal, and
therefore, the issue was incorrectly referred by the
Government for adjudication by the Tribunal. The closure is
stoppage of p.art of the activity or business of the
respondent. Such stoppage is an-act of management which is
entirely in the discretion of the respondent and n0.
Industrial Tribunal can interfere with the discretion
exercised in such a matter, or can have the power to direct
the respondent to continue a part of the ’business which it
had decided to shut down. or direct it to reopen a closed
depot or branch. [284 G-H; 285 A-C]
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(2) On that finding, no question could arise of the
retrenchment being set aside by the Tribunal, because, there
was no business for which the workmen would be required.
All that the workmen could claim was compensation for loss
of the service, and, in a case where a dispute may arise as
to whether workmen discharged are entitled t0 compensation
under s. 25F or s. 25FFF, of the Industrial Disputes Act,
1947, it may -become necessary to decide whether the closure
amounts to closure in law or not. But, in the present case,
the workmen have all been paid retrenchment compensation at
the higher rate laid down in s. 25F and therefore,
received adequate compensation. [287 F-H; 288 A]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 556 of
1966.
283
Appeal by special leave from the order dated August 13,
1964 of the Industrial Tribunal, Andhra Pradesh in
Industrial Dispute No. 41 of 1963.
M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for
the appellants.
K. Srinivasamurthy and Naunit Lal, for the respondent.
The Judgment of the Court was delivered by
Bhargava, J. This appeal, by special leave, has arisen
out of an award made ’by the Industrial Tribunal, Andhra
Pradesh, at Hyderabad in an industrial dispute between the
respondent, the Imperial Tobacco Co., as well as exporting
the tobacco to various (hereinafter referred to as "the
Company"), and its workmen. Admittedly, the Company is an
associate of the Imperial Tobacco Company Ltd., and the main
business carried on by the Company is that of purchasing
tobacco of all varieties and qualities, stemming, grading
and packing of tobacco and supplying it to the Imperial
Tobacco Co., as well as exporting the tobacco to various
foreign countries in the world. The Company has been
carrying on this business for about 40 years and handles
almost 35 per cent of the tobacco grown in the State of
Andhra Pradesh. For the work of stemming, grading and
packing tobacco, the Company has two factories, one at
Anaparty in East Godavari District, and the other at Chirala
in Guntur District. In connection with this business, the
Company, in the year 1962, was maintaining 21 depots
where, according to the workmen, the appellants, the Company
was carrying on the work of collecting tobacco, though the
Company’s case was that the principal work done at these
depots was that of handling the tobacco purchased at other
places and only included the work of purchasing tobacco on a
small scale.
On 16th August, 1963, the Company gave a notice to
the Union of the appellant workmen that 8 out of 21 depots
mentioned therein would be closed down with effect from 30th
September, 1963. Thereafter, an industrial dispute was
raised by the workmen which related to the closure of these
8 depots, as well as to a number of other demands, including
revision of basic wages and dearness allowance, additional
discomfort allowance, etc. The State Government, by its
Order dated 14th November, 1963, referred the dispute for
adjudication under s. 10(1)(d) of the Industrial Disputes
Act, 1947 to the Industrial Tribunal, Hyderabad. The first
issue which was referred for adjudication, was as follows
:--
"How far the demands of the union, viz., (i)
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that no depot which worked during 1962 season
should. be closed, and (ii) that no workman
who worked in 1962 season’should be
retrenched, are justified ?"
284
There were ten other issues, but we need not reproduce them,
as we are not concerned with them in this appeal.
In the proceedings for adjudication, the Company took a
preliminary objection that the closure the depots was a
managerial function, that there could not be an industrial
dispute over such closure, that the Government, therefore,
had no power to refer this issue for adjudication, and that
the Tribunal also had no power to adjudicate on it.
Thereupon, the Tribunal framed a .preliminary issue as to
"whether the employer is justified in alleging that Issue
No. 1 framed by the Government cannot be deemed to relate to
an industrial dispute, and as such, whether the Government
had the power to refer it for adjudication". The Tribunal
decided this preliminary issue by giving an interim award on
the 13th August, 1964. The preliminary objection was
allowed and a further direction was made that the effect of
this decision on Issue No. 1 will be decided later after
hearing the parties, There,after, the Tribunal proceeded to
hear the reference on this question as well as on all other
issues referred to it and’, ultimately, gave its award on
11th December, 1964. In that award, both the parts of issue
No. 1 were decided against the workmen. The workmen have
now come up in this appeal against the interim award dated
13th August, 1964 as well as against the final award insofar
as it relates to issue No. 1.
The decision given by the Tribunal in the interim award,
holding that the reference covered by issue No. 1 was not
competent, has been challenged by learned counsel for the
appellants on the ground that the closure of a depot does
not amount to closure of business in law and, since the same
business was continued by the Company at at least 13 other
depots, the closure of the 8th depots in question was
unjustified. For the proposition that the closure of the
depots did not amount to closure of business, learned
counsel rolled on the views expressed by this Court in
Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor
Union(1), where the Court explained the reason for the
decision given by the Labour Appellate Tribunal in the case
of Employees of Messrs India Reconstruction Corporation
Limited, Calcutta v. Messrs. India Reconstruction
Corporation Ltd., Calcutta(2). It, however, appears to us
that this question raised on behalf of the appellants is
totally immaterial insofar as. the question of the
jurisdiction of the Tribunal to decide the first part of
issue No. 1 is concerned. The closure of the 8 depots by
the Company, even if it is held not to amount to closure of
business of the Company, cannot be interfered with by an
Industrial Tribunal if, in fact, that closure was genuine
and real. The closure may be treated as stoppage of part of
the activity or business of the Company. Such stoppage of
part of a
(1) [1956] S.C.R. 872. (2) [1953] L.A.C. 5 63.
285
business is an act of management which is entirely in the
discretion of the Company carrying on the business. No
Industrial Tribunal, even in a reference under s. 10(1)(d)
of the Industrial Disputes Act, can interfere with
discretion exercised in such a matter and can have any
power to direct a Company to continue a part of the business
which the Company has decided to shut down. We cannot
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possibly accept the submission made on behalf of the
appellants that a Tribunal under the Industrial Disputes Act
has power to issue orders directing a Company to reopen a
closed depot or branch, if the Company, in fact, closes it
down.
An example may be taken of a case where a Bank with its
headquarters in one place and a number of branches at
different places decides to close down one of the branches
at one of those places where it is functioning. We cannot
see how, in such a case, if the employees of that
particular branch raise an industrial dispute, the Bank can
be directed by the Industrial Tribunal to continue to run
that branch. It is for the Bank to decide whether the
business of the branch should be continued or not, and no.
Bank can be compelled to continue a branch which it
considers undesirable to do.
In these circumstances, it is clear that the demand
contained in the first part of Issue No. 1 was beyond the
powers and jurisdiction of the Industrial Tribunal and was
incorrectly referred. for adjudication to it by the State
Government. .
of course, if a Company closes down a branch or a depot,
the question can always arise as to the relief to which the
workmen of that branch or depot are entitled and, if such
a question arises and becomes the subject-matter of an
industrial dispute, an Industrial Tribunal will be fully
competent to adjudicate on it. It is unfortunate that, in
this case, when dealing with the preliminary issue, the
Tribunal expressed its decision in the interim award in
general words holding that Issue No. 1 as a whole was beyond
its jurisdiction. If the reasoning in the interim award is
taken into account, it is dear that the Tribunal on that
reasoning only came to the conclusion that it was not
competent to direct reopening of the 8 depots which had been
closed, so. that the Tribunal should have held that the
first part of Issue No. 1 only was outside its jurisdiction.
So far as the second part of that issue is concerned,
as we have said above, it was competent for the Tribunal to
go into it and decide whether the claim of the workmen that
they should not be retrenched was justified. On an
examination of the interim award and the final award, we,
however, find that the Tribunal in fact did
(1) [1956] S.C.R. 872.
286
do so. The case reported in Pipraich Sugar Mills Ltd.(1)
was also concerned only with the question as to the relief
that can be granted to workmen when there is closure of a
business. No question arose either before the Court, or in
the cases considered by the Court, of an Industrial Tribunal
making a direction to the employers to continue to run or to
reopen a closed branch of the business. The Labour
Appellate Tribunal in the case of Employees of Messrs India
Reconstruction Corporation Ltd., Calcutta(1) was dealing
with the question of retrenchment compensation as a result
of the closure of one of the units of the company concerned,
and it held that the workmen were entitled to retrenchment
compensation in accordance with law. This Court, in the
case of Pipraich Sugar Mills Ltd. (2), only explained why
the Labour Appellate Tribunal was justified in granting
retrenchment compensation in that case. The opinion
expressed by the Court was that, though there is discharge
of workmen both when there is retrenchment and closure of
business, the compensation is to be awarded under the law
no.t for discharge as such but for discharge on retrenchment
and if, as is conceded, retrenchment means in ordinary
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parlance discharge of the surplus, it cannot include
discharge on closure of business. It was in this context
that the Court went on to add that in the case of Employees
of M/s. India Reconstruction Corporation Ltd., Calcutta (1 )
what had happened was that one of the units of the Company
had been closed which would be a case of retrenchment and
not a case of closure of business. It may be noted that, at
the time when this decision was given, section 25FF and
section 25FFF had not been introduced in the Industrial
Disputes Act, and the only right to retrenchment
compensation granted to the workmen was conferred by section
25F. It was in the light of the law then prevailing that the
Court felt that the decision of the Labour Appellate
Tribunal in the case of Employees of M/s. India
Reconstruction Corporation Lid(1) granting retrenchment
compensation. could be justified on the ground that the
services of the workmen had not been dispensed with as a
result of closure cf business, but as a result of
retrenchment. That question does not arise in the case
before us. Since then, as we have indicated above, s. 25FF
and s. 25FFF have been added in the Industrial Disputes Act,
and the latter section specifically lays down what rights a
workman has when an undertaking is closed down. In a case
where a dispute may arise as to whether workmen discharged
are entitled to compensation under s. 25F of s. 25FFF it
may become necessary decide Whether the closure, as a
result of which the services have been dispensed with,
amounts to a closure in law or not. In the case before us,
it was admitted by 1earned counsel for both parties that the
workmen, who have been discharged as a result of the closure
of the 8 depots
(1) 1953 L.A.C. 563. (2) [1956] S.C.R. 872.
287
of the Company, have all been paid retrenchment compensation
at the higher rate laid down in s. 25F, so that, in this
case, it is not necessary to decide the point raised on
’behalf of the workmen.
In connection with the second part of issue No. 1, it
was also urged by learned counsel for the appellants that
the business, which was being carried on at the 8 depots,
had not in fact been closed down and had merely been
transferred to buying points situated in and around the
closed depots, including two new buying points established
by the Company after the closure of these 8 depots. The
argument was that the workmen were old employees who had
served the Company for a long time and were entitled to
certain benefits as a result of that long service. The
Company closed these 8 depots mala fide with the object of
depriving the workmen of those benefits. and merely altered
the nature of the business by closing the depots and
carrying on the stone business at the buying points. This
point urged by learned counsel cannot, however, be accepted
in view of the findings of fact recorded by the Tribunal.
The Tribunal examined in detail the allegations made on
behalf of the workmen in this respect. In fact, the interim
award mentions that, for the purpose of deciding the
preliminary issue and the first issue, evidence was recorded
by the Tribunal for more than a week and arguments of
Advocates of the parties were heard for even a longer
period. After examining the evidence, the Tribunal came to
the conclusion that the stoppage of the work at the depots
was genuine and that the work which was being carried on at
the depots had not been transferred to the buying points
established by the Company. The closure of the business at
the depots was necessitated by reasons of expediency
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inasmuch as the Company had to reduce its purchases in its
quest for quality and its ’desire to run the business
economically. The principal work, which used to be done at
the depots, was not that of purchasing tobacco, but of
handling it and that work was not transferred at all to, any
buying point. The Tribunal, thus, came to the finding that
the closure of these depots was real and genuine and that
the suggestion of the appellants that only a device was
adopted of carrying on the same business in a different
manner had no force at all. if the same business had been
continued, though under a different guise, the claim of the
workmen not to be retrenched could possibly be considered by
the Tribunal; but, on the finding that there was a genuine
closure of the business that used to be carried on at the
depots, no question could arise of the retrenchment being
set aside by the Tribunal. The Tribunal could not ask the
Company to re-employ or reinstate the workmen, because there
was no business for which the workmen could be required. In
these circumstances all that the workmen
288
could claim was compensation for loss of their service and
in that respect, as we have indicated above, the workmen
have received adequate compensation.
Consequently, the appeal has no force and is dismissed
but we make no order as to. costs.
V.P.S. Appeal dismissed.
L2 S.C.I./69--2,500--6-I-70--GIPF.
289