CWP No. 2834 of 2003 1
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CWP No. 2834 of 2003 (O&M)
Date of decision: 17.08.2009
Khem Chand s/o Sh. Kadam Singh and others
.....PETITIONERS
VERSUS
The State of Haryana through the Financial Commissioner and Secretary,
Labour and Employment, New Secretariat Building, Sector-17, Chandigarh
and another
..... RESPONDENTS
CORAM: HON'BLE MR. JUSTICE AUGUSTINE GEORGE MASIH
Present: Ms. Abha Rathore, Advocate,
and Mr. Puneet Gupta, Advocate,
for the petitioners.
Mr. D.S.Nalwa, Addl. A.G. Haryana.
Mr. M.L.Sarin, Sr. Advocate,
with Mr. A.S.Chadha, Advocate,
and Mr. Vivek Sood, Advocate,
for respondent No. 2.
***
AUGUSTINE GEORGE MASIH, J.
This writ petition has been preferred by 62 workmen, who are
aggrieved by the order dated 09.08.2002 (Annexure P-12) passed by the
State of Haryana granting permission to respondent No. 2-M/s Whirlpool of
India Limted, Faridabad, under Section 25-O of the Industrial Disputes Act,
1947 to close down its ‘Evaporator Section’, and order dated 17.01.2003
CWP No. 2834 of 2003 2
(Annexure P-16), vide which the Review Petition preferred by The
Whirlpool of India Employees Union (Regd.) against the order dated
09.08.2002 stands rejected. Apart from praying for quashing of the above
two orders, the petitioners have also sought quashing of the order in the
form of notice dated 13.08.2002 (Annexure P-9) informing the workmen of
the evaporator section about the order dated 09.08.2002 (Annexure P-12)
leading to the termination of the services of the petitioners-workmen.
Respondent No. 2-M/s Whirlpool of India Limited, Faridabad,
took over Kelvinator of India Ltd. in the year 1996 and continued to
manufacture the same products. According to the Company, it was
running into losses and, therefore, had to introduce new technology to
compete with other companies who were producing these products and to
bring down the cost of production, had to reduce the manpower by
introducing the Voluntary Retirement Scheme. Despite cutting down the
manpower, the Company could not break even its expenses and
accordingly, the Compressor Division was transferred to M/s Tecumesh on
‘as is where is’ basis without affecting the terms and conditions of the
employment of the employees. The Plastic Division was transferred to M/s
Brite Brothers in the year 2001 because of the fact that the technology with
regard to manufacture of plastic components used in the refrigerators had
undergone a sea change and the Company was not in a position to meet
with the requirements of fixing quality components of plastic, which were
used by the other competitors in the market.
The Company while manufacturing the refrigerators was using
clinch tube type evaporators. With the change in technology world-wide in
respect of the conventional evaporators, roll bond evaporators were
introduced, which were much more economical, efficient and consumed
CWP No. 2834 of 2003 3
less energy. The competitors of the Company switched over to the said
technology and were, therefore, having an edge over the Company-
respondent No. 2. Apart from this, another compelling circumstance for
use of roll bond evaporators was that as per The Montreal Convention,
1987, on Environment, to which India was one of the participants, had
emphasized that gases which tend to deplete ozone layers in the
atmosphere should not be used. The Government of India, accordingly,
framed the Ozone Depleting Substance (Regulation and Control) Rules,
2000 (hereinafter referred to as ‘Rules, 2000’) under the Environment
Protection Act, 1986, in which the use of gases, which tend to deplete the
ozone layers, was prohibited. The conventional clinch tube type
evaporators, which were being manufactured by respondent No. 2-
Company, used gases which tend to deplete ozone layers and were now
prohibited under the Rules, 2000. As per these Rules, this prohibition was
to come into effect from the end of 2002 and before that the use of these
gases was required to be stopped by the manufacturers of refrigerators.
Taking into consideration all these factors, respondent No. 2-Company
decided to switch over to the use of roll bond evaporators in the
refrigerators. As it did not have the necessary expertise to manufacture the
roll bond evaporators in its factory, it decided to purchase the same from
outside sources. Another aspect, which forced the Company to take this
step, was that the roll bond evaporators had been designed and
manufactured by M/s EAR Canal SA Pvt. Ltd., Spain, which had got the
design patented under the law. All other competitors of respondent No. 2-
Company in India in the refrigerator industry were purchasing the said
evaporators from this very Company. The effect of this decision was that
the entire machinery already lying in the Evaporator Section was rendered
CWP No. 2834 of 2003 4
redundant except that it had to be sold as scrap. Over and above, it
required an expenditure of Rs. 8 to 9 crores in the infrastructure for fixing
the roll bond evaporators purchased from outside to be fitted in the
refrigerators manufactured in the factory of respondent No. 2. Under these
compelling circumstances, a decision was taken to close down the
Evaporator Section to keep itself afloat in the cut throat competitive market
adhering to and complying with the requirement of the statutory provisions.
Therefore, an application for seeking permission to close down the
Evaporator Section was moved to the appropriate Government i.e.
Government of Haryana under Section 25-O of the Industrial Disputes Act,
1947.
The application under Section 25-O of the Industrial Disputes
Act dated 31.05.2002 was received by the Labour Department on
12.06.2002, copy whereof has been appended as Annexure P-3.
According to the said application, the date of proposed closure was
mentioned as 31.07.2002. The Whirlpool of India Employees Union
(Regd.) (hereinafter referred to as ‘the Union’) received a copy of the
application dated 31.05.2002 on 25.06.2002, which was delivered by the
office of Deputy Labour Commissioner, Faridabad, along with a letter of the
Labour Department stating that a meeting is fixed for 28.06.2002 at 11.30
A.M. in the office of the Joint Labour Commissioner, Haryana at
Chandigarh for hearing the matter regarding application dated 31.05.2002
for permission for closure of Evaporator Section by the Management of M/s
Whirlpool of India Ltd. The Union and the Management appeared before
the Joint Labour Commissioner, who agreed to grant time to submit reply
but the Union was not allowed to be represented through their Legal
Secretary, who was a practicing Advocate. The matter was adjourned to
CWP No. 2834 of 2003 5
08.07.2002. The office bearers of the Union appeared on 08.07.2002 and
submitted their reply dated 06.07.2002 to the application. Thereafter, the
matter was adjourned to 13.07.2002 to be heard by the Labour
Commissioner himself. On 13.07.2002, respondent No. 2-Company
submitted rejoinder dated 11.07.2002 to the reply of the Union. The
matter was then adjourned to 23.07.2002 as the Labour Commissioner
reached late in the office and no time was left to take up the matter. On
23.07.2002, the Labour Commissioner was not available and the Union
submitted their written arguments dated 22.07.2002. It would not be out of
way to mention here that respondent No. 2-Company vide notice dated
01.8.2002 informed the employees of the Evaporator Department that the
production activities in the Evaporator Department were being suspended
temporarily w.e.f. 03.08.2002 to 11.08.2002 and, therefore, the employees
of this Department need not report for duty. Thereafter, the Union received
a letter informing that the meeting was fixed on 05.08.2002 at 11.30 A.M.
in the office of the Financial Commissioner and Principal Secretary to
Government of Haryana, Labour and Employment and on that date both
the parties were heard. The Financial Commissioner and Principal
Secretary, Government of Haryana passed order dated 09.08.2002
granting permission to the Management to close down the Evaporator
Section and the letter was sent to respondent No. 2-Management and the
Union on the same day, but no copy was received by the Union or the
workmen individually. On receipt of the order dated 09.08.2002 passed by
respondent No. 1 granting permission to the Management to close down
the Evaporator Section, notice was displayed that keeping in view the
permission granted by the Government to close down the Evaporator
Section, the operation in Evaporator Section is suspended till further orders
CWP No. 2834 of 2003 6
and the workers of the Evaporator Section need not report for duty till then.
The workmen were shocked to read the notice as they had no
knowledge about the order passed by respondent No. 1 granting
permission as the same was not conveyed to them and accordingly, the
Union requested for supply of copy of the order of Government dated
09.08.2002, which was subsequently received by the Union on 26.08.2002
sent by the Labour-cum-Conciliation Officer, Faridabad through proper
channel. However after notice dated 13.08.2002 displayed on the notice
board of the Company, the Union procured a copy of the order and
immediately prepared a Review Petition dated 19.08.2002 and submitted
before respondent No.1 under Section 25-O(5) of the Industrial Disputes
Act, 1947. A request for stay of the order under Review was sought but
respondent No. 1 did not fix the date of hearing of the petition and taking
advantage thereof, respondent No. 2 terminated the services of the 186
workers of the Evaporator Section. Reply to the Review Petition was filed
by the Company-respondent No. 2 on 12.10.2002. Since no decision was
being taken on the Review Petition, the Union approached this High Court
by way of filing CWP No. 17655 of 2002 titled as Whirlpool of India
Employees Union (Regd.) vs. State of Haryana and another, which was
disposed of by this Court vide order dated 31.10.2002 with a direction to
respondent No. 1 to decide the Review Petition preferred by the Union
within two months from the date of certified copy of the order of the Court is
brought to the notice of the competent authority. In compliance with the
order passed by the High Court, the Review Petition preferred by the Union
was decided vide order dated 17.01.2003. The stand of the Union was
rejected by respondent No. 1 leading to the filing of the present petition
challenging the order dated 09.08.2002 (Annexure P-12), vide which
CWP No. 2834 of 2003 7
permission has been granted to the Company under Section 25-O of the
Industrial Disputes Act, 1947 to close down the Evaporator Section as also
the order dated 17.01.2003 (Annexure P-16) passed by respondent No. 1
rejecting the Review Petition preferred by the Union and the notice dated
13.08.2002 (Annexure P-9), vide which the operation in the Evaporator
Section was suspended till further orders and the workers in the Evaporator
Section were directed not to report for duty.
The present petition was initially preferred by the Whirlpool of
India Employees Union (Regd.), Haryana (affected persons of the Union
only) through Sri Parkash s/o Sh. Harpal Singh resident of MCF No. 388,
60 feet Road, Parwatia Colony, Faridabad, Haryana. The Company raised
a number of preliminary objections, out of which one was that Mr. Sri
Parkash and Mr. Dhan Singh have no locus standi to initiate any legal
action on behalf of the petitioner-Union as they are not the office bearers of
the Union. On this objection having been taken, two separate
Miscellaneous Applications i.e. Civil Misc. No. 21925 of 2004 and Civil
Misc. No. 22045 of 2004 were filed. In C.M. No. 21925 of 2004, the
applicants claimed that they were working in the Evaporator Section of the
Company and since they were affected by the impugned orders, which
have been challenged in the writ petition, they have authorized Mr. Sri
Parkash to represent the applicants in all legal proceedings. They have,
therefore, prayed that the applicants be added as writ petitioners and the
name of Whirlpool of India Employees Union (Regd.) Haryana (Affected
members of Union only) may be deleted from the array of parties. The
application was filed by 62 affected members. In C.M. No. 22045 of 2004,
the petitioners had prayed for the amendment of the writ petition in view of
the objections raised by the Company. The amendment sought was
CWP No. 2834 of 2003 8
mentioned in paragraphs 8 and 9 of the application. The applicants had
detailed the amendment sought. Reply to the said applications were filed
by the Company. On consideration of the applications and the reply filed
by the Company and after hearing the counsel for the parties, a Division
Bench of this Court vide its order dated 11.04.2005 allowed both the
applications as per their prayers. However, all objections legal as well as
factual were left open to the Company including the objections with regard
to delay and latches.
Counsel for the petitioners contends that the order dated
09.08.2002 passed by the Government granting permission to the
Company cannot be sustained as the same is in violation of the provisions
of Section 25-O of the Industrial Disputes Act. There is a patent legal
error, which has crept in and the same has not been taken into
consideration by the Government while passing the order dated 09.08.2002
(Annexure p-12) and thereafter, order dated 17.01.2003 (Annexure P-16)
while deciding the Review Application preferred by the Union. She submits
that Section 25-O provides for the procedure for closing down an
undertaking. As per sub-section (1), an employer who intends to close
down an undertaking of an industrial establishment to which this chapter
applies, shall apply in the prescribed manner for the prior permission at
least 90 days before the date on which the intended closure is to become
effective, to the appropriate Government. She submits that the application
for permission to seek closure of the Evaporator Unit is dated 31.05.2002
(Annexure P-11). The said application gives the date, on which the
intended closure is to become effective, as 31.07.2002. This only comes to
60 days, which is against the mandate of Section 25-O. The application, in
any case, was received by the appropriate Government on 12.06.2002
CWP No. 2834 of 2003 9
and, therefore, the actual period, for which the notice was given by the
Company, comes to 48 days. She further submits that Section 25-O (1),
apart from mandating 90 days notice, also provides that a copy of the said
application of intended closing down of an industrial establishment shall
also be served simultaneously on the representatives of the workmen in
the prescribed manner. As has come on record, the said application dated
31.05.2002 was not served upon the Union simultaneously. The same
was received by the Union on 25.06.2002 and that too, not from the
Company but from the Labour Commissioner, Haryana, vide letter dated
21.06.2002, which was received by the Union on 25.06.2002 (Annexure P-
2). Accordingly, she submits that even if the provisions of Section 25-O are
stretched to the extent that all requirements under the provisions were
fulfilled that would come to 25.06.2002, when the application was received
by the Union and when the period is calculated from this date, it comes to
only 35 days. She, on this basis, submits that the application itself being in
violation of Section 25-O of the Industrial Disputes Act, the same could not
have been considered and decided by the Government as it was an
incurable defect. She further submits that apart from this patent error,
which has been overlooked by the Government to the prejudice of the
petitioners, the Government as per Section 25-O (2) of the Industrial
Disputes Act was required to make an enquiry into the reasons mentioned
in the application for seeking permission to close down an undertaking and
such enquiry without taking into confidence the employees, who are
directly affected by such a decision of the Government, would be in
violation of the basic principles of natural justice. The Union was not given
effective hearing by the Government and its officials. They were not
allowed to be represented by the Legal Secretary as the workmen were not
CWP No. 2834 of 2003 10
well conversant with the language, which was being used during the
submissions being made and further the application and the contents
thereof were technical in nature, which a layman could not understand and
respond to. On the other hand, the Management was represented by high
officials, who were well educated and were aware of the details and the
implication of the technical and legal aspects pitted against workmen who
neither understood the intricacies of law and the technical details. The
enquiry thus was without virtually associating the Union and, therefore,
cannot be said to be in accordance with the provisions of law. She submits
that the intention of the Legislature was to give effective opportunities of
being heard to the employer and the workmen, who may be interested in
such closure. All factors relevant have not been taken into consideration
by the Government while coming to its decision granting permission to the
Company for closure. It is her further submission that the requirement of
section 25-O (2) is that on the decision having been taken by the
Government, the order so passed, a copy of such order shall be
communicated to the employer and the workmen simultaneously. In the
present case, the employer has been communicated the order dated
09.08.2002 and copy thereof supplied but the same has not been done as
far as the workmen are concerned. The workmen only came to know of
the said order when notice dated 13.08.2002 was displayed on the notice
board by the Company and the order dated 09.08.2002 was officially
communicated to the Union only on 26.08.2002 when the same was
received from the Labour-cum-Conciliation Officer, Faridabad (Annexure P-
10). She submits that the whole proceedings are biased in favour of the
Company to the prejudice of the workmen. The permission has been
granted under Section 25-O of the Industrial Disputes Act by the
CWP No. 2834 of 2003 11
Government overlooking the provisions of the Act with an intention to
please the Multinational Company. An effort was made by the Government
by not communicating the order dated 09.08.2002 to the Union to scuttle
the right of the workmen to prefer an application under Section 25-O (5) for
review of the order granting permission under sub-section (2).
Another point, which has been pressed into service by the
counsel for the petitioners, is that the Evaporator Section is not an
undertaking of an industrial establishment. She submits that it is only an
up-gradation of the technology or at the most, change of technology, which
would only amount to closing down a Department. It is not an independent
portion of the business of the Company, which is being sought to be closed
down nor an independent venture, which would fall within the definition of
an undertaking, as provided under Section 2 (ka) of the Industrial Disputes
Act. She relies upon the judgments of the Hon’ble Supreme Court in the
case of Avon Services (Production Agencies) Pvt. Limited vs.
Industrial Tribunal, Haryana, Faridabad and others, 1979 LLJ (1) 1,
Management of Hindustan Steel Ltd. vs. The Workmen and others,
1973 LAB I.C. 461, District Red Cross Society vs. Babita Arora and
others, (2007) 7 Supreme Court Cases 366 and a judgment of the Delhi
High Court in the case of Raj Hans Press vs. K.S.Sidhu and others, 1977
LAB I.C. 1633. She has, on the basis of the above judgments, contended
that if a unit or a part of undertaking, which has no functional integrity with
the other unit, then and only then can it be termed as a separate
undertaking or unit, which could be granted permission to close down. She
further submits that the staff of the industry was inter-transferable and,
therefore, the principle of ‘last come first go’ should have been given effect
assuming the closure is said to be in accordance with law. Even if, for
CWP No. 2834 of 2003 12
arguments sake, it is accepted that the closure was in accordance with law,
the principle of ‘last come first go’ should have been followed. She relies
upon the judgment of the Ho’ble Supreme Court in the case of
J.K.Synthetic vs. Rajasthan Trade Union Kendra (2001) 2 SCC 87 in
support of this contention. She contends that since this Evaporator Section
is not an independent unit and the closure of which would, therefore, not
fall within the ambit of Section 25 FFF of the Industrial Disputes Act with
regard to the grant of compensation to the workmen rather it would fall
under Section 25-N of the Industrial Disputes Act. Since the provisions of
Section 25-N of the Industrial Disputes Act having not been complied with,
the termination of the services of the workmen cannot be said to be in
accordance with law and is in violation of the provisions of the Industrial
Disputes Act entitling them to reinstatement in service with all
consequential benefits. It is her contention that the closure could not have
come into force and if the closure had to be effected, the Company could
not have violated the settlement, which it had reached with its workmen by
way of the agreement dated 29.01.2002 entered under Section 12 (3) of
the Industrial Disputes Act, 1947. She submits that as per the said
agreement, the decision regarding installation of machines, increase in
capacity, change in production facilities, new/improved production system
implementation of new technology, raw engineering of shop floor/relaying
of machines was solely to be the prerogative of the Management and union
and the workmen would neither interfere nor obstruct the implementation
of these management decisions rather Union and the workmen were to
provide their full cooperation in implementing these decisions but all this
was dependent upon and subject to the further clause, which
states that it will not have adverse effect on the employment of the
CWP No. 2834 of 2003 13
workmen. It is an admitted position by the Company that the conciliation
settlement/agreement dated 29.01.2002, which has been referred to in
para-3 of the writ petition, was in force, when the application for closure of
the Evaporator Unit was made and thereafter, the closure was effected
from 13.08.2002. She submits that the said decision under the said
agreement under the Industrial Disputes Act was binding between the
parties under Section 18 of the Industrial Disputes Act and, therefore, the
decision of closure is not sustainable in view of the settlement entered into
between the parties.
In view of the above submissions, she submits that the present
writ petition deserves to be allowed and the impugned orders cannot be
sustained entitling the petitioners to reinstatement in service with all
consequential benefits.
On the other hand, learned senior counsel for respondent No.
2-Company has pressed into service certain preliminary objections with
regard to the maintainability of the present writ petition. He submits that
the principle of collective bargaining is applicable to the Industrial Disputes
Act and the orders under challenge cannot be questioned by an individual
workman. He submits that when the initial application for permission of
closure under Section 25-O of the Industrial Disputes Act was preferred by
the Company, the objections were raised by the M/s Whirlpool of India
Employees Union (Regd.). After considering the contentions of the Union
and the Company and after due enquiry, as per the provisions of the
Industrial Disputes Act, the order dated 09.08.2002 (Annexure P-12) was
passed by the appropriate Government granting permission to the
Company for closure of the unit. He further submits that thereafter, an
application for Review under Section 25-O (5) was preferred by the Union.
CWP No. 2834 of 2003 14
None of the petitioners, although provided for under Section 25-O (5) of the
Industrial Disputes Act that a workman can also file a Review, preferred a
Review of the order granting permission under Sub-Section (2) of Section
25-O of the Industrial Disputes Act. The Review Application preferred by
the Union was duly considered by the Appropriate Government and on
consideration of the objections, dismissed the same vide order dated
17.01.2003 (Annexure P-16). The Union has chosen not to challenge the
orders of permission granted for closure dated 09.08.2002 (Annexure P-12)
and the order dismissing the Review Petition dated 17.01.2003 (Annexure
P-16), meaning thereby that the Union has accepted the decision of the
Appropriate Government granting permission for closure of the unit. In
support of this, he submits that out of 186 employees of the Evaporator
Section, 124 employees have accepted the decision of the Government
and have taken the benefits, as provided by the Company, which were far
in excess of the statutory benefits, to which the workmen would have been
entitled to. Only 62 employees have preferred to challenge the above
mentioned orders, which they cannot, in view of the basic principles of the
Industrial Disputes Act containing the concept of collective bargaining. The
petitioners having not challenged the order dated 09.08.2002 by way of
Review Petition, have no right to challenge the same through the present
writ petition. He further submits that the writ petition is marred by delay
and latches as the original order of closure is dated 09.08.2002 and the
present writ petition was initially filed on 10.02.2003 purported to be by M/s
Whirlpool of India Employees Union (Regd.). When an objection was taken
by the Company that no Office Bearers of the Union had filed the writ
petition nor any authority or resolution was placed on record for challenging
the said orders on behalf of the Union, the petitioners filed an amended writ
CWP No. 2834 of 2003 15
petition only on 13.12.2004. The said amendment was allowed by this
Court vide order dated 11.04.2005 and notice of motion was issued for
11.08.2005. He thus, on this basis, submits that the writ petition deserves
to be dismissed on this score alone. Apart from these objections, it has
been submitted that the petitioners, having failed to avail the remedy of
review under Section 25-O (5) of the Industrial Disputes Act i.e. by way of
preferring a Review Petition in their individual capacity, have an alternative
remedy of challenging their termination by taking recourse to Section 10 of
the Industrial Disputes Act by preferring a demand notice, which could
result into reference by the appropriate Government under the Industrial
Disputes Act. As a matter of fact he contends, that the challenge by the
petitioners is to the order dated 13.08.2002 (Annexure P-9), vide which the
notice has been displayed on the notice board by the Company that the
permission of closure has been granted by the appropriate Government,
which has been projected as an order of termination. Pressing all these
submissions into service, he prays for dismissal of the present writ petition.
On merits, it has been submitted that provisions of Section 25-
O (1) of the Industrial Disputes Act are intended primarily to give notice to
the appropriate Government as also to the workmen about the intention of
the Management to close down an undertaking of an industrial
establishment. The requirement of 90 days notice for prior permission has
been prescribed only for this purpose. On going through the complete
Section 25-O of the Industrial Disputes Act, it is apparent that the intention
of Legislature is that the workmen, apart from the employer, are given full
opportunity to put forth their submissions before the appropriate
Government and further to give the appropriate Government reasonable
time for making such enquiry so as to come to a conclusion about the
CWP No. 2834 of 2003 16
genuineness or adequacy of reasons stated by the Management for
closure of the undertaking. The period of 90 days prescribed is not
sanguine as is apparent from Sub-Section (3) of Section 25-O of the
Industrial Disputes Act as it provides that the refusal or grant of permission
to the employer has to be communicated by the appropriate Government
within a period of 60 days from the date an application for permission for
closing down an undertaking has been moved under Section 25-O (1) of
the Industrial Disputes Act. He submits that , in any case, the intent and
purpose of the provisions of Section 25-O (1) has been fully complied with,
as according to the Government, the application under Section 25-O (1) of
the Industrial Disputes Act was received by the appropriate Government on
12.06.2002, the permission for closure by the appropriate Government was
accorded on 09.08.2002 and the actual effective date of closure of the
undertaking was 12.09.2002. He, on this basis, submits that when the
spirit, with which the Legislature has brought about this Section, having
been complied with mere wrong mentioning of the date for intended closure
of the undertaking i.e. 31.07.2002 in the application would not in itself
amount to such a defect, which cannot be cured. He submits that no
prejudice whatsoever has been caused to the petitioners as the Union has
been, at every stage, associated with the process of enquiry and the Union
has been given an opportunity of being heard personally as well as through
making representation. He submits that various meetings were held,
wherein the Union had participated before different authorities. Objections
have been raised by the Union to the application submitted by the
Company under Section 25-O (1). All those objections have been duly
considered and decided by the competent authority in accordance with law.
The technical objection with regard to the application under Section 25-O
(1), wherein the date of intended closure was given as 31.07.2002, which
CWP No. 2834 of 2003 17
would come to 60 days from the date which was mentioned in the
application, was accepted as a mistake by the Management and
accordingly, had undertaken and stated in the rejoinder to the reply filed by
the Union during the proceedings under Sub-Section (2) that the intended
date of closure be read as 12.09.2002 as the date of the submission of the
application under Section 25-O (1) was 12.06.2002 to the appropriate
Government. The appropriate Government has taken all this into
consideration while granting permission to the Company for closing down
the Evaporator Section. As a matter of fact, he submits that the closure
indeed came into effect from 12.09.2002 and the salary of all the
employees of the Evaporator Section and all benefits under the Industrial
Disputes Act have been calculated, compiled and paid as well to 124
workers treating their service up to 12.09.2002. He submits that even the
petitioners were given the wages up to 12.09.2002 and their benefits,
under the Industrial Disputes Act, also calculated up to 12.09.2002, which
was offered to them but the petitioners have chosen not to accept the
same. He submits that the petitioners would be entitled to the same
benefits as other workmen of the Evaporator Section have been granted,
which is much more beneficial than their entitlement under the Industrial
Disputes Act. He further submits that Rule 76-C(1) of the Industrial
Disputes (Central) Rules, 1957, which has been said to be applicable to the
Company is misplaced, as the Industrial Disputes (Punjab) Rules, 1958
has been notified by the Punjab Government, which is applicable to the
State of Haryana and, therefore, Rule 75 (C) of the said Rules would be the
Rule, which would be applicable to the present case. He relies on Rule 75-
C (1) to submit that the same does not mandate the copy of an application
for closing down an undertaking to be served simultaneously on the
representatives of the workmen.
CWP No. 2834 of 2003 18
Counsel for respondent No. 2-Company has supported the
decision of the Management to close down the Evaporator Section
primarily on the ground that the Statute puts such a condition on the
Company according to the Montreal Protocol of 1987, wherein India was
one of the participating countries, which led to the promulgation of the
Ozone Depleting Substance (Regulation and Control) Rules, 2000
(hereinafter referred to as ‘Rules of 2000’) under the Environment
Protection Act, 1986. These Rules of 2000 prohibit the use of gases,
which lead to depletion of the ozone layers. Apart from the statutory
bindings, he has justified the decision on the basis of the technical
advancement in the field of refrigeration, wherein new roll bond
evaporators are being used because of energy efficiency and change of
use of gas. The competitors of the Company having adopted this new
technology were having an edge over them and to keep itself afloat in the
cut throat competitive market the Company had no option. Apart from the
statutory provisions, the technical and economical reasons also forced the
Management to take such a decision to survive in the market. The losses,
which were accumulated by the Company, did not permit the Company to
continue with its obsolete technology, which would have led to the total
closure of the Company itself. He has submitted that as the design and
manufacture of roll bond evaporators was patented under the law by M/s
EAR Canal SA Pvt. Ltd., Spain, the Company was forced to outsource this
vital manufacturing process. He has referred to in detail the reasons, the
technology and the mandate of law to justify the decision of the
Management of the Company as well as the decision of the Government
granting permission for closure. He has taken me through the
compensation package, which the Company has formulated in the light of
CWP No. 2834 of 2003 19
the closure of the Evaporator Section for the workmen in the said unit,
which according to the counsel is much more beneficial than those to which
the workmen are entitled to under the statutory provisions of the Industrial
Disputes Act.
Counsel for respondent No. 2 has referred to Section 25L,
which deals with the definitions for the purposes of Chapter VB of the
Industrial Disputes Act, which is applicable in the present case. According
to Sub-Section (a) ‘Industrial Establishment has been defined. An
Industrial Establishment means a factory as defined in clause (m) of
Section 2 of the Factories Act, 1948, He has, on this basis, referred to the
Factories Act clause 2 (m) (i) and then has referred to Section 2 (cc) , 2
(ka) and 2 (ka)(a) to contend that the Evaporator Section would fall within
the definition of an Industrial Establishment. He submits that Evaporator
Section is an independent unit in itself as the said unit is severable from the
other units of the establishment. He relies upon the judgment of the
Hon’ble Supreme Court in the case of Isha Steel Treatment, Bombay vs.
Association of Engineering Workers, Bombay and another, AIR 1987
Supreme Court 1478 as also on S.G.Chemical and Dyes Trading
Employees Union vs. S.G. Chemicals and Dyes Trading Ltd. and
another, 1986 LAB. I.C. 863, to contend that it is a separate unit in itself
and, therefore, closure of the said unit will fall within the ambit of Section
25-O of the Industrial Disputes Act.
It is further the contention of the counsel for respondent No. 2
that it is for the Management to decide as to how to run the Company in a
most effective and economical manner and specially when the statutory
rules require a particular manufacturing process to be in accordance with
those specifications, the Management is bound by it. Under those
CWP No. 2834 of 2003 20
circumstances, the employers should not be forced to retain the work force
at the expense of losing the economical viability of the unit. Reliance has
been placed on a Division Bench judgment of this Court in the case of Lal
Jhanda Rockman Cycle Industries Workers’ Union vs. State of Punjab
and others, 2007 (1) PLR 359.
He submits that the contention of the petitioners that the
Company has violated the settlement, which has been entered into
between the Management and the Union, is not based on correct reading
of the settlement. He submits that the Union had agreed that the
Management had the sole prerogative to instal new machines, increase its
capacity, change the production facilities, implement new technology etc.
and the Union had stated that they would provide full cooperation in
implementing these decisions. The said decision has not been violated by
the Management as it had no option, in the given facts and circumstances
of the case, but to close down the Evaporator Section so that the statutory
requirements are complied with, failing which, it would have resulted in the
closure of the total manufacturing process of refrigeration. He further
submits that instead of total closure of the manufacturing process of the
refrigeration products, the Company, due to technical changes and the
statutory compulsions, the requirement of which if not complied with would
have resulted into penal consequence and even stopping of production
altogether, the Company had no option but to close down the Evaporator
Section to save the other Sections of the manufacturing processes and the
production of refrigerators. The patent of the technology, which was being
sought to be introduced also was the impediment in itself, which led to the
outsourcing of the production of the Evaporator Section. He, on this basis,
submits that in the larger interest of the employees, this decision was taken
CWP No. 2834 of 2003 21
and the same cannot be said to be in violation of the settlement/agreement
dated 29.01.2002. He, on this basis, submits that the permission of
closure granted by the Government and thereafter, the dismissal of the
review application is in accordance with law and does not call for any
interference by this Court and, therefore, the writ petition deserves to be
dismissed on merits also.
Counsel for the State has supported and reiterated the
submissions, as have been put forth by the counsel for respondent No. 2-
Company. He has, defending the decision of the Government granting
permission to close down the unit, submitted that no prejudice has been
caused to the petitioners as at each stage ample opportunities have been
given to the workmen through their Union to represent their case and their
objections. Various meetings were held and personal hearing was also
given by the authorities before a well considered and detailed order was
passed granting the permission for closure of the unit vide order dated
09.08.2002 (Annexure P-12). He submits that a thorough enquiry was held
by the competent authority at its own level to satisfy itself with regard to the
reasons and the grounds given by the Management in its application for
closure of the unit. He submits that an enquiry was got conducted through
Labour Commissioner and the report substantiated the reasons submitted
by the Management, which were quite genuine and adequate in support of
the decision for closure of the unit. He further submits that although initially
the intended date of closure was given by the Management as 31.07.2002
but when the application was received on 12.06.2002 and the Union of the
workmen in their reply to the application, pointed out the requirement of 90
days notice for intended closure, the Company had, in its rejoinder dated
11.07.2002, stated that the closure would be given effect to from the date
CWP No. 2834 of 2003 22
of completion of 90 days from the date of submission of the application to
the appropriate Government and as a matter of fact also the closure came
into force w.e.f. 12.09.2002. He submits that the provisions of Section 25-
O (I) are only procedural and not mandatory and if any defect is found in
the application that would ipso facto not be the basis for holding the closure
to be bad specially when provisions of Sub-Section (2) of Section 25-O
have been complied with. He has referred to Sub-Section (7) of Section
25-O of the Industrial Disputes Act to contend that the period provided
under Sub-Section (1) can be diluted and is not a rigid requirement of law.
He submits that Sub-Section (1) of Section 25-O and Sub-Section (2) are
two independent provisions. Sub-Section (1) is procedural, which provides
for the requirement of the application, whereas Sub-Section (2) is the
decision to be taken by the appropriate Government. He submits that they
operate in separate fields and once the provisions, as contained under
Sub-Section (2), have been complied with, Sub-Section (1) would stand
diluted specially when the employer undertakes to comply with the
provisions of Sub-Section (1) before a decision as per Sub-Section (2) is
taken by the appropriate Government. On this basis, he submits that the
decision of the Government firstly granting permission for closure and
thereafter dismissal of the Review Application of the Union is in accordance
with law.
I have heard the counsel for the parties and with their able
assistance have gone through the records of the case.
It would be appropriate to first consider the preliminary
objections as have been raised by respondent No. 2-Company with regard
to the maintainability of the present writ petition. As regards the principle of
collective bargaining is concerned, suffice it to say that inspite of the
CWP No. 2834 of 2003 23
principle of collective bargaining, law does recognize an individual’s right to
challenge an order, which affects him personally. Section 25-O (5)
recognizes that right wherein an individual workman has been given the
discretion to move an application for review, where the permission for
closing down an undertaking has been granted or refused by the
appropriate Government under Sub-Section (2). Merely because he has
not preferred a review petition and the Union has chosen to take up his
cause against the grant of permission would not debar the workman to
approach this Court by way of writ petition on the ground that he had
personally not preferred an application for review. It is not a case of an
individual workman but they are 62 workmen, who had preferred the
present writ petition challenging the order of permission granting closure as
also the dismissal of the review application preferred by the Union on their
behalf. This contention, therefore, of the counsel for respondent No. 2-
Company cannot be sustained.
Now coming to the question of delay and latches, this again
cannot come in the way, as initially the present writ petition was filed on
10.02.2003 and even if the application for amendment of the writ petition
along with the amended writ petition is taken into consideration that also
came to be filed on 13.12.2004, whereas the order on the review
application impugned is dated 17.01.2003. The amendment was also
allowed by this Court vide order dated 11.04.2005. As is apparent from the
record that initially the writ petition was filed on 10.02.2003 although under
the wrong bona fide belief to which objections were raised by the
Company-respondent No. 2 and further on realization of the mistake, the
application for amendment was filed which amendment was objected to by
the Company but on consideration of the reasons and the grounds stated
CWP No. 2834 of 2003 24
therein, the Division Bench of this Court vide order dated 11.04.2005
allowed the application for amendment, however leaving it open to
respondent No. 2-Company to take all objections legal as well as factual at
an appropriate stage. This cannot be said to be an inordinate delay in
approaching this Court, which would in itself be a good ground for
dismissal of the writ petition. Therefore, this contention cannot be
accepted. Other objections already taken by the respondent No.2-
Company and rejected by this Court cannot now be allowed to be raised.
As regards the availability of the alternative remedy of
reference of the dispute under Section 10 of the Industrial Disputes Act by
preferring a demand notice is concerned that could be an objection
available to the petitioners but that would not preclude or debar the
exercise of powers by this Court under Article 226 of the Constitution of
India especially when there is no serious dispute on facts. The
submissions of the parties are based on documentary proofs and,
therefore, the present petition cannot be said to be not maintainable. In
any case, the Hon’ble Supreme Court in the case of Orissa Textile and
Steel Ltd. vs. State of Orissa and others, 2002 (1) LLJ 853 has in para
16 at page 870 held as follows:-
“xxx xxx xxx xxx
This review and/or reference under amended Section 25-O
would be in addition to a judicial review under Article 226 or
Article 32.
xxx xxx xxx xxx”
In view of the above observations of the Hon’ble Supreme
Court, this contention of respondent No. 2-Company also cannot be
CWP No. 2834 of 2003 25
accepted.
Now moving on to the merits of the case, Section 25-O of the
Industrial Disputes Act requires to be referred to here as the case revolves
around it.
“25-O. Procedure for closing down an undertaking.-(1) An
employer who intends to close down an undertaking of an
industrial establishment to which this Chapter applies shall, in
the prescribed manner, apply, for prior permission at least
ninety days before the date on which the intended closure is to
become effective, to the appropriate Government, stating
clearly the reasons for the intended closure of the undertaking
and a copy of such application shall also be served
simultaneously on the representatives of the workmen in the
prescribed manner:
Provided that nothing in this sub-section shall apply to
an undertaking set up for the construction of buildings, bridges,
roads, canals, dams or for other construction work.
(2) Where an application for permission has been made
under sub-section (1), the appropriate Government, after
making such enquiry as it thinks fit and after giving a
reasonable opportunity of being heard to the employer, the
workmen and the persons interested in such closure may,
having regard to the genuineness and adequacy of the
reasons stated by the employer, the interests of the general
public and all other relevant factors, by order and for reasons
to be recorded in writing, grant or refuse to grant such
permission and a copy of such order shall be communicated to
the employer and the workmen.
CWP No. 2834 of 2003 26
(3) Where an application has been made under sub-section
(1) and the appropriate Government does not communicate the
order granting or refusing to grant permission to the employer
within a period of sixty days from the date on which such
application is made, the permission applied for shall be
deemed to have been granted on the expiration of the said
period of sixty days.
(4) An order of the appropriate Government granting or
refusing to grant permission shall, subject to the provisions of
sub-section (5), be final and binding on all the parties and shall
remain in force for one year from the date of such order.
(5) The appropriate Government may, either on its own
motion or on the application made by the employer or any
workman, review its order granting or refusing to grant
permission under sub-section (2) or refer the matter to a
Tribunal for adjudication:
Provided that where a reference has been made to a
Tribunal under this sub-section, it shall pass an award within a
period of thirty days from the date of such reference.
(6) Where no application for permission under sub-section
(1) is made within the period specified therein, or where the
permission for closure has been refused, the closure of the
undertaking shall be deemed to be illegal from the date of
closure and the workmen shall be entitled to all the benefits
under any law for the time being in force as if the undertaking
had not been closed down.
(7) Notwithstanding anything contained in the foregoing
provisions of this section, the appropriate Government may, if
CWP No. 2834 of 2003 27it is satisfied that owing to such exceptional circumstances as
accident in the undertaking or death of the employer or the
like, it is necessary so to do, by order, direct that the provisions
of sub-section (1) shall not apply in relation to such
undertaking for such period as may be specified in the order.
(8) Where an undertaking is permitted to be closed down
under sub-section (2) or where permission for closure is
deemed to be granted under sub-section (3), every workman
who is employed in that undertaking immediately before the
date of application for permission under this section, shall be
entitled to receive compensation which shall be equivalent to
fifteen days’ average pay for every completed year of
continuous service or any part thereof in excess of six
months.”
A perusal of the above Section would show that it provides for
the procedure, which is required to be followed for closing down an
undertaking. An employer, who intends to close down an undertaking of an
industrial establishment, is required to apply in a prescribed manner for
prior permission at least 90 days before the date on which the intended
closure is to become effective to the appropriate Government. Not only
this, the further requirement is that the applicant should clearly give the
reasons for the intended closure. Apart from this, the said application is
required to be served simultaneously on the representatives of the
workmen in the manner prescribed. Sub-Section (1), therefore, gives the
requirement of the employer to make an application thereunder, wherein
the minimum time for intended closure has been prescribed apart from the
requirement of the contents of the application as mandated as well as the
CWP No. 2834 of 2003 28
requirement of service of the said application on the representatives of the
workmen. Sub-Section (2) comes into operation when an application under
Sub-Section (1) is submitted by the employer. It mandates an enquiry by
the appropriate Government at its own or through its agencies in the
manner it thinks fit. This sub-section further requires that a reasonable
opportunity of being heard is to be given to the employer, workmen and
persons interested in such closure. This reasonable opportunity of being
heard is to be with regard to the genuineness and the adequacy of the
reasons given by the employer. The Government is required to not only
take into consideration the submissions of the applicant, the workmen and
the persons interested in such closure but also to keep the interest of the
general public and other relevant factors into mind while coming to a
decision on the application of the employer. This sub-section further
requires the order to be recorded in writing which should contain reasons
either granting or refusing to grant such permission. A copy of such order
has then to be communicated to the employer and the workmen. This
exercise, as provided under sub-section (2) has to be complied by the
appropriate Government within a period of 60 days, failing which sub-
section (3) comes into operation, which says that if the appropriate
Government does not communicate the order granting or refusing the grant
of permission to the employer within 60 days from the date on which the
application is made, the permission would be deemed to have been
granted. Sub-Section (4) provides that the order of the appropriate
Government on the application of the employer shall be final and binding
on all parties and will remain in force for one year from the date of order.
Sub-Section (5) provides for and gives a right of review. This right of
review is not restricted to the employer or any workman but it is open to the
CWP No. 2834 of 2003 29
appropriate Government itself to review the order on its own motion or the
appropriate Government may refer the matter to the Tribunal for
adjudication. If such a reference is made, the award is required to be
passed within 30 days from the date of reference. Sub-Section (6) deals
with a situation where no application for permission under sub-section (1) is
made within the period specified therein or where the permission for
closure has been refused, such closure shall be deemed to be illegal from
the date of closure and the workmen shall be entitled to all benefits under
the law as if there was no closure. Sub-section (7) deals with the
exigencies, which may arise where the appropriate Government may, if it is
satisfied owing to such exceptional circumstances, direct the waiver or non-
application of sub-section (1) to such undertaking for such period as may
be specified in the order. Sub-Section (8) deals with the situation where
permission has been granted to the employer under sub-section (2) for
closure or deemed closure under sub-section (3). Every workman in that
undertaking, who was in employment before the date of application for
permission was submitted, has been held to be compensated as per this
sub-section.
The Section, therefore, deals with the procedure and process
for closing down an undertaking. It further gives the requirements, the
rights, responsibilities and the duties at each step to be complied with for
coming to a conclusion of whether to grant permission or not for closure of
an undertaking. It also gives the consequences for non-compliance of the
requirements under this Section. The period, therefore, provided under
sub-section (1) i.e. 90 days, is the period which is minimum provided for a
valid closure of an undertaking by an employer from the date of submission
of the application. Any closure coming into effect of an undertaking earlier
CWP No. 2834 of 2003 30
to the expiry of 90 days from the date of application would ipso facto be
invalid. The only exception to that is provided under sub-section (7) where
in exceptional circumstances, the appropriate Government has been given
the power to waive the application of sub-section (1) for such period, as
specified in the order. Meaning thereby that the intent and purpose of sub-
section (1) is to give an advance notice to the appropriate Government and
the workmen of the intended closure so that the Government is made
aware of the decision of the employer with regard to the intended closure of
an undertaking. The simultaneous serving of the application on the
representatives of the workmen in the prescribed manner again is with an
intention that the directly affected party i.e. the workmen because of the
closing down of the undertaking are put to notice and they are also made
aware of the reasons for the intended closure of the undertaking. What,
therefore, is essential is the 90 days period from the date of submission of
the application to the actual date of closing down of the undertaking. An
employer may give notice of the intended closure beyond the period of 90
days but even if permission under sub-section (2) is provided to him within
the period of 60 days but still the employer cannot close down the
undertaking before the expiry of the period of 90 days from the date of
submission of the application to the appropriate Government. Similarly if
an application is submitted by an employer wherein he gives a date of
intended closure, which is earlier to the expiry of 90 days from the date of
submission of the application and permission is granted under sub-section
(2) by the appropriate Government but still for valid closing down of an
undertaking, he will have to wait till the expiry of 90 days from the date of
submission of the application except where powers under sub-section (7) is
exercised by the appropriate Government. So what is essential and
CWP No. 2834 of 2003 31
mandated under Section 25-O (1) of the Industrial Disputes Act, is 90 days
of clear period from the date of submission of the application for closing
down an undertaking to the actual closure of the undertaking, non-
compliance of which would render the closure of the undertaking as invalid
as is apparent from sub-section (6) as well. The simultaneous serving of
application on the representatives of the workmen as per sub-section (1) is
with the purpose that the workmen are informed of the intention of the
employer so that they can prepare themselves either to oppose the said
proposal before the appropriate Government where the matter is to be
considered and/or to prepare themselves to take up alternative
employment or make alternative arrangements for their livelihood. The
intention of the legislature is not to render the application of employer
invalid due to non serving of the application simultaneously on the
representatives but to give them an opportunity to prepare their response
to the reasons as put forth by the employer for the intended closure of the
undertaking. Thus, merely because a copy of the application has not been
served simultaneously on the representatives of the workmen would not by
itself render the application of the employer invalid.
In the present case, application was submitted by respondent
No. 2-Company on 12.06.2002 under sub-section (1) to the appropriate
Government wherein the date of intended closure given as 31.07.2002,
which was less than 90 days, as prescribed under Section 25-O (1). The
copy of the application was received by the Union on 25.06.2002. On the
consideration of the application under sub-section (2) when the Union was
called upon to submit its response, an objection with regard to the non-
completion of the period of 90 days from the date of submission was put
forth and on a rejoinder submitted by the Company on 11.07.2002, it had
CWP No. 2834 of 2003 32
stated that the closure would be given effect to from the date of completion
of 90 days from the date of submission of the application to the appropriate
Government i.e. 12.09.2002. As a matter of fact, the said closure of the
Evaporator Section came into effect from 12.09.2002, which was beyond
the period of 90 days from the date of submission of the application by the
employer to the appropriate Government. Since the Union had submitted
its response to the application of the Company before the appropriate
Government, no prejudice was caused to the workmen by non
simultaneous supply of the copy of the application to the Union by the
Company. In this view of the matter, the submission of the application
under Section 25-O (1) of the Industrial Disputes Act could at most be said
to be a defective application, which was cured on the basis of the
acceptance of the mandate of 90 days from the date of submission of the
application to the appropriate Government till the date of closure of the
undertaking. The defect having been cured, the consideration of the
application of the Company by the appropriate Government cannot be said
to be not in accordance with law or that because of wrong mentioning of
the period for the intended closure or non-simultaneous supply of the copy
of the application to the representatives of the workmen, had rendered the
application void, ab-initio. The contention, therefore, raised by the counsel
for the petitioners with regard to non-compliance of Section 25-O (1) of the
Industrial Disputes Act cannot be accepted.
The contention of the counsel for the petitioners, that Rule 76-
C(1) of the Industrial Disputes (Central) Rules, 1957 has not been
complied by the Company which mandates supply of the copy of the
application under Section 25-O (1) to the Union simultaneously, has no
force in view of the fact that the said rules are not applicable in the present
CWP No. 2834 of 2003 33
case as the rules applicable in the State of Haryana are the Industrial
Disputes (Punjab) Rules, 1958, which do not mandate the supply of copy of
the application for closing down an undertaking to be served
simultaneously on the representatives of the workmen. However, this
would have no bearing on the present case as it has already been held that
the purpose and intent of Section 25-O (1) of the Industrial Disputes Act
providing for simultaneous supply of the application is only with a purpose
to apprise the workmen of their right to contest the said application moved
by the Management under Section 25-O of the Industrial Disputes Act.
Sub-Section 25-O (2) provides for the consideration of the
application by the appropriate Government for permission submitted by the
employer under sub-section (1). The first mandate is to make an enquiry,
as the appropriate Government thinks fit. Apart from the said enquiry, the
Statute mandates giving a reasonable opportunity of being heard both to
the employer and the workmen apart from any other person, who is
interested in such closure meaning thereby it recognizes the principle of
natural justice where the parties are given an opportunity to put forth their
objections and suggestions. Their submissions are to be considered in the
light of and with regard to the genuineness and adequacy of reasons given
by the employer in the application for the intended closure. This apart, the
appropriate Government may also take into consideration the interest of
the general public and all other relevant factors which it may consider
appropriate in coming to a decision whether to grant permission for closure
or refuse such permission. The further requirement is that the order has to
be a reasoned one and that too recorded in writing. This order is required
to be conveyed to the employer and the workmen.
It is the case of the petitioners that they have been deprived of
CWP No. 2834 of 2003 34
the full opportunity to represent themselves and make their submissions
before the authorities and the appropriate Government while the process of
decision making as per sub-section (2) was in progress. The primary
submission is that they were not allowed to be represented by their Law
Secretary, who is an Advocate and, therefore, the basic principle of audi
alteram partem has been violated and, therefore, the order of granting
permission for closing down the Evaporator Section is bad in law. The
principle, as is apparent, is that the employer and the employees should be
given a reasonable opportunity of being heard. A detailed reply, to the
application submitted by the Company for permission for closure, was
given by the Union. They were represented by their Office Bearers before
the appropriate authorities when the proceedings under sub-section (2)
were in progress. They were given personal hearing and all their
submissions, written and oral, have been duly considered by the
appropriate Government while passing a detailed reasoned order granting
permission to the Company to close down the undertaking. The case of
the petitioners is not that the Company was represented by an Advocate
and thus no prejudice has been caused to the petitioners by non-
representation of the Union by an Advocate on their behalf.
A perusal of the order dated 09.08.2002 would show that an
enquiry was got conducted through the Labour Commissioner. On
completion of the said enquiry, a report was submitted, which accepted the
reasons as given by the Company as genuine and reasonable. It further
substantiated the grounds, as submitted by the Management, which were
found to be genuine and adequate in support of the decision for closure of
the unit. The contention, therefore, of the counsel for the petitioners that
no enquiry has been held by the appropriate Government is without any
CWP No. 2834 of 2003 35
basis. The contention that the petitioners were required to be associated
with the enquiry, which was undertaken by the appropriate Government,
again is not acceptable for the reason that this discretion has been granted
by the Statute to the appropriate Government as sub-section (2) provides
for the making of such enquiry as the appropriate Government thinks fit.
The requirement of associating the representatives of the workmen or the
workmen in the enquiry to be conducted by appropriate Government is not
mandated. Nevertheless, the Union having submitted their objections to
the application by the Company in writing thereafter, the Office Bearers of
the Union were heard in person, even written arguments were submitted
and considered by the appropriate Government before taking a decision,
the principle of giving them reasonable opportunity of hearing having been
complied with, no illegality has been committed by the Government in not
associating the workmen in its enquiry.
The reasons submitted by the employer for seeking permission
to close down the Evaporator Section are primarily based on the statutory
mandate, which required the discontinuance of the gases in the
refrigeration industry, which tend to deplete the ozone layers. It is not in
dispute that the gas used in the conventional clinch tube type evaporators,
which were being produced in the Evaporator Section, were the ones,
which tend to deplete the ozone layers. India being a participant in the
Montreal Convention,1987, which initiated on 16.9.1987, accepted the
same which mandated the prohibition of the use of ozone depleting gases.
In accordance with and as per the Montreal Convention, Government of
India framed the Ozone Depleting Substance (Regulation and Control)
Rules, 2000 under the Environment Protection Act, 1986. According to
Rule 10 (3), no person shall either himself or by any other person or
CWP No. 2834 of 2003 36
enterprise on his behalf sell, stock or exhibit for sale or distribute any
product resulting out of activities, or provide services, specified in column
(2) of Schedule IV using ozone depleting substances specified in column
(3) after the date specified in column (4) of that Schedule. Serial No. 6 of
Schedule IV provides for manufacture of other Refrigeration and other Air-
conditioning products and the Group of Ozone Depleting Substance as
Group I and the phase out date is mentioned as 01.01.2003. This shows
the statutory requirement of replacing the conventional clinch tube type
evaporators, as the gases used in these evaporators were the ones, which
were required to be phased out. The Company, therefore, had no option
but to stop the production of the conventional tube type evaporators. Apart
from this, with the change in technology world wide, the clinch tube type
evaporators were being replaced by roll bond evaporators, which were
much more energy efficient and of an advance technology which fulfilled
the mandate of the Statute as the gases used in roll bond evaporators were
not prohibited under any law. This apart, the Company had no
technological expertise or infrastructures to manufacture the roll bond
evaporators. These evaporators had been designed and manufactured by
M/s EAR Canal SA Pvt. Ltd. Spain, which had got the design patented
under the law. All other competitors of the Company in India in the
refrigerator industry were purchasing the roll bond evaporators from the
said Company, therefore, the economics, the technological, the energy
efficiency and compliance of the statutory provisions left no option to the
Company but to purchase the roll bond evaporators from the said
Company. The result thereof was the decision by the Company to close
down the Evaporator Section. If this step had not been taken by the
Company, it would have no option but to close down the manufacture of
CWP No. 2834 of 2003 37
the refrigerators altogether, which would have resulted in much more
losses to the Government in terms of loss of revenue and taxes, to the
Company as the other machinery would have been rendered surplus and
would have to be sold as junk and further all the employees of the
Refrigerator Section would have been rendered unemployed apart from
those, who were dealing with the sales and maintenance etc. The decision
taken by the appropriate Government granting the permission for closing
down the Evaporator Section on consideration of the reasons as stated by
the employer Company, the interest of the general public and other
relevant factors after giving reasonable opportunity of being heard apart
from making an enquiry is fully justified. A well reasoned and detailed
order in writing has been passed by the appropriate Government which
does not call for any interference by this Court. Similarly the order passed
on the application for review of the order granting permission for closing
down the Evaporator Section is in accordance with law as all contentions
raised by the workers Union have been considered in detail and a
reasoned order has been passed rejecting the review application.
The contention of the petitioners that they have not been
communicated the order granting the permission for closing down the
Evaporator Section and, therefore, the said order is not sustainable, again
cannot be accepted. The intent and purpose of the communication of the
order is to inform the parties showing the consideration of their
submissions by the appropriate Government, the other purpose, which this
communication of the order would serve, is for giving an opportunity to the
concerned party to prefer a review application under sub-section (5). In the
present case, the contention, which has been raised by the petitioners,
therefore, is that the order having not been communicated to them
CWP No. 2834 of 2003 38
simultaneously ipso facto would render the order passed under sub-
section (2) invalid. The permission granted to the Company was vide order
dated 09.08.2002, the said order was displayed on the notice board by the
Company on 13.08.2002, the order as per the workers Union was officially
communicated to them only on 26.08.2002 and, therefore, they were
prejudiced by such act of non-communication of the order by the
appropriate Government. This, according to the petitioners, shows the bias
of the appropriate Government towards the workers as they had
communicated the order to the Company but not to the workmen. The
stands of the Company and the Government is that a copy was indeed
sent to the workers Union but it may be a different position whether they
have received or not. However, it is an admitted position that the Union
had procured that order and has preferred a review application on
18.08.2002 to the appropriate Government which review application has
been duly considered and orders passed thereon. No prejudice has thus
been caused to the workmen by non-receipt or non-communication of the
order dated 09.08.2002. In any case, it is an admitted position that the
order dated 09.08.2002 was received by the Union on 26.08.2002. That
being the position, this contention also cannot be sustained.
Coming to the contention of the counsel for the petitioners that
the Evaporator Section is not an undertaking or an industrial establishment,
as has been referred to in Section 25-O (1) of the Industrial Disputes Act
and, therefore, the permission granted for closure cannot be sustained.
Reference to the relevant provisions of the Industrial Disputes Act, at this
stage, would be helpful to understand the requirement of law to settle this
question. Section 25-L (a) (i) of the Industrial Disputes Act deals with the
definitions, which would be applicable to Chapter VB of the Industrial
Disputes Act wherein Section 25-O finds mentioned.
CWP No. 2834 of 2003 39
Section 25-L (a) (i) of the Industrial Disputes Act reads as
follows:-
“25L. Definitions.-For the purposes of this Chapter,-
(a) "industrial establishment" means-
(i) a factory as defined in clause (m) of Section 2 of the
Factories Act, 1948 (63 of 1948);
xxx xxx xxx xxx"
Section 2 (m) (i) of the Factories Act, 1948, which is relevant
for the present case, reads as follows:-
“(m) “factory'” means any premises including the precincts
thereof-
(i) Whereon ten or more workers are working, or were
working on any day of the preceding twelve months, and in
any part of which a manufacturing process is being carried on
with the aid of power, or is ordinarily so carried on, or
xxx xxx xxx xxx”
Section 2 (ka) (a) & (b), which again defines Industrial
establishment or undertaking under the Industrial Disputes Act, reads as
follows:-
“2 (ka)”Industrial establishment or undertaking” means an
establishment or undertaking in which any industry is carried
on:
Provided that where several activities are carried on in
an establishment or undertaking and only one or some of such
activities is or are an industry or industries, then,-
(a) if any unit of such establishment or undertaking carrying
on any activity, being an industry, is severable from the other
CWP No. 2834 of 2003 40unit or units of such establishment or undertaking, such unit
shall be deemed to be a separate industrial establishment or
undertaking;
(b) if the predominant activity or each of the predominant
activities carried on in such establishment or undertaking or
any unit thereof is an industry and the other activity or each of
the other activities carried on in such establishment or
undertaking or unit thereof is not severable from and is, for the
purpose of carrying on, or aiding the carrying on of, such
predominant activity or activities, the entire establishment or
undertaking or, as the case may be, unit thereof shall be
deemed to be an industrial establishment or undertaking;”
Section 2 (cc) of the Industrial Disputes Act, which defines
closure, reads as follows:-
“2 (cc) “closure” means the permanent closing down of a
place of employment or part thereof;”
The test, therefore, on perusal of the above provisions
applicable to the present case, would be whether the Evaporator Section of
the respondent-Company fulfills the test of the industrial establishment or
undertaking as defined under Section 2 (ka) of the Industrial Disputes Act
as also the ‘factory’ as defined under Section 2(m) (i) of the Factories Act,
1948. Section 25 L (1) of the Industrial Disputes Act by introducing the
definition of ‘factory’ as an industrial establishment as applicable to
Chapter VB has restricted the definition of the industrial establishment or
undertaking as defined under Section 2 (ka) of the Industrial Disputes Act.
The definition, therefore, of the ‘factory’ comes into limelight to determine
whether the Evaporator Section fulfills the definition of the ‘factory’ and if
so; does that fulfil the requirement of the industrial establishment or
CWP No. 2834 of 2003 41
undertaking, as provided under Section 2 (ka) of the Industrial Disputes
Act.
The pleadings, as has been referred to above, clearly indicate
that the Evaporator Section, closure of which was being sought by the
respondent-Company, was a distinct unit, which is severable from other
units of the establishment. What was being manufactured in the
Evaporator Section was the evaporators, which were conventional, namely,
clinch tube type evaporators. It is itself an independent component which
was being manufactured by the Company, which manufacturing process
and technology had been rendered obsolete and was not found
economically feasible in view of the advance technology being used by
other competitors. That apart, the conventional clinch tube type
evaporators could not fulfil the statutory requirement of non use of ozone
depleting gases. The Company did not have the necessary expertise to
manufacture the advanced roll bond evaporators in its factory and that
apart, due to the design of the said roll bond evaporators being patented
under the law, it could not go for the manufacture of the said evaporators
forcing them to close down the Evaporator Section and purchase the roll
bond evaporators from the manufacturers, namely, M/s EAR Canal SA Pvt.
Ltd. Spain from outside source. What the Evaporator Section was
manufacturing could not be continued with due to the statutory
compulsion, which was in the form of non use of ozone depleting gases
and the non-availability of the technology for manufacturing advanced roll
bond evaporators [These aspects have been discussed in detail in the
earlier part of the judgment therefore, need not be repeated again and are
only referred to here]. The unit in itself was carrying on an activity which
would fulfil the requirement of it being a factory as defined under the
CWP No. 2834 of 2003 42
Factories Act, 1948 and also the requirement of industrial establishment or
undertaking as defined under Section 2 (ka) of the Industrial Disputes Act
as the Evaporator Section was a unit carrying on an activity being industrial
and severable from other units of the Company. It cannot be said that this
unit had functional integrity with other units and was not severable from the
other units although the product, which was being manufactured in the
Evaporator Section formed an integral part of the end project but the
activity, which was being performed in the Evaporator Section, was distinct
and separate from the other units. That being so, the Evaporator Section
fulfills the requirement of law, for which the Company could move an
application for permission to close down that unit.
The principles laid down in the judgments which have been
relied upon by the counsel for the petitioners cannot be disputed with and
the present case, as has been stated above, fulfils those principles and
tests laid down therein and the statute as existing now. However, it needs
to be pointed out here that these judgments primarily were dealing with the
statutory provisions which were prevalent prior to the amendment or
introduction of the present provisions applicable for closure of the
undertaking/industrial establishment. Section 25-O of the Industrial
Disputes Act was substituted w.e.f. 28.08.1984. Section 2 (cc), (ka) were
inserted w.e.f. 21.08.1984. The judgments in the case of Avon Services
(Production Agencies) Pvt. Limited (supra), Management of Hindustan
Steel Ltd. (supra), Raj Hans Press (Supra) are cases which were not
dealing with the present provisions. The judgment of the Hon’ble Supreme
Court in District Red Cross Society (Supra) primarily was dealing with the
question with regard to the provisions dealing with the compensation.
However, it has clearly been held in the said judgment that it is not
CWP No. 2834 of 2003 43
necessary that the entire establishment of an employer should be closed.
If a unit or part of an undertaking, which has no functional integrity with
other units, is closed, it will amount to closure. As regards the judgment of
the Hon’ble Supreme Court in the case of J.K.Synthetic (supra) is
concerned that was dealing with a situation where the work force was
totally separate and the workmen were not transferable nor were
transferred from one unit to the other. In the present case, it has been
submitted that some workmen were transferred from other units to the
Evaporator Section. There are only two instances which have been
referred to by the petitioners which cannot establish, as a matter of fact,
that the transfers were being done in a routine manner and that would not
prove and show the functional integrity of the Evaporator Section with that
of other units. A distinct process of manufacturing was being carried out in
the Evaporator Section, which cannot be said to be functionally integratable
with other units merely because two instances of transfer of some workmen
from other units have been done by the Company.
A perusal of all the provisions i.e. Section 25-O (1), 25-L (a) (i),
2 (ka) (a) & (b) and 2 (cc) of the Industrial Disputes Act, 1947 and Section
2 (m) (i) of the Factories Act, 1948 would show that it is not necessary that
in order to effect closure of an undertaking or unit, the Management should
close down all the undertakings/units of its industrial establishment. The
word undertaking has been used in a manner that it is not intended to
cover the entire industry or business of the employer. Even the closure of
a part of the activity or unit by the employer would be covered by the
provisions of the Industrial Disputes Act provided the said unit or activity is
severable from other units or activities of the industrial establishment or
undertaking. Each case has its own peculiar facts and circumstances and,
CWP No. 2834 of 2003 44
therefore, no hard and fast rules can be laid down, which would be
applicable to each case but the test as laid down under Section 2 (ka) of
the Industrial Disputes Act can be stated to mean that the functions of the
unit should be so integrated that there cannot be separated and the said
unit cannot be said to be an independent unit in itself.
In the present case, as has been held above, the Evaporator
Section is an independent unit and, therefore, the Company has rightly
moved an application under Section 25-O of the Industrial Disputes Act for
closing down the same.
Now coming to the contention of the petitioners that there has
been violation of the conditions of the settlement entered into between the
Company and the Union, reference may be made to the
Settlement/Agreement dated 29.01.2002. The relevant portion thereof
reads as follows:-
” Union and workmen agree, that decisions regarding
installation of machines, increase in capacity, change in
production facilities, new/improved production system
implementation of new technology, raw engineering of shop
floor/relaying of machines will solely be the prerogative of the
Management, Union & workman will neither interfere, nor
obstruct the implementation of these management decisions
rather union and the workmen will provide their full cooperation
in implementing these decisions but this will not have adverse
effect on the employment of workmen.”
A perusal of the above would show that the Management, as
per the Agreement, was given the sole prerogative to bring about change in
production facilities, introduce new and improved production system,
CWP No. 2834 of 2003 45
implementation of new technology etc. the only rider, which was put, was
that implementation of these will not have adverse effect on the
employment of workmen. As has been held above, the economic, the
technological and the statutory requirements left no option with the
Company but to outsource the production of the Evaporator Section
leading to the decision of closing down of the Evaporator Section. This
was being done to save the manufacture and production of refrigerators. If
the Company had not taken this decision, it would have been left with only
one option i.e. to close down the production of refrigerators altogether,
which would have led to rendering a large number of employees without
any work which would have adversely effected the employment of much
more workmen than those who have now been affected by the closure of
the Evaporator Section alone. The Company, therefore, cannot be said to
have violated the Settlement dated 29.01.2002, as it has been forced to
take such a decision due to the reasons discussed in detail above.
In view of the above, the order dated 09.08.2002 (Annexure P-
12) passed by the Government of Haryana granting permission to
respondent No. 2-M/s Whirlpool of India Limited, Faridabad under Section
25-O of the Industrial Disputes Act, 1947 and the order dated 17.01.2003
(Annexure P-16) rejecting the review petition of the Whirlpool of India
Employees Union (Regd.) are in accordance with law.
Finding no merit in the present petition, the same stands
dismissed.
It would not be out of way to mention here that it has been
submitted by the counsel for respondent No. 2-Company during the course
of hearing that all the petitioners would be entitled to and paid the same
amount of compensation as paid to the other workmen of the closed
CWP No. 2834 of 2003 46
Evaporator Section who had accepted the same, which is on the higher
side than what was statutorily payable and, therefore, if a request is
submitted by the petitioners for release of the said compensation to the
respondent No. 2-Company, it shall be released to such petitioners within a
period of one month from the date of submission of such request.
( AUGUSTINE GEORGE MASIH )
JUDGE
August 17, 2009
pj
Refer to Reporters …………….Yes.
CWP No. 2834 of 2003 47