A.P. Shah And Ors. vs B.M. Institute Of Mental Health, … on 26 July, 1985

JUDGMENT

B.K. Mehta, Actg. C.J.

1. Since these two petitions, first at the instance of 33 aggrieved workmen challenging the closure of Bakubhai Mangaldas Institute of Mental Health (hereinafter referred to as ‘the Institute’), and second at the instance of the said Institute challenging the award of arbitration under Section 10-A of the Industrial Disputes Act directing reinstatement of 33 workmen-respondents Nos. 2 to 34 of the said petition, raise common questions of law and facts, we intend to dispose them of by this common judgment. In order to appreciate these questions in proper perspective, it is necessary to set out briefly the relevant facts and circumstances which have led to the filing of these two petitions.

2. B.M. Institute is a non-profit, research, service and training organisation interested broadly in preventive mental health services. It was originally founded as a society registered under the Societies Registration Act, 1960 in the year 1966. It was also registered as a public trust under the Bombay Public Trust Act, 1950. Prior to 1966 another public trust known as ‘Nirmala Bakubhai Foundation’ was carrying health services. The Institute took over these activities from the said Nirmala Bakubhai Foundation (hereinafter referred to as ‘the Foundation’). It appears that somewhere in the year 1980, an application was made by the trustees of B.M. Institute to the Charity Commissioner Gujarat State under Section 50-A of the Bombay Public Trusts Act for framing a proper scheme in this behalf. This application was signed by seven out of nine promoters of the aforesaid Society since they felt that the functioning of the organisation as a society as well as trust resulted into unnecessary complications and difficulties. The said Society has, therefore, resolved to wind up the society so that the affairs of the Institute can be effectively conducted as a public trust. By the order of the Joint Charity Commissioner dated November 1, 1980, it was, inter alia, directed that the scheme for the trust be framed in terms of the draft scheme annexed to the said application before the Charity Commissioner. According to Clause 6 of the sanctioned scheme, the objects of the said Institute are to establish, equip run and maintain clinics, day care centers and provide facilities, inter alia of treatment on the premises if the Institute or elsewhere to the children and adults who are mentally and emotionally handicapped; to carry out study and research in the fields of preventive mental health, family relations and other allied subjects; to undertake training of professional clinical and field workers for rendering services in the said field to organise educational programme and mental health services for the students at all levels of school, college and university; to promote education in children, adolescent and adults by establishing or by co-operating and establishing residential day centers, centers and institutions or children’s home; to undertake and conduct research in child-study child-personality and child-education and to seek recognition from the Government, Universities, Municipal authorities and other bodies for their training courses and for awarding diplomas and certificates and thereby to act as a service, research and training agency in the field of mental health services with a view to assist individuals and groups to adopt themselves to changing environments and to foster processes of mental adoption in society. In short, B.M. Institute is engaged in rendering the services, inter alia, pertaining to diagnosis of and treatment and training to mentally and emotionally handicapped persons so as to rehabilitate them in the society and to equip them so that they may lead useful life as normal citizens and for teaching and giving advanced professional training and carrying out research in the field of mental health.

3. It appears that the relations between the B.M. Institute and its employees were by and large cordial till 1980 when the Institute took a decision to re-structure the pay-scales of its employees, though there is a dispute between the parties as to the precise purpose underlying such a movement. It is claimed by the Institute that this was sought to be done with a view to availing of the maximum possible grant under the Grant-in-Aid Rules and there was no hostile intention at all on the part of the Institute to reduce the overall pay packet which was for all intents and purposes protected, while on the other hand it is claimed by the Union and the employees that it was an oppressive measure of manipulating the pay-structure so as to harass the workers. This provided an opportunity for the employees to form a union known as ‘B.M. Institute of Mental Health Employees Union’ which resisted this attempt of re-structuring the pay-scales. The employees adopted an agitative approach by holding demonstrations, shouting slogans etc. which affected the working of the Institute. The Institute therefore, filed a civil suit in the City Civil Court at Ahmedabad in which interim injunction was granted restraining the workers of the Union from conducting any agitation on the premises. This agitation started somewhere in July, 1982. It is claimed by the Institute that inspite of the breach of the prohibitory order of the Court, the management did not think fit to precipitate the matter by initiating contempt proceedings. The employees claim that the Institute declared an illegal lock-out by preventing the employees from entering the premises and working therein unless the employees agree to give undertakings as required by the management. The Institute claims that the employees were required to execute a good conduct bond before entering the premises since their entry and presence in the premises disrupted the normal working of the Institute resulting in irreparable harm to the patients of serious mental ailment. The employees, therefore, challenged this action of the Institute by moving this Court, being Special Civil Application No. 4149 of 1982, which is still pending. This Court, while admitting the aforesaid writ petition, evolved an arrangement and granted interim directions to implement them by suitably modifying the terms of undertaking. It is an admitted position that all the employees, including 33 employees, who are parties to these petitions, signed the undertakings as modified by this Court. It is the grievance of these 33 employees that inspite of their compliance with the interim directions of the Court, not only they were not permitted to resume the work, but they were chargesheeted for having committed grave acts of misconduct and subjected to disciplinary proceedings against them. After holding necessary domestic inquiry and on consideration of the reports of the Inquiry Officers, the Institute held all these 33 employees guilty of the various acts of misconduct levelled against them and imposed penalty of dismissal or removal from the services. These aggrieved employees, therefore, again moved this Court by their Special Civil Application No. 3468 of 1983 and Special Civil Application No. 4646 of 1983 for appropriate writs, orders and directions to quash and set aside the said penalty orders. A consensus was arrived at between the parties in course of the hearing of the said petitions that the entire dispute pertaining to legality and validity of the orders in question be resolved by private arbitration and the matter was referred ultimately to the arbitration of Shri M.C. Trivedi, retired Judge of this Court under Section 10A of the Industrial Disputes Act without prejudice to the rights and contentions of the parties on all questions of law and fact, by order dated September 23, 1983 in light of which both these special civil applications were disposed of as withdrawn.

4. The learned Arbitrator heard the parties and took into consideration the various affidavits and documents placed on record before him since it was agreed between the parties that no oral evidence would be led before him. Two points should be noted at this stage which have a bearing on the questions involved in the petition of the Institute challenging the award that on behalf of the aggrieved employees it was conceded before the learned Arbitrator that the legality or validity of the inquiry was no more under challenge and the only contention which was pressed before him was that the findings of the Inquiry Officers were perverse and, in any case, the punishment was far excessive having regard to the gravity of the proved acts of misconduct. The learned Arbitrator, on consideration of the material placed before him, and the contentions urged held that the Institute was an industry and all the aggrieved employees were workmen within the definition of the said term under the Industrial Disputes Act. He further held that on perusal of the record and proceedings of domestic inquiry, it was apparent that the Inquiry Officers were biased and, therefore, their findings were perverse. He also found that the Management Council of the Institute mechanically adopted the findings made and the conclusions reached by the Inquiry Officers without consideration of the evidence against the individual concerned employees and held them guilty – for the alleged acts of misconduct. In any view of the matter, the learned Arbitrator found that the punishment of dismissal or removal, as the case may be, was far excessive to the gravity of the misconduct alleged and proved and, therefore, the orders of penalty were bad in law and void and liable to be set aside. He, therefore, directed that all the employees should be reinstated with full back wages. It should be recalled at this stage that while the proceedings were pending before the learned Arbitrator, the Institute issued a notice dated December 28, 1983 declaring its intention to close down the Institute with effect from January 31, 1984 and consequently served the notices of termination of the services on all the employees, including the aggrieved workmen before us. It is this closure which has been challenged on behalf of 33 employees and the Union by petition, being Special Civil Application No. 331 of 1984 praying for a declaration that the decision of the Institute to close down was an arbitrary one, bad in law being violative of Articles 14, 16, 19 and 21 of the Constitution and mala fide and in colorable exercise of the power and therefore, null and void and liable to be quashed and set aside and for directions enjoining the Institute to treat all the employees as if all along in service of the Institute and restraining the Institute from implementing the said decision of closure during the pendency and final disposal of the said special civil application.

5. The Institute has challenged the award of the learned Arbitrator by Special Civil Application No. 3871 of 1984 praying for quashing and setting aside the said award and for interim relief staying the operation of the award pending final hearing and disposal of the said special civil application.

6. Following questions arise for our consideration from the contentions urged in the pleadings and elaborated at the time of hearing:

1. Whether this Court has jurisdiction to issue a writ of Mandamus inasmuch as there is no statutory or public duty for that matter on the part of the Institute which may warrant the Court to exercise writ jurisdiction under Article 226 of the Constitution of India. In any case, this Court should not exercise the jurisdiction since there is an alternative remedy available to the aggrieved employees under the Industrial Law.

2. Whether the Institute can be considered as ‘industry’ and, therefore, amenable to the writ jurisdiction.

3. Assuming the Institute to be an ‘industry’, the trustees of the Institutive fundamental right to close down the Institute and it is not open the High Court to go into the question that the intended closure as motivated and for ulterior purposes of unfair labour practice.

4. Whether the impugned award is vitiated inasmuch as the findings are such as no reasonable person could have reached them and, therefore, bad in law, void and liable to be struck down?

5. What reliefs should be granted in Special Civil Application No. 331 of 1984?

7. We will set out the rival contentions main as well as subsidiary, the appropriate places while dealing with the questions in the same seriatim in which they have been raised.

Re: Question No. 1:

8. Since this point has been raised by way of a preliminary objection against the competency of the Special Civil Application moved on behalf of the Institute that the Court should deal with this contention in the first instance so that if the contention recommends itself to the Court, it may not be necessary to go into the other contentions.

9. The learned Advocate General, appearing on behalf of the Institute, made a three-fold submission in support of the larger contention about the want of jurisdiction. In the first place, it was urged that the Institute cannot be said to be a ‘State’ or an ‘Authority’ within the meaning of Article 12 of the Constitution and, therefore, it is not amenable to the writ jurisdiction. Secondly, it was urged that even if it is held to be ‘a public authority’ no constitutional, statutory or other public duty is imposed on it which will justify this Court in exercise of its jurisdiction under Article 226 to issue a writ of Mandamus or a writ in the nature of Mandamus. In any case, it was urged in the third place that in as much as the aggrieved employees have an alternative remedy under the Industrial Law, since it is contended by them that the Institute is an ‘industry’ within the purview of the Industrial Disputes Act, 1947, this Court should relegate them for the redress of their grievances to the Industrial Court since it cannot be said that the decision of the Institute is without any jurisdiction, power or authority and, therefore, the aggrieved employees are justified in invoking this jurisdiction.

10. On behalf of the aggrieved employees, these contentions have been sought to be repelled by urging that this is one of the classical cases where a wider question of great public importance arises as to whether a public trust can close down its activities which are in effect and substance in the nature of public social services to which it has committed itself under the trust deed. Of late the Courts have recognised by adopting a creative approach to look upon the Directors of a joint stock company as Directors acting for and in the interest of the community and, therefore, this Court must exercise the jurisdiction since a public duty is cast on a public trust settled for the purpose of rendering rate services of medical care for mentally retarded and suffering members of the community. It is urged by Mr. Girish Patel on behalf of the aggrieved employees that a clear duty is cast under Section 25-FFA of the Industrial Disputes Act on the employer intending to close down an undertaking to serve a notice in the prescribed manner on the appropriate Government atleast 60 days before the date of the intended closure, the reasons for the intended closure of the undertaking and, therefore, before the Institute can close down its undertaking, there is a statutory duty on it to serve the notice to the Government stating clearly the reasons for the intended closure, and if the Government has not been empowered, as it has been under Section 25-N to consider those reasons for deciding whether it should permit the closure, the Court must fill in the lacuna by examining the reasons and deciding as to whether the closure is genuine or mala fide. In submission of the learned Advocate for the aggrieved employees, the Institute being in the nature of a public trust could not have any fundamental right under the Constitution to close down its activities since it does not carry on any business and, if in the ultimate analysis the trust is held not to be in the nature of an ‘industry’, the Industrial Court may not have jurisdiction and it is only this Court which can really grant the effective reliefs and, therefore, the aggrieved employees cannot be forced to resort to that alternative remedy which may not ultimately be proved to be effective. It is in this backdrop of the rival contentions that we have to consider as to whether this Court has jurisdiction to issue a writ of Mandamus or any other writ in the nature of Mandamus as prayed for.

11. What is the scope of the writ jurisdiction under Article 226 is a question which is not capable of very elaborate discussion. Often the question has been considered by various High Courts and the Supreme Court and it is almost axiomatic to say now that the amplitude of this extraordinary power is as expansive and wide as the language of Article 226. It can affect any person including a private individual and can be invoked for any purpose even for which another remedy may be existing. In the context of an award under Section 10-A of the Industrial Disputes Act challenged on the ground as being apparently erroneous, the Supreme Court, in Rohtas Industries v. Its Union , speaking through Krishna Iyer, J. (as he then was) rejecting the contention of want of jurisdiction since the award under Section 10-A favour of a private arbitration and, therefore, not amenable to correction under Article 226 of the Constitution, observed as under:

9. The expansive and extraordinary power of the High Courts under Article 226 is as wide as the amplitude of the Language used indicates and so can affect any person even a private individual and be available for any (other) purpose, even one for which another remedy may exist. The amendment to Article 226 in 1963 inserting Art, 226(‘-A) reiterates the targets of the writ power as inclusive of any person by the expressive reference to the residence of such person’. But it is one thing to affirm ‘the jurisdiction, another to authorise its free exercise like a bull in a china shop. This Court has spelt out wise and clear restraints on the use of this extraordinary remedy and High Courts will not go beyond those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict or mandate. The mentor of law is justice and a patent drug should be judiciously administered. Speaking in critical retrospect and portentous prospect, the writ power has, by and large, been the people’s sentinel on the qui vive and to cut back on or liquidate that power may cast a peril to human rights…

12. In Engineering Mazdoor Sabha v. Hind Cycles Ltd. A.I.R. 1963 S.C. 875, the Supreme Court ruled that the power conferred on the High Courts to issue certain writes is not conditioned or limited by the requirement that the said writs can be issued only against the orders of Courts or Tribunals, and under Article 226(1), appropriate writ can be issued to any person or an authority; including, in appropriate cases, any Government.

13. The Supreme Court in Gujarat Steel Tubes Ltd. v. Its Mazdoor Sabha again, speaking through Krishna Iyer, J, was not impressed by the traditional limitations attaching to prerogative writs which were again pressed into service in the context of the power of an Arbitrator under Section 10-A of the Industrial Disputes Act to order reinstatement. The Court held as under:

79… Without examining the correctness of this limitation, we disregard it because while Article 226 has been inspired by the royal writs its sweep and scope exceed hide-bound British processes of yore. We are what we are because our Constitution framers have felt the need for a pervasive reserve power in the higher judiciary to right wrongs under our conditions. Heritage cannot hamstring nor custom constrict where the language used is wisely wide. The British paradigms are not necessarily models in the Indian Republic. So broad are the expressive expressions designedly used in Article 226 that any order which should have been made by the lower authority could be made by the High Court. The very width of the power and the disinclination to meddle, except where gross injustice or fatal illegality and the like are present, inhibit the exercise but do not abolish the power.

14. In Praga Tools Corporation v. C.V. Imanual , in the context of a challenge at the instance of retrenched workmen to an agreement entered into between the Praga Tools Corporation and one of the workers’ Unions, namely, Praga Tools Employees’ Union, agreeing to retrench about 92 workmen, the Supreme Court held that the Company being registered under the Companies Act and governed by the provisions of the said Act and not being an authority within the meaning of Article 12 of the Constitution, was not amenable to the writ jurisdiction. The Court, speaking through Shelat, J. (as he then was) held as under:

6 … No doubt. Article 226 provides that every High Court shall have power to issue to any person or authority orders and writs including writs in the nature of habeas corpus, mandamus, etc. or any of them for the enforcement of any of the rights conferred by Part III of the Constitution and for any other purpose. But it is well understood that a mandamus lies to secure the performance of a public or statutory duty in the performance of which the one who applies for it has a sufficient legal interest. Thus, an application for mandamus will not lie for an order of reinstatement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a company towards its workman or to resolve any private dispute (See: Sohan Lal v. Union of India 1957 SCR 738 : . In Regina v. Industrial Court 1965 I QB 377, mandamus was refused against the Industrial Court though set up under the Industrial Courts Act, 1919 on the ground that the reference for arbitration made to it by a minister was not one under the Act but a private reference… Therefore, the condition precedent for the issue of mandamus is that there is in one claiming it a legal right to the performance of a legal duty by one against whom it is sought. An order of mandamus is, in form, a command directed to a person, corporation, or an inferior tribunal requiring him or them to do a particular thing there in specified which appertains to his or their office and is in the nature of a public duty. It is, however, not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue, for instance, to an official of a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their undertakings. A mandamus would also lie against a company constituted by a statute for the purpose of fulfilling public responsibilities (of Halsbury’ Laws of England (3rd ad) Vol. II. p. 52 and onwards).

15. In Sohcmlal v. Union of India , the Court ruled that normally, a writ of mandamus does not issue to or an order in the nature of mandamus is not made against a private individual, and such an order is made against a person directing him to do some particular thing, specified in the order, which appertains to his office and is in the nature of a public duty.

16. It is well settled that mandamus may be to do a particular thing or to abstain from doing a particular thing. In either case the duty to do or abstain from doing a thing arises under the law for the time being in force. But this does not mean that a law should specifically lay down that the public officer in question should forbear from doing something before there can be any question of issuing any mandamus to him to forbear from acting in a particular manner (see: Ram Chandra v. Shankaramma ). In order that a mandamus may issue to compel a party to do something it must be shown that the statute imposes a legal duty and the person seeking a writ of mandamus has a legal right under the statute to enforce its performance (see: Dr. Rai Shivendra v. Governing Body of Nalanda College Bihar ). In Bombay Union of Journalists v. State of Bombay , the Supreme Court held, having regard to the object which is intended to be achieved by Clause (a) and (b) of Section 25-F of the Industrial Disputes Act as distinguished from the object which Clause (c) thereof has in mind, it would not be unreasonable to hold that Clause (c) unlike Clauses (a) and (b) is not a condition precedent. Even if it is assumed that Clause (c) is in nature of a condition precedent, the Court could not persuade itself to hold that its non-compliance would be a ground for the issue of a writ of mandamus since it could not be said that the appropriate Government was bound to refer an industrial dispute even though one of the points raised in the dispute is in regard to the contravention of the mandatory provision of the Act. The Court held that a writ of mandamus could validly be issued in such a case if it was established that it was the duty and obligation of the appropriate Government to refer for adjudication an industrial dispute where the employee contended that retrenchment effected by the employer contravenes the provisions of Section 25-F. The ratio of the decision appears to be that inasmuch as the requirement of service of the notice of retrenchment on the appropriate Government can be observed even by a notice ex post facto as apparent from the rules framed by the State Government in that behalf, no legal obligation and corresponding right could be spelt out for reference. An order of mandamus is a command directed to a person, corporation or an inferior tribunal requiring him or them to do a particular thing therein specified which appertains to his or their office and is in the nature of a public duty. It is not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue for instance to an official of a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed, and also to companies or corporations to carry out duties placed on them by the statute authorising their undertakings. A mandamus would also lie against a company constituted by a statute for purposes of fulfilling public responsibilities (see: Halsbury’s Laws of England (3rd Ed. Vol. II P. 52) This legal position is affirmed in Praga Tools Corporation’s case (supra) where the Supreme Court could not persuade itself to issue a writ of mandamus on the facts of the case before it since the Company before it was neither a statutory company nor one having public duties or responsibilities imposed on it by the statute. This decision clearly settles the legal question that a mandamus can issue even in a case of a society official to compel him to carry out the terms of the statute under or by which the society is constituted or governed or in case of a private company or corporation to carry out their statutory duties laid down by the statute under which they are set up or governed or where they have to perform public duties and public responsibilities. Article 226 of the Constitution invests in the High Court the jurisdiction not only against State or public authorities but against any person who seeks to exercise statutory powers and performs statutory duties. Whenever a person or a body has to perform statutory duties and has statutory powers, it has always been considered statutory authority in that sense eventhough it may not be a public official or an official body. A statutory body need not be a body created by a statute but a body governed by the statute which has mandatory statutory obligations under the statute and the officials need not be public officials but may be private officials even of a co-operative society or a private company or any person who has to perform statutory duties under the statute governing such private persons or bodies, (see: Vasudev Vinayak Kotasthane v. B.P. Baria Science Institute Navsari 1974 Service Law Journal (Gujarat) 327 at p. 335). It is well settled that duties imposed on a corporation not by virtue of express provision of law or charter are necessarily arising from the nature of the privileges or obligations conferred but arising out of private contractual relations involving no question of public trust or duty will not be enforced by a mandamus either against the trustees or the Corporation. The aggrieved party is left to the ordinary remedies either at law or equity. This is necessarily so for the mandamus is limited to the enforcement of the obligation imposed by law, and for the further reason that the writ cannot be substituted for a decree or an order for specific performance of equity (see: Ferris on law of Extraordinary Legal Remedies, pages 351-52). A mandamus will issue to an official of a society to compel him to carry out the terms of the statute by which the society is controlled (see: Halsbury’s Laws of England Vol. II, p. 159).

17. What is public duty is indicated by a Division Bench of the Bombay High Court sitting at Nagpur in Corporation of the City of Nagpur v. Nagpur Electric Light and Power Co. Ltd. Nagpur where the Corporation sought a writ of mandamus enjoining the Electric Company to restore immediately the supply of electric energy to the public-lamps in the city of Nagpur on the ground that the notice for disconnection under Section 24(1) of the Electricity Act, 1910, was defective inasmuch as the amount claimed in the notice was not an accurate amount and in excess of what was legally due. In that context, the Division Bench conceded that a writ of mandamus would not be issued against a private individual since it is competent against a person who has abstained from doing a thing which appertains to his office and is in the nature of a public duty. What is ‘public duty’ has been specified as one devolving upon a public utility concern under a statute. In support of this view the Division Bench cited the following passage from Corpus Juris Secundum, Vol. 73 page 998 which is instructive in that behalf:

As a general rule, a public utility has the duty to give the public reasonable and adequate service at reasonable rates and without delay.

A public utility has the duty to supply a commodity or to furnish service to the public. This duty exists independently of statutes regulating the manner in which it shall do business or of contracts with municipalities or individuals, and is imposed because the utility is organized to do business affected a public interest and holds itself out to the public as being willing to serve all members thereof. Broadly speaking, the primary duty of a public utility is to-give reasonable and adequate service at reasonable rates and without delay.

18. What is a public utility concern has been succinctly indicated in Corpus Juris Secundum, Vol. 73 at pages 990 and 991 as under:

A ‘public utility’ has been described as a business organization which regularly supplies the public with some commodity or service, such as electricity, gas water, transportation, or telephone or telegraph service. While the term has not been exactly defined, and, as has been said, it would be difficult to construct a definition that would fit every conceivable case, the distinguishing characteristic of a public utility is the devotion of private property by the owner or person in control thereof to such a use that the public generally, or mat part of the public which has been served and has accepted the service, has the right to demand that the use or service, as long as it is continued, shall be conducted with reasonable efficiency and under proper charges. The term is sometimes used in an extended sense to include a great many matters of general welfare to the state and its communities.

…The essential requirement is that a business or enterprise must in someway be impressed with a public interest.

Accordingly, whether the operator of a given business or enterprise is a public utility depends on whether or not the service rendered by it is of a public character and of public consequence and concern, which is a question necessarily dependent on the facts of the particular case, and the owner or person in control of property becomes a public utility only when and to the extent that his business and property are devoted to a public use…

19. Whether the Institute is in the nature of a public utility service or not can be appreciated if we look to the definition of the term ‘public utility service’ in Section 2(n) of the Industrial Disputes Act where it has been defined to mean, inter alia, any industry specified in the First Schedule. Item 9 of the First Schedule describes services in hospitals and dispensaries as public utility services. It does not require much of imagination therefore to conclude that the Institute renders the services which can be very well described as public utility services.

20. Whether a public utility concern has a right to discontinue or abandon its service is also indicated in the same Volume at page 1001. The relevant paragraph reads as under:

As a general rule a public utility has no right to discontinue or abandon its service or any part of its property devoted to public use, except with the consent of the State. The devotion of property to a public use carries with it the duty to serve the public, and such duty must be performed by a public utility or its privileges and franchise must be surrendered As a general rule, it has no right to discontinue or abandon its service, or any part of its property devoted to public-use or to disable itself from the performance of its public duties except with the consent of the State; and the mere fact that the enterprise or a particular service is not profitable does justify the utility in ceasing or refusing to perform its duties. In the absence of statute or contract, however, a utility is not bound to continue operation at a loss…

21. The State has always a power to compel the operation of a public utility concern. This has been noted in the said Volume of Corpus Juris Secundum at page 1002 as under:

Compelling operation. The performance by a utility of its public duties may be enforced by the State when no adequate excuse for non performance is shown, and equity will restrain, in a proper case, on ultra vires act on the part of a utility corporation which would operate to impair its ability properly to discharge such duties.

(Emphasis supplied)

22. In view of the above settled legal position, we do not feel doubt in our mind that the Institute must be treated as one akin to one public utility concern since it has committed itself to a duty to furnish services to the public and it holds itself out to the public as being willing to serve all members thereof and to provide it services at reasonable rates and without brooking any delay. If on such public utility there is a two-fold duty imposed by the statute, namely, the Indian Trusts Act under which it is constituted and the Bombay Public Trusts Act under which it is registered, every person having a legal interest flowing from the discharge of the duty has a right to invoke the writ jurisdiction of this Court by praying for appropriate writs, orders or directions in that behalf, unless such public utility is able to obtain appropriate directions from the competent authority by satisfying it that there is adequate excuse for nonperformance of the public duty. Section 11 of the Indian Trusts Act cast an obligation on the trustees to fulfil the purpose of the trust and to obey the directions of the author of the trust given at the time of creation, except as modified by consent of all the beneficiaries being competent to contract, subject to the exception that the trustees are under no obligation to obey the directions when to do so would be impractical, illegal or manifestly injurious to the beneficiaries. The trustees are, therefore, bound to carry out the directions of the settlement and the only way in which the directions of the testament may be varied is by cyprus doctrine which is applied where from lapse of time and change of circumstances it is no longer possible to apply the property left by the founder or donor in the precise way in which it was directed to be, applied (see: Balkrishna Vishvanath v. Vinayak Narayan AIR 1932 Bombay 191). Correspondingly if the trustees fail or disclaim to carry out the lawful directions of the settlement, it would amount to a breach of trust and any person having interest in the trust has a right to approach the competent authority for appointment of new trustees or for appropriate directions as the nature of the case may require. Under Section 34 of the Indian Trusts Act corresponding to Section 56-A of the Bombay Public Trusts Act, the trustees are empowered to apply to the Court of competent jurisdiction for the opinion advice or direction of the Court on any question affecting the management or administration of the trust property or income thereof. This is a power coupled with the duty that in case of any difficulty in the management or administration of the trust, a trustee may seek the opinion or advice of the Court. Similarly under Section 55 of the Bombay Public Trusts Act, the trustees may under the directions of the Charity Commissioner, obtain appropriate directions from the Court of competent jurisdiction, if is not practicable to carry out wholly or partially the original intention of the author of the public trust. A person having interest in the administration of the trust can, therefore, invoke the jurisdiction of this Court in appropriate cases like the present one where the trustees fail to obey the lawful-directions of the settlement without obtaining appropriate directions from competent authority under the aforesaid Act. The High Court, before exercising the jurisdiction would certainly consider whether it should exercise such jurisdiction or should relegate the parties to the special machinery provided under the Bombay Public Trusts Act for redress of their grievances. But this would not mean that the High Court would have no jurisdiction to exercise its extra ordinary jurisdiction under Article 226 of the Constitution for issuance of a writ of mandamus in appropriate case where a public utility like the Institute before us disclaims its obligation to carry out the lawful directions of the settlement which it was hitherto carrying out. In the present case before us, the Institute, apart from its role as a public utility, is under an obligation to give notice of closure of its activities assuming that it is an industry. It cannot be successfully claimed that the trustees of the Institute which is a public trust have any fundamental right to close down the business since the trust is not carrying on any business at all. It may be possible to contend that the Institute being an industry is entitled to close down its activities after complying with the statutory provisions in that behalf. Section 25-F (a) imposes such an obligation on an employer who intends to close down an undertaking to give a notice in the prescribed manner atleast 60 days before the date on which the intended closure is to be made effective on the appropriate Government stating clearly the reasons for the intended closure, except in cases of those undertakings which are excluded from the purview of the section by the proviso. It cannot be gainsaid that the object of Section 25-FF (a) is to prevent a sudden closure and is envisaged to enable the appropriate Government to decide as to whether it should take any measure in respect of such intended closure and in case an industrial dispute is raised, the Government may make a reference for determining whether such a closure was genuine and real or sham or a camouflage to retrench, and to give such relief as the workmen are entitled to depending upon the findings of the Tribunal. It is no doubt true that the section does not empower the appropriate Government to consider the reasons by itself and make an order against the employer intending to close down the undertaking. Nonetheless if an industrial dispute is raised, the Government may refer the matter to the Industrial Tribunal for determining whether the closure is genuine and real or is sham or bogus and to give appropriate reliefs according to the findings. We are, therefore, of the opinion that the petitioners are entitled to invoke the writ jurisdiction of this Court obviously for the reasons that the Institute is in the nature of a public utility subject to the statutory obligations as aforesaid under the relevant Trusts Act and also because it being an industry under an obligation to comply with the requirement of a prior notice as prescribed under the Industrial Disputes Act. The objection that we should refrain from exercising the jurisdiction till the petitioners exhaust the alternative remedy under the Industrial Disputes Act does not present insurmountable difficulty for the obvious reason that, apart from the existence of such a remedy, if at all one, it is no absolute bar to the High Court exercising the jurisdiction under Article 226 of the Constitution; the alternative remedy means remedy which is available to a person concerned and which is not dependent on the opinion of the other authority. Where there is appropriate or equally efficacious remedy, the Court should keep its hands off. This is more particularly so where there is a statutory prescribed remedy which almost reads in mandatory terms, (see: K.K. Shrivastava v. Bhupendra Kumar ). The High Court has to consider in each case whether alternative remedy is adequate and prompt or whether, in the circumstances of the case, it would not be more convenient, effectual and beneficial to grant the relief by means of a writ, direction or order under Article 226 of the Constitution and then to ask the applicant to seek it by other regular Act remedies (see: Union of India v. T.R. Varma ). Since the present case before us raises a wider question of great public importance as to whether the Institute being one akin to public utility can close down its activities which are in effect and substance in the nature of public services to which it has committed itself under the Trust Deed in flagrant disregard of the statutory obligations imposed on it by the trust and industrial statutes in the interest of community, we should not feel ourselves dissuaded merely because there is some remedy open to the petitioners under the industrial law by moving the State Government, if it so pleases to make a reference under Section 10 of the Industrial Disputes Act. There is an additional reason for not relegating the parties to the Industrial Tribunal. The closure has been challenged on the ground by the contesting employees as being motivated so as to weed out the petitioners from its employment and also deny the benefit of the award of the Arbitrator to whom reference was made under Section 10A of the Industrial Disputes Act and, therefore, the impugned closure was mala fide. It is settled position of law as indicated in our discussion relating to question No. 3 hereunder that the Industrial Tribunal will not be entitled to consider the merits of a closure and the question of mala fide of the closure is beyond its purview. It would, therefore, be difficult to uphold the contention urged on behalf of the Institute that there is equally, convenient, beneficial and effectual alternative remedy. In that view of the matter, we must answer the first question in the affirmative and hold that the petitioners are entitled to invoke the writ jurisdiction of the Court against the Institute.

Re: Question No. 2:

23. Whether the Institute can be treated as an industry within the meaning of Section 2(j) of the Industrial Disputes Act, 1917 is a question which is not capable of being debated hotly since the legal position has been settled for all intents and practical purposes by the decision of the Supreme Court in Bengalore Water Supply v. A. Rajason . The three tests which have been laid down by the Supreme Court in Bengalore Water Supply’s case (supra), whether there is systematic activity organised by Co-operation between employer and employee and for the production or distribution of goods and services calculated to satisfy the human wants and needs other than spiritual or religious are all satisfied in the present case before us. It cannot be successfully contended that since the Institute does not carry on any business or trade or that there is no para-trade or quasi-business activity carried on by the Institute, there is no industry in the enterprise of the Institute. It cannot be gainsaid that the sole purpose and object of setting up the Institute is for providing medical facilities of diagnosis, treatment and training of mentally and emotionally handicapped persons so as to rehabilitate them in their lives in order that they may lead useful life as a normal citizen and, therefore, the Institute is rendering services to the mentally and emotionally handicapped persons in the community. It is also not capable of being disputed that the entire activity of the Institute is so organised and systematic that the Institute has been recognised as the pioneer institute in the field of medical services for mentally and emotionally handicapped people not only in this part of the State but is considered as the only Institute in the field in the whole country, with the result that the patients come here from different parts of the country for diagnosis, treatment and training. It is also not capable of being urged that there is no employer-employee relationship between the Institute and its personnel which is considered to be highly motivated and expert in their respective branches of the work through whom the Institute renders yeoman’s service in this field of mental health and care. The only point which was vehemently pressed on behalf of the Institute was that there is admittedly no business activity or a venture in the nature of trade or commerce carried on by the Institute. If this element, according to the learned Advocate General appearing for the Institute, is found wanting in a given undertaking, it can never be termed as ‘industry’. In support of this contention, our attention was invited to. the following observation in the speech of Krishna Iyer, J. who was speaking on behalf of himself, Bhagwati and D.A. Desai, JJ. in Bangalore Water Supply’s case (supra) in para 86, which reads, as under:

86. …If the nature of the activity is para-trade a quasi-business. It is of no moment that it is undertaken in the private sector, joint sector, public sector, philanthropic sector or labour sectors, it is ‘industry’…

We are afraid that this observation has been over-emphasised in support of the contention that the essential element of business or commercial activity is lacking so far as the Institute is concerned. The majority view was examining as to what is the import of the word ‘undertaking’ which is wedged in the definition of the ‘industry’ between words ‘business’ and ‘trade’ on one hand and ‘manufacture’ on other which may indicate that the undertaking must be a business or trade undertaking. Krishna Iyer, J, referring to the Corporation of City Nagpur v. Its employees observed as under in the earlier part of paragraph 86 in which the above observation which has been relied upon is made:

86. The substantial breakthrough achieved by this decision in laying bare the fundamentals of ‘industry’ in its wider sense deserves mention. The ruling tests are clear. 1. The ‘analogous’ species of quasi-trade qualify for becoming ‘industry’ if the nature of the organised activity implicit to a trade or business is shared by them (see p. 960 the entire organisation activity). It is not necessary to ‘equate the other activities with trade or business.’ The pith and substance of the matter is that the structural, organisational, engineering aspect, the crucial industrial relations like wages, leave and other service conditions as well as characteristic business methods (not motives) in running the enterprise, govern conclusion. Presence of profit motive is expressly negated as a criterion. Even the quid pro quo theory-which is the same monetary object in a milder version-has been dismissed. The subtle distinction, drawn in lovely lines and pressed with emphatic effect by Sri Tarkunde, between gain and profit, between no-profit no-loss basis having different results in the private and public sectors, is fascinating, but, in the rough and tumble, and sound and fury of industrial life, such nuances break down and nice refinements defeat. For the same reason, we are inclined to chase the differential ambits of the first and the second parts of Section 2(j). Both read together and each viewed from the angle of employer or employee and applied in its sphere, as the learned Attorney General pointed out, will make sense. If the nature of the activity is para-trade or quasi-business, it is of no moment that it is undertaken in the private sector, joint sector, public sector, philanthropic sector or labour sector, it is ‘industry’. It is the human sector, the way the employer-employee relations are set up and processed that gives rise to claims, demands, tensions, adjudications, settlements, truce and peace in industry. That is the raison d’etre of industrial law itself…

24. It would, therefore, be reading more in those observations which we have set out earlier that unless there is a business or a commercial activity or para-trade or quasi-business activity, the undertaking will not qualify itself for being treated as an ‘industry’ is not well-founded. The crux of the problem, as indicated in the above paragraph, is that if the structure of a given undertaking is so organised as to have crucial industrial relations with its employees coupled with the business methods in running the enterprise, it should be treated conclusively as an industry. In Nagpur Corporation’s case (supra) also Subba Rao, J. summed up the position which clearly indicated the test for determining the true nature of an undertaking namely the primary and predominant activity test and the integrated activity test. The petition has summed up by Subba Rao, J. in Corporation’s of City of Nagpur’s case is quoted with approval in Bangalore Water Supply’s case (supra) which is instructive on the point. In reads as under:

The result of the discussion may be summarized thus: (1) The definition of ‘industry’ in the Act is very comprehensive. It is in two parts: one part defines it from the standpoint of the employer and the other from the stand point of the employee. If an activity falls under either part of the definition, it will be an industry within the meaning of the Act. (2) The history of industrial disputes and the legislation recognizes the basic concept that the activity shall be an organized one and not that which pertains to private or personal employment, (3) The regal functions described as primary and inalienable functions of State though statutorily delegated to a corporation are necessarily excluded from the purview of the definition. Such regal functions shall be confined to legislative power, administration of law and judicial power. (4) If a service rendered by an individual or private person would be an industry, it would equally be an industry in the hands of a corporation. (5) If a service rendered by a corporation is an industry, the employees in the departments connected with that service, whether financial, administrative or executive, would be entitled to the benefits of the Act (6) If a department of a municipality discharged many functions, some pertaining to industry as defined in the Act and other non-industrial activities, the predominant functions of the department shall be the criterion for the purpose of the Act.

25. In State of Bombay v. Hospital Mazdaor Sabha , the Supreme Court was concerned with a hospital run by the Government for medical relief to the people and also having a substantial educational and training role. The Court noted in that case that the said group of hospitals served as a clinical training group for students of the Grant Medical College which is a Government Medical College and run and managed by the Government for imparting medical science leading to degrees of Bachelor of Medicine and Bachelor of Surgery of the Bombay University as well as various post-graduate qualifications of the said University and the College of Physicians and Surgeons of Bombay. On these facts, the Court held that it was an industry. In other words, an institute having a substantial role in medical and training field was held to be an industry. Gajendragadakar, J. speaking for the Court delineated as to what is ‘industry’ in the following terms:

… as a working principle it may be stated that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material service to the community at large or a part of such community with the help of employees is an undertaking. Such an activity generally involves the co-operation of the employer and the employees, and its object is the satisfaction of material human needs. It must be organised or arranged in a manner in which trade or business is generally organised or arranged. It must not be casual nor must it be for oneself nor for pleasure. Thus the manner in which the activity in question is organised or arranged, the condition of the co-operation between employer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of activities to which Section 2(j) applies. Judged by this test there would be no difficulty in holding that the State is carrying on an undertaking when it runs the group of hospitals in question.

26. The Supreme Court in Hospital Mazdoor Subha’s case (supra) further clarified the position that in the ultimate analysis it is the character of activity which decides the question whether a given activity is within the purview of the term ‘industry’ as defined in Section 2(j), and the question as to which conducts the activity or whether it is conducted for profit or not is of no consequence. The following observation of Gajendragadakar, J. in Hospital Muzdoor Sabha’s case (supra) clinches the issue:

If that be so, if a private citizen runs a hospital without charging any fees from the patients treated in it, it would nevertheless be an undertaking under Section 2(j). Thus the character of the activity involved in running a hospital brings the institution of the hospital within Section 2(j).

27. Krishna Iyer, J., therefore, concluded in Bangalore Water Supply’s case (supra), from the above observations that by these tests even a free or charitable hospital is an ‘industry’.

28. A subsidiary question was also debated in course of the argument advanced for and against the question that inasmuch as the Institute before us is a public and charitable trust, can the activities of such an Institute be termed ‘industry’? Krishna Iyer, J. in paragraph 126 in Bangalore Water Supply’s case (supra) answers the question in the following terms; by categorising and classifying the nature of charitable Institutions in three categories having regard to the nature of activities and their object:

126. The first is one where the enterprise like any other, yields profits but they are siphoned off for altruistic objects. The second is one where the institution makes no profit but hires the services of employees as in other like businesses but the goods and services, which are the output, are made available at low or no cost, to the indigent needy who are priced out of the market. The third is where the establishment is oriented on a humane mission fulfilled by men who work, not because they are paid wages, but because they share the passion for the cause and derive job satisfaction from their contribution. The first two are industries the third not.

(Emphasis supplied)

29. It is difficult to view this Institute as one falling in the third category. In our opinion it squarely falls within the second category. The following observation of Krishna Iyer, J. in paragraph 129 dealing with the second category of charitable institutions makes the position clear.

129. The second species of charity is really an allotropic modification of the first. If a kind-hearted businessman or high-minded industrialist or service- minded operator hires employees like his non-philanthropic counter-parts and, in cooperation with them, produces and supplies goods or services to the lowly and the lost, the needy and the ailing without charging them any price or receiving a negligible return, people regard him as of charitable disposition and his enterprise as a charity. But then, so far as the workmen are concerned, it boots little whether he makes available the products free to the poor. They contribute labour in return for wages and conditions of service. For them the charitable employer is exactly like a commercial-minded employer. Both exact hard work, both pay similar wages, both treat them as human machine cogs and nothing more. The material difference between the commercial and the compassionate employers is not with reference to the workmen but with reference to the recipients of goods and services … The fallacy in the contrary contention lies in shifting the focus from the worker and the industrial activity to the disposal of the end product. This law has nothing to do with that. The income-tax law may have, social opinion may have.

30. In light of the above settled principle, therefore, it would be difficult for us to hold that the Institute is not an industry, merely because there is no business or commercial activity or the activities are undertaken by a public charitable trust. It is beyond dispute that the activity of the Institute is organised and systematic involving co-operation between the trust and its employees and actuated with a desire of rendering the services in the field of mental health and care. It is nobody’s case that the Institute has been set up on the basis of a philanthropic devotion by one who whole-heartedly dedicates himself for the mission and pursues it with the patients, attracts others into the Institution not for wages but for sharing in the cause and its fulfilment. It is only in such an exceptional case that a charitable institution may possibly avoid label of being an industry (see the description of the third category of charitable institute by Krishna Iyer, J. in para 132). In that view of the matter, therefore, we hold that the Institute is an industry.

31. A subsidiary contention which requires to be considered is as to whether the respondent-employees Nos. 5, 9, 14, 16, 18, 19 and 32 of Special Civil Application No. 3871 of 1984, being teachers are outside the purview of the Industrial Disputes Act, 1947. The learned Arbitrator has rejected the contention urged on behalf of the B.M. Institute that these employees cannot be called to be ‘workmen’ as defined in the said Act. The same contention has been urged by the learned Advocate General on behalf of the Institute. It was urged that the decision in Bangalore Water Supply’s case (supra) did not overrule the earlier decision of the Supreme Court in The University of Delhi v. Ram Nath and Ors. and the question as to whether teachers are workmen or not was kept open. It is difficult to agree with the learned Advocate General that these employees being teachers are outside the purview of the Industrial Disputes Act. The reasons for our disagreement are obvious. Firstly, it is difficult to advance this argument that since they are not doing any supervisory, technical or clerical work, they are not workers because it is not open to so contend after the decision of the Supreme Court in S.K. Verrna v. Mahesh Chandra 1983 Labour and Industrial Cases 1483. Secondly, assuming that such a contention is open, the aforesaid employees are working as teachers in the department which is part and parcel of the B.M. Institute, and since they teach the mentally retarded children also, their nature of work would naturally be technical and/or skilled. The predominant purpose of their work would be more in the nature of training than teaching in the classical sense. Thirdly, in any case, the Tribunal has found this as a fact, and this finding of fact has not been challenged on behalf of the B.M. Institute, on the ground of it being perverse or based on irrelevant considerations or reached by ignoring relevant considerations. The decisions of the Division Bench and the Single Judge of Kerala High Court in Karthiayani and Ors. v. Union of India and Ors. 1983-2 Vol. 16, Labour and Industrial Cases, 1853 and M.S. Venkatraman v. Labour Court Ernakulam and Ors. 1983-1 Vol. 16, Labour and Industrial Cases 177, would not be applicable in the facts of the present case since we are not concerned with the case of a teacher doing the teaching work in an academic institution which is purely or predominantly a school imparting education. Similarly, the decision of the Bombay High Court in Miss A. Sundermbal v. Govt, of Goa Daman and Diu 1982 H L.L.J. 491 where the Division Bench of the Bombay High Court consisting of Jahagirdar and Couto, J J. held that a teacher was not a workman, would also not be applicable since the Division Bench of the Bombay High Court was concerned with a case of termination of a teacher’s services appointed in a school run by the society of Jesuit sisters. The decision of Calcutta High Court in Jay Engg. Works. Ltd. v. Industrial Tribunal 1978-1 LLJ 282 is more appropriate in the facts of the case. The Calcutta High Court was concerned with the question as to whether the members of the teaching staff of a school provided by a company manufacturing sewing machines were workmen of the Company. The Calcutta High Court noticed that the teaching staff had been employed in the sewing schools which were closely connected with the pushing of sales of the sewing machines manufactured by the Company and, therefore, the work done by the so-called teaching staff was integrally connected with the sale part of the industry of the Company. In the case of University of Delhi v. Ram Nath (supra) Justice Gajendragadkar speaking for the Court held that the education institutions would not fall within the industry since their aim was education and the teacher’s profession could not be equated with the industrial workers. The Court, however, cautioned that this must not be interpreted to be a universal proposition. The actual decision in the University of Delhi case (supra), as pointed out in Bangalore Water Supply’s case (supra) rested on the ground that the predominant activity of the University was teaching, and since teachers did not come within the purview of the Act the only incidental activity of the subordinate staff could fall within this scope but that could not alter the predominant character of the Institution. Krishna Iyer, J in Bangalore Water Supply’s case (supra) explained the ratio of the decision in Delhi University’s case that the true test to determine whether an Institution is an industry or not is the predominant nature of the activity, and in case of a University or an educational institution, the nature of activity is education which is a service to the community. It is no doubt true that the decision in Delhi University’s case (supra) is overruled by Bangalore Water Supply’s case (supra) only to the limited extent that education is an industry. It is equally true that the question as to whether teachers are workmen is kept open in Bangalore Water Supply’s case. Nonetheless the decisions such as those of Kerala High Court and Bombay High Court where it has been held that teachers are not workmen are in context of those members of the teaching staff of institutions which carry purely educational activities where having regard to the predominant nature of the activity, the decision has been reached that the teachers cannot be within the purview of the definition of ‘workman’ as gives in the Industrial Disputes Act since they are not doing any technical, skilled, clerical or manual work. The Supreme Court in A’bad Textile Industry’s Research Association v. State of Bombay took a precaution of observing that the activity of the Research Association before it had little in common with the activities of what may be called purely educational institution, and the Court emphasised that this work was distinct and separate from the work of an institution which carries on purely educational activities. In the present case with which we are concerned, the predominant activity is held to be an industry having regard to the nature of the complex activities and the services rendered by the employees. The majority of the employees are within the definition of the term ‘workman’ since they are employed in an industry to do skilled or technical work for hire or reward. In any case, the predominant nature of the services, and the integrated nature of different departments in the B.M. Institute would make these respondents workmen, even if they are engaged in the activity of imparting education and, therefore, by themselves not within the purview of the definition of the term ‘workman’. In the state of circumstances with which we are concerned, having regard to the essential nature of the work rendered by these respondents which was integrally connected with the main activities which, in our opinion, constituted industry, it is difficult to take any exception to the conclusion reached by the learned Arbitrator that these respondents were workmen. The subsidiary contention, therefore, stands rejected.

A further subsidiary question as to what reliefs some of the employees who are teachers would be entitled to will be considered and decided while dealing with the question No. 4 relating to the validity of the award.

Re Question No. 3:

32. Regarding question No. 3, it has been urged on behalf of the employees who have challenged the closure of the Institute that the decision to close down was actuated with ulterior motive to get rid of these petitioner-employee’s who were active members of the Employees’ Union and because they resisted the unlawful and arbitrary action of the Institute and, therefore, to grant a declaration that the closure was not genuine and merely a pretext of closure.

On behalf of the Institute, it was urged that it is not open to the High Court to go into the question that the intended closure was motivated and amounted to unfair labour practice once it is shown to the Court that the Board of Trustees decided to close down their Institute since it is the fundamental right to close down the undertaking or in any case it is an implied right of the employer to close down an industry under the I.D. Act. 33. Two subsidiary questions would, therefore, arise as to what is the power of the Court to go into the question of closure where a closure is declared by an employer and secondly whether the intended closure in fact was not genuine and/or motivated. In the context of the validity of a reference of an industrial dispute at the instance of the workmen of a closed undertaking, the Supreme Court in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union held that the provisions of the Industrial Disputes Act apply only in cases of a dispute arising out of an existing industry and where it is either admitted or found that the closure was real and bona fide any dispute arising with reference thereto would fall outside the purview of the Industrial Disputes Act and a fortiorari a dispute between the quondam employer and employee arising after the closure.

34. In Banaras Ice Factory Ltd v. Its Workmen AIR 1957 SC 169, the Supreme Court was concerned with the question as to whether the word ‘discharge’ occurring in Clause (b) of Section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 includes termination of services of all workmen, and the Court speaking through S.K. Das; J. referred in that connection to its earlier decision in Hariprasad v. A.D. Divelkar AIR 1957 SC 121 where it was held that retrenchment under Section 2(00) and Section 25F of the Industrial Disputes Act did not include termination of services of workmen on a bona fide closure of the business, and observed as under:

(9)…that the object of Section 22 was ‘to protect the workmen concerned in disputes which form the subject matter of pending proceedings against victimisation’ and the further object was ‘to ensure that proceedings in connection with the industrial disputes already pending should be brought to a termination in a peaceful atmosphere and…. Those objects are capable of fulfilment in a running or continuing industry only and not in a dead industry….

The observation made thereafter by Das, J. is instructive on the point with which we are concerned. It reads as under:

(9)…There is hardly any occasion for praying for permission to lift the ban imposed by Section 22 when the employer has the right to close his business and bona fide does so, with the result that the industry itself ceases to exist. If there is no real closure but a mere pretence of a closure or it is mala fide, there is no closure in the eye of law and the workmen can raise an industrial dispute and may even complain under Section 23 of the Act.

(Emphasis supplied)

The aforesaid observation of Das, J. which we have set out, came for consideration in Tea Districts Labour Association v. Ex-Employees of Tea Districts Labour Association and Anr. . In Tea Districts Labour Association’s case (supra), the Supreme Court was concerned with the question of the validity of a part of the award of the Industrial Tribunal, Orissa whereby the Tribunal declared that the closure of two agencies contemplated by the Tea Districts Labour Association was not effective and the agencies be treated as continuing agencies in the eye of law and, therefore, the employees of such agencies were entitled to all their pay and allowances as before. The appellant-association was a company limited by guarantee of performance of service only for its members, and was formed in 1917, who were the owners of several Tea Gardens in West Bengal and Assam and its chief object was to recruit labour from different parts of India and supply to said Tea Gardens according to their requirement. The appellant-association had local agencies in different parts of the country whose function was mainly to recruit labour which was transmitted to and from Tea Gardens by another agency known as local forwarding agency. Since the estimated requirement of labour force for the financial year 1955-56 appreciably declined, a question arose for consideration of the appellant-association of closing down some of its local agencies. In March, 1957 the general committee of the appellant-association decided accordingly to close down two local agencies at Korakut and Behrampur with effect from April 1, 1957, which was ultimately decided to close down from May 31, 1957. The employees of these agencies raised industrial disputes which were referred to the Tribunal, inter alia, as to whether the closure was bona fide and, if not, to what reliefs the workers were entitled to. The main grievance on behalf of the appellant-Association before the Supreme Court was that the Tribunal erred in directing that the closure must be treated as a non test and the agencies continued to function, despite their factual closure. The Supreme Court, therefore, proceeded to examine the legality of the declaration and the directions since the Tribunal granted the declaration as above in light of the decision of the Supreme Court in Banaras Ice Factory’s case (supra). The Supreme Court, speaking through Gajendragadakar, J., referred to the observation made by Das, J. in Banaras Ice Factory’s case and proceeded to explain the same in the following terms:

(9)…

It is on this latter observation that the Tribunal has Founded its decision. With respect we do not read the observations as laying down an unqualified and categorical proposition of law that wherever a closure is mala fide, it must be deemed to be unreal and non-existent. What this Court has said is that in cases of pretence of closure no closure in fact has taken place and for the purpose of Section 23 of the Act with which the Court was dealing a mala fide closure may conceivably be treated as failing in the same class as a pretence of closure. But in the present case the facts are not in dispute. There has been a closure and the agencies have been closed and their business has been wound up. If it is found that the closure was not bona fide the consequences would be the liability of the employer to pay the higher compensation under Section 25-FFF of the Industrial Disputes Act, 1947. But it is difficult to see how when the two agencies have in fact been closed the finding about mala fides can justify the conclusion that the said two agencies should be deemed to continue and how the award can make an order on that basis. Besides, as we have already indicated even the finding about the mala fides of the closure is itself open to serious doubt. In our opinion the said finding is based on mere surmises and is entirely opposed to the weight of evidence adduced in this case….

34. In Indian Hume Pipe Co. v. Their Workmen . the validity of the award of the Industrial Tribunal, West Bengal, declaring the closure of Baraker factory was not bona fide and justified and the retrenchment of 12 workers on the ground of closure was, therefore, vitiated and they were deemed to be in service and entitled to all the back wages, was challenged. According to the appellant-company, the closure was necessitated since the entire factory area became unsafe on account of subsidence which occurred in December, 1962 as a result of the coal extraction in the vicinity of the factory. The closure was admittedly made on December 31, 1964 and the dispute arose as a result thereof was referred to the Industrial Tribunal in April 1965. The Supreme Court noted that there were disputes between the appellant-company and its workman from 1957 to 1961 and its industrial policy was not beyond reproach. The Supreme Court also noted that the closure of the factory was not immediately after the subsidence which occurred in December, 1962. It also took into consideration the evidence that the adjoining factories were not closed down. In that set up of facts the Court, speaking through Mitter, J. observed as under:

(7) In our opinion, it was not open to the Tribunal to go into the question as to the motive of the appellant in closing down its factory at Barakar and to enquire whether it was bona fide or mala fide with some oblique purpose, namely, to punish the workmen for the union activities in fighting the appellant. It has been laid down by this Court in a series of decisions that it is not for Industrial Tribunal to enquire into the motive to find out whether the closure is justified or not…

After referring to its earlier decisions in Pipraich Sugar Mills’ case (supra) where it was held that a dispute regarding the closure which is real and bona fide is outside the purview of the Industrial Disputes Act, the Supreme Court explained this expression ‘bona fide’ in the following terms:

(7) … The use of the expression ‘bona fide’ in the above quotation does not refer to the motive behind the closure but to the fact of the closure. The question about the bona fides of the closure had to be examined in the case of Tea Districts Labour Association Calcutta v. Ex employees of Tea Districts Labour Association . This Court held that once it was established that the agencies had in fact been closed, the finding about the mala fide of the closure would not ‘justify the conclusion that the said two agencies should be deemed to continue’ and allow the Tribunal to make an award on that basis…

After referring to the decisions in Hatisingh Manufacturing Co. Ltd. v. Union of India , Express Newspapers (P) Ltd. v. The Workers and Andhra Prabha Ltd. v. Secy. Madras Union of Journalists . Justice Mitter, speaking for the Court, summed up the position as under:

(9) In view of these decisions, our conclusion is that once the Tribunal finds that an employer has closed its factory as a matter of fact it is not concerned to go into the question as to the motive which guided him and to come to a conclusion that because of the previous history of the dispute between the employer and the employees the closure was not justified. Such a closure cannot give rise to an industrial dispute.

35. In Kalinga Tubes Ltd. v. Their Workmen in the context of the closure applied by the company management as a result of about 150 workers virtually staging a Gherao in the administrative office building which was likely to result in deterioration of industrial relations between the management and the workers as also endanger to the personal safety of the administrative staff, the Court held that the closure of an undertaking as envisaged under Section 25-FF of the Industrial Disputes Act cannot be limited or restricted only to financial, economic or other considerations of like nature. The only pre-requisite is that the closure has to be genuine and bona fide in the sense that it should be a closure in fact and not mere pretence of closure since the motive behind the closure is immaterial and what has to be seen is whether it was an effective one. In order to determine this question the entire set of circumstances and facts has to be taken into account while endeavouring to find out if in fact there has been a closure and the Tribunal or the Court is not confined to a particular set of facts or circumstances. The essence of the matter, according to the Supreme Court is the factum of closure by whatever reasons motivated. In Kalinga Tubes case (supra), the trade results of the business of the company during the year 1966-67 were such that it would never have induced any businessman to close down the undertaking. The closure was found to be the direct consequence of the alleged illegal activities of the workers and the refusal by the officers and the supervisory staff to carry on their normal work and it was not due to shortage of raw materials, fuel or power. The Tribunal on these facts found that the action taken by the management in issuing the notice for closure on October 3, 1967 and suspending the work in the factory amounted to a lock out and not a closure. The Tribunal also found that the closure was illegal since it contravened the provisions of Section 23 of the Industrial Disputes Act as two cases relating to gratuity and retrenchment were pending adjudication before the Tribunal. The Tribunal also found that 40 members of the staff working in the administrative building had been prevented from going out for about three hours in the night between 1st and 2nd October, 1967. Since the Tribunal found that the closure was illegal, it directed the reinstatement of the workmen with half of the backwages for the period of unemployment. On appeal to the Supreme Court, it was held that the closure can be for any reason and not necessarily for financial, economic or other consideration. The Court, therefore, went into a further question as to whether the closure was on account of unavoidable circumstances. In course of consideration of this question Graver, J., speaking for the Court ruled as under:

12. The explanation appearing in the proviso gives some indication of the anxiety of the legislature to expressly rule out certain contingencies which ordinarily could have been pleaded by the employer as unavoidable circumstances beyond his control. In the normal working of business of a commercial undertaking financial losses or accumulation of undisposed of stocks and the expiry of the period of the lease or the licence can ordinarily go a long way in establishing that it has virtually become impossible to carry on the business… For instance, it’s a Company is heading towards liquidation its business will in normal course, have to be closed down. Similarly if the period of lease of the site on which a factory has been set up has expired and there is no provision for its renewal or extension it would ordinarily present insurmountable difficulty in the way of the working of an undertaking by a company or a commercial concern. Notwithstanding all this the legislature provided that in spite of the aforesaid difficulties or impediments or obstacles the conditions of the proviso would not be satisfied merely by the happening or existence of the circumstances embodied in the explanation. The reason for doing so seems to be that whenever such difficulties as are mentioned in the explanation arise, the employer is not expected to sit idly and not to make an all out effort like a prudent man of business in the matter of tiding over these difficulties for saving his business. The legislature was apparently being very stringent and strict about the nature of the circumstances which would bring them within the proviso. The laying down of two preconditions therein in the language in which they are couched is significant and must be given due effect.

The Court, on consideration of the entire facts and circumstances of that case, was not satisfied that the closure was due to unavoidable circumstances beyond the control of the appellant and, therefore, the workers were held to be entitled to the compensation as prescribed for the closure for any reason.

36. The same question came up for consideration before the Supreme Court in Workmen of I.L.T.D. Co. v. I.L.T.D. Co. . The Company was carrying on the business of purchasing tobacco of all varieties and qualities grading and packing of the same and supplying to the Imperial Tobacco Company as well as exporting to various foreign countries. For the work of stemming grading and packing the tobacco, the Company had two factories – one in East Godavary District and another at Chirala in Guntur District. The Company was maintaining about 21 depots for the business where it was carrying on the work of collecting tobacco, according to the workers, while according to the company, it was doing mainly the handling work of the tobacco purchased at other places, and only incidentally the work of purchasing small quantity of tobacco, the Company notified in August 1963 that eight out of twentyone depots, as specified would be closed down with effect from September 30, 1963. An industrial dispute was raised by the workmen inter alia pertaining to the closure of these eight depots. A reference was made on November 14, 1963 under Section 10 of the Industrial Disputes Act to the Industrial Tribunal, Hyderabad which included as to how far the demands of the Union that no depot which worked during 1962 season should be closed and no workman who worked in 1962 season should be retrenched. The Company raised the question of jurisdiction that the Government has no power to refer the question about the validity of the closure nor the Tribunal could adjudicate upon it. The Tribunal decided the question of jurisdiction by way of preliminary issue by giving an interim award in favour of the Company. In the final award also on merits it decided against the workmen. On appeal to the Supreme Court, the court ruled that no Industrial Tribunal even in a reference under Section 10(1)(d) can interfere with the discretion exercised by a company in the matter of closing down some of its branches or depots, and even if such closure may not amount to closure of business of the company, the Tribunal has no power to issue orders directing a company, to reopen a closed depot or branch if the company closes it down in fact, and that the closure is genuine and real and if the workers are retrenched as a result of genuine and real closure, they are only entitled to retrenchment compensation and cannot claim re-employment or reinstatement. The Supreme Court ruled that it was beyond the competence of the Government to refer the question as to whether the workers were justified in raising the demand that no depot should be closed though the Tribunal was held to be in error in holding that the company was not justified in retrenching the workmen since a question can always arise as to the relief to which the workmen of a closed branch or a depot were entitled, and if that became the subject matter of an industrial dispute, it could be referred. The Supreme Court also explained as to when it would amount to ‘closure’. It ruled that the closure may be treated as a stoppage of a part of the activity or business of the Company since such stoppage of a part of business is an act of management which is entirely within the discretion of the Company carrying on the business.

37. In Workmen of the Straw Board Manufacturing Co. Ltd. v. Straw Board Mfg. Co. Ltd. , the company closed down one of its units on the ground of non-availability of bagasse which is the raw material for the manufacture of strawboard and terminated the services of the workmen of its unit by stages between May 7 and July 28, 1967. The first batch consisted of 98 workmen whose dispute was the subject matter of the reference before the Tribunal. One of the points of reference was that the stoppage of work by the employer and the consequent non-employment of the workers amounted to lay off/retrenchment/lock out, or whether it should be treated as legitimate closure. The Tribunal found that there was a complete closure of an independent industrial unit and the employer could validly close one unit without closing the entire establishment. On appeal to the Supreme Court, the Supreme Court referred to the finding of fact made by the Tribunal that the closure was as a result of nonavailability of the raw material and, therefore, held that the workmen cannot question the motive of the closure once the closure has taken place in fact. The view of the Court expressed thereafter is instructive. In paragraph 16 it has been held as under:

16… The workmen cannot question the motive of the closure once closure has taken place in fact. The matter may be different if under the guise of closure the establishment is being carried on in some shape or form or at a different place and the closure is only a ruse or pretence. Once the Court comes to the conclusion that there is closure of an undertaking the motive of the employer ordinarily ceases to be relevant. No employer can be compelled to carry on his business if he chooses to close it in truth and reality for reasons of his own. It is because of this that Section 25-FFF has been inserted by an amendment of the Industrial Disputes Act by Act 18 of 1957 and it is not necessary for us to trace the history of the insertion of Chapter V-A in the Central Act by Amendment Act 47 of 1953 and later on or Section 25-FFF with other provisions…

(emphasis supplied)

38. It is in the context of this settled legal position that we have to consider this question, namely the Institute has fundamental right to close the undertaking and the High Court is not entitled to go into the question that the intended closure was motivated or for an alterior purpose of unfair labour practice. The neat resultant position in law emerging from the line of decisions set out hereinabove is that once a closure of an industrial unit in fact takes place, the question of examination of motives behind it is not open and such a closure cannot give rise to an industrial dispute. The motive of an employer in closing down his industry is not justifiable. If, however, the closure is a mere pretext, it would amount to no closure and the Court may examine the challenge to such a mala fide closure from all the relevant attendant circumstances. A mala fide closure may conceivably be treated as falling in the category of pretence of closure. Relying on this legal position which is not capable of being disputed, the learned Advocate General on behalf of the Institute urged that it was not open to this Court to examine as to whether the closure was motivated and virtually amounted to unfair labour practice. We have to remind ourselves, however, that the context which was there before the Supreme Court in the different decisions which have been set out above was limited in the sense whether the workers could raise an industrial dispute against the employer in respect of an industrial undertaking which has been closed down in fact. The perspective with which we are concerned in this matter is slightly different. We are not concerned as to whether there is or is not a valid and legal industrial dispute subsisting between the employer and the employees. What we are concerned with in the present case is whether this Court can, on the facts and in the circumstances before it, issue a writ of mandamus or a writ in the nature of mandamus or grant any other declaration and give appropriate directions in that behalf. It is in that perspective that we have to consider as to whether the intended closure notified by the Institute is justiciable, and if so, whether it was a mere pretence to ward off the liabilities arising or likely to arise from the industrial dispute which was pending before the Arbitrator at the time of the impugned notice of intended closure. We must again emphasise that we are not called upon to deal with a situation where there was a closure in fact and, therefore, the motives at the back of the mind of the employer were beyond the pale of challenge. It was, therefore, urged on behalf of the Institute that the closure notified by the impugned notice of December 26, 1983 with effect from January 31, 1984 would have been a matter of fact if the Institute had not been restrained by the interim relief granted by this Court (Coram: P.S. Poti, C.J, and S.B. Majmudar, J.) vide its order of February 13, 1984 directing status quo to be maintained in Special Civil Application No. 331 of 1984 moved by the contesting employees. The learned Advocate General, therefore, submitted that merely because the Institute was obliged to carry on its activities under the protective umbrella of this Court would not make any difference in the situation and this Court must proceed on the basis that the closure would have been a matter of fact but for the interim relief on or after January 31, 1984. In this submission, therefore, the question of the ulterior motives, if at all there were any, was not justiciable. Assuming that this contention of the learned Advocate General was well-founded, this Court could always examine the question as to whether the intended closure was genuine or it was merely a pretence or ruse to ward off the liabilities of the Institute arising, if any, in the arbitration proceedings which were pending at that time. The pertinent question to which we have to address ourselves is whether the Institute really intended to close down the activities or was it merely a pretence or ruse. The learned Advocate appearing for the contesting workmen enumerated a number of circumstances to establish that the Board of Trustees of the Institute did not intend really to close down the undertaking.

39. Before we enumerate these circumstances to which our attention has been drawn, it would be profitable to refer to the impugned notice of December 28, 1983. The impugned notice of closure is in accordance with the provisions of Sub-section (1) of Section 25-FFF of the Industrial Disputes Act, 1947 and addressed to the Secretary to Government of Gujarat in Education and Labour Department. The total number of the workmen of the Institute who were to be affected by the closure was 119 the break-up of which according to their categories is as under:

 Department                No. of workmen              No. of workmen to be
                           Employed                       affected by the closure
  (1)                         (2)                                (3)
Professionals                56
Administrative               18  }   86                           86
Instrustors                  3
Maintenance                  9

Professionals                9
Administrative               4  }    86                           86
Instrustors                  3
Maintenance                  17
                            ____                                ____
                             119                                 119 

 

The statement of reasons annexed to this notice indicates, inter alia, as to what different mental health centres it was running and the different clinics each of the centres was considering. The particulars about these centres and the clinics are as under:
  

The trust in order to attain aforesaid pious and charitable objects runs the B.M. Institute for Mental Health, comprising
 

(1) Nirmala Centre for emotionally disturbed people,
 

(2) Kamalini Centre for developmentally handicapped,
 

(3) Sarala Centre for professional education and research,
 

(4) Balghar Centre.
 

The aforesaid four centres are ran by professional Committees. At the top there is committee known as B.M. Council headed by a chairman.
 

(b) Nirmala Centre operates several clinics as under:
  

(a) Godavari Clinic
 

(b) Sarvangi Clinic
 

(c) Learning difficulties clinic
 

(d) Chetan
 

(e) Bakubhai-ni-pole
 

(f) Speech, language and audiology clinic
 

(g) Out patient service
 

(c) Kamalini Centre, inter alia, operates the following clinics:
  

(a) Clinic for developmentally handicapped
 

(b) Rehabilitation service
 

(c) Speech, language and audiology clinic
 

(d) Community services
 

(e) Sharda School for Mentally Retarded.
 

The nature of the activities is also indicated in this statement the material part whereof is reproduced below:
  

In the aforesaid Centres, following activities are conducted and carried out:
  

Children, adolescents and adults are admitted for diagnostic testing. Psychiatric evaluation and treatment. Each case is considered individually from a psycho-dynamic point of view. A decision by the clinical staff representing each discipline determines the final diagnosis and the treatment is planned and procedure is laid down accordingly. The mode of treatment varies according to need. All age-groups are offered intensive individual psychiatric therapy. For children under 12 years of age, special groups are formed with a view to have intensive observation in order to enable the staff to arrive at a differential diagnosis for each child. Day care is offered to adults in a crisis situation…

Pre vocational training as a part of totally educational approach. The trust also conducted Diploma and Degree courses such as professional training in advanced psychiatry, social work, psychiatric occupational therapy and basic training in special therapy etc. In service facilities are offered for teachers, social workers, psychiatrists, psychologists and professional in allied fields…

40. The reasons which have weighed with the Board of Trustees of the Institute for taking the decision to close down are stated in paragraphs 4 and 5. Shortly stated the reasons are as under:

(a) Insurmountable financial crisis of continuing large deficit over last three or four years.

(b) Large scale borrowings from the Co-operative Bank of Ahmedabad for providing working funds.

(c) Withdrawal of the over-draft facility by the said Bank on and after October 31, 1983.

(d) Borrowing from the parent trust, namely, Nirmala Bakubhai Foundation to pay and satisfy the over-draft account of the aforesaid Bank.

(e) Inability of the Institute to raise any funds by borrowing since the liability exceeded the assets.

These are in short the reasons. To put in broadly, the inability of the Institute to have sufficient working funds so as to provide for the activities through the health care centres, educational centres and the clinics. On the same day the workers and the employees of the Institute were served with notice of termination of their services with effect from 31st January 1984. In this notice also the workers were informed that it was not feasible for the Institute to carry on its various activities and the management was constrained to decide to close down the Institute with effect from January 31, 1984 as the Institute was caught in the grip of insurmountable financial difficulties for last three to four years and was unable to repay its already huge outstandings and borrowings. It was also clarified in the said notice that without prejudice to the contention of the Institute that it was not an industry within the meaning of the term given in the Industrial Disputes Act, the Government was served with a notice of the intended closure by way of abundant caution, and that without prejudice to the order of punitive discharge passed against the contesting workmen herein and without prejudice to the other rights and contentions of the Institute, the said respondents along with other workers were given one month’s notice and informed that their services will stand terminated with effect from January 31, 1984 even if it was ultimately found in law that the said contesting workmen continue in service despite the order of their punitive discharge.

41. The learned Advocate for the contesting workmen urged the following circumstances in support of the plea that the intended closure was merely a pretence to ward off the liability which might accrue as a result of the arbitration proceedings. The circumstances which have been relied upon are as under:

1. Pending arbitration proceedings under Section 10-A of the Industrial Disputes Act between 33 workmen who are contesting in these proceedings and the Institute.

2. Reference to the financial difficulties only after the reference of the dispute to the Arbitrator.

3. Subsequent conduct of the Institute, namely:

(a) inviting applications after the closure notice;

(b) declaration to continue activities by the trustees and on the same premises;

(c) collection of fees for the term upto June, 1984;

(d) financial assistance obtained from different trusts;

(e) assurance before the Charity Commissioner that the trust would continue the activities;

(f) maneuver through one of the trustees Shri Surendra Shah who also happens to be the Managing Director of the Ahmedabad Cooperative Bank for withdrawal of the banking facilities;

(g) Maneuver to set up a new trust through Shri Sumant Majmudar and Smt. Saroj Mehta, the Chairman and Member respectively, of the Council of the Institute for taking over the activities of the Institute with the financial and other assistance of the parent trust, namely, Nirmala Bakubhai Foundation, and with the services of the loyal employees for weeding out the inconvenient employees like the contesting workmen; and

(h) concerted attempt by the Institute to render the order of interim relief of maintaining status quo as nugatory by encouraging its professional employees to tender resignations and a simultaneous move by the professional employees to take over the activities.

4. Ex-facie false reason of insurmountable financial difficulties.

42. We do appreciate that prima facie there appears to be some force in the contention of the learned Advocate for the contesting workmen that the intended closure was not genuine as tried to be spelt out from the above circumstances.

On behalf of the Institute, the learned Advocate General joined issue that assuming that this Court can examine these attendant circumstances, none of them, either singly or collectively, tends to indicate that the Institute did not take a bona fide decision of closing down the undertaking. The learned Advocate General made a forceful effort to persuade us that the Institute would not have terminated the services of all the employees if it did not decide to close down the undertaking for good. The collection of fees or invitation of applications after the impugned closure notice was only with a view to see that the Institute could maintain the status quo as directed by the Court. If the Institute therefore, did not object to some attempts being made by the highly motivated professionals working in the Institute to take over the activities so as to provide continuity of the services to the people suffering from serious and complicated mental diseases and complaints, who are drawn from all stratas of the society and who come to the Institute from far and near and from every nook and corner of the country for obtaining the benefit of the services at the centres and clinics run by the Institute, it cannot be construed as a conspiracy entered into with the diabolic motive for weeding out the so-called inconvenient and intransigent trade union workers like the contesting workmen. In submission of the learned Advocate General all these circumstances are irrelevant if it is established that the Institute was caught in the grip of the insurmountable financial difficulties. Assuming without deciding that the learned Advocate General was right in the contentions which he has urged, we find it difficult to persuade ourselves to accept the contention without the entire question being investigated and appropriate directions being granted by the competent authority under the relevant statutes pertaining to public trust. We have, therefore, examined the problem only from this limited angle as to whether the Institute has been able to prima facie make good this reason of insurmountable financial difficulty. It was urged by workers that if the financial statements of the Institute produced on the record before us do not indicate that the Institute has entailed financial liabilities which it could not have discharged and, therefore, the trustees were not prepared to continue the activities since they were starved of the working funds and consequently decided to close down the activities, the objective fact of the financial difficulty is not established and therefore the intended closure must necessarily be held to be a mere pretence for some ulterior purposes.

43. In the petition moved by the contesting workmen, a number of circumstances has been collated to substantiate the averment that the intended closure was mala fide in the sense of it being merely a pretence. These circumstances have been particularly set out in grounds 5 to 10. In reply affidavit dated Junuary 25, 1984 of Shri Raghuvirdas Gordhandas Mahant filed on behalf of the Institute in paragraph 3.10 it has been inter alia, stated as under:

3.10 As regards grounds (vi), (vii) and (viii) on page 10 of the petition, I state that the averments made therein bear no substance inasmuch as the decision of the Institute to close down is based only on account of its internal financial problems and such decision has not been taken with a view to get rid of the 33 petitioners as alleged. I further state and submit that the termination simplicitor of the 119 employees only incidentally includes petitioners Nos. 1 to 33, and that the financial difficulties with which the Institute is faced is both a valid and sufficient justification for such action. I further deny the allegation that such action has been initiated by the Institute with a view to frustrate the arbitration proceedings agreed upon by the parties. In fact, the Institute continues to participate in such proceedings… It is pertinent to note that the present petitioners Nos. 1 to 33 are the very 33 employees who had chosen to challenge the findings of the domestic inquiry by way of writ petition, which ultimately led to the arbitration proceedings. I, therefore, submit that it cannot be imagined that the Institute would deliberately close down and effect the termination of 119 employees merely in order to get rid of the 33 employees as alleged.

44. In affidavit in rejoinder dated January 30, 1984 of Shri S.R. Apte filed on behalf of the contesting workmen, the assertion made in paragraph 3.10 of the affidavit in reply which we have set out hereinabove has been contested. In paragraph 14 of this affidavit in rejoinder, it has been, inter alia stated as under:

14. With reference to paragraph 3.10, I say that the reason given by the Institute for closing down the Institute due to financial crisis is absolutely false and artificially created. I say that the new scheme granted by the Charity Commissioner and the special provision made therein has already been referred to in the petition at page No. 14 and 15. In that connection I say that in view of the recorded deposition of Shri Gautam Sarabhai and the order of the Charity Commissioner, the N.B.F. was under obligation to pay Rs. 15,00,000/-for the period between 1980 and 1983 to B.M.I. to meet its recurring expenses whereas for the same period it has been stated in the closure notice that the Institute ran up a loss of Rs. 13.44 lakhs which had to be obtained as a loan from the N.B.F. Such a statement is clearly absurd and contradictory on the face of records. If Rs. 15 lakhs to be paid by the N.B.F. is taken into account then the entire deficit of Rs 13. 44 lakhs gets wiped off leaving a net excess of Rs. 1.56 lakhs. The ‘deficit’ of Rs. 13.44 lakhs is therefore artificially created…

(Emphasis supplied)

45. In the supplementary affidavit dated February 2, 1984 of Shri Raghuvirdas Gordhandas Mahant filed on behalf of the Institute, an attempt has been made to justify the decision of intended closure. It has been pointed out in this affidavit that the trustees of the Institute considered in their meeting held on November 24, 1983 the different ways and means to tide over the financial stringency and other attendant difficulties of the Institute and on a total consideration of all the circumstances, the Trustees could come to the only conclusion that they had no other choice but to close down the activities of the Institute. At an earlier meeting held on October 27, 1983, it has been stated in the reply affidavit, the financial position of the Institute was examined in details. In that connection in paragraphs 1.2, 2 and 3 of this supplementary affidavit, it has been stated as under:

1.2. At an earlier meeting held on 27th October 1983, the Trustees had discussed the grave financial position of the Institute, and a statement of the recurring grants-in-aid respectively from the State and the Central Governments was considered in conjunction with various other financial aspects delivered from the audited accounts for the year ending 31-3-1983. It was noted with grave concern that the income and expenditure account reflected a deficit of Rs. 7,32,405/-. It was also noted that the instalments of grants due and receivable aggregating to Rs. 4,28,000/-in respect of the year 1982-83 had not been released upto 31st March 1983. The total borrowings as on 31st March 1983 were Rs. 11,16.000/- including the principal amount of Rs. 4,72,000/- due and payable to the Co-operative Bank of Ahmedabad Ltd. which amount was secured by hypothecation of movable assets. The said meeting also discussed the said Bank’s letter dated 25th October, 1983 requiring the Institute to make repayment of the amount aggregating to Rs. 4,90,336/-inclusive of interest as on 31-10-1983. Since the arrangement with the said Bank was operative only upto 31st October 1983, and looking to the financial position of the Institute, the said Bank was unwilling to extend the repayment period or to re-schedule the payment, the Trustees had no choice but to repay the amount. This was made possible only by obtaining a further interest-free loan of Rs. 4. 9 lacs from the Nirmala Bakubhai Foundation. This borrowing thus raised the total amount due by the Institute to the said Foundation to Rs. 13.44 lacs. It was also noted with concern that the salary of the employees for the month of September 1983 remained unpaid even as on 27th October, 1983 due to lack of funds.

1.3 At the aforesaid meeting held on 27th October 1983, it was further decided to convene the next meeting of the Trustees on 14th November 1983 so that, in the meanwhile, they may be able to utilise the time interval, and the opportunity to consider further and/or alternative steps that could possibly be taken in order to meet the financial crisis. The Trustees expected that the instalments of grants already accrued and due in respect of the year 1982-83 aggregating to Rs. 4,28,000/-would be received by the Institute before end of October, 1983. However, even until 14th November 1983 such instalments had not been received. For this reason, the next meeting of the Trustees was postponed from 14th November 1983 to 24th November 1983, on which date it was in fact held. By 24th November, 1983 a portion of the aforesaid grant amounting to Rs. 2,87,000/- was received. It was observed at the discussion that from out of this portion of the grant received, certain essential expenses had to be met and after doing so, it would be possible to pay the salaries of the employees for the month of September 1983 only to the extent of 50% and that the balance of 50% of such salary together with the salary for October 1983 continued to remain unpaid. Accordingly, the said grant was utilised to meet 50% of the wage-bill in respect of September 1983.

2. Due to the various allegations and/or complaints made by the petitioner Union and its members to various Departments of the State and Central Governments such Governments did not release even the instalments of grant long overdue in respect of the earlier period, namely, 1982-83. Consequently, even during the Divali festival in November 1983, all employees experienced great hardship due to non-receipt of salaries under the aforesaid circumstances.

3. The Trustees of the Institute, as well as the members of the B.M. Council made all possible efforts, including efforts at personnel level, to alleviate the existing deficit/ short of funds by raising the fees and charges from the students and patients, respectively, to whatever extent possible, by increasing the credit facility of Rs. 1.6 lacs sanctioned by the Bank to the Institute in October 1983 to Rs. 4.6 lacs, and by making personal visits and representations at the highest government levels for obtaining the timely release of the overdue instalments in respect of the year 1982-83. In this situation, the liabilities and the financial status of the Institute were such that it had become impossible to make any further borrowings from any source whatsoever.

3.1 xx xx xx

3.2 The deterioration in the financial situation accelerated itself and reached a crisis proportion during the period September-end to November-end, 1983. Thus at the relevant meeting of the Board of Trustees held on 24th November 1983 the Trustees had to reluctantly come to an inevitable conclusion that they had no choice but to close down the activities of the Institute and, accordingly, such a decision was taken. The said decision was conveyed to the State Government by a notice on the same day.

46. In the affidavit in sur rejoinder of February 3, 1984 of Shri H.S. Arora filed on behalf of the contesting workmen, it has been pointed out in paragraph 4(b) as under:

4(b). On page No. 138 at 18th line respondent states that instalments of grants worth Rs. 4,28,000/ were receivable. Therefore it cannot be said that there was deficit of Rs. 7,32,405/- but there was deficit of only Rs. 3,04,405/-. It cannot be understood how the same then reached to Rs. 13.00 lacs.

It has been further stated in paragraph 4(d) of this affidavit as under:

4(d). Objectives, aims and trusteesofB.M. Institute Trust and Nirmala Bakubhai Foundation are same. In fact, as stated in my earlier affidavits B.M. Institute Trust came into existence in 1966 and for the period of 1950 to 1966, B.M. Institute was run by N.B. Foundation. Therefore, I state that N.B. Foundation is a parent organisation of B M. Institute and loan taken from N.B. Foundation cannot be considered to be financial stringency. / reiterate that according scheme annexure A (page 60) it is binding that N.B. Foundation should pay Rs. 15/-lacs to B.M. Institute. If loan taken by B.M. Institute is deducted out of these Rs. 15/-lacs there is no deficit but surplus of Rs. 1.56 lacs.

In paragraph 9 of the said affidavit this question is dealt with and it reads as under:

9. I further state that the respondents have filed various statements regarding their financial position on oath in front of various courts and authorities. If all these statements are brought together, it can be seen that none of these statements are true in front of Hon’ble City Civil court in Civil Suit No. 3388/1982. Respondents have filed financial statement of B.M. Institute and Sharda. The copy of this statement is annexed hereto and marked as Annexure I. This statement does not show any contribution from N.B. Foundation. Before Hon’ble Charity Commissioner Shri Gautam Sarabhai has stated that N.B. Foundation gives Rs. 5/- lacs per year to B.M. Institute (Annexure A) (page 60) And in front of Hon’ble Charity Commissioner again in affidavit filed by respondents on 30-1-84 they have filed a statement that N.B. Foundation has given Rs. 22 lacs donation to B.M. Institute during the period of last 6 to 7 years. The copy of this statement is annexed hereto and marked as Annexure II. In the affidavit filed by Shri Sumant Majmudar (Ann. 4, page 118) he has stated names of 4 other trusts which are giving financial assistance to B.M. Institute, but no such financial assistance received is shown in Annexure I. The comparison of all these documents clearly shows that so-called deficit is false and artificially created deficit and that the respondents are only filing false and misleading statements on oath.

10. I, therefore, state that:

a. that the closure is not real and bona fide,

b. the closure is mala fide,

c. the closure is with the ulterior motive inter alia to get rid of the petitioner and to get rid of Arbitration Proceedings,

d. it has also been decided by the concerned parties to continue the same activities in same manner.

47. In order to appropriate these rival contentions in these affidavits, we had requested the learned Advocate General to produce annual audited balancesheets for the years 1980-81, 1981-82 1982-83, which have been produced by him. We have taken these balance sheets on record. A consolidated income and expenditure statement culled out from these three years’ balancesheets has also been placed on record by way of summary. The consolidated statement also includes the income and expenditure particulars of 1979-80 though the balancesheet for that year has not been placed on record. Without going much into the details of the balancesheets a mere look at this consolidated statement shows that there is a rising deficit every year. We produce the said consolidated statement for ready reference:

————————————————————————————-

Year      Recurring     Recurring      Grant      Total       Deficit    Contribution
          expenditure   income less                                      N.B.
                        Misc. income                                     Foundation.
                        etc.
-------------------------------------------------------------------------------------
          Rs.           Rs.            Rs.        Rs.         Rs.        Rs.

1979-80   12,66,448     2,78,217       7,11,509   9,89,726    2,76,722   73,375
1980-81   13,47,477     2,43,068       6,57,745   9,00,813    4.46,664   2,59,551
1981-82   14,05,907     2,59,367       8,93,324   11,52,691   2,53,216   3,08,002
1982-83   15,38,397     2.92,992       5,13,000   8,05,992    7,32,405   2,50,000
-------------------------------------------------------------------------------------

 

48. On behalf of the contesting workmen, the following facts and circumstances have been pointed out to us in support of their contention that the financial difficulties were not insurmountable:
 

The last column in the statement indicates what is the contribution made by N. B Foundation every year. It should be recalled that when the trustees of this trust moved the Charity Commissioner for framing proper scheme under Section 50-A of the Bombay Public Trusts Act, 1950, Shri Gautam Sarabhai who happens to be a Trustee of this Institute as well as Nirmala Bakubhai Foundation had stated, inter alia, that the total running expenses of B.M. Institute amounted roughly to Rs. 12,00,000/- per annum, and that every year the Institute collected about Rs. 2,00,000/- by way of fees received, Rs. 5,00,000/- towards the grants from State as well as Central Government, and that the remaining loss of nearly Rs. 5,00,0001-per annum was borne by Nirmala Bakubhai Foundation, and in view of this recurring annual liability from Nirmala Bakubhai Foundation, it was necessary to provide for the appointment of three nominees of the foundation as the trustees on the Board of Trustees of the Institute. He also justified the said provision on the ground that Nirmala Bakubhai Foundation has placed at the disposal of the Institute the properties of the Foundation worth about Rs. 30,00,000/- without any corresponding obligation on the Institute to pay the rent or charges for their permissive use. The Charity Commissioner has recorded in his order framing the scheme in Scheme Application No. 1 of 1980 as under:

I have gone through the various clauses of Exh. 14. I am satisfied that it will be in the interest of the trust to have a scheme as per Exh. 44. In fact the applicants gave a draft. That draft is at Exh. 2. As I said earlier as I was unhappy with the draft, I suggested certain amendments. ‘The trustees have carried out these amendments and Exh. 14 is the outcome. No change or alteration is being brought about in the objects of the trust. The objects of the trust continue to be the same. I have no power to permit the trustees to alter the objects of the trust, and the trustees do not want any alteration in the original objects of the trust. Clause 8 of Exh. 44 may be deemed to be of a doubtful nature of validity. Clause 8 provides that on the board of trustees of this trust, three persons will be those who will be appointed by another public trust namely Nirmala Bakubhai Foundation. Shri Gautambhai has deposed that Smt. Nirmala happened to he his father’s sister. In the later part of her life, on account of disease she became a physically handicapped woman. So she decided to donate all her properties to charity. She especially wanted that mentally retarded children should receive aid out of her charities. So the Institution known as Nirmala Bakubhai Foundation came into existence out of the properties donated by her. Shri Gautambhai has stated that the book value of the properties owned by Nirmala Bakubhai Foundation is roughly Rs. 30,00,000/- and to day on account of inflation the market value has increased several times. He states that the B.M. Institute is housed in the properties owned by the Nirmala Bakubhai Foundation and the parent institution or the trust does not charge a pie as rent. In other words the B.M. Institute is being run or housed in the immovable properties of considerable value owned by the public trust, known as Nirmala Bakubhai Foundation. Gautambhai has further deposed that the total running expenses of the B.M. Institute amount to roughly Rs. 12,00,000/- per annum. He has said that every year the Institution gets about Rs. 2,00,000/- as fees, and Rs. 5,00,000/-per annum as grants from the Government and that the remaining loss of nearly Rs. 5,00,000/- per annum is borne by the Nirmala Bakubhai Foundation. He thus states that in view of that position it is necessary to have a provision of the nature contained in Clause 8 of the scheme. I see force in the argument. The trust which permits its properties worth about a crore of rupees to be occupied by the B M. Institute rent free and which bears per annum nearly 40 per cent of the running expenses of the B.M. Institute must have some voice in the administration of the B.M. Institute. It is but just and fair that the Nirmala Bakubhai Foundation must have a right to appoint three trustees of this trust. I thus find no objection in any of the clauses of Exh. 44. I pass the following order.

(Emphasis supplied)

49. The learned Advocate for the contesting workmen, therefore, urged that on perusal of the said balance sheets and the consolidated statement which we have set out above, it is clear that Nirmala Bakubhai Foundation has not paid its contribution of atleast Rs. 5,00,000/-every year as assured by Shri Gautam Sarabhai one of the common trustees of the Institute as well as the Foundation. If, therefore, Nirmala Bakubhai Foundation had carried out its obligation fully to the extent of Rs. 5,00,000/-, as it was bound under the scheme, the deficit increasing every year would have been reduced appreciably and the shortfall thereafter could have been met with by matching grant from the Government. According to the learned Advocate for the contesting workmen, it is interesting to note that the Institute has not though fit to move the Government at all requesting the State as well as the Central Govts to increase the annual grant or to give special grant in case of deficit since this Institute is rendering immense services in the field of mental care and to handicapped and infirm people. In his submission, as a matter of fact, the N.B. Foundation is supposed to contribute for the period of four years commencing from 1979 to 1983 about Rs. 20,00,000/-. They have in all contributed about Rs. 8,90,928/- (say Rs. 9,00,000/-) against their obligation to contribute Rs. 20,00,000/-. The aggregate deficit for the same period is about Rs. 17,00,000/-. If this aggregate deficit is set off against the balance contribution which the Foundation had to make under the scheme, the shortfall would be of about Rs. 6,00,000/- which would hardly come to about Rs. 1,50,000/- per year. It is difficult to believe that the trustees of such esteem status and connection could not have raised for such a healthy cause a small deficit of Rs. 1,50,000/- every year. In that state of affairs, it was urged that the reason advanced by the Institute in the notice of closure before us of insurmountable financial difficulties does not appear to be prima facie well-founded. If that is so, the intended closure is undoubtedly for some other reasons. The grievance of the contesting workmen that this is an artificial reason which has been pressed into service and the decision of the intended closure is merely a pretext. In these circumstances, therefore, we must answer question No. 3 that this Court has jurisdiction to go into the question as to whether the intended closure was merely a pretext and, therefore, mala fide.

50. According to the contesting employees there is an additional reason for reaching this conclusion. The reason is that though admittedly on the own showing of the Institute, as is manifestly clear from the affidavits filed on its behalf, that the Institute was facing this difficulty since 1979-80 onwards, it considered the question in the meeting of the Board of Trustees for the first time in October, 1983. Till then, nothing has been pointed out to us from any convincing material that the Board of Trustees was considering this question from time to time. It should be noted that by 27th October 1983 the parties had come to head and the relations between the workmen and the Institute started deteriorating from August, 1983, culminating into different legal proceedings in this Court. The reference of the industrial dispute arising out of the challenge to the legality and validity of the punitive orders passed against the contesting workmen was referred to arbitration of Shri M.C. Trivedi under Section 10-A of the Industrial Disputes Act by the order of this Court of September 23, 1983. It is only after this reference that the question of financial position of the Institute was considered in the meeting held on October 27, 1983. This speaking circumstance has been pressed into service by the workmen to show that the reason of the financial difficulty was merely an artificial reason for declaring the closure which was not genuine and, therefore, merely a pretext to frustrate the arbitration proceedings as urged on behalf of the workmen. We are, however, unable to adjudicate conclusively as to the validity of the reason of insurmountable financial difficulty for closure, and that it was genuine or merely a pretext and not real but artificial. The reasons of our inability are, inter alia as under.

51. Firstly, whether there was any understanding between the Niamala Bakubhai Foundation and the Institute about the annual contributions to be made by the Foundation, and whether it was formerly recorded. Secondly, if no such understanding was recorded, what were precisely the circumstances under which, and the reasons for which Shri Gautam Sarabhai stated before the Charity Commissioner that the Foundation was to contribute annually Rs. 5 lacs to the Institute. Thirdly, whether there was any obligation on the Foundation to make such annual contributions in consideration of which the trustee Shri Gautam Sarabhai claimed on behalf of the Institute as well as the Foundation the permanent representation to the Foundation on the Board of Trustees of the Institute, and which claim of representation was accepted by the Charity Commissioner in the order sanctioning the scheme of the Institute. Fourthly, whether the Board of Trustees of the Institute considered this question of insurmountable financial difficulty, and the ways and means to overcome them before August 1983 when the relations between the parties started deteriorating. Fifthly, what were the reasons for the Foundation in not making the aforesaid annual contribution in consideration of which the Foundation got a permanent right of representation of the Board of Trustees of the Institute. Sixthly, whether the Board of Trustees of the Institute made any attempt to secure further financial assistance from the State Government and the Central Government, or from any national or international social welfare agencies. Seventhly, whether the Board of Trustees made any efforts to obtain accommodation from any nationalised or scheduled or a Co-operative Bank other than the Ahmedabad Cooperative Bank Ltd. by way of short-term or long-term arrangement. Eighthly, what was the reason for raising loans from Nirmala Bakubhai Foundation when it was granted representation under the orders of the Charity Commissioner in consideration of the liability, if any, of making annual contribution of Rs. 5 lacs.

52. It is because of the inadequacy of the material on this point that we find ourselves unable to adjudicate conclusively that the closure was not genuine and was merely a ruse. In any case, till this alleged reason for the closure, namely, insurmountable financial difficulty is investigated and adjudicated upon by the competent authority, and the appropriate directions granted in the matter by inter alia permitting the Board of Trustees to close down the Institute, and/or to make any other alternative arrangement, the Board of Trustees of the Institute could not have unilaterally applied the closure. We are, therefore, declined to answer question No. 3 in the circumstances aforesaid.

53. What would be the relief to which the workmen would be entitled is a question which we will separately consider at the end while dealing with the question No. 5.

Re: Question No. 4:

54. This question has been raised by the Institute in Special Civil Application No. 3871 of 1984 where the Institute has prayed for appropriate writs, orders and directions to quash and set aside the award of the learned Arbitrator Shri M.C. Trivedi in the matter of arbitration between the Institute and the contesting workmen under Section 10-A of the Industrial Disputes Act. The grievance of the Institute is that having regard to the concession made on behalf of the contesting workmen before the learned Arbitrator that the validity and legality of the domestic inquiries were not under challenge and the only challenge was that the punitive orders passed by the institute were vitiated in as much as the findings of the Inquiry Officers were arbitrary, perverse and mala fide, the learned Arbitrator ought to have examined each case and decided whether the findings were without any evidence. It is in light of this concession that it was declared before the learned Arbitrator on behalf of the contesting workmen that they did not want to lead any oral evidence, and consequently there was no occasion for the management to adduce any further evidence about the alleged misconduct of the contesting workmen. The grievance of the contesting workmen before the learned Arbitrator was that no attempt was made by the Inquiry Officers to weigh evidence against them and the findings were mechanical, without application of mind and not warranted by the evidence. The ultimate orders made imposing penalty by the Institute were, therefore, vitiated since they were based on the findings of the Inquiry Officers which were perverse and mala fide. The learned Advocate General made a grievance that the learned Arbitrator did not make any attempt to scan the evidence of each individual workman concerned for purposes of deciding as to whether the findings were without any evidence or for that matter perverse. What the learned Arbitrator has done was to examine the general criticism made by the employees against the approach of the Institute and the Inquiry Officers appointed by it from the beginning to the last which, according to the learned Arbitrator, threw flood of light on the intention of the management against the employees. The learned Advocate General has invited our attention to the opinion of the learned Arbitrator that the case before him was not of wrong appreciation of evidence or insufficiency of evidence but was of reluctance on the part of the management to take into consideration the objections raised by the delinquents at the final hearing and the management had a closed mind over the question. In short, it was urged on behalf of the Institute that the award deserves to be set aside since the validity and legality of the domestic inquiries being not under challenge and the only challenge being the perversity of the findings, the learned Arbitrator was duty bound to examine individual cases and find out whether the grievance of the workmen about the perversity of the findings was well-founded, and the conclusion of the learned Arbitrator that since the Inquiry Officers were biased, their findings have become perverse, is tantamount to saying that the principles of natural justice are violated which was on concession not the grievance of the workmen. The learned Arbitrator reached the conclusion that the findings were perverse in spite of his view clearly recorded in the order that it was not a case of misappreciation or insufficiency of evidence.

55. On behalf of the contesting workmen the learned Advocate Mr. Patel fairly admitted that before the learned Arbitrator the concession was made that the legality and validity of the domestic inquiries were not under challenge. However, the question before the learned Arbitrator was as to whether the acts imputed to the workmen concerned constituted misconduct, whether the evidence established such misconduct, whether there was any victimisation and if the misconduct was established, the punishment was excessive. No doubt, the learned Arbitrator has, according to Mr. Patel, recorded that the case before him was not of misappreciation or insufficiency of evidence. Inspite of the view so expressed by the learned Arbitrator he has found that the approach of the Inquiry Officers as well as the Management Council of the Institute disclosed that they had a closed mind on the point and without examining the evidence in details of the various acts of misconduct imputed to the workmen concerned, all were found guilty by the Inquiry Officers and the Management Council before accepting these findings, did not consider the objections filed by the individual workman concerned against these findings. If this general approach is writ large on the face of the domestic inquires, the conclusion was beyond exception and it has been rightly reached by the learned Arbitrator, in submission of Mr. Patel, that the findings of the Inquiry Officers as well as the Management Council of the Institute were perverse. Mr. Patel urged with all the force at his command that the learned Arbitrator was entitled to look at the mode of inquiry not for purposes of determining whether it was legal and valid, but for purposes of finding out as to whether the Inquiry Officers and the Management Council had open mind on the question of the guilt of the delinquent for the alleged acts of misconduct. In submission of Mr. Patel the findings of the Inquiry Officers as well as the punitive orders made by the Management Council might very well be vitiated and in fact they were on account of the perversity arising as a result of the approach of the Inquiry Officers and that of the Management Council. It is in light of these rival contentions that we have to decide whether the award of the learned Arbitrator is vitiated.

56. Before we examine the question, it would be proper to refer to the concession made and the limited challenge raised by the workmen before the learned Arbitrator. The learned Arbitrator formulated the points for his consideration after setting out the facts, and the cases of the rival parties. Point No. 3 related to the scope and the powers of the Arbitrator under Section 11-A of the Industrial Disputes Act to interfere with the findings of the Inquiry Officers and the final orders passed by the employer. In course of discussion on this point No. 3, the learned Arbitrator has in paragraph 30 noted as under:

30. Point No. 3. The petitioners have not challenged the validity and legality of the domestic inquiry held against them by the B.M. Institute but they have challenged the findings of the Inquiry Officers as well as the final orders passed by the Institute against them on the ground that the findings of the Inquiry Officers are arbitrary, perverse and mala fide and, therefore, it is their contention that the Arbitrator has powers under Section 11-A of the Act to go into these questions by examining the mode of inquiry, the approach of the Inquiry Officers in conducting the inquiries, the approach and attitude of the Management in reaching the final decisions against them…

In paragraph 34 of the award, the learned Arbitrator has again recorded as under:

34… In the present case there is no question of management’s right of adducing further evidence against the employees because it is not the contention of the employees that they were held guilty by the Inquiry Officers without there being sufficient evidence against them. Their say is that a false show of inquiry in accordance with the principles of natural justice was made and no attempt was made by the inquiry officers to weigh the evidence against them and to reach the conclusions based on evidence led before them. The findings of the inquiry officers are challenged on the ground that they are vitiated because they are perverse and mala fide…

In paragraph 48 of the award, the learned Arbitrator has again noted:

48. In the instant case, it is not necessary to examine the individual cases of the employees and the findings of the inquiry officers against each of them and also the final order passed by the B.M. Council against each of them. I shall simply state in short the allegations of misconduct against each of the employe the findings reached by the inquiry officers against him, the representation made by him in the personal hearing, and the final order made by the B.M. Council against him. Thereafter, I shall examine the general criticism made by the employees against the approach of the Institute and the inquiry officers appointed by it from the beginning to the last which throws a flood of light of the intention of the management against the employees.

Again, in paragraph 53 of the award, the learned Arbitrator has recorded as under:

53…this is not a case of wrong appreciation of evidence or of insufficiency of evidence. The case is of reluctance to take into consideration the objections raised by the delinquents at the final hearings. The Management had a closed mind and was not prepared to hear and consider what the delinquents had to say against the manner in which the inquiries were held and findings were given against them. This is so far as the attitude of the Management is concerned.

(Emphasis supplied)

57. In paragraph 55, the learned Arbitrator has again noted as under:

55. It is true that at the domestic inquiry the Inquiry Officer is not required to follow the technical rules of evidence and procedure. However, rules of natural justice require, that the inquiry officer should approach the matter with an open mind and he should give a fair and reasonable opportunity to the delinquent to defend himself against the charges levelled against him with a view that he can convince the Inquiry Officer that what is alleged against him is not true. Here that open mindedness was absent in the case of all the six inquiry officers…

58. In paragraph 57, it has been observed as under by the learned Arbitrator:

57…It is also not in dispute that the Inquiry Officer is not required to observe the technical rules of evidence and procedure. However, it is of the essence of such domestic inquiry that the same should be fair and impartial; the delinquent should be given a fair and reasonable opportunity to defend himself, which can be done by the Inquiry Officer who proceeds with the inquiry with an open mind. In the instant case, I am not prepared to believe that the Inquiry Officers had approached the questions with an open mind, on the materials placed before me, and which I have discussed in the foregoing paragraphs of the Award. I am reasonably inclined to hold that they were pre-determined to hold all the delinquents guilty of all the charges levelled against them, and in fact they did so. The conclusions reached by them on the materials placed before them were the conclusion to which no reasonable prudent man would have reached on the same materials. Therefore, it is held that the findings of the Inquiry Officers against all the delinquents are perverse and, therefore, the inquiries are held to have been vitiated because the same were held in violation of principles of natural justice.

(emphasis supplied)

59. In paragraph 58, the learned Arbitrator was at pains to emphasise as under:

58. … It was not denied that the employees were agitating and shouting slogans outside the premises of the Institute. In such a case the inquiry officers were duty bound to scrutinise the evidence and to find out whether any of the delinquents had in fact individually committed any misconduct as alleged because in such cases of mass agitation mere presence of an employee in the crowd or the witnesses saying that he was also shouting slogans cannot be reasonably taken as proof of misconduct. None of the Inquiry Officers took trouble to find out as to exactly what conduct, if proved against any of the delinquents would amount to misconduct. It is because of such biased approach shown by the Inquiry Officers that Mr. Nanavati’s argument cannot be accepted.

60. The learned Arbitrator has again emphasised the invalidity of the inquiries on the ground of they being violative of the principles of natural justice, in paragraph 54:

54. So far as the attitude of the inquiry officers is concerned, much can be said against their impartiality and independence; not only because they were employees of the Chairman of the B.M. Council in other undertakings, but because of the way in which they approached the inquiries held by them. Number of charges were levelled against most of the delinquents, but the inquiry officers did not care to scan the evidence with respect to each charge separately…

61. If we have to sum-up shortly the reasoning which found favour with the learned Arbitrator in holding that the findings of the Council about the guilt of the delinquents have been vitiated because the Council accepted the reports of the Inquiry Officers who had pre-determined and pre-judged the issue and therefore, were biased not only because they were employees in other undertakings functioning under the chairmanship of Shri Gautambhai Sarabhai who happened to be the Chairman of the B.M. Institute but also because the way in which they appreciated the evidence and recorded their finding and, therefore, they did not act in a fair and just manner with the result that the inquiries and the findings were vitiated as they were against the principles of natural justice and fair play. The learned Advocate General appearing on behalf of the B.M. Institute was, therefore, right in urging that even though the inquiries were challenged on the grounds of principles of natural justice and fair play, the learned Arbitrator set aside the findings and the orders of penalty on that very ground inasmuch as the learned Arbitrator found that the Inquiry Officers were biased and had prejudged the issues. The learned Arbitrator could not have reached the conclusion as he did, according to the learned Advocate General, that no reasonable person could have reached the conclusion on the evidence which was placed before the Inquiry Officers since the learned Arbitrator himself has recorded in no uncertain terms at more than one place in his award that this was not the case of insufficiency of evidence or wrong appreciation of the evidence. If that was so, the learned Arbitrator could not have set aside the impugned findings and the orders of penalty on this very ground. We do find a great force in this contention. As a matter of fact, with respect, both the possible grounds such as violation of principles of natural justice and the findings without evidence, on which findings of domestic Tribunal and for that matter the penalty imposed as a consequence thereof can be impugned, were not relied upon by the contesting employees and the learned Arbitrator has noted those concessions. It is difficult to appreciate how the learned Arbitrator could have, after recording the concession and agreeing with them, avoided the impugned findings and the orders of penalty on this very ground. We have not been able to appreciate also as to how the learned Arbitrator could have reached the conclusion that the findings of the Inquiry Officers and for that matter the Disciplinary Authority, namely, the Management Council in the present case, could be said to be such as no reasonable person could have arrived at. It cannot be gainsaid that the question, whether a given finding is one which could not have been arrived at by any reasonable person, a Court or an Arbitrator, as to the case of an individual case on the facts and in the circumstances of such case arc brought on record. Unless, the Court or the Arbitrator examines each case from the angle of the peculiar facts and circumstances pertaining to it, it is well nigh impossible to conclude that the findings are such which could not have been reached by a reasonable person or, in other words, they are perverse. The learned Arbitrator in the present case has clearly noted that he does not intend to go into the merits of the individual cases. He also records, on concession being made on behalf of the contesting employees, that this is not a case of no evidence of wrong appreciation of evidence. If that is so, we do not think that the learned Arbitrator could have reached the conclusion that the findings are such that no reasonable person could have reached on the facts and in the circumstances of the case before him. It is no doubt true that the learned Arbitrator has dealt with certain general features of these inquires and on consideration of the same reached the conclusion that the Inquiry Officer and the Management Council had pre-judged the issue since they were biased. We do not think that this can be said to be a correct approach in the matter for determining the issue as to whether the findings are perverse or otherwise. In that state of affairs we agree with the learned Advocate General that the findings of the learned Arbitrator on point No. 4 about the validity and legality of the orders of dismissal passed by the Management Council against contesting employee-respondents Nos. 1 to 12, and the orders of punitive discharge against the contesting employee-respondents Nos. 13 to 32 and 34 are liable to be set aside. On this opinion we set aside the findings of the learned Arbitrator on point No. 4.

62. One of the courses open to us is to remit the matter back to the learned Arbitrator by quashing and setting aside the award. This would, in our opinion, merely protract the litigation and will result in lose of public time and costs. We, therefore, think that it is advisable to address ourselves to the question as to whether the penalty which has been imposed is excessive or adequate on the facts and in the circumstances of the case. This alternative course recommends us for obvious reason that if the contesting employees had conceded, which they had, that they do not intend to challenge the validity and legality of the inquiries, nor did they claim before the learned Arbitrator that this was a case of no evidence, or that the findings are perverse which they in fact had conceded before the learned Arbitrator, the only conclusion which the learned Arbitrator could have reached was that the guilt of the delinquents was proved and the misconduct attributed to each of them has been established. If that is so, the next question which would immediately arise is about the adequacy of the punishment to which the learned Arbitrator has addressed himself by raising point No. 6. He noted that the question of the adequacy of punishment did not arise in view of his findings on points Nos. 4 and 5. Even then he proceeded or assumption that even if some of the charges were proved against the contesting employees, the punishment of dismissal or removal was certainly unjustified in the case before him. This again in our opinion, assuming that he was justified in adopting this course, it was not properly pursued. The learned Arbitrator ought to have examined each case for finding out what charges are proved and what punishment each of the delinquents deserves. To examine the case on the ground of the assumption that some charges have been established against the contesting employees and then to conclude that the extreme penalty of dismissal or removal from the service was unjustified is, in our opinion, with respect to the learned Arbitrator, a course which would certainly result into miscarriage of justice. Whether penalty is adequate in a given case or not depends upon the gravity of the misconduct established, the prejudicial past record, if any, and the consequences ensuing from such misconduct, inter alia, of loss to the employer in particular and the community in general are the relevant considerations which an authority has to bear in mind before determining as to whether an interference is called for. The learned Arbitrator has, in support of his view that the punishment was excessive, observed in paragraph 66 as under:

66. As stated by me earlier, in the instant case the final orders are invalid and illegal and therefore the question of passing any punishment on any of the delinquents does not arise. However, even if it is held that some charges of misconduct were rightly held proved, then also it cannot be said that against any of the delinquents punishment of dismissal or punitive discharge was called for. All the delinquents appear to have a good record of service ranging from 5 to 20 years. The only misconduct alleged against them is the misconduct of joining the agitation against the Institute. Agitation was generally carried on outside the premises of the Institute. Even if some of the employees committed some small lapses in carrying on the agitation, the same cannot be said to be serious misconduct, and under no circumstances it can be said that the punishment of dismissal or punitive discharge was called for against any of the petitioner employees. Therefore, it is held that even if any of the petitioner-employees is held guilty of the misconduct alleged against him, the order of punishment passed against him is not justified in the circumstances of the case.

63. The width and power under the amended Section 11A of the Industrial Disputes Act has come for consideration on a number of occasions before the Supreme Court and other High Courts. The limitations which were spelt out by the Supreme Court in the case of Indian Iron and Steel Co. Ltd. v. Their Workmen AIR 1958 SC 130 no longer exist after the insertion of Section 11A on the statute book. The Tribunal or for that matter an Arbitrator under Section 10A is now at liberty to consider not only whether the finding of misconduct recorded by an employer is correct but also to differ from the said finding if a proper case is made out. It is the satisfaction of the Tribunal on the question of the establishment of the guilt that finally decides the later in case where a proper and valid domestic inquiry has been held (see: Workmen of Firestone Tyer and Rubber Co. of India P. Ltd. v. The Management at p. 1240). If the employer does not hold an inquiry or holds an inquiry which is found to be defective, it is always open to the employer even after insertion of Section 11A to adduce evidence for the first time before the Tribunal justifying the order of penalty, discharge or dismissal. In Delhi Cloth and General Mills Co. v. L.B. Singh it is ruled that it is open to the Tribunal to deal with the validity of the domestic inquiry, if any, as a preliminary issue. If it finds in favour of the management, there would be no question of any opportunity to be given to the employer to establish the misconduct. However, if the finding on the preliminary issue is against the employer, the Tribunal is under an obligation to give an opportunity to the employer to cite additional evidence justifying his action. This legal position is beyond dispute (see: Firestone Tyre and Rubber Company’s case – supra). By Section 11 A, the Tribunal is now empowered to alter the punishment imposed by the employer which power the Tribunal had not before Section 11A was inserted. Under Section 11 A, though the Tribunal may hold that the misconduct is proved even then it may reach the conclusion that the extreme penalty of discharge or dismissal for the said misconduct is not justified. In other words, the proved misconduct may not merit the extreme punishment and the Tribunal can award a lesser punishment (see: Firestone Tyre and Rubber Company’s case – supra) It is a trite position in law that a Tribunal or an Arbitrator has no jurisdiction to sit in judgment over the decision of the employer as an appellate body, and it can interfere with the decision of an employer only when the inquiry is unfair or the findings arrived at in the inquiry are perverse, or have no basis in the evidence, or the management is guilty of victimisation, unfair labour practice or mala fide, or the punishment is harsh and oppressive. The Tribunal cannot re-appraise the evidence and arrive at a domestic inquiry (see: East India Hotel v. Their Workmen ). The term ‘Tribunal’ under Section 11A read with Section 10A of the Industrial Disputes Act includes also an Arbitrator (see: Gujarat Steel Tubes Ltd. v. Its Mazdoor Sabha ). In Rama Kant Misra v. State of U.P. the Supreme Court held that with the insertion of Section 11A, the Labour Court has the jurisdiction and power to substitute its measure of punishment in place of the managerial wisdom once it is satisfied that the order of discharge or dismissal was not justified in the facts and circumstances of the case, and the Supreme Court, in exercise of its jurisdiction under Article 136 can examine whether the Labour Court has properly approached the matter for exercising or refusing to exercise its power under Section 11 A.D.A. Desai, J., speaking for the Court makes some instructive observation in that case in paragraph 6 which reads as under:

6. The punishment must be for misconduct. To some extent misconduct is a civil crime which is visited with civil and pecuniary consequences. In this case it has resulted in dismissal from service. In order to avoid the charge of vindictiveness, justice, equity and fair play demand that punishment must always be commensurate with the gravity of the offence charged. In the development of industrial relation norms we have moved far from the days when quantum of punishment was considered a managerial function with the Courts having no power to substitute their own decision in place of that of the management. More often the Courts found that while the misconduct is proved the punishment was disproportionately heavy. As the situation then stood Courts remained powerless and had to be passive sufferers incapable to curing the injustice. Parliament stepped in and enacted Section 11-A of the Industrial Disputes Act which reads as under:

11-A xx xx xx

7. It is now crystal clear that the Labour Court has the jurisdiction and power to substitute its measure of punishment in place of the managerial wisdom once it is satisfied that the order of discharge or dismissal was not justified in the facts and circumstances of the case. And this Court is at present exercising jurisdiction under Article 136 over the decision of the Labour Court. Therefore this Court can examine whether the Labour Court has properly approached the matter for exercising or refusing to exercise its power under Section 11-A…

64. In view of this settled legal position, therefore, we have to consider as to whether the learned Arbitrator has adopted a proper approach in exercising his powers under Section 11-A. We indicated above that the learned Arbitrator has not considered at all the facts and circumstances of the individual cases or group of cases, if some of the delinquents are similar, before reaching the conclusion that the punishment of removal or dismissal was excessive. The learned Advocate General made a grievance that the entire approach of the learned Arbitrator was laconic inasmuch as he just proceeded on some assumption that if some charges are proved against some of the delinquents, even then the punishment is not justified. In submission of the learned Advocate General this is hardly a way of exercising the power under Section 11-A.

65. We are afraid that the approach of the learned Arbitrator can be said to be hardly satisfactory. With respect to him, it does not commend to us as a proper course. The learned Arbitrator ought to have examined the case of individual delinquents or a group of individual delinquents having regard to the common charges levelled against the respective employee and examined the evidence in respect thereof for purposes of holding whether the charges are proved or not. As stated above, the learned Arbitrator has recorded on more than one place that the case before him was not a case of insufficiency of evidence or wrong appreciation thereof. The contesting employees had already conceded that they were not interested in challenging the validity and legality of the inquiries. The learned Arbitrator had, therefore, in the concluding portion of paragraph 44 noted this concession as under:

44… In the instant case the employees have not challenged the validity and legality of the inquiry and therefore there is no question of the Arbitrator holding that the inquiry officers reached their conclusions on sufficient evidence. There is no question of the management being given a right to adduce further evidence in the matter because the legality and validity of the inquiries is not being challenged…

The learned Arbitrator did not think fit to examine the individual cases of the employees and the findings of the Inquiry Officers against each of them and, consequently, the final orders passed by the Management Council. It is in these circumstances that we feel that the approach of the learned Arbitrator in the matter of the exercise of his power under Section 11-A was not proper and legal.

66. What is then precisely the position of the contesting employees in the matter of the charges and the findings made by the Inquiry Officers and the orders by the Management Council? The charges fell in three broad categories: (1) Demonstration, obstruction and slogan shouting, (2) Disturbing the Institute’s working, and (3) Manhandling and threats of physical violence. If we make the analysis of these charges qua each of the contesting employees, these categories will emerge (i) the charge of remaining absent during the period between 3rd August and 6th November, 1982 against Respondent No. 29 of Special Civil Application No. 3871 of 1984; (ii) the charges of shouting slogans, using abusive language and holding demonstration, obstruction etc. against Respondents Nos. 3, 16, 19, 21, 22, 23, 24, 25, 28, 30, 32 and 34 of Special Civil Application No. 3871 of 1984; (iii) the charges of shouting slogans, using abusive language, holding demonstration, causing obstruction and remaining absent during the period 3rd August to 6th November, 1982 against Respondents Nos. 7 and 27 of Special Civil Application No. 3871 of 1984; (iv) the charges of shouting slogans, holding demonstration, using abusive language and entering through the gates not meant for entry against Respondents Nos. 10 and 31 of Special Civil Application No. 3871 of 1984; (v) the charges of shouting slogans, using abusive language, holding demonstration and making unauthorised entry into the room of inquiry in Ashoknagar, Sarkhej and disturbing inquiries by shouting slogans against Respondents Nos. 2, 4, 8, 14, 15, 17 and 18 of Special Civil Application No. 3871 of 1984, and (vi) the charges of shouting slogans, using abusive language, holding demonstration and obstructing Shri Sumant Majmudar the Chief Executive of the Trust and others against Respondents Nos. 5, 6, 9, 12, 13, 11, 20, 26 and 33 of Special Application No. 3871 of 1984. We have given thought to the contentions urged by the learned Advocates appearing on behalf of the B.M. Institute as well as these contesting employees. We are of the opinion that even if we agree with the Institute that in-as-much as the employees did not challenge the validity or legality of the inquiries, nor did they challenge that the evidence was insufficient to warrant the guilt, we do not think that the punishment which has been inflicted can be said to be just on the facts and in the circumstances of the case. As stated above, the only serious charge can be the charge categorised at Item No. (vi). 7 he other charges are by and large holding some demonstration, shouting slogans, even obstructing the visitors or persons coming for treatment at the Institute and thereby partially disturbing the working of the Institute. It is no doubt true that these employees who are in the employment of the Institute engaged in such humanitarian activities of medical care of mentally retarded persons, the approach and attitude of the employees as if they are ordinary trade union workers is not wholly justified. Any agitational approach by these employees may fear away those mentally retarded children and persons who come for the treatment in the Institute. It does not require much of imagination to appreciate as to how sharply these retarded children and persons react to such explosive situation. It is hardly required to be emphasised that these employees could not have created a situation by which not only the normal beings would be disturbed and scared away but created a sense of great insecurity in those retarded children and persons who require a great sympathy and warmth and understanding. We do appreciate the imperatives of such an Institute, even then we are inclined to hold that the extreme penalty of removal or dismissal was not justified particularly having regard to the fact that these demonstrations were held outside the gate of the Institute, though in course of which a point had reached when some employees and outsiders coming to the Institute were obstructed and on one occasion the Chief Executive Officer and some other persons were manhandled. The rationale of punishment is not to retribute but it is motivated to inculcate discipline amongst the employees. If that is the purpose of punishment, we are of the opinion that for these different categories the extreme penalty was wholly unjustified. We have given anxious consideration to what would be the reasonable quantum of punishment commensurate with the gravity of the charges, the gravity of the misconduct and the consequences ensuing therefrom for the Institute in particular and the community in general. On over-all consideration of the matter, we are of the opinion that the orders of penalty for dismissal and/or discharge, as the case may be, should be and are set aside and instead the following penalties should be imposed.

1. As regards category No. (i) the adequate order of penalty should be that the period of absence should be treated as leave without wages so far as Respondent No. 29 of Special Civil Application No. 3871 of 1984 is concerned and he should be accordingly reinstated.

2. As regards categories Nos. (ii), (iii) and (iv) having regard to the similarity of the charges, the reinstatement shall be without back wages. Accordingly Respondents Nos. 3, 7, 10, 16, 19, 21 to 25, 27, 28, 30, 31, 32 and 34 of Special Civil Application No. 3871 of 1984 shall be reinstated without backwages.

3. As regards category No. (v) having regard to the established charge that they made a forcible and unauthorised entry in the room of inquiry in Ashoknagar, Sarkhej, and thereby disturbed the inquiries by shouting slogans, the penalty should be that the concerned respondent employees would not be entitled to backwages and that two increments should be withheld without future effect. Accordingly Respondents Nos. 2, 4, 8, 14, 15, 17 and 18 are to be reinstated without backwages and with stoppage of two increments without future effect.

4. As regards category No. (vi) the concerned employees had manhandled the Chief Executive Officer and the other persons concerned. We are therefore of the opinion that they would not be entitled to back wages, and there should be withholding of two increments with future effect. Accordingly, respondent Nos. 5, 6, 9, 12, 13, 11, 20, 26 and 33 shall be reinstated without backwages and with withholding of two increments with future effect.

67. The result, therefore, is that Special Civil Application No. 3871 of 1984 is partially allowed, and the award of the learned Arbitrator to the extent to which it grants back wages is quashed and set aside, and instead the lesser penalties as indicated in paragraphs 1 to 4 hereinabove in respect of the different respondent-employees are imposed. Rule in this petition is made absolute accordingly with no order as to costs.

68. Before we part with this matter, we would like to impress our disapproval for the manner and method adopted by the employees for ventilating their grievances and vindicating their rights, particularly having regard to the nature of the services rendered and the duties performed by the Institute for which these workmen were engaged. The routine trade union methods of demonstration and agitation including that of Gherao etc. were hardly befitting the role which the workmen have to play in an organisation set up for purposes of taking care and treating the mentally retarded young patients whose parents come to the Institute with their suffering wards with the anxiety and hope of being cared of their mental ills which anxiety is aggravated and the hope being frustrated when they are faced with a situation and an atmosphere surcharged by excitement and hindrance. It is no doubt true that the management is supposed not to ill-treat the workers who are the back-bone of these services, and practice discrimination amongst their rank and file, and also under an obligation to ensure best conditions of service as may be feasible within the financial constraints; it is equally necessary for the workers to bear in mind their role in this mental health care service and try to avoid, as far as possible, the confrontation which is fraught with grave consequences not only for the parties to the dispute in particular, but also to the entire community of patients in general who come from different corners of the country to this Institute which is the only of its kind in this country. We are sure that in future the contesting workmen shall render their fullest co-operation and avoid a situation of confrontation in the interest of all.

Re: Question No. 5:

69. What would be the relief which the contesting employees who are the petitioners in Special Civil Application No. 331 of 1984 are entitled to. We have held that the Institute is amenable to the writ jurisdiction, and, therefore, till the Institute obtains appropriate directions from the Competent Authority under the statutes pertaining to the public trusts by satisfying the said Authority that it had adequate excuse for the non-performance of its obligations under the trust, it cannot discontinue or abandon its services and cease or refuse to perform its duties. We, therefore, direct that the Institute shall continue to render its services, and would not refuse to perform its duties as it was rendering and performing before it issued the impugned notice dated December 28, 1983 declaring its intention to close down the Institute with effect from January 31, 1984 till it obtains appropriate directions for closure or otherwise from the Charity Commissioner under the Public Trusts Act, who is directed to dispose of the application that may be moved by the Institute in that behalf within six months of the filing of the same. Rule is made absolute accordingly with no order as to costs in this Special Civil Application No. 331 of 1984.

R.J. Shah, J.:

70. I have had the advantage of going through the judgment rendered by the learned Acting Chief Justice but I find it difficult to share the views expressed therein to the extent mentioned below though I substantially agree with the directions given by the learned Acting Chief Justice in Special Civil Application No. 331 of 1984. My directions in the said petition, however, would be in the terms mentioned on page 10 of this judgment.

71. The facts pertaining to the above Special Civil Applications Nos. 331 of 1984 and 3871 of 1984 have been succinctly stated by the learned Acting Chief Justice in his Judgment and I see no reason either to add to or subtract from the same. It is also not necessary to repeat the same in this judgment.

72. Since the two matters are akin to each other and the facts from which they arise are common it is thought fit to dispose of the two matters by a common judgment.

73. The questions which arise for consideration in the above matters are as under:

1. Whether this Court has jurisdiction to issue a writ of mandamus inasmuch as there is no statutory or public duty for that matter on the part of the Institute which may warrant the Court to exercise its writ jurisdiction under Article 226 of the Constitution of India? In any case whether this Court should not exercise the jurisdiction since there is an alternative remedy available to the aggrieved employees under the Industrial law?

2. Whether the Institute can be considered as “industry” within the meaning of the Industrial Disputes Act, 1947?

3. If the Institute is “industry” whether the trustees have a right under the Industrial law to close down Institute? If the trustees have such a right then whether it is not open to the High Court to go into the question that the intended closure was motivated and was for ulterior purpose of unfair labour practice? and

4. Whether the impugned award is vitiated inasmuch as the findings are such as no reasonable person could have reached them and therefore bad in law, void and liable to be struck down?

Point No. 1

74. This point has been raised by way of a preliminary objection against the competency of the special civil application preferred by the affected employees.

75. The learned Advocate General appearing on behalf of the Institute viz. B.M. Institute has urged in the first place that the Institute cannot be said to be a ‘state’ or ‘authority’ within the meaning of Article 12 of the Constitution and so it is not amenable to the writ jurisdiction. Alternatively, it was urged that even if it is held to be a ‘public authority’ no constitutional, statutory or public duty is imposed on it which will justify this Court to issue a writ of mandamus under Article 226 of the Constitution or a writ in the nature of mandamus. It was further urged that in any event as the aggrieved employees have an alternative remedy under the Industrial law (the aggrieved employees themselves contend that the Institute is ‘Industry’ within the purview of the Industrial Disputes Act, 1947) this Court should relegate them to the Industrial Court for the redress of their grievance as it cannot be said that the decision of the Institute is without any jurisdiction, power of authority.

76. The legal position regarding the writ jurisdiction under Article 226 is well settled and it can be said without any fear of being contradicted that the amplitude of this extraordinary power is as expansive and wide as the language of Article 226. It is efficacious against any person including a private individual and if need be, can be invoked for a purpose even in a case where alternative remedy is available. In the context of an award under Section 10A of the Industrial Disputes Act challenged on the ground as being apparently erroneous, the Supreme Court in Rohtas Industries v. Its Union , speaking through Krishna Iyer, J. (as he then was) observed as under:

9. The expansive and extraordinary power of the High Courts under Article 226 is as wide as the amplitude of the language used indicates and so can affect any person – even a private individual – and be available for any (other purpose, even one for which another remedy may exist. The amendment to Article 226 in 1963 inserting Article 226 (1-A) reiterates the targets of the writ power as inclusive of any person by the expressive reference to ‘the residence of such person’. But it is one thing to affirm the jurisdiction, another to authorise its free exercise like a bull in a china shop. This Court has spelt out wise and clear restraints on the use of this extraordinary remedy and High Courts will not go beyond those whole some inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict or mandate. The mentor of law is justice and a potent drug should be judiciously administered. Speaking in critical retrospect and portentious prospect the writ power has, by and large, been the people’s sentinel on the qui vive and to cut back on or liquidate that power may cast a peril to human rights…

Hence the contention of jurisdiction was rejected in the said case. One has therefore to remember that it is one thing to affirm the jurisdiction and quite another to authorise its free exercise like a bull in a china shop. The Supreme Court has spelt out wise and clear restraints on the use of the extraordinary remedy and the High Courts should not go beyond those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict or mandate. It would seem that the writ jurisdiction of the High Court is wide and kept wide as stated above so that it may not find difficulty in exercising it in suitable cases. It is not kept wide so that the High Court may freely exercise the same even when the subject or the case can be appropriately dealt with under the relevant statutes. A sword can be used when occasion demands it and real necessity requires it. It cannot however be used to cut a cucumber. Likewise, when the monstrosity of the situation or other exceptional circumstances cry for the timely judicial interdict or mandate the High Court without the slightest hesitation will use the extraordinary power which it has under Article 226 of the Constitution. It has been very rightly said that the mentor of law is justice and a potent drug should be judiciously administered.

77. The Supreme Court in Gujarat Steel Tubes Limited v. Its Mazdoor Sabha , again speaking through Krishna Iyer, J. was not impressed with the traditional limitations attaching to prerogative writs which were pressed into service in the context of the power of an Arbitrator under Section 10A of the Industrial Disputes Act to order reinstatement. The Court held as under:

79… Without examining the correctness of this limitation, we disregard it because while Article 226 has been inspired by the royal writs its sweep and scope exceed hide-bound British processes of of yore. We are what we are because our Constitution framers have felt the need for a pervasive reserve power in the higher judiciary to right wrongs under our conditions. Heritage cannot hamstring nor custom constrict where the language used is wisely wide. The British paradigms are not necessarily models in the Indian Republic. So broad are the expressive expressions designedly used in Article 226 that any order which should have made by the lower authority could be made by the High Court. The very width of the power and the disinclination to meddle, except where gross injustice or fatal illegality and the like are present, inhibit the exercise but do not abolish the power.

It is pertinent to note that here again it has been pointedly brought out that the very width of the power and the disinclination to meddle except where gross injustice or fatal illegality and the like are present, inhibit the exercise but do not abolish the power.

78. Praga Tools Corporation v. C.V. Emanuel AIR 1969 Supreme Court 1306 requires a special mention. This was a case of challenge at the instance of retrenched workmen to an agreement entered into between the Praga Tools Corporation and one of the workers’ unions, namely, Praga Tools Employees’ Union agreeing to retrench about 92 workmen. It was held by the Supreme Court that the company being registered under the Companies Act and governed by the provisions of the said Act and not being an authority within the meaning of Article 12 of the Constitution, was not amenable to the writ jurisdiction. Shclat, J. (as he then was) observed inter alia as under:

6…No doubt Article 226 provides that every High Court shall have power to issue to any person or authority orders and writs including writs in the nature of habeas corpus, mandamus, etc, or any of them for the enforcement of any of the rights conferred by Part III of the Constitution and for any other purpose. But it is well understood that a mandamus lies to secure the performance of a public or statutory duty in the performance of which the one who applies for it has a sufficient legal interest. Thus, an application for mandamus will not lie for an order of reinstatement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a company towards its workmen or to resolve any private dispute (See: Sohanlal v. Union of India ). In Regina v. Industrial Court 1965-1 QB 377, mandamus was refused against the Industrial Court though set up under the Industrial Courts Act, 1919 on the ground that the reference for arbitration made to it by a minister was one under the Act but a private reference…. Therefore, the condition precedent for the issue of mandamus is that there is in one claiming it a legal right to the performance of a legal duty by one against whom it is sought. An order of mandamus is, in form, a command directed to a person, corporation, or an inferior tribunal requiring him or them to do a particular thing therein specified which appertains to his or their office and is in the nature of a public duty. It is, however, not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue, for instance, to an official of a society to compel him to carry out the terms of the state under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their undertakings. A mandamus would also lie against a company constituted by a statute for the purpose of fulfilling public responsibilities (Halsbury’s Laws of England (3rd Ed) Vol. II p. 52 and onwards).

The nature and scope of the writ of mandamus has been clearly pointed out in the above decision.

79. In Sohan Lal v. Union of India , the Supreme Court had ruled that normally a writ of mandamus does not issue to or an order in the nature of mandamus is not made against a private individual, and such an order is made against a person directing him to do some particular thing, specified in the order, which appertains to his office and is in the nature of a public duty. It cannot be gainsaid that in order that a mandamus may issue to compel a party to do something it must be shown that the statute imposes a legal duty and the person seeking a writ of mandamus has a legal right under the statute to enforce its performance. In Bombay Union of Journalists v. State of Bombay , the Supreme Court held having regard to the object which is intended to be achieved by Clauses (a) and (b) of Section 25-F of the Industrial Disputes Act as distinguished from the object which Clause (c) thereof has in mind, that it would not be unreasonable to hold that Clause (c) unlike Clauses (a) and (b) is not a condition precedent. Even if it is assumed that Clause (c) is in nature of a condition precedent, the Court could not persuade itself to hold that its non-compliance would be a ground for the issue of a writ of mandamus since it could not be said that the appropriate Government was bound to refer an industrial dispute even though one of the points raised in the dispute was in regard to the contravention of the mandatory provisions of the Act, The Court held that a writ of mandamus could validly be issued in such a case if it was established that it was the duty and obligation of the appropriate Government to refer for adjudication an industrial dispute where the employee contended that retrenchment effected by the employer contravened the provisions of Section 25-F. The ratio of the decision appears to be that in as much as the requirement of service of the notice of retrenchment on the appropriate Government can be observed even by a notice ex post facto as apparent from the rules framed by the State Government in that behalf, no legal obligation and corresponding right could be spelt out for reference. An order of mandamus is a command directed to a person, corporation or an inferior tribunal requiring him or them to do a particular thing therein specified which appertains to his or their office and is in the nature of a public duty. It is not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue for instance to an official of a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed, and also to companies or corporations to carry out duties placed on them by the statute authorising their undertakings.

80. A mandamus would also lie against a company constituted by a statute for purposes of fulfilling public responsibilities.

81. Tested on the said legal principles it does not seem that the Institute to all intents and purposes can be regarded as a public utility concern or a concern akin to public utility concern. It would be too much to say that the Institute committed itself to a duty to furnish service to the general public or that it has held itself out to the public as being willing to serve all members thereof and to provide its services at reasonable rates and without brooking any delay. It will almost be straining the concept of public utility beyond permissible limits in the existing state of law. Doing so would so deform the concept of public utility as to make it entirely diffused and unrecognisable. When the Institute is a registered public trust the provisions of the Bombay Public Trusts Act, 1952 will take complete care of the Institute. The provisions of the said Act are more than sufficient to take care of all the breaches on the part of the trustees and prosecution can also be launched wherever it becomes necessary. Under the provisions of the said Act, the Trust can also be amalgamated with their trusts or trust. A person having interest in the administration of the Trust can approach the Charity Commissioner in appropriate cases where the trustees commit breach of the trust deed. This Court would therefore be slow in entertaining such petitions. As stated above, the writ jurisdiction of the High Court is wide and kept wide so that it may not find difficulty in exercising it in suitable cases. To repeat, it is not kept wide so that it may freely exercise even when the subject or the case can be appropriately dealt with under the relevant statutes. This Court therefore at the instance of a person who is interested in the administration of a public trust will not entertain a writ petition when he comes with an allegation that the trustees have failed to obey the trust deed. In such a case, amongst other remedies under the Bombay Public Trusts Act it is open to him to even seek the removal of the concerned trustee or trustees and have new trustees appointed under the provisions of the said Act.

82. On the assumption that the Institute is “industry” within the purview of the Industrial Disputes Act, 1947 it is possible to contend that the Institute being “industry” is entitled to close down its activities after complying with the statutory provisions in that behalf. Section 25FFA imposes an obligation on an employer who intends to close down an undertaking to give a notice in the prescribed manner at least 60 days before the date on which the intended closure is to be made effective on the appropriate Government stating clearly the reasons for the intended closure except in cases of those undertakings which are excluded from the purview of the section by the proviso. It cannot be gainsaid that the object of Section 25FFA is to prevent a sudden closure and is envisaged to enable the appropriate Government to decide as to whether it should take any measure in respect of such intended closure; and in case an industrial dispute is raised, the Government is under an obligation to make a reference for determining whether such a closure was genuine and real or sham or a camouflage to retrench, and to give such relief as the workmen are entitled to depending upon the findings of the Tribunal. It is no doubt true that the section does not empower the appropriate Government to consider the reasons by itself and make an order against the employer intending to close down the undertaking. None the less if an industrial dispute is raised, the Government is under an obligation to refer the matter to the Industrial Tribunal for determining whether the closure is genuine and real or is sham or bogus and to give appropriate reliefs according to the findings. It is therefore open to the employees to raise such a dispute and when such a dispute is raised the Government is bound to take an appropriate action and if and only if the Government fails to take such an action, the petitioners at that stage may invoke the writ jurisdiction of this Court. It is also to be noted that if the Government decides itself to raise such a dispute at the instance of the employees or when the Government is required under orders of the Court to raise such a dispute the matter has to go to the Tribunal in the first instance. The said alternative remedy is therefore adequate, prompt and effectual in the facts and circumstances of the present case.

83. On behalf of the aggrieved employees, it is submitted that this is one of the classical cases where a wider question of great public importance arises as to whether a public trust can close down its activities which are in effect and substance in the nature of public social service to which it has committed itself under the trust deed. In support, it was urged that of late the Courts have recognised by adopting a creative approach to look upon the directors of the stock exchange companies as directors acting for and in the interest of the community and therefore this Court must exercise the jurisdiction since public duty is cast on a public trust set up for the purpose of rendering services of medical care for mentally retarded and suffering members of the community. In view of what is discussed hereinabove, this submission has no force. Writ jurisdiction of the High Court concerning mandamus is like a sword which if wielded properly brings about just and efficacious results but a realisation is also necessary that the mentor of law is justice and a potent drug should be judiciously administered.

84. It was next urged by Mr. Girish Patel on behalf of the said employees that a clear duty is cast under Section 25FFA of the Industrial Disputes Act on the employer intending to close down an undertaking to serve a notice in the prescribed manner on the appropriate Government at least 60 days before the date of the intended closure stating the reasons for the intended closure of the undertaking and therefore before the Institute can close down its undertaking there is a statutory duty in this connection on it to serve the notice to the Government. Unlike under Section 25N if the Government is not authorised or empowered to consider those reasons for deciding whether it should permit the closure, the Court must fill in the lacuna by examining the reasons and deciding as to whether the closure is genuine or mala fide. This submission is totally ill-founded. The Legislature in its wisdom has provided Section 25N: but has not thought it fit to empower or authorise the Government itself in any other case to find out whether the closure is genuine or mala fide, and therefore, there is no lacuna as alleged by Mr. Patel. Secondly, Legislature has advisedly left this aspect to the Industrial Tribunal which can after recording evidence reach a proper conclusion. It is well-established that wherever there are disputed facts which go to the root of the matter, this Court will not exercise its writ jurisdiction. No good case is made out at all for bypassing the normal machinery which has been specifically provided to ventilate such grievances. It is also possible to urge that the Institute being “industry” is entitled to close down its activity after complying with the statutory provisions in that behalf. The discussion on point No. 2 hereinafter will show that the Institute is an “industry.” As the institute is an “industry”, of necessity, the question of its closure inclusive of mala fide aspect will need to be examined in the light of the provisions of the Industrial Law. In the opinion of this Court, there is no wider question of great public importance involved in the present case as urged by Mr. Girish Patel. In that view of the matter, since the writ jurisdiction of this Court is very wide as stated above, the first part of point No. 1 is answered in the affirmative and the second part of point No. 1 is answered by saying that this is not a case where this Court would like to issue a writ in the petition filed by the employees more particularly when appropriate directions in the said petition would serve the ends of justice.

Point No. 2

85. To recall, the first point has been answered on the assumption that the Institute is “industry.” We have heard both the sides on the question whether the Institute is “industry” or not. The learned Advocate General has submitted that the Institute is not “industry.” This Court will therefore examine this aspect of the matter also as arguments have been advanced and heard in this connection at length. The learned Acting Chief Justice has exhaustively dealt with this aspect of the matter and has also closely examined several decisions bearing on the point. After carefully considering all aspects of the matter, he has concluded that the Institute is “industry”. I endorse the said view which is absolutely well-founded and there is no reason whatsoever to strike a dissenting note. I therefore answer point No. 2 in the affirmative.

Point No. 3

86. The Supreme Court in the context of the validity of a reference of an industrial dispute at the instance of the workmen of a closed undertaking in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union held that the provisions of the Industrial Disputes Act apply only in cases of a dispute arising out of an existing industry and where it is either admitted or found that the closure was real and bona fide any’ dispute arising with reference thereto would fall outside the purview of the Industrial Disputes Act. The aforesaid view is on the assumption that the employer exercised his right to close down the industry bona fide with the result that the industry itself ceased to exist. Where such is the case, there cannot be an industrial dispute. There may however be an occasion for praying for permission to lift the ban imposed by Section 22 when in effect and substance there is no real closure but a mere pretence of a closure or it is mala fide. In the latter case, there is no closure in the eye of law and the workmen can raise an industrial dispute and may even complain under Section 23 of the Act. In the aforesaid first contingency, viz. in a case of bona fide closure no question arises of exercising any writ jurisdiction of this Court. In the latter case viz. where the closure is merely a pretence of a closure or is mala fide an industrial dispute can be raised where both the sides can be fully heard after recording evidence on disputed questions of fact and after affording full opportunity to both the sides to cross-examine witnesses. If in the latter case the industrial court reaches a conclusion that the closure is merely a pretence of closure or is mala fide it can proceed on the footing that the industrial dispute exists. If it reaches a conclusion that the closure is real and bona fide it will not entertain the industrial dispute. This was exactly what was done in Tea Districts Labour Association v. Ex-Employees of Tea Districts Labour Association and Anr. . In this case, the Supreme Court was concerned with the question of the validity of a part of the award of the Industrial Tribunal, Orissa whereby the Tribunal declared that the closure of two agencies contemplated by the Tea Districts Labour Association was not effective and the agencies be treated as continuing agencies in the eye of law and, therefore, the employees of such agencies were entitled to all their pay and allowances as before. The appellant-association was a company limited by guarantees of performance of service only for its members and was formed in 1917 who were the owners of several Tea Gardens in West Bengal and Assam and its chief object was to recruit labour from different parts of India and supply to the said Tea Gardens according to their requirement. The appellant-association had local agencies in different parts of the country whose function was mainly to recruit labour which was transmitted to and from Tea Gardens by another agency known as local forwarding agency. Since the estimated requirement of labour force for the financial year 1955-56 appreciably declined, a question arose for consideration of the appellant-association of closing down some of its local agencies. In March 1957, the general committees of the appellant-association decided accordingly to close down two local agencies at Korakut and Behrampur with effect from April 1, 1957 which was ultimately decided to close down from May 31, 1957. The employees of these agencies raised industrial disputes which were referred to the Tribunal inter alia as to whether the closure was bona fide and if not to what reliefs the workers were entitled to. The main grievance on behalf of the appellant-association before the Supreme Court was that the Tribunal erred in directing that the closure must be treated as ‘non est’ and the agencies continued to function, despite their factual closure. The Supreme Court therefore proceeded to examine the legality of the declaration and the directions since the Tribunal granted the declaration in the light of the decision of the Supreme Court in the case of Banaras Ice Factory Ltd. v. Its Workmen . The Supreme Court speaking through Gajendragadkar, J. referred to the observations made by Das, J. in Banaras Ice Factory’s case (supra) and proceeded to explain the same in the following terms:

(9)…

It is on this latter observation that the Tribunal has founded its decision. With respect we do not read the observations as laying down an unqualified and categorical proposition of law that wherever a closure is mala fide, it must be deemed to be unreal and non-existent. What this Court has said is that in cases of pretence of closure no closure in fact has taken place and for the purpose of Section 23 of the Act with which the Court was dealing a mala fide closure may conceivably be treated as falling in the same class as a pretence of closure. But in the present case the facts are not in dispute. There has been a closure and the agencies have been closed and their business has been wound up. If it is found that the closure was not bona fide the consequences would be the liability of the employer to pay the higher compensation under, Section 25-FFF of the Industrial Disputes Act, 1947. But it is difficult to see how when the two agencies have in fact been closed the finding about mala fides can justify the conclusion that the said two agencies should be deemed to continue and how the award can make an order on that basis. Besides, as we have already indicated even the finding about the mala fides of the closure is itself open to serious doubt. In our opinion the said finding is based on mere surmises and is entirely opposed to the weight of evidence adduced in this case…

As a consequence, the Tribunal’s finding regarding closure was set aside. It is pertinent to note incidentally that in this case the challenge regarding closure viz. that it was unreal, non-existent, and mala fide was made before the Tribunal and the Tribunal had looked into it.

87. In Indian Hume Pipe Co. v. Their Workmen , the validity of the award of the Industrial Tribunal, West Bengal, declaring the closure of Barakar factory was not bona fide and justified and the retrenchment of 12 workers on the ground of closure was, therefore vitiated and they were deemed to be in service and entitled to all the back wages, was challenged. According to the appellant-company, the closure was necessitated since the entire factory area became unsafe on account of subsidence which occurred in December 1962 as a result of the coal extraction in the vicinity of the factory. The closure was admittedly made on December 31, 1964 and the dispute which arose as a result thereof was referred to the Industrial Tribunal in April 1965. The Supreme Court noted that there were disputes between the appellant-company and its workmen from 1957 to 1961 and its industrial policy was not beyond reproach. The Supreme Court also noted that the closure of the factory was not immediately after the subsidence which occurred in December 1962. It also took into consideration the evidence that the adjoining factories were not closed down. In that set of facts the Court speaking through Mitter, J. observed as under:

7. In our opinion, it was not open to the Tribunal to go into the question as to the motive of the appellant in closing down its factory at Barakar and to enquire whether it was bona fide or mala fide with some oblique purpose, namely, to punish the workmen for the union activities in fighting the appellant. It has been laid down by this Court in a series of decisions that it is not for Industrial Tribunal to enquire into the motive to find out whether the closure is justified or not…

After referring to its earlier decision in Pipraich Sugar Mills’ case (supra) where it was held that a dispute regarding the closure which is real and bona fide is outside the purview of the Industrial Disputes Act, the Supreme Court explained the expression ‘bona fide’ in the following terms:

(7) The use of the expression ‘bona fide’ in the above quotation does not refer to the motive behind the closure but to the fact of the closure. The question about the bona fides of the closure had to be examined in the case of Tea Districts Labour Association Calcutta v. Ex-Employees of Tea Districts Labour Association .. This Court held that once it was established that the agencies had in fact been closed, the finding about the mala fide of the closure would not ‘justify the conclusion that the said two agencies should be deemed to continue’ and allow the Tribunal to make an award on that basis.

After referring to the decisions in Hatising Manufacturing O. Ltd. v. Union of India AIR 1960 Supreme Court 923, Express Newspapers (P) Ltd. v. The Workers Andhra Prabha Ltd. v. Secy. Madras Union of Journalists Justice Mitter, speeking for the Court summed up the position as under:

(9) In view of these decisions, our conclusion is that once the Tribunal finds that an employer has closed its factory as a matter of fact it is not concerned to go into the question as to the motive which guided him and to come to a conclusion that because of the previous history of the dispute between the employer and the employees the closure was not justified. Such a closure cannot give rise to an industrial dispute.

It is again pertinent to note that in the Indian Hume Pipe’s case (supra), the matter regarding closure had first gone to the Tribunal for decision.

88. In Kalinga Tubes Ltd. v. Their Workmen in the context of the closure applied by the company management as a result of about 150 workers virtually staging a gherao in the administrative office building which was likely to result in deterioration of industrial relations between the management and the workers as also endanger the personal safety of the administrative staff, the Court held that the closure of an undertaking as envisaged under Section 25FFF of the Industrial Disputes Act cannot be limited or restricted only to financial, economic or other considerations of like nature. The only pre-requisite is that the closure has to be genuine and bona fide in the sense that it should be a closure in fact and not mere pretence of closure since the motive behind the closure is immaterial and what has to be seen is whether it was an effective one. In order to determine this question the entire set of circumstances and facts has to be taken into account while endeavouring to find out if in fact there has been a closure and the Tribunal or the Court is not confined to a particular set of facts or circumstances. The essence of the matter, according to the Supreme Court, is the factum of closure by whatever reasons motivated. In Kalinga Tube’s case (supra) the trade results of the business of the company during the year 1966-67 were such that it would never have induced any businessman to close down the undertaking. The closure was found to be the direct consequence of the alleged illegal activities of the workers and the refusal by the officers and the supervisory staff to carry on their normal work and it was not due to shortage of raw materials, fuel or power. The Tribunal on these facts found that the action taken by the management in issuing the notice for closure on October 3, 1967 and suspending the work in the factory amounted to a lock out and not a closure. The Tribunal also found that the closure was illegal since it contravened the provisions of Section 23 of the Industrial Disputes Act as two cases relating to gratuity and retrenchment were pending adjudication before the Tribunal. The Tribunal also fund that 40 members of the staff working in the administrative building had been prevented from going out for about three hours in the night between 1st and 2nd October, 1967. Since the Tribunal found that the closure was illegal, it directed the reinstatement of the workmen with half of the backwages for the period of unemployment. On appeal to the Supreme Court, it was held that the closure can be for any reason and not necessarily for financial, economic or other consideration. The Court, therefore. went into a further question as to whether the closure was on account of unavoidable circumstances. In course of consideration of this question, Grover, J. speaking for the Court ruled as under:

21. The explanation appearing in the proviso gives some indication of the anxiety of the legislature to expressly rule out certain contingencies which ordinarily could have been pleaded by the employer as unavoidable circumstances beyond his control. In the normal working of business of a commercial undertaking financial losses or accumulation of undisposed of stocks and the expiry of the period of the lease or the licence can ordinarily go a long way in establishing that it has virtually become impossible to carry on the business. For instance, if a Company is heading towards liquidation its business will in normal course, have to be closed down. Similarly if the period of lease of the site on which a factory has been set up has expired and there is no provision for its renewal or extension it would ordinarily present insurmountable difficulty in the way of the working of an undertaking by a company or a commercial concern. Notwithstanding all this the legislature provided that in spite of the aforesaid difficulties or impediments or obstacles the conditions of the proviso would not be satisfied merely by the happening or existence of the circumstances embodied in the explanation. The reason for doing so seems to be that whenever such difficulties as are mentioned in the explanation arise, the employer is not expected to sit idly and not to make an all out effort like a prudent man of business in the matter of tiding over these difficulties for saving his business. The legislature was apparently being very stringent and strict about the nature of the circumstances which would bring them within the proviso. The laying down of two preconditions therein in the language in which they are couched is significant and must be given due effect.

The Court on consideration of the entire facts and circumstances of that case was not satisfied that the closure was due to unavoidable circumstances beyond the control of the appellant and therefore the workers were held to be entitled to the compensation as prescribed for the closure for any reasons. It is again to be noted that the matter in the first place had gone to the Tribunal for consideration.

89. In Workmen of I. L T.D. Co. v. I.L.T.D. Co. , the facts were that the company was carrying on the business of purchasing tobacco of all varieties and qualities grading and packing of the same and supplying to the imperial Tobacco Company as well as exporting to various foreign countries. For the work of stemming grading and packing the tobacco, the company had two factories -one in East Godavary district and another at Chirala in Guntur district. The Company was maintaining about 21 depots for the business where it was carrying on the work of collecting tobacco, according to the workers, while according to the company, it was doing mainly the handling work of the tobacco purchased at other places, and only incidentally the work of purchasing small quantity of tobacco. The Company notified in August 1983 that eight out of twentyone depots, as specified would be closed down with effect from September 30, 1963. An industrial dispute was raised by the workmen inter alia, pertaining to the closure of these eight depots. A reference was made on November 14, 1963 under Section 10 of the Industrial Disputes Act to the Industrial Tribunal, Hyderabad which included as to how far the demands of the Union that no depot which worked during 1962 season should be closed and no workman who worked in 1962 season should be retrenched. The company raised the question of jurisdiction that the Government has no power to refer the question about the validity of the closure nor the Tribunal could adjudicate upon it. The Tribunal decided the question of jurisdiction by way of preliminary issue by giving an interim award in favour of the company. In the final award also on merits it decided against the workmen. On appeal to the Supreme Court, the Court ruled that no Industrial Tribunal even in a reference under Section 10 (1) (d) can interfere with the discretion exercised by a company in the matter of closing down some of its branches or depots, and even if such closure may not amount to closure of business of the company, the Tribunal has no power to issue orders directing a company to reopen a closed-depot or branch if the company closes it down in fact, and that the closure is genuine and real and if the workers are retrenched as a result of genuine and real closure, they are only entitled to retrenchment compensation and cannot claim re-employment or reinstatement. The Supreme Court ruled that it was beyond the competence of the Government to refer the question as to whether the workers were justified in raising the demand that no depot should be closed though the Tribunal was held to be in error in holding that the company was not justified in retrenching the workmen since a question can always arise as to the relief to which the workmen of a closed branch or a depot were entitled, and if that became the subject matter of an industrial dispute, it could be referred. The Supreme Court also explained as to when it would amount to ‘closure’. It ruled that the closure may be treated as a stoppage of a part of the activity or business of the company since such stoppage of a part of business is an act of management which is entirely within the discretion of the company carrying on the business.

90. In Workmen of the Straw Board Manufacturing Co. Ltd. v. Straw Board Mfg. Co. Ltd. , the company closed down one of its units on the ground of non-availability of Bagasse which is the raw material for the manufacture of strawboard and terminated the services of the workmen of its unit by stages between May 7 and July 28, 1967. The first batch consisted of 98 workmen whose dispute was the subject matter of the reference before the Tribunal. One of the points of reference was that the stoppage of work by the employer and the consequent non-employment of the workers amounted to lay off/retrenchment/lock out, or whether it should be treated as legitimate closure. The Tribunal found that there was a complete closure of an independent industrial unit and the employer could validly close one unit without closing the entire establishment. On appeal to the Supreme Court, the Supreme Court referred to the finding of fact made by the Tribunal that the closure was as a result of nonavailability of the raw material and, therefore, held that the workmen cannot question the motive of the closure once the closure has taken place in fact. The view of the Court expressed thereafter is instructive. In paragraph 16 it has been held as under:

16… The workmen cannot question the motive of the closure once closure has taken place in fact. The matter may be different if under the guise of closure the establishment is being carried on in some shape or form or at a different place and the closure is only a ruse or pretence. Once the Court comes to the conclusion that there is closure of an undertaking the motive of the employer ordinarily ceases to be relevant. No employer can be compelled to carry on his business if he chooses to close it in truth and reality for reasons of his own. It is because of this that Section 25-FFF has been inserted by an amendment of the Industrial Disputes Act by Act 18 of 1957 and it is not necessary for us to trace the history of the insertion of Chapter V-A in the Central Act by Amendment Act 47 of 1953 and later on of Section 25-FFF with other provisions…

The aforesaid decisions clearly show that a reference in the matter of closure has first been made to the Industrial Tribunal and the matter has not been brought to the High Court directly. In this connection, certain facts regarding the present case need to be mentioned. The closure in the present case was notified by a notice dated December 28, 1983 by the Institute. As per the said notice, the closure was to become effective from January 31, 1984. The record shows that an order was passed by this Court (Coram: P.S. Poti, C.J. and S.B. Majmudar, J.) on 31st January 1984 directing that the decision to close down the B.M. Institute of Mental Health will not be implemented until the Court passed further order after hearing counsel on the next day and it was also directed that Sharda Association for the Mentally Retarded should not be closed down until further orders were passed on the next day after the hearing. Thereafter, the Institute was restrained by an interim relief granted by this Court (Coram: P.S. Poti, C.J., and S.B. Majmudar, J.) vide its order dated February 13, 1984 directing status quo to be maintained in Special Civil Application No. 331 of 1984 moved by the contesting employees. It was therefore contended by the learned Advocate General and in my opinion rightly that merely because the Institute was obliged to carry on its activities under the protective umbrella of this Court the same should not make any difference in the situation as the act of the Court cannot prejudice any party. The said notice of closure is in accordance with the provisions of Sub-section (1) of Section 25FFF of the Industrial Disputes Act, 1947 and has been addressed to the Secretary to the Government of Gujarat in Education and Labour Department. The total number of workmen of the Institute who were to be affected by the closure was 119. Incidentally, it may be noted that the number of aggrieved employees is 33. It was clarified in the said notice that without prejudice to the contentions of the Institute that it was not ‘industry’ within the meaning of the term given in the Industrial Disputes Act the Government was served with the notice of the intended closure by way of abundant caution and that without prejudice to the order of the punitive discharge passed against the contesting workmen and without prejudice to the other rights and contentions of the Institute the said respondents along with others were given one month’s notice and informed that their services will stand terminated with effect from January 31, 1984 even if it was ultimately found in law that the said contesting workmen continued in service despite the order of their punitive discharge. On behalf of the Institute, the learned Advocate General had urged with emphasis that the Institute would not have terminated the services of all the employees if it did not decide to close down the undertaking for good and that the collection of fees or invitation of applications after the impugned closure notice was only with a view to see that the Institute can maintain status quo as directed by the Court. As, when the said order was passed by this Court the Institute had actually not closed down, the order to maintain status quo obliged the Institute to run the Institute and if the Institute had collected fees or invited applications after the impugned closure notice by way of honouring the said order of status quo the same cannot weigh as a circumstance against the Institute. If the said order regarding status quo was not passed by this Court, then the Institute on its own would not have chosen to collect fees or invite applications after the date of the said notice. The situation therefore is that one has to ignore what has transpired as a result of the passing of the said order of status quo in order to decide the Special Civil Application filed by the aggrieved employees. If that be so and the date mentioned in the said notice viz. 31st January 1984 having expired a question legitimately arises as to whether this Court can entertain directly a petition regarding closure or should the Court relegate the aggrieved employees who have filed the said Special Civil Application to have recourse to Industrial Tribunal under the relevant provisions of the Industrial Disputes Act, 1947. If the answer to the said question is against the Institute then this Court will need to go into the further question as to whether the closure in the present case is according to law in view of the aforesaid and the other decisions on the aspect in question and in view of the facts that have been brought on record in this matter.

91. As pointed out hereinabove, in none of the cases that has been referred to hereinabove we have a fact situation where the aggrieved party has come to the High Court over the shoulders of the Industrial Tribunal without in the first place having had a recourse to the Industrial Tribunal. To me, it appears that unless the Tribunal has had an opportunity to look into the aspect of closure from all considerable view points after affording full opportunities to both the parties including an opportunity to resort to cross-examination, a party cannot be permitted to come directly to the High Court where disputed facts regarding closure are held out by the parties against each other and where it might become necessary to have the say of Nirmala Bakubhai Foundation in relation to the matter regarding closure. Before this Court, Nirmala Bakubhai Foundation is not a party impleaded in the petition filed by the aggrieved employees. I am therefore of the opinion that the trustees, since the institute is ‘industry’, have a right under the Industrial law to close down the Institute. No employer can be compelled to carry on his business if he chooses to close it down in truth and in reality for reasons of his own. I therefore answer first part of Point No. 3 in the affirmative.

92. So far as the second part of point No. 3 is concerned I hold in view of the aforesaid discussion that it is not open to this Court to go into the question that the intended closure was motivated and/or was for ulterior purposes of unfair labour practice and in this view of the matter I am not expressing any opinion on the evidence that has been put on record and on the submissions made on merits regarding the aspect of closure by both the sides.

Point No. 4

93. I entirely agree with the reasoning and the final, conclusion reached by the learned Acting Chief Justice in connection thereto. It is therefore not necessary for me to repeat the same in this judgment.

94. Before parting with these matters, I would like to point out that ours is a society which is day by day becoming alarmingly less and less duty-conscious. There is nothing objectionable if people become right-conscious: but at the same time they should also be more and more duty-conscious in the larger interest of the people. In such a state of affairs should not mature and enlightened citizens set worthy examples by becoming more duty-conscious? This might bring about some conflict with one’s self-interest. But should not those who are mature and enlightened acknowledge in all humility that there are higher values in life which bring about not only peace and happiness but also immense job satisfaction? I pose a question in the present case. All concerned, including the management and the employees (even those employees who are not amongst the 33 aggrieved employees) have suffered in one way or the other, but have the helpless and the disabled in particular not suffered during the period the two parties have kept fighting? Was it the fault of the helpless and the disabled that they suffered and still suffer. I believe it was the common goal of both the management and the employees to help the cause of the helpless and the disabled. It was the common goal which was rightly accepted, consciously and voluntarily by both the sides. Not only that, both the sides till the present conflict have made sacrifices for fulfilment of the common goal. But it is painful to remember that when prejudices and differences take control of the mind the goal disappears and all energies get directed to a cause which cannot favourably compare with the lofty goal. Such a diversion has brought about an end of a fine Institute which had earned reputation which was second to none.

95. Would the management and the aggrieved employees not rise to the occasion and try once again to sink their differences in a spirit of give and take to salvage such an institution which is so dear to them and which is of their own creation and in the exemplary reputation of which each one of them has contributed in his or her own way? The world is a good place to live in not because it is full of selfish people who constantly store bitterness and hatred in their hearts but because it also does have people with noble hearts and lofty ideals and who believe in storing love and having hatred for none. May I expect both the sides to make a new beginning focussing their attention on the helpless and disabled who are in dire need of this Institute?

96. The above discussion makes it apparent that though this is not a fit case to issue a writ of mandamus, the facts and the circumstances of the case clearly necessitate the issuance of some directions in the interest of all concerned and to remove the stalemate. It is therefore directed in Special Civil Application No. 331 of 1984, that is to say, the one filed by the aggrieved employees, that the trustees of the Institute shall obtain appropriate directions from the competent authority under the Bombay Public Trusts Act, 1950 regarding the running or discontinuing the Institute, and on the trustees moving the said authority, the authority having regard to all the circumstances of the case and after giving an opportunity to the petitioners of Special Civil Application No. 331 of 1984 to represent then-case regarding the aforesaid shall dispose of the said application latest within six months from the date such application is received. It is further directed that the Institute should continue to render its services during the said period of six months or till the authority decides such an application whichever is earlier. Rule in Special Civil Application No. 331 of 1984 is therefore made absolute to the extent mentioned above.

97. Special Civil Application No. 3871 of 1984 is partially allowed and the award of the learned Arbitrator to the extent to which it grants backwages is quashed and set aside and instead the lesser penalties as indicated in the judgment of the learned Acting Chief Justice in respect of the different respondent-employees are imposed. Rule in Special Civil Application No. 3871 of 1984 is made absolute accordingly.

98. In the circumstances of the case there will be no order as to costs regarding both the aforesaid petitions.