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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 1977 OF 2006
1. M/s. Agarwal Traders ]
Proprietor of Navyug ]
Processes, 12, D.D. Sathe ]
Marg, Girgaon, Mumbai ]
2. Banwarilal Jalan ]
Partner, residing at ]
12, D.D. Sathe Marg, Girgaon]
Mumbai 400 004 ]..Petitioners
versus
1. Ankush M. Bhabal ]
Shivshankar Nagar, Salt Pan ]
Road, Wadala (E), Mumbai 37 ]
2. Smt. Laxmi Maruti Bhabal ]
widow of late Shri Maruti ]
Vishram Bhabal, Residing at ]
Room No. 105, First floor, ]
"A' Wing, Swarganga ]
Apartments, Sector - 18 ]
Kamothe, Khandeshwar, ]
Navi Mumbai 410 209 ]
3. Vijay Dattatraya Yeram ]
A/90, Shastri Nagar, Sion ]
Koliwada, Mumbai - 22 ]
4. Sadanlal Mahabir Mali ]
Silver Dukes B No. Room 203 ]
Prabhadevi, Hathiskar Marg ]
Mumbai - 25 ]
5. Suryakant Laxman Bhabal ]
Shivshankar Nagar, Salt Pan ]
Road, Wadala (E), Mumbai 37 ]
6. Madhukar Atmaram Lakeshri ]
Baramden Rami Chawl, ]
Jawahar Nagar, Sai Baba Road]
Khar (E), Mumbai - 51 ]
7. Naseer Abbas Mullah ]
Municipal Pathra Chawl, ]
Chawl No. 43, Room No. 4 ]
Byculla, Mumbai - 11 ]
8. Manoj Banwarilal Jalan ]
12/2, D.D. Sathe Marg, ]
Girgaum, Mumbai - 4 ]
9. Smt. Pratikha Prakash ]
Ghavale, widow of late Shri ]
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Prakash Gunaji Ghavale ]
Lokmanya Co-operative ]
Housing Society, Plot No.526]
Room No. 22, Charkop, ]
Kandivali (West), ]
Mumbai 400 067 ]
10. Smt. Shaila Dattatray ]
Kharkar, widow of late Shri ]
Dattatray Janardan Kharkar ]
G-8(96), Hiraji Baug Wadi ]
Chawl No. 8, Jakeria Bunder ]
Road, Sewri, Mumbai 400015 ]..Respondents
Mr. Sudhir Talsania, Senior Counsel with Mr. Kiran
Bapat with Mr. J. K. Desai for the Petitioners.
Mr. Vinod Shetty with Ms. Ketki Rege for the
Respondent No. 1.
Mr. Neel Helekar for the Respondent No. 8.
ig CORAM : S. A. BOBDE, J.
DATE : 22ND JULY, 2008.
ORAL JUDGMENT :
. This petition by the employer is directed
against the Order of the Industrial Court, Mumbai,
dated 6.6.2006 holding the petitioners guilty of
Unfair Labour Practices under Item 6 of Schedule II
and Item 9 of Schedule IV of the MRTU & PULP Act,
1971. The Industrial Court has further directed the
petitioners to pay the wages of the complainants till
subsistence of contract of employment after deducting
the payment already made / deposited.
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2. The Petitioner No.1 is a partnership firm
engaged in the business of job work of calendaring
and packaging of cloth. In 1986, the land upon which
the factory of the petitioners was situate was
acquired by the BEST Undertaking for construction of
Depot. This acquisition was challenged by the Union
Sarva Shramik Sangh by Writ Petition No. 1106 of
1993. This petition was dismissed on 15.6.1993.
3. On 12.7.1993 a Notice of intended lock-out with
effect from 26.7.1993 was put up on the notice board.
Before the
lock-out took effect, on 13.7.1993 the
BEST Authorities demolished the factory premises of
the petitioners.
4. According to the petitioners they offered the
dues to the workmen on account of closure.
Apparently some accepted the dues while others did
not.
5. On 30.8.2000 the Respondent Nos. 1 to 7 filed a
Complaint on their own behalf and on behalf of other
workmen totalling 76, after a period of about 7 years
claiming that the closure effected by the petitioners
is in the guise of the lock-out and being in
contravention of Section 25(O) of the Industrial
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Disputes Act, is illegal since the contract of
employment continues, the petitioners are bound to
pay the wages to the respondents employees.
6. The Industrial Court condoned the delay of about
7 years and thereupon adjudicated the complaint. It
came to the conclusion that the lock- out announced
vide a Notice dated 12.7.1993 intended to be
effective from 26.7.1993 was illegal and unjustified
and further that the petitioners have not taken any
steps to terminate the contract of employment and
therefore
they are liable to pay wages. The learned
Industrial Court therefore directed the petitioners
to pay wages and legal dues to the respondents
workmen till the subsistence of contract of
employment.
7. Mr. Talsania, learned counsel for the
petitioners submitted that the Order of the
Industrial Court is unsustainable in law, primarily
since the Industrial Court has ignored the existence
of the closure of the petitioners establishment on
13.7.1993. According to the learned counsel it was
necessary to give legal effect to the closure which
necessarily terminated the contract of employment and
therefore even though the petitioners might be held
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liable to payment of closure compensation they should
not be held liable for payment of wages as if the
contract of employment continued.
8. Mr. Shetty the learned counsel for the
respondents submitted that the Industrial Court has
come to the conclusion that the lock-out is illegal
and since the petitioners had really effected closure
in the guise of lock-out, there was a clear unfair
labour practices committed by them and therefore the
contract of employment must be held to be in
existence.
Accordingly, the petitioners must be held
liable for payment of wages. The procedure of a
valid closure is provided by Section 25 FFA of the
Industrial Disputes Act, which reads as follows:-
“25FFA. Sixty days’ notice to be given of
intention to close down any undertaking.- (1) Anemployer who intends to close down an
undertaking shall serve, at least sixty days
before the date on which the intended closure is
to become effective, a notice in the prescribed
manner, on the appropriate Government statingclearly the reasons for the intended closure of
the undertaking:
Provided that nothing in this section shall
apply to -
(a) an undertaking in which-
(i) less than fifty workmen are employed,
or
(ii) less than fifty workmen were employed
on an average per working day in::: Downloaded on – 09/06/2013 13:37:07 :::
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(b) an undertaking set up for the construction
of buildings, bridges, roads, , roads, canals,
dams or for other construction work or project.
(2) Notwithstanding anything contained in
sub-section (1), the appropriate Government,may, if it is satisfied that owing to such
exceptional circumstances as accident in the
undertaking or death of the employer or the like
it is necessary so to do, by order, direct that
provisions of sub-section (1) shall not apply inrelation to such undertaking for such period as
may be specified in the order].
It may be noted that the respondents have been unable
to establish the existence of more than 76 workmen
and
therefore it is clear that the provisions under
Chapter VB which include Section 25-O of the I. D.
Act are not applicable.
9. There is no doubt that the closure took place.
There was in fact a physical demolition of the
petitioners factory by the BEST on 13.7.1993 in
pursuance of notice of land acquisition. That
thereafter the lock-out notice given on the earlier
day 12.7.1993 was not given effect to. It is clear
from the complaint that the respondents are aware of
this demolition. Earlier the respondents had also
challenged the acquisition by way of a writ petition.
The question is, in such circumstances what is the
responsibility and liability of an employer such as
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the petitioners. It is clear that Section 25FFA
would not apply to the closure in question because
the closure did not take place in pursuance of an
intention of employer to close down the undertaking.
The closure took place as a result of acquisition of
the premises and the demolition of the factory. In
the circumstances, the petitioners’ liability will
have to be worked out in accordance with Section
25FFF. That liability must therefore be a liability
to issue notice and pay compensation in accordance
with the provisions of Section 25F as if the workmen
had been retrenched.
10. Mr. Talsania the learned counsel for the
petitioners stated that the petitioners does not
claim any protection of liability under Proviso to
Section 25FFF. However, the Industrial Court has
ignored the settled position in law that the closure
brings an end to the contract of employment and has
held that the contract of employment which existed on
12.7.1993 i.e. on the date of the notice of lock-out
continued thereafter because the petitioners did not
take any steps for terminating the contract of
employment. This is a clear error of law on the face
of the record. The Industrial Court ought to have
noticed the closure and given effect to the said
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closure by imposing liability of compensation for
closure rather than for payment of wages as if the
contract of employment subsist. There is in fact
very little discussion by the Industrial Court on the
existence of closure. On the other hand, the
Industrial Court has come to the conclusion that the
lock-out proposed by the petitioners was not
justified. In doing so the learned Industrial Court
overlooked the fact that the lock-out never became
effective since it was intended to take effect from
26.7.1993, Whereas the petitioners factory and
establishment
suffered a forcible closure because of
the land acquisition on 13.7.1993. The order of the
Industrial Court is therefore not sustainable. It
therefore appears clear that the petitioners
establishment was closed with effect from 13.7.1993
and indeed there is no evidence on record to come to
a contrary conclusion.
11. It must be made clear that the Petitioners
cannot be held liable for any non-compliance because
they did not issue notices and offer compensation
before the closure.
12. It is a settled law, vide Judgment of the
Supreme Court in M/s. Avon Services Production
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Agencies (P) Ltd., vs. Industrial Tribunal, Haryana
and others [AIR 1970 Supreme Court 170] and Maruti
Udyog Ltd. vs. Ram Lal & Ors. [(2005)2 Supreme
Court Cases 638]
638 that issuance of a notice and
payment of compensation is not a condition precedent
for giving effect to a closure as in the case of
Section 25FFF of the Industrial Disputes Act.
13. In M/s. Avon Services case the Supreme Court,
vide a paragraph 16 observed as follows:
“…..
By S. 25F a prohibition against
retrenchment until the conditions prescribed
by that section are fulfilled, is imposed;
by S. 25FFF(1) termination of employment onclosure of the undertaking without payment
of compensation and without either serving
notice or paying wages in lieu of notice is
not prohibited. Payment of compensation and
payment of wages for the period of notice
are not, therefore, conditions precedent toclosure.”
In Maruti Udyog case, the Supreme Court, vide a
paragraph 21 observed as follows:-
“21.
21. How far and to what extent the provisions
of Section 25-F of the 1947 Act would apply in
case of transfer of undertaking or closure
thereof is the question involved in this appeal.
A plain reading of the provisions contained in
Section 25-FF and Section 25-FFF of the 1947 Act
leaves no manner of doubt that Section 25-Fthereof is to apply only for the purpose of
computation of compensation and for no other.
The expression “as if” used in Section 25-FF and
Section 25-FFF of the 1947 Act is of great
significance. The said term merely envisages
computation of compensation in terms of Section
25-F of the 1947 Act and not the other::: Downloaded on – 09/06/2013 13:37:07 :::
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25-FF and Section 25-FFF provide for payment of
compensation only, in case of transfer or
closure of the undertaking. Once a valid
transfer or a valid closure comes into effect,the relationship of employer and employee does
not survive and ceases to exist. Compensation
is required to be paid to the workman as aconsequence thereof and for no other purpose.”
14. Thus, the closure of the petitioners
establishment cannot be held to be vitiated on the
ground that it was not preceded by notice and payment
of compensation. The closure was validly effected.
This however does not relieve the petitioners of
petitioners have
their liability to pay compensation.
not paid closure
Admittedly, the
compensation.
According to them they were ready to, but the
respondents did not approach them. It is clear that
the law casts a duty on the employer to pay the
compensation and the employer is not entitled to
contend that he wanted to but the workmen did not
claim it. It appears that the petitioners have
deposited compensation before the Industrial Court as
per the order of this court and the amount has been
withdrawn by the respondents.
15. The learned counsel for the respondents
submitted that the petitioners had deliberately
avoided payment of compensation from the date of
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closure i.e. 13.7.1993 and must be held liable to
pay interest on the said sum. There is merit in this
contention on behalf of the respondents and
accordingly I consider it appropriate to direct the
petitioners to pay interest at the rate of 12% per
annum from 13.7.1993 till the date the amount was
deposited by them before the Industrial Court. The
petitioners are accordingly directed to deposit the
amount of interest, as stated above, before the
industrial Court within a period of 12 weeks from
today.
16. The respondents shall be at liberty to claim
interest of unpaid gratuity in accordance with law,
as may be advised. The petitioners shall be at full
liberty to defend such an application, if made.
17. At this juncture, it may be noted that the
learned counsel for the petitioners submitted that
the learned Industrial Court committed error in
entertaining the Dispute after a period of seven
years. It is true that there is AN inordinate delay.
However, having regard to the circumstances of the
case, viz. the fact that the respondents mainly are
illiterate and appear to have been laid down by their
Union, the learned Industrial Court has condoned the
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delay in the interest of justice. I see no reason to
interfere with the order condoning the delay.
18. In the result, the impugned order is hereby set
aside. The Petitioners shall be liable, as above.
19. Rule made absolute as indicated above.
(S. A. BOBDE, J.)
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