JUDGMENT
M.L. Pendse, C.J.
1. These four appeals are directed against judgment dated January 10th, 1992, delivered by the learned Single Judge in Writ Petition Nos. 12586 of 1985 and 14335 of 1987. As the issues raised in these four appeals are identical, it is convenient to dispose of all the appeals by this judgment. The facts, which gave rise to the filing of these appeals, are as follows :
Vanivilas Co-operative Sugar Factory is registered under the provisions of the Karnataka Co-operative Societies Act, and is engaged in the manufacture of sugar, running a distillery and other incidental activities. The Factory was managed by the Board of Directors as contemplated under the Act and the rules and the State Government held majority of shares of the society. The Government of Karnataka and the Registrar of Co-operative Societies exercise the control over the management and affairs of the society. The factory had employed more than 600 workmen and out of them, 338 were permanent, while 312 were seasonal. The seasonal workmen were engaged from time to time. The Factory commenced the business in the year 1972.
2. On April 2nd, 1985, the Factory published lay-off notice informing the workmen that the workmen will be laid off with effect from April 3rd, 1985. The lay-off notice recites that the Factory is running in losses and being a seasonal industry, it is not possible to give work to the employees. The workmen filed petition under Article 226 of the Constitution being Writ Petition No. 12586 of 1985 before the learned single Judge of this Court challenging the action of the Management on the ground that it is not permissible for the Management to unilaterally determine that the Factory is a seasonal industry and consequently, Section 25-A of Chapter V-A of the Industrial Disputes Act, 1947 (‘the Act’), is attracted and the workmen will not be entitle to compensation for lay-off. The learned single Judge admitted the petitioner and issued an interim order after hearing the Management on October 28th, 1985. The interim order reads as under :
“Accordingly, there will be an interim order directing the second respondent-Management to pay 50 per cent. of the emoluments the workmen were drawing on the date of the lay-off till disposal of the writ petition.”
During the pendency of the petition, the State Government, which holds the majority of shares of the Factory, passed order on April 23rd, 1986, declaring the Factory as the seasonal industry in exercise of powers conferred under Section 25-K(2) of the Act. The order was passed without any hearing to the workmen. The workmen, thereupon, challenged the order by filing Writ Petition No. 9326 of 1986 before the learned single Judge. The learned single Judge, by order dated June 16th, 1986, vacated the order passed by the Government on the short ground that the order was passed behind the back of the workmen and such order, which entails civil consequences, was in breach of the principles of natural justice.
3. The Government, thereafter, issued notices to the Management and the workmen to file statements in support of their respective claims. The Management filed statement on August 4th, 1986 inter alia, claiming that the sugar industry is a seasonal industry and the Factory is of a seasonal character. The Management claimed that only a small portion of the employees are permanent and the majority are seasonal or temporary. The Management further claimed that the harvesting of the sugarcane and the crushing commence from October and continue upto February of each year. In paragraph 19 of the statement, it was claimed that crushing had taken place on 184 days in the year 1978-79 and 32 days in the year 1983-84. It was then claimed that for optimum utilisation, the Factory is required to work a minimum of 182 days in a year and also requires 2.94 lakhs metric tonnes of sugarcane. The Management claimed that in the entire decade of its existence, the Factory was never able to work for 182 days and was unable to crush 2.25 lakhs metric tonnes of sugarcane. In paragraph 20, it was claimed that the Factory is engaged in production by using skilled and unskilled labour only in a few months in a year and after the crushing season is over, skeleton staff is maintained for the purpose of maintenance of machinery and sale of sugar produced. The workmen filed statement of objections and the assertion of the Management that the Factory is a seasonal industry was denied. The workmen claimed that the assertion of the Management that the Factory had suffered losses for over several years is totally incorrect and the correct position about the accounts is not coming forth. The workmen also pointed out that crushing of the sugarcane is only one part of the business carried on by the Factory and the Management is running a distillery and the purchasing of store materials. The workmen claimed that the activities of the industry consist of production and maintenance, marketing, accounting and extensions work for sugarcane cultivation etc. The workmen claimed that the Management is claiming that the Factory is a seasonal industry with a view to sustain the notice of lay-off and deny lay-off compensation to the workmen. It was also claimed that the lay-off is not genuine and bona fide and is merely a camouflage for closing of the industry.
What happened thereafter at the hearing before the Secretary makes sad reading. The file produced by the State Government clearly reflects that the Secretary, who had taken the decision on behalf of the Government, had not applied his mind, but was solely guided by the decision taken by the Cabinet. Indeed, the noting of the Minister and which was also noticed by the learned single Judge, clearly indicates that the decision to declare the Factory as a seasonal industry was already taken by the Cabinet and the Secretary merely endorsed the same by passing order dated November 7th, 1986. The order recites that the Factory entirely depends on growing of sugarcane by the farmers and who are dependent on rain. Sugarcane is the principal raw material and being an agricultural commodity, is available during certain seasons. The order then recites that the recorded days of crushing by the Factory ranges from 43 days to 230 days only and in no years, the number of days range between 140 and 160 days. These variations, according to the Government order, prove that the industry is seasonal. The validity of the order passed by the Government was challenged by the workmen by filing Writ Petition No. 14335 of 1987 under Articles 226 and 227 of the Constitution before the learned single Judge. There is one circumstance which is required to be noted, and that is as soon as the Government declared the Factory as a seasonal industry, the Management issued an order on November 11, 1986, declaring that the workmen will not be paid any lay-off compensation. This order was passed inspite of the interim order passed by this Court directing payment of 50 per cent. of the wages. The Management did not bother about the existence of the interim order and refused to carry it out, possibly because the Government had given a declaration. The action of the Management was totally illegal and amounts to committing contempt by breach of the interim order.
4. The learned single Judge heard the two petitions together, being Writ Petition No. 12586 of 1985, which was filed by the workmen to challenge the validity of lay-off notice dated April 2nd, 1985, and Writ petition No. 14335 of 1987 filed by the workmen to challenge the Government Order dated November 7th, 1986. By impugned judgment dated January 10th, 1992, the learned single Judge held that the decision of the Government dated November 7th, 1986, declaring the Factory as a seasonal industry suffers from serious infirmities. The learned Judge notice that the decision suffered from non-application of mind and was delivered because the Cabinet had taken a decision. The learned Judge further held that the Government had applied different rule while examining whether the two other Factories being Gowribidanur Sahakara Sakkare Karkhane and Thungabhadra Sugar Works, are seasonal industries. Even on merits, the learned Judge found that the order of the Government declaring the Factory as a seasonal industry, cannot be sustained. As regard the challenge to the lay-off notice, the learned single Judge held that the Management could not have taken a unilateral decision that the Factory is a seasonal industry and issued lay-off notice without approaching the Government is not open to challenge under Article 226 of the Constitution, was turned down. In view of these findings, the learned single Judge struck down the lay-off notice published on April 2nd 1985, and the Government Notification dated November 7th, 1986, declaring the Factory as a seasonal industry. The Management has preferred Writ Appeal Nos. 943 and 944 of 1992, while the State Government has preferred Writ Appeal Nos. 1930 and 1931 of 1992, to challenge the legality of the impugned judgment.
5. Mr. Sundaraswamy, learned Counsel appearing on behalf of the Factory, and the learned Government Advocate, submitted that the finding recorded by the Government in exercise of powers under Section 25-K(2) of the Act that the Factory is a seasonal industry, is final and cannot be disturbed in exercise of the writ jurisdiction unless the finding is found to be wholly unsustainable or perverse. The learned Counsel submitted that independently of the Government Order, the claim of the factory of being a seasonal industry, is required to be upheld on the facts and circumstances of the case. It was also contended that once the conclusion is reached that the Factory is a seasonal industry, then there is no obligation on the Management to pay lay-off compensation to the workmen. Mr. Narasimhan, learned Counsel appearing on behalf of the workmen, on the other hand, submitted that the finding recorded by the Government cannot be final and cannot be claimed to be not justiciable in writ Court. It was further submitted that the finding that the Factory is a seasonal industry suffers from serious infirmities and the finding is entirely mala fide and was recorded for reasons which are not difficult to comprehend. The learned Counsel further submitted that the action of the Management in publishing lay-off notice was a camouflage to closed down the industry and that is the reason why the Factory had remained closed from April 3rd 1985, till November 19, 1994. The learned Counsel urged that the lay-off cannot be for an indefinite period and consequently the workmen cannot be deprived of the lay-off compensation, even assuming that the lay-off notice was legal and valid.
6. In view of this rival submission, the first question which requires determination, is whether order dated November 7th, 1986, passed by the State Government in exercise of powers conferred under Section 25-K(2) of the Act, in valid and legal. The sub-section provides that if a question arises whether an industrial establishment is of a seasonal character or whether work is performed therein only intermittently, the decision of the appropriate Government thereon shall be final. It hardly requires to be stated that the mere expression in the sub-section that the mere expression in the sub-section “the decision shall be final” cannot entitle the Government to claim that it is not justiciable on a Court of Law. In case the decision is found to have been recorded mala fide or is a perverse decision or is based on facts which are totally irrelevant for the decision, then it is always open for this Court to strike down the same. The Counsel for the workmen submitted that after the statements were filed by the parties, the Secretary did not give oral hearing and on that count itself, the order is required to be struck down. We are not inclined to do so and we propose to examine the other objection levelled against the order. The first and the foremost objections it that the order is passed without any application of mind and only because the Cabinet had taken a decision to declare the Factory as a seasonal industry. It is rather surprising that while exercising powers under the statute, the Secretary proceeds to declare the Factory as a seasonal industry on the basis of the decision of the Cabinet and without examining the contention urged on behalf of the workmen. The order passed by the Secretary and which is counter signed by the Minister for Labour, sets out that the Cabinet have already considered the question as to whether the Factory should be declared as a seasonal industry and have taken a decision and the Management is in favour of such a declaration, while the workmen are not. The noting further cites that the points urged by the workmen are similar to what was stated while considering the case of Gowribidanur Sahakara Sahakare Karkhane. The noting then recites :
“It was at the instance of the Department of Co-operation that a declaration that a seasonal industry was made in the case of Vanivilas Sahakari Sakkare Karkhane. However, since there is a Cabinet decision in the matter, we may again notify that the Vanivilas Sahakari Sakkare Karkhane is a seasonal industry which will be in accordance with the decision already taken by the Cabinet in this matter.”
In our judgment, the decision cannot be sustained as the decision has been taken without application of mind and for some ulterior reasons. In this connection, it cannot be overlooked that the controlling shares of the Factory are held by the State Government. The State Government possibly realising that the Factory is running in losses found out an easy method to declare it as a seasonal industry and thereby deprived the workmen of their dues. It would not be out of place at this juncture to mention that the Management was in doldrums and the Administrator was appointed to take charge of the Factory. We have serious reservation as to the manner in which the order of the Government came to be passed and we do not find any error in the conclusion of the learned single Judge that the order cannot be sustained.
The second objection to challenge the legality of the order is of equal merit. The workmen pointed out that the two other Karkhanas being Gowribidanur Sahakari Sakkare Karkhane and Thungabhadra Sahakari Sakkare Karkhane, had filed applications for declaring their Factories as seasonal industries. Thungabhadra Sahakari Sakkare Karkhane had claimed that the Factory was running in losses and the Factory cannot declare lay-off unless the Factory is declared as one of seasonal industry. The Government did not accept the claim and by order dated March 14th, 1985, the claim was turned down. The Government was not impressed by the claim that the Factory is the seasonal industry because it is running in losses. Gowribidanur Sahakari Sakkare Karkhane sought a declaration that the establishment is of a seasonal character, but by order dated February 19th, 1985, the application was turned down. The Government felt that merely because the Factory is in a critical financial condition, that cannot be the reason for declaring it as a seasonal industry. It was observed that working of a sugar factory is not to be equated with crushing of sugarcane alone and industrial activity consists of production as well as maintenance, marketing, accounting, extension work for sugar cultivation etc. The Counsel for the workmen submitted and in our judgment very rightly, that correct tests were applied while rejecting the application of Gowribidanur Sahakari Sakkare Karkhane and Thungabhadra Sahakari Sakkare Karkhane, while in respect of the appellants’ Factory, the Government merrily gave the declaration, probably because the Government holds the majority shares in the Factory. It was also hinted that the decision was a political one and not on the basis of merit of the claim. We do not wish to express any opinion on this aspect, but the fact remains that different tests were applied in the year 1985 itself in respect of the two other Factories and that makes the decision of the Government extremely vulnerable. In our judgment, the learned single Judge was right in this background to strike down the decision of the Government.
7. It was then contended on behalf of the Management and the Government that independently of the decision of the Government, it should be examined whether the Factory is of a seasonal industry. The expression “seasonal industry” is not defined under the Act, but the expression should be understood as the industry which runs during a season or for a part of the year. The benefit for claiming advantage of a seasonal industry is because of the provisions of Section 25-A of Chapter V-A of the Act. Section 25-A, inter alia, provides that the provisions of Sections 25-C to 25-E shall not apply to industrial establishments, which are of a seasonal character or in which work is performed only intermittently. Section 25-C deals with the right of workmen laid off for compensation. The section sets out the limits during which the Management can declare lay-off. Chapter V-B sets out special provisions relating to lay-off, retrenchment and closure in certain establishments and Section 25-K provides that the provisions of the chapter shall not apply to an establishment which is of a seasonal character or in which the work is performed only intermittently. While determining whether an industry establishment is of a seasonal character, what is required to be ascertained is whether the work is perform therein only during a season or intermittently. It is wholly immaterial whether the industry is making profits or running in losses. That element has not bearing on the issue as to whether the establishment is of a seasonal character or the work is performed only intermittently. It was, therefore, entirely unnecessary for the Government to be impressed by the fact that the Factory was running in losses.
8. It is a common knowledge that crushing of sugarcane is performed between October and February of each year. The sugarcane gets ready for crushing by about September and to secure better yield or recovery, it is necessary to crush the sugarcane while still it had not dried up. It is, therefore, true that the crushing exercise is performed only during certain months, but that itself cannot lead to the conclusion that the industry is a seasonal industry. It is well known and the judicial notice can be taken thereof that the work performed in the Sugar Factory is not only of crushing sugarcane, but several other diverse activities incidental to running Sugar Karkhane are performed. Almost every Sugar Factory has a distillery where molasses are used for the purpose of manufacturing liquor. After the sugarcane is crushed and the sugar bags are ready, sugar is not sold overnight, but is releases from the factory from time to time. The Sugar Factory also performs other function, like, extending the area of sugar cultivation, providing facilities to the members and the bills are paid to the members and the bills are paid to the members from time to time. It is futile to suggest that the industry performs only during crushing season and not for the remaining part of the year. The workmen rightly pointed out in the statement filed before the Government that the Factory performs diverse activities, like production of sugarcane, marketing, accounting and extending the area of sugar cultivation. It is not in dispute that the Factory is having a distillery unit and purchases materials for storage. The Counsel for the Factory submitted that the distillery is let out on lease. All these facets of various activities of the industry were not borne in mind by the Government while determining whether the industry is a seasonal industry. The Government seems to be under a wrong impression that the industry consists of only a unit of crushing of sugarcane. It hardly requires to be stated that an industrial establishment can consist of different units and each of the units can work independently of the other. The definition “industrial establishment or undertaking” in Section 2(ka) of the Act means an establishment or undertaking in which any industry is carried on. It further provides that where several activities are carried on in an establishment and only one of such activities is an industry, then the unit of such establishment is severable from the other unit or units. The definition further provides that if the predominant activities carried on in the establishment or in any unit thereof is the industry and other activities are not severable and are carried on to aid the predominant activities, then the entire establishment shall be deemed to be an industrial establishment. In our judgment, several units in the Sugar Factory are performing activities, which are industrial in nature and in any event, the predominant activities carried on by the Sugar Factory are industrial and it is not possible to severe the other units from the predominant activities. The distillery is functioning because of the molasses available after crushing of the sugarcane and the functioning of the distillery is dependent upon the availability of the molasses. The marketing and other activities also depend upon the sugarcane crushed by the Factory. In our judgment, various activities performed by the industry are so inter connected that it is not possible to claim that crushing of the sugarcane is the only unit which can be described as an industrial establishment and because of the non-availability of sugarcane, the industry should be declared as a seasonal industry. In this connection, it must also be borne in mind that the Factory had never declared lock-out from the year 1972 till the year 1985 and the complaint of non-availability of sugarcane may not be genuine. The Counsel for the workmen rightly highlighted the fact that out of about 600 workmen engaged by the Factory in the year 1985, 338 were working as permanent employees and the remaining were seasonal. It was contended that if about half of the number of employees are permanent in service, it is futile to suggest that the industry is a seasonal industry and not run for the entire year. In our judgment, even on merits and independent of the order of the Government, the assertion of the Factory that the industry is a seasonal industry cannot be accepted. It is not correct to suggest that the industry is a seasonal industry or the work is performed therein intermittently. The tests necessary to determine whether the industry is of a seasonal character, are not at all satisfied on the facts and circumstances of the case and the Factory is not entitled to claim as a seasonal industry. The claim of the Factory in this respect is, therefore, required to be turned down.
9. The lay-off notice dated April 2nd, 1985, was issued by the Factory on the assumption that the industry is a seasonal industry and the provisions of Sections 25-C to 25-E of Chapter V-A are not applicable. The expression “lay-off” has been defined in Section 2(kkk) and means the failure, refusal or inability of an employer on account of shortage of raw materials or the accumulation of stocks or the breakdown of machinery to give employment to workmen. The plain reading of the definition makes it clear that a lay-off, by its nature, can be only for a short duration and not for a period of several years. The lay-off notice issued by the Management claims that sufficient raw material in the nature of sugarcane is not available and therefore work cannot be given to the employees. The Factory claims that to utilise the optimum level of capacity, the Factory requires 2.00 lakhs of tonnes of sugarcane every year, but from the date of inception, the Factory was unable to secure the sugarcane for the purpose of reaching the optimum level. The mere fact that the Factory is unable to reach the optimum level does not warrant a conclusion that the raw materials were not available. In case the Factory did not receive sufficient quantity of sugarcane for a period of over 13 years and still it was not felt necessary to give lay-off to the workmen, it is difficult to appreciate what prompted the Management to do so in the year 1985. The grievance of the workmen that the lay-off was nothing but a camouflage to close down the Factory is of considerable substance. The Factory had remained closed from the year 1985 till the end of the year 1994. It is difficult to imagine how the lay-off can continue for a period of almost 10 years. This is indicative of the fact that the lay-off was not a bona fide exercise of power, but was resorted with a view to close down the Factory. In our judgment, the lay-off notice was not the bona fide exercise of power because the object seems to be to close down the Factory.
There is one more aspect which cannot be overlooked. The validity of lay-off notice was challenged by the workmen by filing writ petition before the learned single Judge. As mentioned hereinabove, the learned single Judge passed order on October 28th, 1985, directing the Management to pay 50 per cent. of the wages to the employees during the pendency of the petition. It surpasses our imagination as to how the Management could issue order dated November 11th, 1986, that no compensation will be paid to employees. The order seems to have been issued because the Government declared on November 7th, 1986, that the Factory is a seasonal industry. The Management should have realised that the declaration made by the Government cannot wipe out the effect of the interim order passed by the Court. The Management never cared to move the learned single Judge to vary the order and the action of the Management in issuing notice was entirely illegal and shows the attitude to by-pass the order of the Court and deny the dues of the employees. In our judgment, the decision of the learned single Judge in these circumstances is correct and the appeals must fail.
10. Before parting with the judgment, it is necessary to refer to the contention of the learned Counsel for the appellants that the Factory had suffered losses for over several years and that it would not be possible to bear the financial burden which will accrue because of the payments required to be made to the employees. On last occasion, when the contention was raised, we suggested to the Counsel for the employees whether the employees would give up a part of the amount due and the employees readily acceded to the suggestion. The Counsel for the appellants, thereafter, took time to get instructions and informed that the appellants are not in a position to make any payment. We are perturbed by the attitude taken by the Government. The Government is holding the majority shares of the Factory and it is difficult to appreciate why the small number of employees should be deprived of their dues and more so, when the employees are kept out of job for over several years.
11. Accordingly, all the four appeals are dismissed with costs.