Delhi District Court
Sh. Shashi Bhusan Singh vs M/S Hindustan Times Ltd on 2 February, 2019
IN THE COURT OF SHRI UMED SINGH GREWAL,
POLCXVII, ROOM NO. 514:
DWARKA COURTS: NEW DELHI
LIR No. 4812/2016
Sh. Shashi Bhusan Singh,
R/o 145, Plot no. 1011, Vipin Garden,
Uttam Nagar,
New Delhi110059 ..............Workman
Versus
1. M/s Hindustan Times Ltd.
Hindustan Times House,
1820, Kasturba Gandhi Marg,
New Delhi110001
2. H.T. Media Ltd.,
Hindustan Times House,
1820, Kasturba Gandhi Marg,
New Delhi110001 ..........Management
DATE OF INSTITUTION : 27.08.2007
DATE OF RECEIVING IN THIS COURT : 26.09.2018
DATE ON WHICH AWARD RESERVED : 14.12.2018
DATE ON WHICH AWARD PASSED : 02.02.2019
A W A R D :
1. This is a Direct Industrial Dispute filed by the workman
under the Industrial Disputes Act, 1947 (hereinafter referred as "the
Act") for reinstatement with continuity of service and full back
LIR No. 4812/2016 1/64
wages.
2. Claimant's case is that the management no. 1 is a company
incorporated under the Companies Act and since last seven decades,
it is engaged in printing, publishing and selling of newspapers
journals, periodicals and other business. For that business, it had
employed journalists and non journalists including him. It is owned,
controlled and managed by the members of Mr. K.K. Birla family.
Its profit has been growing with leaps and bounds. Barring few
cases of dismissal or termination of individual employees due to
their misconduct, there has never been any case of mass removal or
retrenchment of service. There has been a complete Industrial peace
and harmony in industry. The management no. 2 is also a company
incorporated under the Companies Act 1956 and its promoter/
owner/ Creator is management no. 1 as it was 100% subsidiary of
management no. 1 at the time of incorporation. The management
no. 1 holds 69% shares and in this way, controls and manages the
affairs of management no. 2. As a business strategy and to meet
competition in the market, the management no. 1 promoted a new
entity for itself out of its funds in the name and style of
management no. 2 for the same and identical objective i.e. to
continue to print, publish and selling of newspapers journals,
periodicals. So, in practical, the management no. 1 & 2 are only one
LIR No. 4812/2016 2/64
management as neither the administration changed nor the business
or its objective.
It is further mentioned that he had joined management no. 1
as temporary Semi Clerk on 17.07.1993 in Times Office and was
confirmed in job on 08.07.1994. Vide letter dated 07.06.1997 the
workman was transferred from the reception to the General
Department. He was permanent employee at the time of termination
from service. His service record was excellent as he was never
involved in any misconduct. He was member of Hindustan Times
Employees Union (Registered) Delhi and his service condition is
governed by certified standing orders applicable to the Non
Journalists Employees; Shops and Establishment Act; Wage Board;
Industrial Disputes Act 1947 and other Acts. Nothing practically
changed when management no. 2 started functioning. The entire
system remained the same. He also kept on working as usual in the
same department and in the same office where he was working for
last several years. He had no knowledge of day to day affairs of
management nos. 1 & 2.
All of a sudden on 03.10.2014, the management retrenched
362 workers working in printing department, in violation to the
provisions of Chapter V B of ID Act 1947. Prior permission from
LIR No. 4812/2016 3/64
the appropriate government was not taken. He and coemployee
were shocked by that unjustified and illegal act. They were taken
aback and shaken by the sudden turn of events. That act was done
by management no. 1 in collusion with management no. 2, to
remove the permanent wage board and unionized employees. The
intention was thick and sound to eliminate the unionized employees
from the company and only to attain that object, the management
no. 2 was formed by management no. 1 out of its own funds to
transfer the entire business to the new entity and then to remove
entire workforce from their permanent employment on the ground
of no work. Since then i.e. 03.10.2014, he and coworkers were
pressurized by management no. 1 to take voluntary retirement but
they refused. Some of the employees who had refused to take VRS
were shifted to the 7th Floor of the building in the 1st week of March
2006 and were not allowed to perform work. They were forced to
sit idle for a week. They were left with no alternative but to
approach the office of Labour Commissioner through Delhi Union
of Journalists and The Hindustan Times Employees Union who
filed a complaint against both managements on 16.03.2006 on their
behalf.
In the mean time, on 21.03.2016, the management no. 1
launched VRS scheme. Atmosphere of terror, intimidation and fear
LIR No. 4812/2016 4/64
was created in the entire office. The officers repeatedly threatened
that if anybody failed to take VRS, he would be terminated. Four
types of scheme were launched to woo to employees. There was a
time bound scheme by which the amount of VRS was reduced by
Rs 1 lac with the passage of couple of day's time. They were
reminded of the treatment meted out to 362 workers of printing
department. They were threatened that if they did not take VRS,
their service shall be terminated. In this way, VRS became
compulsory retirement scheme and the employees started taking
retirement thinking that their service would be terminated but he
and many others not bow down. They were threatened by
management no. 1 that if they did not take VRS, they would be
terminated. But they did not budge. After filing of the case, the
workers who were forced to sit idle, were to allowed to resume
duty as usual. But the consistent pressure of the management on
them to take VRS was still in existence.
As usual, the claimant and coemployees went to the
premises of management no. 1 on 07.05.2007 to do duty but the
guard refused their entry saying that same was the order of Chief
Manager, HR. When they had reported for duty last day, they were
not told that they would not be allowed to do duty from the next day
onwards. When they raised hue and cry, security incharge came
LIR No. 4812/2016 5/64
there and handed over letter dated 05.05.2007 with following
contents:
"After the service agreement dated 05.03.2005 stood
terminated, the company offered a voluntary retirement scheme
offering substantial benefits to the employees opting for VRS vide
notice dated 21.03.2006. However, you along with 19 others, did
not take VRS and a result of which, you along with others have
been doing no work and sitting idle. Since the company has
absolutely no work to be provided to you, you have become
redundant to the company's requirement and as such your services
are hereby terminated by way of (retrenchment) w.e.f. 09.05.2007
on payment of one month's notice pay and retirement compensation
in accordance with section 25F of ID Act 1947..."
The Central Government had sanctioned setting up of a new
Wage Board for journalists and non journalists, recommendation of
which were to be implemented very soon. He and coemployees
were to be benefited by the Wage Board. But before the
recommendations of the wage board came out, his service was
terminated. The statement of management no. 1 is that there was no
work, is absolutely false. It created management no. 2 which is
doing the same business. It has transfered its entire business,
goodwill and assets to management no. 2. The owners of both
companies are same. Share holding pattern, composition of board of
LIR No. 4812/2016 6/64
directors and entire business system clearly show that transferor
and transferee are one and the same. The management no. 1 had
committed unfair labour practice by terminating his service. He
was retrenched without prior permission from the government.
Moreover, it had not given prior 21 days mandatory notice before
changing the service conditions applicable to him.
The termination letter dated 05.05.2007 was delivered to him
on 07.05.2007 by the security officers Mr. Naresh Gautam at the
entry gate. On 08.05.2007, he filed a case for reinstatement with an
application U/s 10 (4) of ID Act 1947 for interim relief and stay of
termination order which was to come into effect on 09.05.2007. But
it was dismissed on 08.05.2007 holding that there was no Industrial
Dispute in existence as on that day. Against that order, he filed a
writ petition in the Hon'ble High Court of Delhi on 09.05.2007
which he withdrew on 10.05.2007 with a liberty to file present
statement of claim. The Hon'ble High Court had directed the Labour
Court to decide the Industrial Dispute as expeditiously as possible
but not later than 8 months. As per the order passed by Hon'ble
High Court of Delhi on 10.05.2007, he filed statement of claim on
22.05.2007 directly in which the management no. 1 appeared on
02.06.2007 and filed an application that the case was not
maintainable as demand notice was not served upon it. The
LIR No. 4812/2016 7/64
application was allowed by thethen POLC Mr. Alok Aggarwal
vide order dated 07.07.2007 and the case was dismissed holding
that the same was not maintainable in the absence of demand
notice. Then he served demand notice dated 14.07.2007 upon Mr.
K.K. Birla, Chairman of management no. 1 to which the Secretary
to the Chairman had replied on 24.07.2007 that Mr. K.K. Birla was
neither chairman nor director of management no. 1. In the light of
that reply, a fresh demand notice dated 04.08.2007 was served upon
the Board of Directors of the management no. 1 but it went
unrespondend.
3. Written Statement of management no. 1 is to the effect that
the claimant has not come to the court with clean hands as he has
concealed some material facts and particulars. He was fully aware
that his service would be utilized by management no. 2 with
continuity of service on the same terms and conditions as were
applicable to him and no prejudice whatsoever would be caused to
him. Despite it, he did not accept the offer of joining the
management no. 2 despite the fact that majority of employees had
gladly joined management no. 2 who are working peacefully since
then because their service conditions, contract of service and perks
have been protected. Vide notice dated 07.02.2004 displayed on
notice board by management no. 1, the claimant and coemployees
LIR No. 4812/2016 8/64
were informed that the management no. 2 was willing to take over
their services on existing terms and conditions. It was further
clarified that around 2,000 employees had joined management no.
2 without any prejudice and reservation. But the claimant and others
did not accept the offer. As it had entered into service agreement
dated 05.03.2004 with management no. 2 under which it was
providing certain supported services to that management and hence,
his service was being utilized by management no. 2 which
terminated the service agreement vide letter dated 30.04.2006 and
he became redundant as no work was available with management
no. 1 because it had already sold media business to management no.
2. Instead of resorting to retrenchment, in the first instance, the
management no. 1 decided to offer VRS to employees vide notice
dated 21.03.2006 by offering very liberal benefits and more than
200 employees opted for it. Only a handful employees did not opt
for it and the claimant was one of them. It kept on paying salary
and other allowances for about one year though no work was
available with it. In this background, his service was retrenched as
per the provisions of section 25F of ID Act 1947 for which he
himself is responsible.
Date of employment, designation and promotion of the
claimant have not been denied in written statement. His service was
LIR No. 4812/2016 9/64
not terminated on any misconduct but he had become redundant.
The management no. 1 is not promoter of the management no. 2
and both companies are separate entities having separate
registration numbers. Shareholders of both companies are different.
Both companies are in different business. Management no. 2 was
not incorporated with the object to carry on the business of the kind
carried out by management no. 1 The management no. 1 is run,
managed and controlled by its own Board Directors on the
principles of corporate governance. Management no. 2 is in media
business where as management no. 1 is engaged in renting and
maintaining its premises and also in investment business. Business
and objectives of both companies are altogether different. VRS was
introduced as a welfare measure for rehabilitation of the employees
who had become redundant. It was not for getting rid of wage
board permanent employees.
4. Written statement of management no. 2 is to the effect that
the case is bad for misjoinder of parties because it had never
employed claimant and coclaimants and in this way, there has
never been relationship of employer and employees between them.
5. After recast on 18.03.2010, following are the issues:
1. Whether the claim is barred by principles of Resjudicata?
LIR No. 4812/2016 10/64
2. Whether there exists any relationship of employer and
employee between the workman and management no. 2. If so, its
effect?
2a. Whether the management was required to take prior
permission before the alleged retrenchment of the workman?
2b. Whether the management has changed service condition of
the workman as alleged by the workman?
3. Whether the services of the workman had been terminated
illegally. If so, its effect?
6. In order to substantiate the case, the claimant tendered his
affidavit in evidence as Ex. WW1/A mentioning all the facts stated
in the statement of claim. He relied upon documents from Ex. WW
1/1 to Ex. WW1/34.
7. The management no. 1 examined its General Manager Mr.
Avik Basu as M1W1 who repeated the contents of written
statement. He relied upon documents from Ex. M1W1/1 to Ex.
M1W1/15. Additionally, he deposed that a cheque of Rs. 2,88,466/
including retrenchment compensation of 15 days wages for each
year's completed service and six months' notice pay was given to
the claimant which he did not encash. Later, in the year 2009, the
management readily issued fresh cheques to the claimant which
LIR No. 4812/2016 11/64
were duly encashed by him.
In crossexamination, he deposed that the claimant was also
transferred to management no. 2 where he did not join. He admitted
that the transfer letter was not on the file. He further admitted that
there was no document on the file which may show that transfer
letter was delivered to the claimant. He could not recollect if the
notice dated 07.02.2004 Ex. M1W1/4 was responded by the union
and was received by the management. He could not admit or deny
that reply of the union was received in the office of management
no. 1 in the form of letter dated 05.03.2004. He could not admit or
deny that Ms. Sobhana Bhartia had issued power of attorney for filing
the same on behalf of management no. 2. In crossexamination, he
admitted that management no. 2 was the subsidiary of management
no. 1 in 20062007. He next admitted that as per record, the
claimant had not refused to join management no. 2 and in fact, the
refusal was by union on his behalf. In crossexamination, he
deposed that no offer letter was given to claimant to join
management no. 2. He further admitted that there was no letter on
the file which may show any offer given by management no. 1 to its
worker from 05.03.2004 till the date of their termination, to join
management no. 2. In a specific question, he admitted that the
managements had not given any transfer letter to the claimant from
LIR No. 4812/2016 12/64
2003 till termination. When he was pricked time and again about
transfer letters, he produced those letters in the crossexamination
as Mark M1, M2 and Mark M3 dated 22.12.2003, 22.12.2003 and
30.12.2003. He next admitted that no transfer letter was given to the
claimant to join management no. 2 and that it was given to him
through his union. In just next reply, he deposed that no transfer
letter was issued to the claimant through union.
8. The management no. 2 examined four witnesses.
M2W1 Mr. Ankit Srivastawa is working as Assistant General
Manager with management no. 2. He deposed that the management
no. 2 is public limited company incorporated under the Companies
Act having obtained registration numbers and license from statutory
authorities. It has obtained account numbers from ESIC and PF
Department to run media business i.e. editing, printing, publishing
and distribution of newspapers and periodicals. It had no
relationship of employer and employee with the claimant as he was
never interviewed, selected and appointed as an employee. He was
never paid salary by it. He next deposed that the management no. 2
had its own board of directors and share holders. Majority of the
directors and share holders had no relationship with the directors
and share holders of management no. 1. It has been deposed next
LIR No. 4812/2016 13/64
that the management no. 2 was ready and willing to take into
employment all the employees of media business of management
no. 1 w.e.f. 01.07.2003 listed in Schedule V in terms of Article 7.1
of business purchase agreement dated 15.08.2003. About 2200
employees of management no. 1 accepted their transfer to
management no. 2 but other employees refused. The transferred
employees were transferred on the same terms and conditions of
employment which they were enjoying with management no. 1 at
the relevant time. The management no. 2 had nothing to do with
the termination of service of the claimant. He relied upon
documents from Ex. M2W1/1 to Ex. M2W1/8.
M2W2 Mr. Kailash Chander, Head Clerk from ESIC, placed
on record ESI record of the employees of management no. 2 having
ESI code no. 114040/0220A/83/contractor, from April 2004 to
March 2005 as Ex. M2W2/1. About ESI record from April 2005 to
March 2007, he deposed that the same is not available as it has been
weeded out.
M2W3 Mr. Sashikant Kumar, Senior Social Security
Assistant in PF office, deposed that PF record of the employees of
the management had been weeded out and in this regard, he placed
on record letter as Ex. M2W3/1.
LIR No. 4812/2016 14/64
M2W4 Mr. K.S. Rawat, an officer from ESIC, placed on
record ESI record of the employees of management no. 2 having
ESI code no. 114040/0220A/83/contractor, from April 2004 to
March 2005 as Ex. M2W4/1. About ESI record from April 2005 to
March 2007, he deposed that the same is not available as it has been
weeded out.
Lifting of Corporate Veil:
9. The first argument of Ld. AR for both managements is that
the case has been filed U/s 10(4) A of ID Act 1947 and hence, it is
U/s 2A of the Act which exclusively deals with four scenarios
discharge, dismissal, retrenchment and otherwise termination of
service of individual workman. Nature of those four kinds shows
that those are individual disputes and not industrial disputes U/s
2(k) of the Act. The scope for this court is limited in the case in
hand because the plea of management no. 1 is that workman's
service was retrenched and that he was not terminated.
Retrenchment compensation was paid and other conditions U/s 25F
of the Act have been complied with. This court cannot decide, in
individual disputes, the status of parties. It cannot be decided
whether management nos. 1 and 2 are one or two managements.
This court cannot decide whether the claimant is employee of
LIR No. 4812/2016 15/64
management no. 2 or not. In support, he relied upon Bharat Heavy
Electricals Ltd Vs. Anil & Others, (2007) I SCC 610. All these
questions can be decided only on a reference and not in individual
dispute. Only due to that reason, the issue of lifting of corporate veil
was not framed wisely by thethen POLC. Without framing of
issue to that effect, the corporate veil cannot be lifted by the court.
The second argument of Ld. ARMs is that the following
principles are to be taken into account while lifting corporate veil:
I. Ownership and control of a company were not enough to
justify piercing the corporate veil.
II. The court cannot pierce the corporate veil even in the absence
of third party interests in the company, merely because its thought
to be necessary in the interests of justice.
III. The corporate veil can be pierced only if there is some
impropriety.
IV. The impropriety in question must be linked to the use of the
company structure to avoid or conceal liability.
V. To justify piercing the corporate veil, there must be both
control of company by the wrong doers and impropriety; that is use
or misuse of the company by them as a device or facade to conceal
their wrong doing; and
VI. The company may be a 'facade' even though it was not
LIR No. 4812/2016 16/64
originally incorporated with any deceptive intent, provided that it is
being used for the purpose of deception at the time of relevant
transactions.
Relying upon Balwant Rai Saluja & Ors AIR India Ltd.
and Others, 2014 III CLR 751 (SC), they submitted that the
present case does not have the facts justifying the applicability of
above principles.
The third argument of Ld. ARMs is that it is within the
managerial discretion of an employer to organize and arrange his
business in the manner he considers best. So long as that is done
bonafide, it is not competent for a tribunal to question its propriety.
Management no. 2 was formed by management no. 1 to do business
efficiently and this court cannot comment whether the same was
done correctly or incorrectly. In this regard, he relied upon Parry
& Co. Ltd. Vs. P.C. Pal & Ors, (1969) 2SCR.
Relying upon Balwant Rai Saluja & Ors AIR India Ltd.
and Others (Supra), Ld. ARMs lastly argued that in the cited case,
the Hon'ble Apex Court was required to decide whether workers,
engaged on casual or temporary basis by a contractor (HCL) to
operate and run a statutory canteens under the provisions of Factory
LIR No. 4812/2016 17/64
Act 1948, on the premises of a factory Air India, can be said to be
workmen of the said factory or corporation. In order to decide that
question, the court was required to decide whether there existed
corporate veil or not. HCL was wholly owned subsidiary of the Air
India and its share capital was held by Air India. The Air India
controlled the composition of board of directors of HCL. Airl India
had the right to issue directions to HCL, which the latter was bound
to comply with. Despite so many favourable facts for lifting of
corporate veil, Ld. ARMs argued, the Hon'ble Apex Court held that
HCL and Air India were not one and the same company. Similar are
the facts of the present case and hence, both managements are not
the same companies.
10. Ld. ARW replied that case of the management is that it
formed management no. 2 as its wholly owned subsidiary and
transferred media business to it. All employees of management no.
1 were deemed to be the employees of management no. 2. Offer of
transfer to management no. 2 was given to claimant by management
no. 1 which he did not avail. No work was left with management
no. 1 and hence, he became surplus and his service was retrenched.
He submitted that claimant's case is that management no. 1 and 2
are not different entities and is one and the same management. The
business of management no. 1 is the business of management no. 2
LIR No. 4812/2016 18/64
and that business is still being done by management no. 2. So, it
cannot be said that he had become surplus. In order to decide the
termination, it is very necessary to decide whether management no.
1 and 2 are two separate entities or only one. He argued that Bharat
Heavy Electricals Ltd. Vs. Anil & Others (Supra) is not
applicable because in that case, it was the plea of the workers that
they were employed by contractor in the premises of Bharat
Heavy Electricals Ltd. Despite such clear cut assertion, the Labour
Court had directed Bharat Heavy Electricals Ltd. to reemploy the
workers. In this background, the Hon'ble Supreme Court had held
that if the workers wanted direct employment from Bharat Heavy
Electricals Ltd. or regularization, they were required to raise
substantial industrial dispute and not individual dispute before the
tribunal. In the case in hand, it is not the case of any of the party
that workers were employed in the premises of management no. 1
through management no. 2. He admitted that issue to the effect
whether the corporate veil be lifted or not, has not been framed.
But non framing of that issue cannot stop the court to decide that
point because pleadings and evidence of all parties to that effect are
before this court and that point goes to the root of the case as only
after decision of that point, the court can come to know whether the
termination / retrenchment was legal / justified or not. So, J.K. Iron
and Steel Company Ltd. Vs. Iron and Steel Mazdoor Union and
LIR No. 4812/2016 19/64
Ors. 1956 LLJ 227SC is not applicable.
He relied upon Life Insurance Corporation of India Vs.
Escorts Ltd and Others, (1996) 1SCC 264 to argue that it was not
possible to enumerate the class of cases where lifting of veil was
permissible. The court has to see the facts of each case and it should
lift the veil if it causes effect on parties who may be affected. As
the service of the claimant has been terminated by the management
on the ground that he became surplus as he did not accept transfer
to management no. 2, it is necessary to decide whether there are
two managements or only one. So, this court can lift the veil.
The third argument of Ld. ARW is that the businessman may
reorganize his business and if any employee becomes surplus in
that process, he can be retrenched. But the court can definitely
decide whether there has been any reorganization or not. In the
case in hand, there was no organization as the management no. 1 &
2 are not two different entities. So, Parry & Co. Ltd. Vs. P.C. Pal
& Ors, (1969) 2SCR is not applicable.
The last argument of Ld. ARW is that the facts of Balwant
Rai Saluja & Ors AIR India Ltd. and Others (Supra) are
different from the facts of the case in hand and hence, the citation is
LIR No. 4812/2016 20/64
not applicable. In that case, the contractor was subsidiary of the Air
India. Air India had total control over the management of the
contractor. Similar are the facts in the present case. Additional facts
are that the directors and key management of management no. 1
were the same as of management no. 2. Officers remained the same.
Sometimes an officer of management no. 1 executed document on
behalf of management no. 1 and after sometime, the same officer
executed another document on behalf of management no. 2.
Business of both managements was also the same. Both
managements were operating from the same address. Same were
their telephone numbers. Every employee of management no. 1,
despite creation of management no. 2, kept on working in the same
way, manner, at the same post, in the same room and same work
was performed by him.
11. Principle of lifting of corporate veil is mentioned in sections
45, 147, 212, 247 and 254 of the Companies Act 1956. The
corporate veil is lifted when the court ignores the company and
concerns itself directly with the members or managers.
12. In following judgments, the Hon'ble Supreme Court and
High Court held that Industrial Courts have wide powers to do
substantial justice.
LIR No. 4812/2016 21/64
In Bidi, Bidi Leaves' and Tobacco Merchants Association
Vs. The State of Bombay AIR 1962 SC 486, Hon'ble Supreme
Court observed as follows:
It is well settled that industrial adjudication
under the provisions of the Industrial Disputes Act,
1947 is given wide powers and jurisdiction to make
appropriate awards in determining industrial
disputes brought before it. An award made in an
industrial adjudication may impose new obligations
on the employer in the interest of social justice and
with a view to secure peace and harmony between
the employer and his workmen and harmony
between the employer and his workmen and full co
operation between them. Such an award may even
alter the terms of employment if it is thought fit and
necessary to do so. In deciding industrial disputes
the jurisdiction of the tribunal is not confined to the
administration of justice in accordance with the law
of contract.
It was further held that:
LIR No. 4812/2016 22/64
Indeed, during the last ten years and more
industrial adjudication in this country has made
so much progress in determining industrial
disputes arising between industries of different
kinds and their employees that the jurisdiction
and authority of industrial tribunals to deal with
such disputes with the object of ensuring social
justice is no longer seriously disputed.
It has been observed in The Bharat Bank Ltd., Delhi Vs.
Employees of the Bharat Bank Ltd., Delhi MANU/SC 0030/1950
that:
The Tribunal "can confer rights and privileges
on either party, which it considers reasonable and
proper, though they may not be within the terms of
any existing agreement. It has not merely to
interpret or give effect to the contractual rights and
obligations between them which it considers
essential for keeping industrial peace.
Hon'ble Delhi High Court in Delhi Administration Vs.
Yogender Singh, 1997 (1) AD (Delhi) 8 observed as follows:
Industrial Tribunal is not bound by the rigid rules of law.
LIR No. 4812/2016 23/64
The process which an industrial Tribunal employs in coming to a
decision is not a judicial process. It may confer rights and
privileges on either party which it considers reasonable and
proper, though they may not be within the terms of any existing
document. It may even create new rights and obligations which it
may consider essential for keeping industrial peace.
13. In Bharat Heavy Electricals Ltd. Vs. Anil & Others
(Supra), the facts were that BHEL ( the company registered under
Companies Act 1956) was the principal employer and a person
namely Mr. K.P. Singh was contractor under whom the workers
were working as contract labour. Their service was terminated and
the reference was sent to the Labour Court to the effect whether the
termination was justified and /or lawful or not. The Labour Court
came to the conclusion that the termination was illegal and directed
the principal employer i.e. BHEL to reemploy the workers directly
or through its contractor. The Hon'ble Apex Court reversed the
award observing that if the workers wanted direct employment from
BHEL or regularization, they were required to raise substantial
industrial dispute before the tribunal. They were required to join the
regular union of BHEL and the get their cause espoused. But the
facts of the present case are that the claimant was employed by
management no. 1 who created its wholly owned subsidiary in the
LIR No. 4812/2016 24/64
form of management no. 2 and sold its media business to
management no. 2 under the Business Purchase Agreement in
which there was a clause that the workman shall be treated as
employee of management no. 2. Plea of management no. 1 is that it
asked him to join management no. 2 but he refused. No work was
left with it and the claimant became surplus. Such facts are entirely
different from the facts of the cited case. So, the citation is not
applicable at all.
The claimant has come out with the case that his service was
terminated whereas the managements no.1's defence is that he was
not terminated and rather, he was retrenched as he had become
surplus. Further plea of the claimant is that the management no. 1
& 2 is only one management and management no.2 is still doing the
same business carried out by management no. 1. So, the claimant
cannot be said to have become surplus and hence, there was no
retrenchment but termination. The matter cannot be decided without
deciding the point whether management no. 1 & 2 are two different
entities or only one.
It is correct that the issue to the effect whether the
management no. 1 & 2 are two different entities or only one, has not
been framed. But statement of claim shows that such plea has been
LIR No. 4812/2016 25/64
taken by the claimant. Written statement shows that the said plea
has been refuted by the management. The parties have also led
evidence on that point. In J.K. Iron and Steel Company Ltd. Vs.
Iron and Steel Mazdoor Union and Ors. (Supra), the Apex Court
held that the only point in pleadings and framing issues is to
ascertain the real dispute between the parties, to narrow the area of
conflicts and to see just where the two sides differ. It was further
held that it was not open to the tribunal to fly off at a tangent
disregarding the pleadings and reach any conclusion that they think
are just and proper. In the cited case, it was not held by the Hon'ble
Apex Court that if there were pleadings and evidence on a
particular point but no issue, the court cannot decide that point.
Rather, was held that if some facts are not mentioned in the
pleadings, the court cannot take them into account. In the case in
hand, the facts leading to lifting of corporate veil have been stated
by both parties and evidence has also been led. So, this court can
definitely decide whether the veil should be lifted or not because
decision on that point is very necessary to decide whether there was
legal retrenchment or termination.
14. The second argument of Ld. ARM is based upon the para no.
68 of Balwant Rai Saluja & Ors AIR India Ltd. and Others
(Supra), perusal of which shows that those principles are applicable
LIR No. 4812/2016 26/64
in foreign countries. Para no. 70 of the same judgment shows that
the principle of lifting of veil in India was discussed by the
Constitution Bench of the Hon'ble Apex court in Life Insurance
Corporation of India Vs. Escorts Ltd. and Others (Supra) in
which following was held:
"90. ... Generally and broadly
speaking, we may say that the corporate veil
may be lifted where a statute itself
contemplates lifting the veil, or fraud or
improper conduct is intended to be prevented,
or a taxing statute or a beneficent statute is
sought to be evaded or where associated
companies are inextricably connected as to
be, in reality part of one concern. It is neither
necessary nor desirable to enumerate the
classes of cases where lifting the veil is
permissible, since that must necessarily
depend on the relevant statutory or other
provisions, the object sought to be achieved,
the impugned conduct, the involvement of the
element of the public interest, the effect on
parties who may be affected etc."
LIR No. 4812/2016 27/64
As per above principles, two of the grounds on which
corporate veil can be lifted are when a beneficent statute is sought
to be evaded or where there is effect on a party who may be
affected. It is the case of the management itself that the claimant
had become surplus as he had refused to join the service of
management no. 2 and that no work was left it. It had transferred
his service to management no. 2 as it had sold it media business to
management no. 2. So, due to formation of management no. 2 by
management no. 1, the service of claimant has come to an end. It
means that the agreement between both managements has affected
the interest of the third party adversely. Due to that reason also, in
view of above citation, this court can lift the corporate veil.
15. Facts of Parry & Co. Ltd. Vs. P.C. Pal & Ors.(Supra)
were that the appellant company was carrying on business at
various places in India including Calcutta as merchants, selling
agents and manufacturers. Its registered office was in Madras. Its
business at Calcutta was two folds: (1) as selling agents of certain
companies, and (2) - of conducting an engineering workshop at
Kidderpore. Its agency business started declining in 1954 and it
had, therefore, to retrench some of its employees in that year. The
company consequently decided upon a policy of reorganizing its
business by giving accent to its manufacturing activities and giving
LIR No. 4812/2016 28/64
up the agencies held by it. In pursuance of that policy, the company
relinquished 30 agencies in Bombay, 11 in Delhi, 8 in Madras and
11 in Calcutta. It also closed down 3 of its agencies in Northern
India and 11 in Southern India. Due to reorganization, service of
several employees was retrenched. In that background, the Hon'ble
Apex Court held that so long as reorganization business was done
bonafidely, it was not competent for a tribunal to question its
propriety. It should not be actuated by any motive of victimization
or unfair labour practice. In the case in hand, the case of
management no. 1 is not that it has closed down some of its
departments. Rather, it created its wholly owned subsidiary in the
form of management no. 2 and transferred media business to that
management. As per the case of the management no. 1, all its
employees were also to be transferred to management no. 2. So, the
facts of the cited and the present case are entirely different.
Though the labour court cannot decide the propriety of
reorganization of any business. But certainly, it can decide whether
there has actually been any reorganization or not. If management
no. 1 & 2 are not found two entities but only one, it means there is
no reorganization. That point can be decided while lifting corporate
veil. Due to that reason also, this court is competent to lift the
corporate veil.
LIR No. 4812/2016 29/64
16. In Balwant Rai Saluja & Ors AIR India Ltd. and Others
(Supra), the only question before the Hon'ble Supreme Court was
"whether workers engaged on a casual or temporary basis by a
contractor (HCL) to operate and run a subsidiary canteen, under the
provisions of the Factory Act 1948, on the premises of factory Air
India, can be said to be the workmen of the said factory or
corporation". But in the case in hand, facts are entirely different as
the plea of the management is that it had formed management no. 2
as it wholly owned subsidiary to do the same business and all its
employees were to be transferred to management no. 2. The
claimant refused to go there and hence, his service was retrenched
because no work was left with management no. 1. So, it is the plea
of management no. 1 itself that initially the claimant was its
employee and both managements had decided in business purchase
agreement that all employees of management no. 1 shall be deemed
to be the employees of management no. 2. In Balwant Rai Saluja
& Ors AIR India Ltd. and Others (Supra) the Apex Court held
that a judgment has to be considered in the context in which it was
rendered and that a decision is a authority for what it decides and it
is not everything said therein constitutes a precedent. Following
were observations of Hon'ble Apex Court:
LIR No. 4812/2016 30/64
21. By placing his fingers on Clause (iii) of
paragraph 107, the learned counsel would
contend that the said observation is the ratio of
the Court's decision and, therefore, it is binding
on all other Courts. We do not agree. The
Constitution Bench in Steel Authority of India's
case (supra) was primarily concerned with the
meaning of the expression "appropriate
Government" in S. 2(1) (a) of the Contract Labour
(Regulation and Abolition) Act, 1970 and in S.2(a)
of the Industrial Disputes Act, 1947 and the other
issue was automatic absorption of the contract
labour in the establishment of the principal
employer as a consequence of an abolition
notification issued under S. 10(1) of the Contract
Labour (Regulation and Abolition) Act. The Court
while overrulling the judgment in Air India
Statutory Corporation v. United Labour Union
1997 ICLR 292 S.C., prospectively, held that
neither S.10 of the Contract Labour (Regulation
and Abolition) Act nor any other provision in the
Act, whether expressly or by necessary
implication, provides for automatic absorption of
LIR No. 4812/2016 31/64
contract labour on issue of notification under the
said section, prohibiting contract labour and
consequently the principal employer is not
required to absorb the contract labour working in
the concerned establishment.
In the aforesaid decision, firstly, the issue
whether contract labourers working in statutory
conteen(s) would fall within the meaning of
expression "workmen" under the Act, 1948 and
therefore they are employees of the principal
employer to fulfil its obligation under S.46 of the
Act, 1948 engages a contractor, the employees of
the contractor can claim regularisation and
extension of the service conditions extended to the
employees of the principal employer did not
remotely arise for consideration of the Court.
Secondly, in our considered view, the
observations made by the Constitution Bench in
paragraph 107 of the judgment by no stretch of
imagination can be considered 'the law declared'
by the Court. We say so for the reason, the Court
after noticing several decisions which were
LIR No. 4812/2016 32/64
brought to its notice, has summarised the view
expressed in those decision in three categories.
The categorisation so made cannot be said the
declaration of law made by the Court which
would be binding on all the Courts within the
territory of India as envisaged under Article 141
of the Constitution of India. This court in the case
of The Commissioner of Income Tax v. Sun
Engineering Works (P) Ltd., (1992) 4 SCC 363,
has observed:
"39. It is neither desirable nor
permissible to pick out a word or a sentence from
the judgment of this Court under consideration
and treat it to be complete 'law' declared by this
Court. The judgment must be read as a whole
and the observations from the judgment have to
be considered in the light of the questions which
were before this Court. A decision of this Court
takes its colour from the questions involved in
the case in which it was rendered and while
applying the decision to the later case, the Courts
must carefully try to ascertain the true principle
laid down by the decision of this court and not
LIR No. 4812/2016 33/64
pick out words or sentences from the judgment,
divorced from the context of the questions under
consideration by this Court, to support their
reasonings."
In view of above citation, it can be said safely that the law
relied upon by the managements in argument no. 4 is not a
precedent.
17. Moreover, following are the additional facts which are
compelling this court to hold that management no. 1 & 2 are not
two different entities but only one management:
A. There is no dispute between the parties that business purchase
agreement dated 15.08.2003 was entered between HTL and HTML
where HTL was seller and HTML was purchaser. It was signed by
Ms. Shobhna Bhartia as authorised signatory of seller / M1 and by
Sh. Priyavart Bhartia, authorised signatory of purchaser/M2. MW1
Mr. V.K. Charoria (Director and Company Secretary of HTL) had
deposed in crossexamination of the case titled as workman (Aita
Ram) Vs. HTL, ID no. 207/10/05 decided by thethen POIT Mr.
Mahavir Singhal on 23.01.2012, that at the relevant time, Board of
Directors of management no. 1 consisted of Sh. S.M. Aggarwal, Sh.
LIR No. 4812/2016 34/64
D.N. Patodia, Sh. M.D. Dalmia, Mr. K.K. Birla, Mr. Priyavart
Bharti and Ms. Shobhna Bhartia. Point to be noted is that at the
relevant time Mr. Priyavarth Bhartia was director of management
no.1 on one hand and he was authorised signatory of management
no. 2. Moreover, Mr. Priyavarth Bhartia is the son of Ms. Sobhna
Bhartia.
B. MW1 Mr. V.K. Charoria deposed in above mentioned case
that he did not resign management no. 1 but on continuity on
service basis, he was moved to management no. 2 w.e.f.
01.07.2003. It shows that directors of holding company i.e. HTL
and subsidiary company HTML were interchangeable.
C. As per memorandum and articles of association of HTML, its
object no. 1 is printing, publishing and selling of one or more
newspapers and periodicals including magazines, books and
pamphlets or any other publication in English, Hindi or any other
language anywhere in India, either daily or otherwise. To the same
effect is the object of management no. 1 i.e. HTL as mentioned in
memorandum and articles of association of HTL which still exists
in the record of Registrar of Companies.
D. It is mentioned in transfer deed dated 01.11.2003 executed
LIR No. 4812/2016 35/64
between both managements that management no. 1 was the 100%
share holder of management no. 2. Consequently, the subregistrar
passed order that stamp duty was not required as 100% share was
being held by the holding company.
E. Transfer deed was signed by Mr. V.K. Charoria on behalf of
management no. 2 i.e. HTML on 01.11.2003. On 20.12.2003, same
Mr. V.K. Charoria signed declaration appearing at page no. 296 on
behalf of management no. 1 i.e. HTL.
F. For authorising Mr. Dinesh Mittal, Ms. Shobhana Bhartia had
executed Power of Attorney dated 23.11.2006 on behalf of HTML
i.e. management no. 2. Same Ms. Shobhna Bhartia had executed
Power of Attorney dated 28.10.2005 in favour of Mr. Jagjeet Singh,
on behalf of HTL i.e. management no. 1.
G. As per transfer letter, one Navneet Kaushik was transferred to
HTML/M2 w.e.f July 2003. Despite transfer to HTML in July
2003, Mr. Kaushik had signed written statement dated 24.10.2005
appearing at page no. 2 on behalf of HTL/M1 which was filed
before Labour Commissioner.
H. The business purchase agreement Ex. M1W1/3 was signed by
LIR No. 4812/2016 36/64
Ms. Shobhana Bhartia on behalf of HTML and by Mr. Priyavrat
Bhartia on behalf of HTL. Perusal of that document shows that
address and phone numbers of both parties are the same.
I. The agreement dated 05.03.2004 Ex. M1W1/4 was signed by
Mr. V.K. Charoria on behalf of HTML/M2 and by Mr. S.M.
Aggarwal on behalf of HTL/M1. Perusal of the agreement shows
that address and phone numbers / fax numbers of both
managements are same.
J. Letter dated 01.02.2006 Ex. M1W1/12 was written by M2 to
M1 regarding termination of agreement dated 05.03.2004. It was
answered by M1 vide letter dated 10.02.2006. Perusal of the letter
and reply shows that phone numbers / fax numbers and addresses of
both managements are the same. If both were separate entities
since 2003, how the phone numbers and fax numbers can be the
same in 2006.
K. As per annual report Ex. M1W1/W1 for the year 2002 -
2003, Mr. K.K. Birla, Ms. Shobhana Bhartia, Mr. Priyavrat Bhartia,
and Mr. S.M. Aggarwal were the directors of management no. 1 and
Mr. K.K. Birla was the Chairman. The same report shows that
directors of management no. 2 in that year were Ms. Shobhana
LIR No. 4812/2016 37/64
Bhartia, Mr. Priyavrat Bhartia and Mr. Shamit Bhartia.
L. As per annual report Ex. M1W1/W2 for the year 20032004,
directors of management no. 1 were Ms. Shobhana Bhartia, Mr.
S.M. Aggarwal and Mr. Priyavrat Bhartia. As per the same report,
the directors of management no. 2 were Mr. K.K. Birla, Ms.
Shobhana Bhartia, Mr. S.M. Aggarwal, Mr. Shamit Bhartia, Mr.
K.K Birla, Mr. Y.C. Deveshwar and Mr. K.N. Memani. It means in
that year also, both managements had almost the same set of
directors.
M. As per annual report Ex. M1W1/W3 for 20042005,
directors of management no. 1 were Dr. K. K. Birla, Ms. Shobhana
Bhartia, Mr. M.D. Dalmia, Mr. D.N. Patodia, Mr. Priyavrat Bhartia
and Mr. S.M. Aggarwal. As per the same report, the directors of
management no. 2 were Mr. K.K. Birla, Ms. Shobhana Bhartia, Mr.
Shamit Bhartia, Mr. Y.C. Deveshwar, Mr. K.N. Memani and Mr.
Sanjeev Kapoor. It means that the directors of both managements
were almost same in the year 20042005.
N. As per annual report for the year 20052006, directors of
management no. 1 were Dr. K.K. Birla, Ms. Shobhana Bhartia, Mr.
D.N. Patodia, Mr. S.M. Aggarwal and Mr. Shamit Bhartia. As per
LIR No. 4812/2016 38/64
the same report, the directors of management no. 2 were Mr. K.K.
Birla, Ms. Shobhana Bhartia, Mr. K.N. Memani, Mr. Ajay Relan,
Mr. Roger Greville, Mr. Priyavrat Bhartia and Mr. Shamit Bhartia.
It means that in that year also, both managements had some
common directors.
O. Both managements have been as one and the same
management by Mr. Mahavir Singhal, thethen POIT, in the case
titled as the Workmen Vs. HTL & Anr., bearing ID no. 207/10/05
decided on 23.01.2012. That award has become final.
18. In view of above discussion, this court is of the firm opinion
that both managements are one and the same management.
19. Moreover, The Working Journalists and Other Newspaper
Employees (Conditions of Service) and Miscellaneous Provisions
Act, 1955 provides that the two or more newspaper establishments
under common control shall be deemed to be one establishment.
Following provisions of section 2(d) of the Act are highly relevant:
2(d) "newspaper establishment" means an establishment under
the control of any person or body of persons, whether incorporated
or not, for the production or publication of one or more newspaper
LIR No. 4812/2016 39/64
or for conducting any news agency or syndicate and includes
newspaper establishments specified as one establishment under the
Schedule;
Explanation - For the purposes of this clause,
(a) .....
...(b) a printing press shall be deemed to be a newspaper
establishment if the principle business thereof is to print
newspaper;
The Act has only one schedule U/s 2(d) in which it is
mentioned.
1. For the purposes of clause (d) of section 2,
1. Two or more newspaper establishments under common
control shall be deemed to be one newspaper establishment;
2. ..........
3. ..........
2. For the purposes of paragraph number 1 (1), two or more
establishments shall be deemed to be under common control
(a) (i) ...........
(ii) .........
(iii) Where the newspaper establishments are owned by
bodies corporate, if one body corporate is a subsidiary of other
body corporate, or both are subsidiaries of a common holding
company or a substantial number of their equity shares are owned
LIR No. 4812/2016 40/64
by the same person or group of persons, whether incorporated or
not.
It is the admitted position of both parties that management
no. 2 was 100% subsidiary of management no. 1 in the beginning.
As of today, it is still the subsidiary of management no. 1 with 69%
shares. So, as per section 2(d) and schedule attached to section 2(d)
of the The Working Journalists and Other Newspaper Employees
(Conditions of Service) and Miscellaneous Provisions Act, 1955,
two newspaper establishments can be said to be a one newspaper
establishment, if relation between them is of holding and subsidiary
establishment which in the case in hand is the admitted position.
The objection of ARMs to the application of the schedule is that
both establishments should be newspaper establishments and that
after selling of media business, the management no. 1 is not a
newspaper establishment. But that argument is of no consequence
because as per the articles of association, the main business of
management no. 1 is to print, publish and sell newspapers,
periodicals and magazines in Hindi and / or other languages. That
memorandum is still on the record of register of companies. The
management no. 1 did not place on record any document to show
that it was no more in printing, publishing and selling newspapers.
So, by operation of law as contained in the The Working Journalists
LIR No. 4812/2016 41/64
and Other Newspaper Employees (Conditions of Service) and
Miscellaneous Provisions Act, 1955, both managements are one
establishment. In that case, lifting of corporate veil is not required.
Issue no. 1:
20. This issue was framed as the management had taken
objection in written statement that claimant's case for the same
relief had earlier been dismissed twice and hence, the present case
was barred by Resjudicata.
Previous ordersheet shows that that the managements had
moved an application for dismissal of the case on the ground that it
was barred by resjudicata. That application was decided vide
detailed order dated 26.04.2008 with following observations:
17. Testing the present objections on the anvil of the law,
codified as well as the enunciations of the Hon'ble Supreme Court,
the orders dated 08.05.2007 and 07.07.2007 do not fall within the
definition of Awards (M/s Cox & Kings (Agents) Ltd. vs. Their
Workmen & Others) (supra), hence it cannot be said that the said
orders have become final, deciding the dispute between the parties
with some finality, the principles of resjudicata would therefore not
apply to the present proceedings.
LIR No. 4812/2016 42/64
21. So, by dismissing the application of the managements to
dismiss the case on the ground of resjudicata, the court has already
decided this issue in favour of claimant and against managements.
Issue no. 3:
22. The first argument of Ld. ARW is that as per section 2(oo) of
ID Act 1947 retrenchment means termination of service of
workman by the employer for any reason whatsoever otherwise
than as punishment inflicted by way of disciplinary action. He
argued that if the service of a person has been terminated on the
ground of misconduct, the same does not amount to retrenchment.
In the case in hand, MW1 deposed that when the claimant did not
accept his transfer to management no. 2, the management no.1
terminated his service by taking disciplinary action based upon that
misconduct. He submitted that the crossexamination of MW1
establishes that claimant's service was not retrenched and that it was
terminated.
Ld. ARM replied that retrenchment letter was issued to the
claimant and he has placed the same on the file. As per that letter,
his service was retrenched because he had become surplus. He was
never terminated. He argued that when competition is between oral
and documentary evidence, precedence be given to the
LIR No. 4812/2016 43/64
documentary evidence. Moreover, the claimant did not take specific
plea in statement of claim that termination of his service was bad
in law as it was based upon misconduct and without chargesheet
and domestic inquiry.
23. In J.K. Iron and Steel Company Ltd. Vs. Iron Steel
Mazdoor Union and others, AIR 1956 S.C. 231, the Hon'ble
Supreme Court held that the Labour Court cannot totally ignore the
pleadings to give something good to workmen. Following was held
by the Apex Court in the Management of Hindustan Steel Ltd.
Vs. The Workmen and Ors., (1973) 3SCC564:
12. It is also clear that the respondent had not specifically raised
any plea of defect in the notice given to Shri Naidu. The Tribunal, however, allowed the objection of the notice Ex.7 being conditional to be argued on the view that the notice was infirm on the face of it and that the objection was covered by the general plea in the written statement filed on behalf of Shri Naidu, to the effect that the grounds given in the retrenchment notice were all false and cooked up. On this view the notice was held to be conditional and, therefore, invalid and Shri Naidu was held entitled to be reinstated.
13. In our view, Shri Setalvad was fully justified in submitting that the management had been taken by surprise and that the LIR No. 4812/2016 44/64 Tribunal was in error in holding the general ground in the written statement to cover the specific plea of infirmity of the notice because of its being conditional. The plea of statutory defect in the notice should, in our opinion, have been reasonably specific and precise so as to enable the appellant to meet it. The general plea could not serve the object of putting the appellant on guard about the precise case to be met at the rial and tell the management the precise nature of the plea with respect to the defenct in the notice, to enable them to meet it. In our view, if clause (b) of Section 25F is excluded from the consideration and the plea relating to infirmity of the notice is ruled out, as we hold on these two points in agreement with Shri Setalvad, then, the impugned order is clearly insupportable. We are, therefore, constrained to allow the appeal, set aside the impugned award and hold that the retrenchment of Shri Naidu was proper and justified. In the circumstances of the case there would be no order as to costs.
24. Perusal of statement of claim shows that the claimant has not mentioned expressly or implicitly that his service was terminated due to some misconduct. In fact, it is mentioned that his tenure with management was neat, clean and smooth and that there was no allegation of any misconduct. He has challenged termination on other grounds. To the same effect is his affidavit in evidence.
LIR No. 4812/2016 45/64Management's clear cut defence is that claimant's service was retrenched and that he was never terminated. In support, it is heavily relying upon retrenchment letter. It is the plea of claimant also that the management had delivered him retrenchment letter. Perusal of the letter clearly shows that claimant's service was retrenched as he had become surplus. It is not mentioned in the letter that he was guilty of any misconduct. So, argument of Ld. ARW on this point is totally beyond pleading and is hit above citations.
Moreover, MW1 deposed in examination in chief that claimant's service was retrenched. His crossexamination to the effect that claimant's service was terminated due to misconduct, is totally in contradiction to examination in chief and retrenchment letter placed on record by both parties. When competition is between documentary and oral evidence, precedence is to be given to documents because the documents never lie but a person can. So, argument of Ld. ARW that claimant's service was terminated on the ground of misconduct, is not tenable.
25. The second argument of Ld. ARW is that the management did not comply with the conditions prescribed U/s 25F (c) of ID Act 1947 precedent to retrenchment of service. He submitted that the management, before terminating claimant's service, was required to LIR No. 4812/2016 46/64 serve notice on the appropriate government. But such notice was not served and hence, termination is illegal. In support, he relied upon Raj Kumar vs. Director of Education and Ors. (2016) 6 SCC541.
Ld. AR for both managements argued that the above argument of ARW is hit by the concept of "beyond pleading"
because the claimant did not challenge his termination on the ground that the management had not served notice on appropriate government before termination. He cannot take that ground at this stage. They next argued that the management was required to comply with only first two conditions mentioned in section 25F (a) and 25F (b) as both are mandatory whereas the condition prescribed U/s 25F (c) is only directory and requires only substantial compliance.
26. Perusal of statement of claim shows that the claimant did not challenge termination of service expressly or implicitly on the ground that the management had not served notice of termination of his service on the appropriate government. Due to that reason, there is no say of the management on this point in written statement. Perusal of rejoinder shows that the claimant did not mince a single word that termination of his service was bad in law due to non LIR No. 4812/2016 47/64 service of notice on the appropriate government. To the same effect is his affidavit in evidence. On this score, the argument of Ld. ARW is hit by above citations i.e. Management of Hindustan Steel Ltd. Vs. The Workmen and Ors. (Supra) and J.K. Iron and Steel Company Ltd. Vs. Iron and Steel Mazdoor Union and Ors. (Supra).
In Raj Kumar vs. Director of Education and Ors. (Supra), Hon'ble Apex Court held that compliance of condition contained in section 25F (c) was mandatory. In rebuttal, the managements have relied upon Pramod Jha and Ors. Vs. State of Bihar (2003) 4SCC 619 to argue that compliance of condition was not mandatory.
Perusal of para no. 11 of the judgment relied upon by managements show that the Apex Court had held that compliance of clause (c) was directory as substantial compliance was enough. It is not the case of the management no. 1 that it had complied with the condition U/s 25F (c) of the Act substantially. It did not place on record any notice etc. sent by it to the appropriate government either before or after termination of service of the claimant. So, it is held that the managements had not complied with the condition U/s 25F (c) of the Act even substantially. But it has already been held LIR No. 4812/2016 48/64 that argument of Ld. ARW on notice point is beyond pleading as such objection was not taken in statement of claim.
27. The third argument of Ld. ARW is that at the time of termination of service of the claimant, more than 100 workers were working with the management. So, it was required to obtain permission of the appropriate government U/s 25N of ID Act 1947 before terminating his service. Admittedly, the management had not moved any application for permission and hence, termination / retrenchment has become illegal.
Ld. ARM replied that provisions of section 25N of the Act are applicable only to industrial establishments. As per section 25L of the Act, industrial establishment means a factory as defined in clause (m) of section 2 of the Factories Act 1948. As per clause (m) of the Factories Act 1948, only that premises shall be factory where a manufacturing process is done. The management has already sold media business to management no. 2. It has also sold the printing press. The management no. 1 is no more in publishing business and so, it is not an industry. The second argument on non application of section 25N is that the strength of workers of management no. 1 was only 34 at the relevant time and the section comes into play when the strength is more than 100.
LIR No. 4812/2016 49/64Ld. ARW replied that object of incorporation of management no. 1 which is still existing in the record of Registrar of Companies, is to print, publish and sell newspapers, periodicals and magazines. Process of printing means manufacturing activity and hence, the management is a factory due to which provisions of section 25N are applicable. He submitted that strength of workers of management no. 1 was more 100 at the relevant time.
28. It has already been observed that objects and reasons of incorporation of both managements are the same which includes printing, publishing and selling of newspapers, magazines and periodicals in English and other languages. It has already been observed that management nos. 1 and 2 are not two different entities but only one management. So, even if, it is presumed that only management no. 2 is engaged in the business of printing of newspaper, the same is deemed as the business of management no.
1. It is the admitted case of management no. 1 that it had terminated services of some employees who were working in the printing division on the ground that it had sold printing press to management no. 2. That order has already been set aside by Ld. POIT and the management no. 1 has been directed to reinstate those employees and the award has become final. So, as per the award, LIR No. 4812/2016 50/64 terminated employees are employees of management no. 1 in printing press. The printing of newspaper includes manufacturing process and that process makes management a factory and consequently an industrial establishment upon which the provisions of section 25N are applicable.
M1W1 deposed in crossexamination that after termination of 362 employees after 03.10.2004, the number of employees of management no. 1 was 17001800. He placed on record a list of employees whose service was terminated / retrenched from 2004 to 2007 and as per that list, the strength of such employees was 371. It has been mentioned in affidavit in evidence of M1W1 that 265 workers had taken VRS in 2006. So, from 2004 to 2007, 371+265=636 employees were either terminated/ retrenched or had taken VRS. Before that, the strength of employees was 17001800 and hence, in the end of 2007, the strength of employees of management no. 1 was 1700636=1064. That calculation deposed by M1W1 is totally in contradiction to the the record filed by M1W2 Mr. Shiv Kumar, Senior Security Service Assistant, EPFO, Wazirpur. It is pertinent to mention that the said witness has placed on record annual return of PF contribution of employees of management no. 1 for the period 20072008 as Ex. M1W4. As per that record, the management no. 1 had deposited PF only for 34 LIR No. 4812/2016 51/64 employees in 20072008. But it has been admitted by M1W2 in crossexamination that the return was meant only for Delhi office. So, the management did not examine witnesses from the concerned department who might have brought the strength of employees of management no. 1 of on all India basis for whom it had deposited PF in 20072008. Moreover, Ex. M1W2/4 is the record only of deposit of PF whereas the evidence of M1W1 throws direct light on the strength of workers who were actually working with the management no.1. Hence, evidence of M1W1 is direct on the issue whereas Ex. M1W2/4 is not throwing any light on the workers who were actually working with the management. As per cross examination of M1W1, the total strength of employees of management no. 1 at the time of termination of service of claimant was 1064. Such strength comes out more than 100.
As the management no. 1 is industrial establishment and as the strength of its employees on the date of termination of the claimant was more than 100, it is held that provision of Section 25N of the Act are applicable to it. The management was required to take prior permission of the appropriate government before terminating the service of the claimant which it did not take and hence, as per section 25N(7) of the Act, the retrenchment of his service has become illegal from the date on which notice of LIR No. 4812/2016 52/64 retrenchment was given to him.
29. The last argument of Ld. ARW is that plea of management no.1 that claimant's service was retrenched as he had not joined the service of management no. 2 despite offer, is untenable because it had not issued any offer/ offer of transfer letter to him to join management no. 2. The management no. 2 also did not write any letter to claimant asking him to join the job. He submitted that he had no notice that his service had been transferred to management no. 2 and hence, there was no question of joining the management no. 2. So, he cannot be said to have become surplus.
Ld. ARMs argued that the management had pasted notice dated 07.02.2004 on the notice board addressed to the union of the claimant intimating all workers that their service had been transferred to management no. 2. Whoever had desired to join management no. 2, transfer letter was issued to him. But the claimant had refused to join management no. 2 and hence, no transfer letter was issued. As he did not join management no. 2 and as no work was left with management no. 1, he became surplus and his service was retrenched.
30. Notice dated 07.02.2004 is on the file. It has been signed by LIR No. 4812/2016 53/64 Deputy Manager (HRD) Mr. A.S. Sethi on behalf of the management. It is addressed to nobody but its copy was sent to Hindustan Times Employees Union (Registered). Perusal of the notice shows that it is not notice of the fact to the workers that their service had been transferred to management no. 2 and that they were required to join management no. 2. Rather, it is mentioned that after creation of management no. 2, the matter was discussed with the union and it was explained to the union that management no. 2 was willing to take the service of all employees of management no. 1 on their existing terms and conditions, on on going basis. The union declined to accept the offer of HTML. The purpose of the notice is mentioned at the end in the words that in view of categorical stand of the union declining to accept the transfer of employees of management no. 1 to management no. 2, the employees shall continue to remain employees of management no.
1. So, notice dated 07.02.2004 is neither an offer nor transfer of the claimant to management no. 2. Rather, it is a general notice vide which it was intimated to the workers that their union had declined to accept their transfer to management no. 2 and hence, they shall continue to be its employee. But the notice was totally repudiated by the union by writing a letter dated 05.03.2004 to management no. 1 that the union had never declined any offer of transfer of employees of management no. 1 to management no. 2. Hence, it is LIR No. 4812/2016 54/64 held that notice dated 07.02.2004 does not amount to transfer of service of claimant to management no. 2.
When M1W1 was pricked time and again on production of any letter vide which intimation might have been given to the claimant that his service had been transferred to management no. 2, at last, he produced three documents Mark M1, M2 and M3 dated 22.12.2003, 22.12.2003 and 30.12.2003 respectively. Perusal of those document shows that none of them is transfer of service of claimant to management no. 2.
M1W1 admitted in crossexamination dated 05.02.2015 that transfer letter issued to the claimant was not on the file. He further admitted that there was no document on the file showing that transfer letter was delivered to the claimant. He next deposed that the refusal was of the union on behalf of the workers due to which some workers did not join management no. 2. In crossexamination, M1W1 clarified that the claimant had not refused to join management no. 2 and that refusal was by union on his behalf. He further deposed in crossexamination that no offer letter was given to the claimant. He next deposed that there was no letter on the judicial file which may prove that any offer was given to the worker by the management after 05.03.2004 till the date of termination of LIR No. 4812/2016 55/64 his service. Hence, as per M1W1, the management had not issued any transfer or offer letter to claimant to join management no. 2. He clarified that such offer was given to his union which declined the offer. He did not place on record any offer letter or transfer letter issued to the claimant through union. Plea of Ld. AR for management no. 1 that transfer letters were issued only to those workers who had accepted the transfer is not finding place in written statement. Moreover, that plea is not cogent because it was agreed between both managements that all the workers of management no. 1 shall be deemed the management no. 2 with the terms and conditions on which they were working with the management no. 1. As all employees of management no.1 were to go to management no. 2 and the management no. 1 was bound to issue transfer to all its employees. It should have issued transfer letter to claimant also which it did not. Due to non issuance of transfer letter, the claimant had no occasion to join management no. 2 and due to that reason also, the termination is bad.
31. The management no. 1 did not take prior permission of the appropriate government U/s 25N of ID Act 1947 before retrenching claimant's service. It did not issue him letter transferring his job to management no. 2. Due to these reasons, the retrenchment / termination is illegal. This issue is decided in favour of claimant LIR No. 4812/2016 56/64 and against management no. 1.
Issue no. 2:
32. Ld. AR for management no. 2 argued that it is the case of the claimant himself that the management no. 1, as a part of business strategy and to meet competition in the market, created new entity by the name of management no. 2. It is his admitted case that he was employed by management no. 1 and his service was also terminated by management no. 1. The management no. 2 is a public limited company incorporated under the Companies Act having its own registration numbers and licenses obtained from statutory authorities including code numbers under ESIC and EPF. It never employed claimant. The claimant was never paid salary by it. He never worked with it. The management no. 2 had nothing to do with termination of his service. He next argued that claimant also admitted in crossexamination that till the day of termination of his service, he was employed with management no. 1.
Ld. ARW argued that it is mentioned in business purchase agreement executed between both managements that every employee of management no. 1 shall be the employee of management no. 2. Moreover, there is no difference between management nos. 1 & 2 and both are not two different entities but LIR No. 4812/2016 57/64 only one management.
33. Plea of the claimant in statement of claim and affidavit in evidence is that he was employed by the management no. 1 and that his service was terminated by management no. 1. He admitted in crossexamination that salary was paid to him by management no. 1. He did not place on record any document to show that he had ever joined management no. 2.
As per clause no. 7.1 of business purchase agreement, all the employees shall with effect from the effective date, stand transferred to the purchaser on the same terms and conditions of employment as were offered by the seller i.e. management no. 1 on continuity in service basis. The management no. 1 was to cause management no. 2, if required, to issue fresh employment letters to employees. It is mentioned in clause no. 7.4 that if the seller was unable to transfer employees to management no. 2 due to reasons beyond its control, the management no. 1 shall retain them and provide their service on contract basis to management no.2. Hence, as per clause no. 7.1, every employee of management no. 1 was to be transfered to management no. 2. Any employee who could not be transferred to management no. 2, shall remain on the roll of management no. 1 and his service was to be provided to LIR No. 4812/2016 58/64 management no. 2 on contract basis. For that purpose, both managements had entered into agreement dated 05.03.2004. But it is the case of the claimant himself that he never joined service of management no. 2 as he was not given any offer letter. He kept on working with management no. 1.
It has already been held that management nos. 1 and 2 are not separate entities in relation to their workers. They are one and the same management. Whoever is employee of management no. 1 shall be deemed to be the employee of management no. 2 and whoever is employee of management no. 2 is employee of management no. 1. Hence, it is held that by being employee of management no. 1, the claimant is employee of management no. 2 also. This issue is decided in favour of claimant and against management no. 2.
Issue no. 2(a):
34. This issue has already been dealt in argument no. 3 of issue no. 3 and decided in favour of claimant and against managements.
Issue no. 2(b):
35. During oral arguments, Ld. ARW did not say a single word on this issue. Perusal of written arguments shows that he wants to LIR No. 4812/2016 59/64 argue that no notice was given by the management till termination of service of the claimant U/s 9A of Industrial Disputes Act and the same was violation of the Act. In this regard he has relied upon Raj Kumar vs. Director of Education and Ors. (Supra).
The above citation deals with section 25F (c) of ID Act 1947 that notice is to be served on the appropriate government in case of termination of service of an employee. Ld. ARW did not tell the court how the managements had changed service condition of the claimant and which of the condition was changed. So, this issue is decided in favour of both managements and against claimant.
Relief:
36. Ld. ARW argued that the claimant is roaming idle since termination as he could not find any job despite his best efforts. So, he be granted reinstatement along with 100% back wages and continuity of service.
Ld. ARMs replied that the management no. 1 sold its media business to management no. 2 and no work was left with management no. 1 and that is why, the service of the claimant was retrenched. As no work is available with management no. 1, it cannot give him any employment. So, no useful purpose would be LIR No. 4812/2016 60/64 served by passing award of retrenchment. In this regard, they relied upon State of M.P. And Others Vs. Arjunlal Rajak (2006) 2 SCC 711 Civil Appeal no. 1266 of 2006, decided on February 24, 2006. They further argued that only 50% back wages be granted and in this regard, they relied upon Rajasthan State Road Transport Corporation, Jaipur Vs. Shri Phool Chand (Dead) through LRs. Civil Appeal No. 1756/2010, decided on September 20, 2018 and The Management of Regional Chief Engineer P.H.E.D. Ranchi Vs. Their Workmen Rep. By District Secretary 2018 LLR 1167 CAJ CA No. 9832/2018, dated 21.09.2018.
37. Both parties admitted during arguments that superannuation age of the employees of management no. 1 is 58 years.
38. In State of M.P. And Others Vs. Arjunlal Rajak (Supra), the Hon'ble Apex Court held that for non compliance with section 25F, ordinarily workmen would be directed to be reinstated with or without back wages. But when project or scheme or office itself is abolished, relief by way of reinstatement is not granted. The citation is not applicable because it has already been held that management no. 1 and 2 are not two separate entities in relation to the LIR No. 4812/2016 61/64 employees. Business of management no. 1 is the business of management no. 2 and business of management no. 2 is the business of management no. 1. So, it cannot be said that any office, project or scheme has been abolished by management no.1. Moreover, in Aita Ram's case (details given above) the Hon'ble POIT has directed management to reinstate workers and that award has become final. Taking cue from above citation that for non compliance with section 25F, ordinarily the workmen could be directed to be reinstated, the management is directed to instate claimant with continuity of service.
39. In Rajasthan State Road Transport Corporation, Jaipur Vs. Shri Phool Chand (Dead) through Lrs. (Supra), the appellant Rajasthan State Road Transport Corporation, Jaipur was a government department and deceased was working as a driver. The question for consideration before the Hon'ble Apex Court was whether the Hon'ble High Court and Labour Court were justified in awarding full back wages to the deceased workman after setting aside his dismissal order holding it to be bad in law. The Hon'ble Apex Court answered in following words:
10. Having heard the learned counsel for the parties and on perusal of the record of the case, we are inclined to allow the appeal in part and while modifying the impugned order award 50% LIR No. 4812/2016 62/64 back wages to the deceased workman (his legal representatives) in place of full wages.
11. In our considered opinion, the Courts below completely failed to see that the back wages could not be awarded by the Court as of right to the workman consequent upon setting aside of his dismissal/ termination order. In other words, a workman has no right to claim back wages from his employer as of right only because the Court has set aside his dismissal order in his favour and directed his reinstatement in service.
12. It is necessary for the workman in such cases to plead and prove with the aid of evidence that after his dismissal from the service, he was not gainfully employed anywhere and had no earning to maintain himself or/ and his family. The employer is also entitled to prove it otherwise against the employee, namely, that the employee was gainfully employed during the relevant period and hence not entitled to claim any back wages. Initial burden is, however, on the employee.
In, The Management of Regional Chief Engineer P.H.E.D. Ranchi Vs. Their Workmen Rep. By District Secretary (Supra), the Hon'ble Apex Court held that workman has no right to claim back wages as of right only because the court had set aside his dismissal order in his favour and directed reinstatement. The court LIR No. 4812/2016 63/64 granted workman 50% back wages.
It is the admitted plea of both parties that the workers in Aita Ram's case have been held by Hon'ble High Court of Delhi to be entitled to 50% back wages. In above citations also, the Hon'ble Apex Court had granted only 50% back wages. So, the management is directed to pay claimant 50% back wages from the date of termination.
40. In view of above discussion, management is directed to reinstate claimant with continuity of service and 50% back wages. The management is directed to pay that amount to claimant within one month after expiry of 30 days from the date of publication from today failing which it shall be liable to pay interest @ 9% per annum from today till realization. Parties to bear their own costs. Award is passed accordingly.
41. The requisite number of copies be sent to the Govt. of NCT of Delhi for publication of the award. File be consigned to record room.
Dictated & announced (UMED SINGH GREWAL)
in the open Court on 02.02.2019 POLCXVII
DWARKA COURTS, NEW DELHI
LIR No. 4812/2016 64/64