Madhya Pradesh High Court
Sae Mazdoor Union, Jabalpur vs The Labour Commissioner, Indore And ... on 15 March, 2001
Equivalent citations: 2001(3)MPHT200
ORDER S. K. Kulshrestha, J.
1. The petitioner Union seeks a writ for quashing the order dated 27-12-2000 (Annexure P-1) passed by the first respondent, by which the permission granted to respondent No. 2 for lay-off by order dated 24-10-2000 has been maintained with the modification with regard to the period of lay-off. The petitioner is a Trade Union registered under the provisions of the Trade Unions Act, 1926, and claims that majority of workmen of respondent No. 2 are its members. It is stated that respondent No. 2 employs more than 100 workmen attracting the applicability of the M.P. Industrial Relations Act, 1960, and is required to follow the provisions of Chapter V-B of the Industrial Disputes Act for any intended lay off. It is alleged that without serving a copy of the application, respondent No. 2 made an application to respondent No. 1 on 14-9-2000 seeking permission to lay-off its employees and without service of any notice on the petitioner Union, respondent No. 1 proceeded to decide the matter after issuing a notice only to the other two Trade Unions (respondents 3 and 4). It is alleged that these Unions are employer sponsored pocket Unions and, in collusion, permission was obtained by order dated 24-10-2000 (Annexure P-2), passed by respondent No. 1. This order of respondent No. 1 was challenged by the petitioner in Writ Petition No. 6676/2000, in which on an objection being raised by the counsel for the employers that a review application had already been filed, direction was issued for decision on the review application and the stay application filed by the petitioner Union and pending such decision, the operation of the order granting permission for lay-off was stayed. The review petition having been dismissed by the impugned order, the petitioner Union has once again approached this Court in the present writ petition challenging the said order on the ground of procedural irregularities and absence of legal ground warranting such a permission.
2. The respondent No. 2 employer it its reply has challenged the locus standi of the petitioner Union on the ground that although a registered Union, it has not been in action for more than a decade with virtually no membership and a plea of alternative remedy of raising a dispute has also been raised and circumstances necessitating the course followed have been referred to. The grounds on which the action has been challenged have also been traversed in the reply and allegations refuted and it has been pointed out that after following due procedure with regard to service of the application for permission for lay-off, the matter has been decided on the objective criteria laid down in Section 25M of the Industrial Disputes Act and the petition is inappropriate for resolving the dispute relating to the facts. Respondents 3 and 4 have also filed reply, challenging locus standi of the petitioner Union on the ground of it having been non-functional for more than eleven years and virtually not having any membership. It is alleged that the petitioner Union is always engaged more in activities destructive of industrial peace and harmony rather than for the benefit of the employees and in view of the fact that the respon-
dent Unions were fully satisfied about the course suggested by the employer, as almost 50% of the workers had to be kept idle for a long period, the order did not call for any interference. It is also averred that due notice of the application made by the Management was given to the Unions which were representing the workmen and such a notice was also pasted on the notice board, with the result, there was full participation of the workmen in the proceedings through the respondent Unions. The claim of the petitioner with regard to membership has also been denied by referring to the number of workmen who have denied being the members of the petitioner Union. To the petitioner's rejoinder, an additional return has been filed to point out that the letter with regard to the pending orders had no co-relation with the application for lay-off as the purpose of the letter was to make financial arrangement and for grant of time for refund of the amount borrowed.
3. The locus standi of the petitioner Union has been seriously challenged by the respondent employer and the other Unions (respondents 3 and 4) and its bona fides disputed on the ground that the petitioner Union after having been inactive and dormant since 1989 has suddenly sprung up to challenge the order passed by respondent No. 1 based on general consensus of the workmen to save the industry from disastrous consequence of closure and to avert retrenchment. It is alleged by the employer that this Union has no existence and virtually no membership and only respondents 3 and 4 Unions were operating in the Factory. It is averred that all agreements in the past ten years including the last agreement regarding service conditions were signed between the Management and respondents 3 and 4 which have been accepted by the employees. In particular, it has been pointed out that out of 749 employees, 685 employees had informed the Management that they were members of respondents 3 and 4 and given authorization in favour of the said respondents for deduction of subscription from their wages and payment thereof to respondents 3 and 4. According to the employer, the Union being only a paper Union, it does not represent the workmen.
4. In the return of respondents 3 and 4, it is asserted that out of 749 employees, 685 are members of these Unions and the petitioner Union has not been participating in any negotiations in the past eleven years. It is pointed out by these respondents that the petitioner Union has always resorted to the activities destructive of industrial peace by engaging in illegal strike, go-slow, Gherao etc. and has acted always with the intention of bringing the industry to stand still rather for the benefit of the employees. In the additional return filed by respondent No. 2, it has been reiterated that all discussions ever since 1989 have taken place between the Management and respondents 3 and 4. The claim of the petitioner with regard to membership has also been disputed and an affidavit illustrative of the document having been forged to indicate membership of the Union, has been filed. Learned counsel for the petitioner has submitted that under sub-section (2) of Section 25M of the Industrial Disputes Act, application for permission under sub-section (1) of Section 25M can be made by the employer only after copy of such an application has simultaneously been served on the workman concerned in the prescribed manner. The submission of the learned counsel is that the provision clearly contemplates notice to individual workman and, therefore, each workman has locus to challenge the order passed by the respondent No. 1. It is not disputed that the Secretary of the Union himself is a workman and can, contends learned counsel, therefore, challenge the order passed by respondent No. 1. According to the stand of the learned counsel for the petitioner, the membership of the Union for the purpose of locus standi to challenge the action pales into insignificance and the entitlement of the individual workman to challenge the action cannot be disputed in view of the specific requirement in the Act of notice of such application to the workmen. In this connection, reliance has been placed on the decision of this Court in Bhilai Steel Employees Association Vs. A. W. Kanmadikar (1974 JLJ 91). In that case, maintainability of petition under Art. 226 was challenged on the ground that the petitioner Trade Union was not representative Union and the representative Union were a party before the Industrial Court which had not challenged the order passed by it. In dealing with the contention, it was observed that a petition under Arts. 226 and 227 of the Constitution was an original proceeding in the High Court even though the relief sought was for quashing the order of the Industrial Court. Therefore, all that was necessary for the petitioners to show was that their interest was affected by the order. The observations contained in Paragraph 9 of the decision read as extracted below:
"Now, a proceeding under Articles 226 and 227 of the Constitution cannot be said to be a proceeding under the Act. A petition under Articles 226 and 227 is an original proceeding in the High Court, though it may seek for quashing of an order of the Industrial Court or Labour Court made in a proceeding taken under the Act. Such a proceeding in the High Court is quite independent of the original controversy and cannot be understood to be a continuance of the proceeding before the Industrial Court; See Ramesh Vs. Gendalal. Therefore, Sections 26 to 28 of the Act, which govern the mode of representation of employees in a proceeding under the Act, cannot apply to a proceeding begun by a petition under Articles 226 and 227 of the Constitution in the High Court. If the petitioners are affected by the order of the Industrial Court, they will have sufficient interest to move the High Court for interference under Articles 226 and 227. It is not disputed before us that A.R. Kumar and N.P. Sharma who are petitioner No. 2 in these petitions arc employees in the Bhilai Steel Plant and are affected by the order of the Industrial Court. They have, therefore, sufficient interest to file these petitions."
4. In the present case, there can be no dispute that even Balihari who has filed the petition in his capacity as General Secretary of the petitioner Union, is very much a workman of the respondent No. 2 and in his said capacity is entitled to challenge the impugned order. Even if for the purpose of argument of the respondents, it is assumed that the majority of workmen have disengaged and dissociated from the petitioner Union, yet on the pleadings of the parties, the petitioner Union has not become completely bereft of the membership and challenge to its locus standi to maintain the present petition is, therefore, quite unsustainable.
5. Legality and propriety of the order dated 27-12-2000 (Annexure P-1) and that of the order dated 24-10-2000 (Annexure P-2) has been challenged mainly and substantially on the ground that no case falling within the parameters laid down in Section 25N of the Act had been made out for grant of permission. It is not disputed that the provisions of Chapter V-B of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Act') apply in the case as the first respondent is covered by the provisions of Section 25K of the Act. Section 25M prohibits lay-off in such establishments except with prior permission of the appropriate Government or the specified authority obtained on the application made in this behalf. Such an application is required to be made by an industrial establishment except when such lay-off is due to shortage of power or to natural calamity, and in the case of a mine, it is due to fire, flood, excess of inflammable gas or explosion. Learned counsel has referred to the definition of 'lay-off' contained in Section 2(kkk) of the Act and contended that it is only on one or more of the conditions prescribed therein that a permission can be granted for lay-off. Section 2(kkk) reads as follows :--
" "lay-off (with its grammatical variations and cognate expressions) means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other connected reason to give employment to a workman whose name is borne on the muster-rolls of his industrial establishment and who has not been retrenched;
Explanation :-- Every workman whose name is borne on the muster-rolls of the industrial establishment and who presents himself for work at the establishment at the time appointed for the purpose during normal working hours on any day and is not given employment by the employer within two hours of his so presenting himself shall be deemed to have been laid off for that day within the meaning of this clause :
Provided that if the workman, instead of being given employment at the commencement of any shift for any day is asked to present himself for the purpose during the second half of the shift for the day and is given employment then, he shall be deemed to have been laid off only for one half of that day:
Provided further that if he is not given any such employment even after so presenting himself, he shall not be deemed to have been laid off for the second half of the shift for the day and shall be entitled to full basic wages and dearness allowance for that part of the day."
6. Contention of the learned counsel is that it was not a case of failure, refusal or inability of employer to give employment to workmen on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or on the ground of natural calamity or for any reason connected with the above that the application had been made, but what was urged by the respondent No. 2 before the specified authority was that the industry was dependent upon power plant development and on account of insufficiency of orders, it was going through a critical period as the power sector growth had been reduced from 12% to 3 to 4% affecting adversely the transmission industry. The contention of the learned counsel is that the case for lay-off stated by respondent No. 2 could not be co-related with any ground contained in Section 2(kkk) authorising the course, and therefore, the first respondent ought to have refused the permission. Learned counsel contends that the specified authority is under a duty to consider genuineness and adequacy of the reasons for lay-off in the interest of the workmen and all other relevant factors and since even a ground for lay-off under Section 2(kkk) had not been made out, permission could not have been granted. Reference has been made to the decision of a Division Bench of this Court in Hope Textiles Ltd. and another Vs. State of M.P. and others [1993 (1) LLJ 603] that where the only reason advance for seeking permission for lay-off was financial stringency, it was held by this Court that since financial stringency could not be a ground for lay-off within the meaning ascribed to it by Section 2(kkk), permission had been rightly refused by the specified authority.
7. Learned counsel for the respondents, per contra, submitted that where it is impossible for the employer to continue work and to grant employment, better alternative to the retrenchment of workers is lay-off to keep the industry going and it was, therefore, in the interest of the workmen that permission for lay-off was granted by the respondent No. 1. Learned counsel contends that the activities of the industry had come to a stand-still on account of there being more or less total absence of orders for its product and it was very much a reason connected with the other grounds contained in Section 2(kkk) and the Unions had also expressed their willingness to the course suggested in the interest of the workmen, that the permission had been granted. Learned counsel has referred to the decision of the Supreme Court in Management of K. Estate Vs. Rajamanickam (AIR 1960 SC 893) to support his contention that even in relation to the definition of 'lay-off prior to amendment made by Act 46/82 w.e.f. 21-8-84, the expression "any other reason" was construed to be one which was allied or analogous to the reasons already specified in the section. Learned Senior Counsel contends that since respondent No. 1 has exercised the discretion on objective consideration of relevant facts after affording opportunity to the parties which opportunity has admittedly become available to the petitioner in review, no fault can be found in the exercise of discretion where the facts were so glaring and patent indicating that it was impossible for the industry to give work to the employees.
8. The first question that arises for consideration in the present case, therefore, is as to whether a ground relating to the provisions of Section 25M read with Section 2(kkk) had been made out to seek permission for lay-off of the workmen of the respondent industry. What was stated before the specified authority was that since the industry was catering only to the demand of the power plants in the country and the industry was totally dependent on its growth, with the reduction of the power sector growth from 12% to 3 or 4%, the industry suffered a great set back and had no orders in hand to continue its production activities. It was pointed out that the industry did not have orders enough to run one shift much less to give work to the employees in every shift and, therefore, it had no alternative except to lay-off its workmen. Learned counsel submits that the ground projected was not referable to the causes enumerated in Section 2(kkk) and, therefore, even assuming, without conceding, the reason to be correct, permission could not have been granted for the reasons advanced in the application.
9. In Hope Textiles Ltd. and another Vs. State of M.P. and others (supra), the case before this Court was with regard to permission for lay-off because there was disconnection of power supply and financial crisis due to non-receipt of sanction from the Government to sell the land belonging to the industry and it was observed that financial stringency could not be accepted as a reason for laying off of the workmen and the ground was absolutely irrelevant. In the present case, the reason advanced before the first respondent was that it was impossible to run the industry as the industry had no orders in hand. Learned counsel for the respondents has referred to the decision of the Supreme Court in Management of K. Estate Vs. Rajamanickam (supra) to point out that if the reason is so inextricably connected with any of the reasons contained in Section 2(kkk), then it is a case which falls under the heading of "for any other connected reason" and, therefore, lay-off was permissible on the said ground. In the above case, it was observed that if there is a strike or slowing down of production in one part of establishment and if lay-off is the consequence, the reason for which lay-off has taken place would undoubtedly be similar to the reasons specified in the definition. In the present case, it is clear that it was not possible for want of adequate orders to engage workmen and 50% of the labour had been kept idle for a long period. It is not expected that the Management in fond hope of getting orders would continue production and accumulate stocks for which there is no fore-seeable market. If it does so, the action would itself depict that the employer had deliberately brought about a situation necessitating lay-off and the action would be exposed to being branded as mala fide, as observed in Tatanagar Foundry Co, Vs. Their Workmen (AIR 1962 SC 1533). It is not necessary that the resultant situation should be first created before application for permission to lay-off the employees is made. The fact that the situation of accumulation of stock would become inevitable if workers were not laid-off, would, therefore, in my considered view, fall squarely within the scope of the connected reasons. Under the circumstances, it cannot be said that the application for permission did not reflect any ground on the basis of which the respondent No. 1 could have objectively considered the case for grant of such permission.
10. While it is true that on the basis of the concession of the workmen Unions before respondent No. 1, decision could not have been taken for grant of permission for lay-off, in the present case, since the ground itself depicts that continuance of production would result only in piling up of the stocks and the accumulated stock is very much a ground covered by Section 2(kkk), it was quite permissible for the respondent No. 1 to grant permission having regard to the genuineness and adequacy of the reasons for such lay-off and the interest of the workmen and all other relevant factors. Even respondents 3 and 4 Unions in their return have clearly admitted that for want of sufficient work orders the Company could not continue manufacturing activities and majority of employees who had reported for duty were virtually staying idle for want of work. It has, in particular, been pointed out by the respondent Unions that the Management was seriously considering closing down the industry or retrenchment of the employees. The contention of the learned counsel for the petitioner in the above facts that since the Unions had also acted in the interest of the majority of employees, even assuming that they were not representing all of them, and there was every likelihood of the closure of the industry or retrenchment being the only alternative, if permission was granted keeping these relevant factors in mind, merely because a Union has shown dissatisfaction more for creating problems for the workmen than for solving them, extraordinary jurisdiction of the Court under Art. 226 of the Constitution should not be exercised to grant the relief claimed by the petitioner, especially when the reason for which permission has been granted is very much a reason connected with the reasons contained in Section 2(kkk), deserves to be accepted. Since in the order Annexure P-2 as also in the order Annexure P-l passed in review, the ground has been considered as germane and adequate for lay-off of the workmen and the permission has been granted keeping the interests of the workmen in mind, I do not find any substance in the contention of the petitioner that on the ground as projected before the specified authority permission could not have been granted under Section 25M of the Act.
11. At this stage, it is also necessary to consider the contention advanced on the basis of the document Annexure R-J-II purporting to be a letter written by R.P.G. Transmission Ltd., New Delhi, to the Industrial Development Bank of India, Mumbai. Reference has been made to the recital contained in the letter to the effect that the Company had an order book position of Rs. 226 crores and was expecting to achieve the turnover of Rs. 190-200 crores in the year 2000-2001 with a net profit of Rs. 35 lacs. On the basis of the above, learned counsel has contended that apparently the position of the Company was quite sound and it had sufficient orders in hand to continue the production and to provide work to the employees. In the additional return, the respondent No. 1 has stated that this document was not issued by the Factory at Jabalpur and in any case, the letter was in connection with borrowing of money and extension of time for payment, which had no co-relation with the application for lay-off. Learned counsel for respondent No. 2 has also contended that having work, order by itself, is not conclusive of the fact that the industry can continue production when it was notoriously known that the buyer Electricity Board had no finances available with them. Even on the basis of the work order, if manufacturing activities have been continued only to accumulate stock, the factual position would have been no different from the one stated in the application for lay-off. Reference has been made to the decision of the Supreme Court in Workmen Vs. Meenakshi Mills Ltd. [(1992) 3 SCC 336] to point out that the specified authority with necessary expertise and knowledge in the field has found the ground genuine and adequate and, therefore, even assuming that some orders were in hand, it cannot be said that the ground that the industry cannot continue its production to capacity, was false. Whether or not the orders stated in the document Annexure R-J-II were in hand and the industry could not have continued production, are questions essentially of facts which can best be decided on the basis of evidence and such an enquiry is not possible in the present proceedings. From the reasons advanced before the specified authority and the contention of the respondent Unions who were representing workmen, the specified authority has granted permission upon satisfaction about genuineness and adequacy of the ground which cannot be dislodged merely by reference to a statement made by any Unit in its letter addressed to a financial institution more for arrangement and adjustment of funds than anything else. Even in the review application, reference to the said letter was not made.
12. Only contention of the petitioner that now survives is with regard to the non-compliance of the provisions of Section 25M(2). Learned counsel has contended that under sub-section (2) of Section 25M, an application for permission under sub-section (1) thereof can be made by the employer in the prescribed manner only when a copy of such an application has been served simultaneously on the workman concerned in the prescribed manner. Reference has been made to Rule 75-B of the Madhya Pradesh Industrial Disputes Rules, 1957, prescribing the manner for application for permission for lay-off under Section 25M. According to Rule 75-B, the application is required to be made in Form C-3 and delivered to the authority specified - either personally or by registered post. In sub-rule (2) thereof, the application is required to be made in triplicate along with sufficient number of copies of the application for service on the workmen concerned. Learned counsel has invited attention to the decision of this Court in O. & A. Industries Ltd. Vs. State of M.P. [2000(1) MPLJ 26] in which where the requirement of notice of application to the workman concerned and the filing of the application in triplicate in the case of permission for retrenchment of employees in accordance with Section 25N(2), had not been complied with, permission granted by the authority was quashed.
13. In the present case, the contention is that the copy of the application was not served on the workman concerned. In the reply of respondent No. 2, it is stated that the copies of the application were served on respondents 3 and 4 Unions and were also affixed on the notice-board near Time Office where every employee is required to report. It has also been stated that several meetings were held within the factory premises where detailed discussions had taken place and workers were also informed on loud-speakers. It is also alleged that the petitioner Union had also held meetings in November and December, 2000, addressed by Shri Balihari and other Office-bearers in which application by respondent No. 2 to respondent No. 1 for lay-off was discussed. It is stated that the petitioner Union deliberately avoided to participate before the Labour Commissioner, in the return of respondents 3 and 4 also, it is admitted that the application moved by Management was put on the notice board and was given to the Union and it was also brought to the notice of all employees in the factory. Learned counsel for respondent No. 2 has referred to the decision of the Supreme Court in State Bank of Patiala Vs. S.K. Sharma (AIR 1996 SC 1669) in support of his contention that where technicality and irregularities did not occasion failure of justice, they should not be allowed to defeat the ends of justice. The said decision was in respect of the requirement of observance of the principles of natural justice in relation to a domestic enquiry conducted by a Bank against its employee and from the decision also, it is clear that substantive provision has normally to be complied with and the theory of substantial compliance or test of prejudice is not to be applied in such a case. The requirement of serving simultaneously copies of such applications on the workman concerned is contained in sub-section (2) of Section 25M which is a substantive provision. However, in the present case, while the petitioner is alleging its non-compliance, the respondents have stated that it was fully complied with and due notice had been served on the two Unions and also affixed on the noticeboard. While the requirement of the rule of furnishing copies for service on the workman concerned is different from the one contained in sub-section (2) of Section 25M which is a stage before the application is actually filed, yet in the facts of the present case, it cannot be said that the provision was not complied with by the petitioner. No workman has come forward to show that he had no notice of the application. The facts are seriously disputed and while the petitioner Union is alleging non-compliance, the respondent employer and the other two Unions have stated that the applications were duly served and affixed on the notice board. The respondent No. 1 has also taken all these facts into consideration and it is not possible to hold an enquiry in proceedings under Art. 226 of the Constitution of India to come to any definite conclusion in this behalf.
14. In view of the foregoing discussion, this petition fails and is dismissed. It is made clear that this order shall not preclude the petitioner from raising any dispute as permissible in law with regard to the permission granted by respondent No. 1 as the respondent No. 2 has itself taken the stand that the remedy of the petitioner lies in raising a dispute. There shall be no order as to costs.
15. Writ Petition dismissed.