Kerala High Court
Premier Automibles Ltd. vs Cochin Labour Union, Represented By Its ... on 7 August, 2002
Equivalent citations: [2003(96)FLR774], (2002)IIILLJ1138KER
Author: M. Ramachandran
Bench: M. Ramachandran
JUDGMENT M. Ramachandran, J.
1. Ext. P19 award passed by the second respondent--Industrial Tribunal, Alleppey is under challenge at the hands of the petitioner. By Exts. P14 and P15 respectively dated 30-06-1989 and 27-01-1990, the Government had referred two disputes for adjudication to the said Tribunal, pertaining to workmen, M/s. Shahul Hameed and K.K. Pareeth, represented in the dispute by the first respondent-Union. The disputes were numbered as I.D. No. 107/89 and 27/90 and in view of the common nature of the contentions, they were jointly tried and a common award is passed. By the award, a declaration was made that the retrenchment effected in the case of the said workmen is violative of Section 25-N and they were entitled for preferential treatment for appointment as envisaged under Section 25-H of the Industrial Disputes Act.' The facts of the case could be given briefly as following:
The petitioner is a public limited company and they have two factories, one at Kurla and another at Kalyan in the State of Maharashtra. According to them, they have separate independent units for production, administration, marketing, sales, personnel etc. The petitioner had a sales depot at Mamangalam at Ernakulam for supplying commercial vehicles to the dealer-M/s. T.V. Sundaram Iyengar & Sons. The company had decided to stop production of commercial vehicles and consequent to the above decision it had been decided to wind up the sales depot at Ernakulam and also the depots so functioning in all other States. It was in this circumstance that they had issued orders terminating the services of the workmen in the sales depot at Ernakulam. It is stated that in the Ernakulam sales depot there was a sales representative, two assistant security officers, one watchman, one driver and one mechanic on the rolls. It is also stated that the sales depot was registered under the Kerala Shops & Commercial Establishments Act, as an establishment. The termination notice issued dated 31-05-1986 from the Bombay office informed the workers that as the Kerala Sales Depot at Mamangalam is closed, effective from 31st May, 1986, their services are not required. All the workmen attached to the depot were paid one month's notice wages and retrenchment compensation. The workmen, including Mr. Shahul Hameed and Pareeth, had accepted the compensation so offered on the very date itself. It is further submitted that they had in due course applied for the eligible gratuity and the provident fund dues and these also had been made available to them on subsequent dates. Ext. P4 indicates that the amounts given through the agents -- M/s. T.V.S. & Sons--had been accepted by Shahul Hameed on 04-02-87 and Pareeth had accepted the amounts offered on 17-12-1986.
2. It is submitted by the petitioner that thereafter they had heard nothing about any claims from any of the workmen until they had been served with notices by a lawyer, Exts. P7 and P6 respectively, relating to K.K. Pareeth dated 03-03-1988 and K. Shahul Hameed dated 12-10-1987. These notices accused the petitioner-company that they had illegally and wrongfully retrenched them from service on 31-05-19869, that they had not paid the statutory gratuity, that minimum wages were not paid to them and there was a claim for bonus. The notices also referred to a circumstance that there was an offer for employment at Calicut when a branch was opened there and this also was not honoured. According to the company, the notices were appropriately replied and they had by Exts. P8 and P9 denied the allegations and also had indicated that the issues, as far as the company is concerned, practically were settled.
3. As leading to the reference, it appears that a complaint to the Labour officer had been filed by the Union in respect of Shahul Hameed on 21-11-1987 and in respect of Pareeth on 20-05-1988. On notice from the Labour Officer in February, 1989 and in October, 1989 the petitioner had made known to the officer about their stand detailing all the relevant circumstances and according to them there was no justification in reopening the issue as in fact it amounted to harassment. But, notwithstanding this the matter had been referred to adjudication. The issues so referred for adjudication, identically worded in the orders, were the following:
"1) Whether retrenchment of Sri. K. Shahul Hameed is justifiable or not?
2) Whether Sri. K. Shahul Hameed is eligible for re-employment in Calicut Branch?
3) If the retrenchment is not in accordance with law what relief he is entitled to?"
[Only there was change in names]
4. For completion of the pleadings, it may also be stated that the workmen had claimed that on 14-07-1986 Exts. W5 and W5(a) letters had been forwarded to the company, protesting against retrenchment, but receipt of any such letters was denied by the petitioner and it has not been possible for the workers to establish that such letters ever had been issued as had been claimed.
5. Before the Industrial Tribunal the statements of the workmen were almost identical and paragraphs 2, 3, 4 and 5 from the statement would highlight the contentions urged, in the following manner:
"The workman, Sri. K. Shahul Hameed was employed as a Driver-cum-Mechanic in the establishment of Premier Automobiles Ltd., at Mamangalam, Palarivattom. P.O., Cochin-682 025. As the Opposite Party decided to close their said establishment, the workman was retrenched from service with effect from 31.5.1986 after office hours. The workman has put in 14 years and 7 months of service in the management's establishment at Cochin.
The said retrenchment of the workman from service is in total violation of Section 25-N and Section 25-O of the Industrial Disputes Act, 1947. None of the conditions stipulated in Section 25-N of the Industrial Disputes Act were complied with by the management while retrenching the workman. Further, the management has not complied with the procedure laid down in Section 25-O of the Industrial Disputes Act for closing down an undertaking. Hence the retrenchment of the workman in question from service is illegal, null and void, and the closure of the undertaking at Cochin is illegal.
It is submitted that the management of Premier Automobiles Ltd., have opened a branch at Calicut and they have taken in employment other persons without informing the workman in question and giving him a chance to offer his services. This action of the management is in total violation of Section 25-H of the Industrial Disputes Act, 1947. The workman in question, Sri. K. Shahul Hameed is eligible for reemployment in Calicut Branch of the management.
It is also submitted that the retrenchment of the workman is by way of victimisation. The workman had demanded his legal claims from the managers at the depot such as overtime, uniform allowance, washing allowance etc., out of vendetta created because of this, the management retrenched the workman and denied him re-employment opportunities at Calicut branch."
6. In the written statement, it appears that an objection had been raised about the maintainability of the disputes in view of the great passage of time. It had been highlighted that the Union had no locus standi to raise a dispute as it was never functioning as a recognised Union in the establishment. It was also urged that the sales depot was a separate establishment, not an integral part of the factory and it was a case of closure since the production of commercial vehicles had been stopped. It was highlighted that all benefits were paid to be workmen whose services stood terminated. The management also pleaded that the employees were estopped from raising claims. As about the re-employment in Calicut depot, it was submitted that what was existing was not an arrangement which could employ any personnel, as the work relating to booking and delivery had been entrusted with an independent company and there was no question of re-employment in the aforesaid circumstances. In respect of claims under Section 25-N and 25-O of the Industrial Disputes Act, the company had taken a stand that the Cochin unit which had been closed was not an industrial establishment which come under Chapter V-B of the Industrial Disputes Act and therefore there was no merit in the contentions so raised.
7. As could be seen from the nature of the contest, the main issues were as to whether the dispute was maintainable, whether the demands were stale and about concluded issues, and whether there was justification in the contentions traceable to Sections 25-N, 25-H and 25-O of the Industrial Disputes Act.
8. Mr. Shahul Hameed had filed C.M.P. No. 32871 of 2002 to get himself impleaded. Though it was opposed by the management, the Union did not oppose the application and it has been allowed. The counsel for the workmen urged that on the strength of the decisions reported in 2000(8) JT SC 501 ( Workmen reptd. by Hindustan V.O. Corporation Ltd. v. Hindustan Veg. Oils Corporation ltd. and Ors.), the case may be taken up only after passing orders on the 17-B applications filed under the Industrial Disputes Act. The contentions, however, the dealt with separately.
9. I will examine the first contention, namely, the one as regards the maintainability and justifiability of the dispute. The prayer is for quashing the reference orders (Exts. P14 and P15), though wrongly stated as Exts. P17 and P18. Sri. Ashok B. Shenoy appearing for the workmen raised a preliminary objection that the issue was no more open to the challenged, since the management had participated in the adjudication. It had also been submitted that there was no specific challenge as had been presently made in the Original Petition and in fact the pleadings indicated that the reference was correctly worded. But I am afraid, the matter has to be gone into at some length taking notice of the rival contentions of the parties and the materials that had forthcome. In the counter affidavit filed by the State Government, the reference order had been justified and they had supported the findings of the Tribunal as well, but the averments in the said affidavit show that the real issue had been failed to be taken notice of.
10. This was a case of a closure and consequent retrenchment brought about on 31-05-1986, of a depot functioning in the State of Kerala, by a company who had their production unit at Maharashtra. All the six workmen, who were on the rolls, had accepted the compensation and the retirement benefits in full. This was on proximate dates to the date of closure. It has also been conceded that the depot was no more there at Ernakulam. The counsel for management points out that the issue concerned is a closure of an establishment, and it cannot be any more disputed that after the amendment brought in by Act 46/82 effective from 21-08-1984 a closure' means the permanent closing down of a place of employment or part thereof. (see Section 2(cc) of the Industrial Disputes Act). According to him, it is the settled position that closure of an establishment can never form the subject matter of a dispute or an adjudication. According to the respondents the issues referred are not closure, but retrenchment and validity thereof, and the right for re-employment. They say that after the closure of the establishment also, a cause of action had arisen in view of the opening of a depot at Calicut and really it was in that context that the dispute had been raised. Facts being these, the objection raised by the management as such may not be sustainable as it was not about the closure that the dispute had come to be referred.
11. We may, therefore, examine as to the complaint of the petitioner that the Tribunal had not even adverted to one issue of delay and estoppel of the claims though such a plea had been agitated and pressed. The Industrial Disputes Act although does not prescribe any time limit in the matter of raising a dispute, for adjudication under Section 10 of the Act, expression almost in the nature of present participle is used, viz., where the Government is of opinion that an industrial dispute exists, or in apprehended'. It is also settled position that stale issues cannot be adjudicated. It is within the purview of the Tribunal to notice the contentions and prescribe an award taking notice of larger public interest. The Tribunal, in other words is not obliged to answer the dispute on merits always. It can hold that there is no industrial dispute subsisting on the date of reference, that what is referred to is not an industrial dispute, or even that the reference was without jurisdiction. If such question are raised, they have to be subjected to examination. Matters which are closed and finalised are not to be permitted to be reopened only for the reason of a reference. So viewed, it has to be noticed that the Tribunal had failed to advert to the issue since the points raised by the management had not been dealt with at all in the award. It had been contended by the management before the Tribunal, and as reiterated in the O.P., that the workmen were estopped from raising a dispute as had been done. This was for the reason that they had accepted the compensation that had been offered to them and had no dispute about the closure. Thereafter, they had received the amount of gratuity. Provident fund accounts were closed. It was years thereafter that a demand had been raised as against the management incorporating a plea that the retrenchment was bad and ineffective. So on the date of the demand, and the date of reference, it would be prudent to hold that there was neither a dispute subsisting or one was apprehended, in respect of issues 1 & 3. Understanding these difficulties, the workmen had attempted to rely on Exts. W5 and W5(a), but they are only creations for bridging the unexplainable gap.
12. As I find it, this part of the claim could well be characterised as stale from all points of view. The Tribunal unfortunately had not adverted to the above aspects. It was a case where even if there were any substance in the plea, reliefs should have been refused. Consequently, there is a serious error of law apparent on the face of the record which would require interference. As had been referred to earlier, objections had been raised by the workmen after years. The union did not represent them at the time of closure, and the evidence is that they had joined the union, years later. About the closure and consequential retrenchment there was no dispute whatever, as could be understood in common parlance, and also against the backdrop of industrial law. It was not ethical for the union to take up such an issue which had become stale. There was no dispute subsisting, capable of being infused with breath of life. Before coming to the next aspects, one more limb of the argument can be subjected to examination, viz., justifiability of the demand.
13. The issue of estoppel normally is alien to industrial law. But we have to carve out exceptions, as it will otherwise be an unruly horse. If a workman receives the retrenchment compensation offered to him without demur or protest, and immediately thereafter raises a dispute about the validity of the employer's action, it may not be possible to silence him by a legal contention of estoppel as the issue is more concerned with human relations than contractual situations. If out of his helplessness he had accepted the compensation, that cannot interfere with the rights he otherwise may have, especially if there is violation of a statutory prescription. But that is not the case here. The closure had been accepted by all; it was an all India based policy to discontinue depots, and even the provident funds were settled, and as pointed out, the workmen had departed. Of the six workmen, one had thought it fit to lodge a complaint after about two years, and yet another, after three years. Even if it could be granted that in respect of a re-employment, a dispute could validly originate, the issues regarding retrenchment due to the closure was hopelessly belated, and barred by efflux of time. An adjudicator, in a reference made to him has all jurisdiction and even a duty to separate the grain from the chaff and he had to prescribe an award, taking note of the real nature of the lis. At least, at some point of time a firm foot has to be placed. Therefore, even if there was any sustainable claims on the basis of Section 25-H, the contentions on the basis of Sections 25-N or 25-O or about an illegal retrenchment could not have been entertainable at all, when the parties had arranged their affairs as mutually accepted and the issue had reached a quietus. There was no industrial dispute subsisting to be adjudicated.
14. Though I have pointed out that the Tribunal had erred in these regions, as it has been treated as foundation for granting the reliefs in the award, it may also be seen how far he was correct in holding that Section 25-N and 25-O were violated.
15. Sections 25-N and 25-O appear in Chapter V-B of the Industrial Disputes Act. The provisions of the Chapter are applicable to industrial establishments in which not less than one hundred workers are employed. Section 25-L defines the industrial establishment, for the purpose of the said chapter, as following:
(a) "industrial establishment" means --
(i) a factory as defined in Clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948);
(ii) a mine as defined in Clause (j) of Sub-section (1) of Section 2 of the Mines Act, 1952 (35 of 1952); or
(iii) a plantation as defined in Clause (f) of Section 2 of the Plantations Labour Act, 1951 (69 of 1951)."
Therefore the general definition of industrial establishment as found in Section 2(ka) has no application as far as this Chapter is concerned. We have therefore to see whether the finding of the Tribunal that the sales depot comes within Sub-clauses (i), (ii) or (iii) is based on law.
16. Not much discussions are necessary to come to the factual position. A sales depot had been established some time in 1971-72 at Cochin. It was employing only six persons, and was registered under the Kerala Shops and Commercial Establishments Act as an establishment. It was not a factory coming under the definition of Factories Act, as no manufacturing process was carried out. Nor was it a mine, or a plantation. It was simply a delivery point, to cater to the needs of the distributor. The enquiry should have come to an end here.
17. But the Tribunal permitted to carry itself away to regions which were irrelevant, and ultimately has landed itself in a confusion. Section 25-N and 25-O were introduced to reserve a right of scrutiny with the Government. It was to make sure that large establishments did not stop business altogether or retrenched workers wholesale, which would have affected the interest of the community. By their very nature, the provisions had to be strictly interpreted, and the Supreme Court had occasion to hold that the provisions enacted originally were unconstitutional. Every employer has a right to adjust and re-arrange its business and activities at its sole discretion, but acting within the four corners of the statutory prescriptions. The Tribunal erred in supplanting the restrictions of Chapter V-B in respect of an independent unit, which employed less than ten persons.
18. Reliance had been placed by it on the letter of appointment that had been issued. It is pointed out that the letter was issued from Bombay and there was reference to the standing orders which were applicable to the workmen concerned, which were those applicable to workers of the Kurla establishment of the company. Reliance was also made on the confirmation order that was issued. Therefore, according to him the sales office had no independent existence and it was not a separate unit but was to be treated as an integral part of the main establishment at Bombay and the provisions of Section 25-N and Section 25-O were applicable. If that yardstick was adopted the retrenchment, according to him, was illegal and abinitio void as prior permission was not obtained and three months notice was mandatory.
19. However, as pointed out earlier, there are serious errors in approving such as approach. A view necessarily has to be adopted which does not do violence to the normal interpretation of positions, which are universally acceptable. The unit at Bombay was functioning as a manufacturing unit. A depot was opened at Cochin at some time during the existence of the company and it had been closed down on a later occasion. This is insufficient for holding that the depot is part and parcel of the parent unit, as obviously the existence of the Cochin unit was independent in all perception. The recruitment, the service conditions and the ultimate retrenchment were transactions which did not (SIC) functioning of the main factory. The (SIC) service were not stated as identical. There was no claim that a common seniority list was maintained, or the workmen were transferable. The petitioner did not suppress that the activities were being controlled from Bombay, and this would not have made an establishment under the Shops and Commercial Establishments Act, an establishment coming under Chapter V-B of the I.D. Act. The State of Kerala, which was the appropriate government as regarding the depot could not have entertained or enquired an application if filed, as required by Section 25-O with them. First of all it was never conceived by the statute. Secondly, the Kerala Government lacked jurisdiction to grant permission or refuse permission in respect of an industry which had its registered office and works at Bombay. The Tribunal should not have permitted itself to be confused by the propositions launched by the union, experimentally. As there is a declaration that the retrenchment is abinitio void, on the above erroneous presumption the award is liable to be set aside for this reason as well. The directions are illegal and not sustainable in law.
20. In this context, I may also refer to some observations in respect of the reliefs that had been conferred under Section 25-H of the Industrial Disputes Act. Section 25-H provides that if the workmen are retrenched and the employer proposed to take into his employ any persons he shall in such manner as may be prescribed, give an opportunity to the retrenched workmen who are citizens of India to offer themselves for re-employment and they will have preference. However, Rule 78 of the Kerala Industrial Disputes Rules, which in extenso deals with the issue, provides that this duty of the employer should be limited to one year from the date of retrenchment. Of course, counsel for the workmen submits that this rule has to be ignored as the parent section does not refer to any period of limitation. But rules as they presently stand confers rights and prescribe obligations as has been laid down and it may not be proper to hold that such rights for re-employment is indefinitely kept alive. The Rule making authority has validly brought the rules as prescribed, and it is a reasonable view, in the interests of the employer as well as the employee. The basic rights have been suggested by the Industrial Disputes Act, as opportunity has to be given to retrenched workers in a manner as is prescribed. The rules prescribed that the rights could be enforced only for a limited period, and this is neither illegal nor arbitrary.
21. In the present case, reasoning of the Tribunal to hold that the workmen concerned have a right of re-engagement appears to be on precarious reasoning. It has been established that the petitioner had never reopened the depot in Kerala or anywhere else. Being a manufacturer a working arrangement to transact business in Kerala with another organization had been brought in by an agreement. Only in a case where the employer proposed to employ persons, Section 25-H could be attracted. The principle of re-engagement of workmen therefore did not arise at all. The directions in the award were cryptic in nature and when it was found that the depot had been closed down, it could not have been conceivable as to how a right of re-employment arose, even if for argument sake it was possible to hold that the retrenchment was bad in law. The observation that the agreement with M/s. T.V.S. & Sons Ltd., should have incorporated such a stipulation was in the region of absurdities, and in any case beyond jurisdiction. Thus even if it be conceded that a dispute under Section 25-H was capable of being referred for adjudication, after years of closure and retrenchment, the facts of the case did not justify grant of reliefs as appears in the award. The award is therefore unsustainable and is hereby quashed.
22. Before concluding the discussion, I may also advert to the claims of the workmen for reliefs under Section 17-B of the I.D. Act. In appropriate cases, it may be possible for the workmen to enforce such claims. But the essential preconditions are not satisfied here. In paragraph 1 of this judgment, the operative portion of the award had been reproduced. The Tribunal had found a closure and the award was for preferential treatment for appointment. It was not a case of reinstatement. The workmen were not therefore endowed with rights as envisaged by the said section, as the right upheld was only a priority for re-employment. As such the claims under Section 17-B had no merit. It would not be out of place to find that Mr. Pareeth in his affidavit dated 24-01-2000 has disclosed his age as 59, and Mr. Shahul Hameed, on 9.7.2002, in his affidavit, showed his age as 67. The retirement age was 60 and the claims for 17-B wages for period beyond the retirement age seem to be out of place and not envisaged by the I.D. Act. The learned counsel for the petitioner very obligingly has sworn to affidavits one after another, speaking about factual details, and how the workmen were gainfully employed, and why they are not entitled to reliefs. This is embarrassing, as the counsel holding brief for his clients is not expected to cross swords with the party respondents about factual details. These have to be settled by the parties in between themselves. I hold that this was not a case where claims under Section 17-B were maintainable.
23 .The Original Petition will stand allowed. There shall be no order as to costs.