Karnataka High Court
The Management Of M/S. Powergear Ltd., vs Powergear Employees Union (R) on 17 September, 2018
Bench: Chief Justice, R Devdas
-1- W.A.No.1198/2018
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 17TH DAY OF SEPTEMBER, 2018
PRESENT
HON'BLE MR.JUSTICE DINESH MAHESHWARI, CHIEF JUSTICE
AND
HON'BLE MR.JUSTICE R.DEVDAS
WRIT APPEAL NO.1198 OF 2018 (L-RES)
BETWEEN
THE MANAGEMENT OF
M/S. POWERGEAR LTD.
PLOT NO.15 & 16, 3RD PHASE
PEENYA INDUSTRIAL AREA
BENGALURU 560 058
REPRESENTED BY ITS
CHAIRMAN
MR. X. DURAIRAJ.
... APPELLANT
(BY SRI.S.N. MURTHY, SENIOR ADVOCATE FOR
SRI. ANAND K. R., ADVOCATE)
AND
POWERGEAR EMPLOYEES' UNION (R)
NO.757, 2ND MAIN
VIJAYANANDA NAGARA
NANDHINI LAYOUT
BENGALURU 560 094
REPRESENTED BY ITS
PRESIDENT.
... RESPONDENT
(BY SRI. K.SUBBA RAO, SENIOR ADVOCATE FOR
SRI .K. S. SUBRAMANYA, ADVOCATE)
-2- W.A.No.1198/2018
THIS WRIT APPEAL IS FILED U/S 4 OF THE KARNATAKA
HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER
DATED 27/02/2018 PASSED BY THE LEARNED SINGLE JUDGE
IN WRIT PETITION NO.5594/2018 [L-RES] AND FURTHER BE
PLEASED TO HOLD THAT THE APPELLANT IS NOT LIABLE TO
PAY INTERIM RELIEF AS ORDERED AND CONSEQUENTLY
ALLOW THE WRIT PETITION.
THIS WRIT APPEAL HAVING BEEN HEARD AND
RESERVED AND COMING ON FOR PRONOUNCEMENT OF
JUDGMENT THIS DAY, R. DEVDAS J., DELIVERED THE
FOLLOWING:
JUDGMENT
The appellant-Management is before this Court assailing the order dated 27.02.2018 passed by the learned Single Judge in W.P.No.5594/2018.
2. The appellant is a Company registered under the Companies Act. It is the contention of the appellant that it had transferred the Management of the Industrial undertaking, vide notice dated 28.03.2015 to one M/s.Extraco Composites India (P) Ltd., which is based in Chennai. The notice and transfer was preceded by an agreement for transfer of undertaking dated 10.03.2015 and registered lease deed dated 15.03.2015.
-3- W.A.No.1198/2018
3. The respondent-Union raised an industrial dispute which was subsequently referred to the Industrial Tribunal, Bengaluru in I.D.No.129/2015. The order of reference was whether the act of the Management amounted to closure of the establishment with effect from 01.04.2015 or whether it amounted to transfer of Management under Section 25FF of the Industrial Disputes Act, 1947 ('I.D. Act')?
4. During the course of the proceedings before the Tribunal, I.A.No.VII dated 16.11.2016 came to be filed by the respondent herein seeking interim relief under Section 10(4) of the I.D. Act for payment of 50% of the gross wages, every month, to each of the workman (16 workmen listed in the application), from 01.04.2015 and arrears along with interest at the rate of 18% per annum, till realization.
5. By an order dated 26.08.2017, the Tribunal allowed the application and directed the appellant-Management to pay 50% of the gross wages along with interest at the rate of 18% per annum, within thirty days from the date of the order. The Tribunal further ordered that failure to comply with the orders -4- W.A.No.1198/2018 would entitle the Union to set in motion penal provision as stated in I.D. Act, against the Chairman, Managing Director and all the Board of Directors of the Management.
6. The order dated 26.08.2017 was challenged in W.P.No.45175/2017. By the order dated 17.10.2017, the petition was allowed and while setting aside the order dated 26.08.2017, the learned Single Judge directed the Tribunal to hear the interlocutory application afresh and consider the existence of a prima facie case before granting any interim relief. Accordingly, the Tribunal heard the parties afresh and passed an order dated 08.12.2017 reiterating its earlier order, directing the Management to pay 50% of the gross wages with other directions.
7. Aggrieved, the appellant once again approached the learned Single Judge in W.P.No.5594/2018. The learned Single Judge was of the opinion that it was not appropriate to interfere at that stage and accordingly, disposed of the writ petition directing the Tribunal to dispose of the main -5- W.A.No.1198/2018 Reference as expeditiously as possible, but not later than six months from the date of the order. Hence, this appeal.
8. Heard learned Sri S.N.Murthy, learned Senior Counsel appearing for the appellant-Management and Sri K.Subba Rao, learned Senior Counsel appearing for the respondent-Union.
9. On behalf of the appellant, it was submitted that the Tribunal has misdirected itself while coming to a conclusion that there was prima facie case established by the respondent-Union, and that the action of the appellant amounted to closure of the industrial establishment. The learned Senior Counsel has submitted that sufficient evidence was placed before the Tribunal to substantiate the case that the Management had entered into an agreement with M/s.Extraco Composites India (P) Ltd., to transfer the Management as per Section 25FF of the I.D. Act. Notice was given to the workmen under Section 25FF of the I.D. Act bringing to their notice the fact that since there was lack of purchase orders from buyers and continuous financial burden -6- W.A.No.1198/2018 in the operation of Bangalore and Hindupur units, the Management was unable to continue its manufacturing activities in both the units. The notice specifically stated that the Board of Directors decided for cessation of manufacturing activities from 01.04.2015 and also decided to give the factories for sale/lease to prospective Companies or individuals.
10. The learned Senior Counsel has referred to the material that were placed before the Tribunal and the contents of the order passed by the Tribunal which refers to such material, which according to the learned Senior Counsel clearly establishes the fact that the action initiated by the appellant is under Section 25FF of the I.D. Act i.e., transfer of Management. Material was also placed on record to establish the fact that 99 out of 115 workmen entered into settlement through the respondent-Union, and they accepted monetary compensation in settlement of their dispute. The learned Senior Counsel has submitted that it was open to the 16 workmen, who were before the Tribunal, to accept the settlement likewise. It was also submitted that there was -7- W.A.No.1198/2018 material placed before the Tribunal to establish the fact that even these 16 workmen had accepted the compensation given by the Management in terms of the notice issued under Section 25FF of the I.D. Act.
11. It was submitted by the learned Senior Counsel on behalf of the appellant that the application for interim relief would be maintainable only if the relief sought is incidental to the main Reference. According to the learned Senior Counsel, the relief sought by the respondent-Union was not incidental to the main relief sought. The learned Senior Counsel has taken us in great detail, through the order passed by the Tribunal. It was pointed out that the workmen were taken into confidence and 99 out of the 115 workmen accepted the compensation payable under Section 25FF of the I.D.Act, while the remaining 16 who have also received the compensation, but are acting high-handedly in disturbing the peaceful transfer of the Management and they have prevented the new Management from restarting the operations in the industrial establishment. -8- W.A.No.1198/2018
12. It was pointed out that a writ petition in W.P.No.34972/2015 was filed by the appellant and a writ was issued on 04.11.2016 compelling the workmen to move out of the factory premises and they were directed not to come within 50 metres from the premises. It was also submitted that the Management has incurred loss since it was bound to pay rents at the rate of Rs.5,40,000/- per month to the new Management and on the other hand, the appellant is being prevented by the respondent herein and the new Management from restarting the activity in the industrial establishment.
13. The learned Senior Counsel appearing for the respondent justified the order passed by the Tribunal directing the appellant to pay 50% of the last drawn wages to the 16 workmen. He has submitted that the workmen are without alternative employment and, therefore, the Tribunal has been justified in directing the appellant to pay 50% of the wages.
14. The learned Senior Counsel has referred to several decisions which were also cited before the Tribunal and has -9- W.A.No.1198/2018 submitted that the evidence on record would prima facie establish the fact that the appellant has closed down the industrial establishment illegally.
15. We have heard both the learned Senior Counsel at length.
16. Having glanced through the documentary evidence on record and the oral evidence adduced on behalf of the Management, we feel, prima facie, that the action initiated by the appellant was under Section 25FF of the I.D. Act. We find that the Tribunal, except relying upon the word 'cessation' in the notice issued under Section 25FF of the I.D.Act, found nothing on record which would prima facie suggest that the Management has closed down the industrial establishment. We are mindful of the fact that further elaboration or discussion on these aspects might prejudice the decision on the merits of the case and hence, not making final comments on the merits. However, we have noticed that the Management has submitted the records and led oral evidence stating that the 16 workmen have also received the - 10 - W.A.No.1198/2018 compensation. The Tribunal has failed to take note of this aspect. Had the Tribunal taken note of this fact, the balance of convenience while deciding the interlocutory application would have gone in favour of the Management.
17. In the totality of circumstances, though we are in agreement with the decision of the learned Single Judge in directing the Tribunal to dispose of the main Reference as expeditiously as possible, but at the same time, the interim direction given by the Tribunal compelling the appellant- Management to pay 50% of the wages along with accrued interest and arrears of wages, neither appears justified nor would help the situation, particularly when basic ingredients for grant of interim relief are not in favour of the respondent- Union.
18. We are of the considered opinion that the interim direction issued by the Tribunal in order dated 08.12.2017 deserves to be stayed, and is therefore stayed till the disposal of I.D.No.129/2015. The impugned order dated 27.02.2018 is modified to this extent. The Tribunal is directed to dispose of - 11 - W.A.No.1198/2018 the main Reference as expeditiously as possible, but not later than three months from the date of this order.
19. The writ appeal is accordingly disposed of.
SD/-
CHIEF JUSTICE SD/-
JUDGE JT/-