Karnataka High Court
Parle Workers Union vs Government Of Karnataka on 2 September, 2024
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NC: 2024:KHC:35683
WP No. 39433 of 2013
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 2ND DAY OF SEPTEMBER, 2024
BEFORE
THE HON'BLE MRS JUSTICE K.S. HEMALEKHA
WRIT PETITION NO.39433 OF 2013 (L-RES)
BETWEEN:
PARLE WORKERS UNION,
25, 4TH CROSS, BYRAPPA LAYOUT,
NAGASHETTIHALLI,
BANGALORE-560 094,
REPRESENTED BY ITS GENERAL SECRETARY,
SRI KARIBASAPPA. ... PETITIONER
(BY SRI K.S. SUBRAHMANYA, ADVOCATE)
AND:
1. GOVERNMENT OF KARNATAKA,
DEPARTMENT OF LABOUR,
VIKAS SOUDHA, VIDHANA VEEDHI,
BANGALORE-560 001,
BY ITS PRINCIPAL SECRETARY.
2. PARLE PRODUCTS PVT. LTD.,
Digitally signed by
15KM STONE, TUMKUR ROAD,
MAHALAKSHMI B M BANGALORE-560 073,
Location: HIGH REPRESENTED BY SRI. N. SURESH,
COURT OF FACTORY MANAGER. ... RESPONDENTS
KARNATAKA
(BY SRI C.K. SUBRAHMANYA, ADVOCATE FOR
SRI B.C. PRABHAKAR, ADVOCATE FOR C/R-2;
SMT. RASHMI RAO, HCGP FOR R-1)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER
NO.I.D.28810M2013 DATED 03.08.2013 PASSED BY THE FIRST
RESPONDENT GOVERNMENT IN SECTION 25-O PROCEEDINGS VIDE
ANNEXURE-A AND ETC.
THIS WRIT PETITION COMING ON FOR DICTATION, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
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NC: 2024:KHC:35683
WP No. 39433 of 2013
CORAM: HON'BLE MRS JUSTICE K.S. HEMALEKHA
ORAL ORDER
Assailing the legality and correctness of the order passed by respondent No.1 under Section 25(O) of the Industrial Disputes Act, 1947 (hereinafter referred to as "ID Act" for short), granting permission to respondent No.2 to close the factory, the Parle Workers Union represented by its secretary is before this Court in this writ petition.
2. Heard Sri K. S. Subrahmanya, learned counsel for the petitioner, Sri C. K. Subrahmanya, learned counsel for Sri B. C. Prabhakar, learned counsel for respondent No.2 and Smt Rashmi Rao, learned High Court Government Pleader for respondent No.1 and perused the material on record.
Factual matrix :
3. Respondent No.2 is an industrial establishment, commenced the production of biscuits and other confectionaries in the year 2001 at Tumkur Road, -3- NC: 2024:KHC:35683 WP No. 39433 of 2013 Bangalore, the petitioner-Union was formed and registered under the Trade Unions Act on 17.01.2011, a charter of demands for revision of wages and other service conditions of the workmen was submitted to respondent No.2-management, it is the case of the petitioner that the peaceful atmosphere was vitiated by issuing a notice, changing the service conditions of the workmen without compliance with the Section 9-A of the ID Act, by charging for carry bags which used to be supplied free to the workmen to carry the biscuits at concessional rate once a month, further the Petitioner-Union addressed a letter in protest and demanded restoration of the original service conditions of the workmen and that the Management did not agree. The petitioner-Union approached the Conciliation Officer, on intervention in the matter and to resolve the issue, however, it ended in failure, The Deputy Labour Commissioner and Conciliation Officer issued notice regarding lockout, the petitioner-Union gave Complaint to the Secretary to the Government, Labour Department regarding violation of Section 9-A of ID Act and unfair -4- NC: 2024:KHC:35683 WP No. 39433 of 2013 labour practice by respondent No.2. There was a continuous protest by the workers and the factory was unable to function, on 06.06.2013, an application was filed under Section 25(O)(1) of the ID Act, enclosing an application in form No.Q-A prescribed under Rule 77(c)(1) of the Karnataka Rules 1957 r/w 25(O)(2) of the ID Act, seeking State Government for permission to closedown the factory, the reasons for leading the decision to close are enumerated as under:
"1. The Factory was set-up in the year 2000 and manufacturing activities started in the year 2001. The Company manufactures nutritious hygienically packaged biscuits. This nutritious snack is easily available at affordable prices and has a shelf-life. In the past two decades (between 1994 and 2013), there has been considerable hike of prices of raw materials by 335%, including the prices of wheat, sugar, vegetable oil, milk, packaging, fuel, power as also wages of employees. It is important to bear such increased raw materials cost etc., in mind because the product being price sensitive and has short shelf-life, the hike in its price can never be in proportion to the hike in the cost of -5- NC: 2024:KHC:35683 WP No. 39433 of 2013 raw materials, etc. In order to neutralize such cost effects, the Company has to adopt measures like stream lining the process, efficient man power utilization, introduction of cost effective measures in production, packaging material sourcing, logistics, marketing etc. Consequently, net margins on low in prices are very less. The above unit at Bangalore, like all other units in different parts of the country, is an independent unit with Independent cost and profit centers. The Company has made a total Investment of about Rs.70 Crores in Bangalore and has incorporated the best of technology and State of art infrastructure. But over the past 12 years, the Company has earned very negligible profits and in the recent past two years has not been functioning continuously at all, the reasons for which are not far to seek. As a matter of fact, we have functioned only for 3.5 Months.
2. The Parle Workers Union has been functioning as the sole Trade Union since 2004. As a progressive and liberal Management, even though there is no legal provision for recognition of unions, we accorded 'recognition' to the union. Both the Management and the Union entered into a settlement binding on the parties for a period of three years i.e., from 1.4.2004 to -6- NC: 2024:KHC:35683 WP No. 39433 of 2013 31.3.2007. On the expiry of the said settlement, a second settlement was signed between the parties which were binding on the parties between 1.4.2008 and 31.3.2011. It is pertinent to note that immediately after signing the settlement in 2008, during that year itself all the union office-bearers resigned and were re-placed by a set of now office bearers who resorted to violations of the terms of the settlement and have been creating one hurdle after another in the day to day operations of the Factory for the past two years, approximately. The entire details are set-forth in Annexure "D" here to which may be read as a part and parcel of this statement. Hence, we are not mentioning all the details in this letter. Suffice it to say, we are only stating most important bench marks so as to enable us to present our case cogently.
3. The immediate provocation for stopping production all of a sudden thereby causing loss of property and damage to goods was because of the suspension of one Mr. Honnappa, who had abused and threatened the Personnel Officer of the Company on 17.8.2011. Needless to say, Mr. Honnappa happened to be the Vice-President of the Parle Workers Union. On 17.8.2013, at 10.45 am all the Office- Bearers of the union entered -7- NC: 2024:KHC:35683 WP No. 39433 of 2013 the production shop floor and caused extensive damage to the product in process and finished products as well. All the workers struck work from 17.8.2011 at the behest of the Union. This thin unleavened cake dry, crisp and sweetened before firing and glazing was allowed to rot, causing extensive damage. From 18.8.2011 the workers entered the Factory after marking their attendance and staged stay-in-strike and resorted to sabotage, violent acts etc. The Management, therefore, thought it appropriate that the workmen should give an undertaking in the format displayed along with notice dated 22.8.2011. The workmen, at the instance of the Union, did not sign the undertaking and remained outside the Factory from 22.8.2011.
4. From the above incidents, two principles, which are inviolable and are easy to discern by anybody emerges:-
a) The employee-union leader is first and foremost an employee and is not beyond the pale of office discipline, however exalted be his position in the union; and
b) The workers have a right to enter the Factory only for working and any stay-in--8-
NC: 2024:KHC:35683 WP No. 39433 of 2013 strike beyond shift timings, will amount to trespass for which they are legally liable.
5. Given this position and given the fact of fear of physical violence, assault, abuse etc., the Management was left with no alternative but to move the Civil Court, which is the only option left to those who abide the rule of law. Both the Civil Court (and thereafter on appeal) and the High Court granted relief to the Management injuncting the union and workmen from preventing ingress and egress to the Factory, etc. The facts that both the Civil Court and the High Court passed those orders go to prove that our grievance is genuine and there was a serious Management problem. You will concede that the orders are from the most reputed source and beyond reproach. These orders were also observed more in breach and the Union despite giving undertakings continued to hold demonstrations, agitations and prevented ingress and egress to the Factory premises. The strike which started from 17.8.2011 continued for 13 months during which period the workmen indulged in violent and abusive acts near the two gates, obstructed the movement of vehicles and visitors and attacked office staff and willing workmen. The Management suspended 29 more -9- NC: 2024:KHC:35683 WP No. 39433 of 2013 workmen and initiated disciplinary action against them. In November 2011, 57 workmen called off the strike and joined the duties after giving the undertaking. Thus for nearly over 13 continuous months the Company has suffered substantial production losses. All the details are contained in the Appeal to the High Court and those documents will be produced at the appropriate time.
6. Sometime in September 2012, we were amazed to receive a call from the Hon'ble Minister of Law and Parliamentary Affairs who intervened in the dispute. Without standing on any jurisdictional formalities, we participated in the meeting and entered into certain understanding. The workers at the instance of the union gave undertaking as agreed and called off the strike and resumed work from 28.9.2012. The Management, on its part, revoked the suspension order on 23 workmen who had one charge against them and they were allowed to resume duty after signing the undertaking. The other 7 workmen continued to be on suspension as they had more than one charge and the enquiry continued on all the 30 workmen.
7. In a bid to end all the disputes, including the Charter of Demands dated 2.3.2011 submitted
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NC: 2024:KHC:35683 WP No. 39433 of 2013 by the union, the Management offered the same terms which were given to 57 workmen who had called off the strike earlier, without prejudice to the right of the workmen to continue the adjudication proceedings with regard to Charter of Demands pending before the Industrial Tribunal, Bangalore. The Union for reasons best known to is and with a view to keep the "cauldron" boiling spurned the Management's offer. This Indeed shows that the union is not only not interested in restoring the Industrial peace but was against re-starting production in the Factory.
8. On 19.1.2013, the Management dismissed six workmen against whom serious acts of misconducts were held to be proved in the domestic enquiry. From 24.1.2013, at the instance of the union the workers resorted to illegal stay-in-strike. On 1.2.2013, Mr. K.S. Subramanya an outsider, President of the Union entered the Factory forcefully at about 4.45 pm and exhorted the workers to continue the illegal stay-in-strike until the Management agreed to reinstate the six dismissed workmen. On the day of hearing on 13.2.2013, Senior Counsel of the Union assured the Hon'ble High Court that they would abide by the order of the High Court. On
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NC: 2024:KHC:35683 WP No. 39433 of 2013 the basis of this categorical assurance while disposing of the Writ Petition, the Hon'ble High Court directed that if there is any violation of the interim order in future, it is open to the Company to take such action as is open to it in law and the Company may take the help of police in order to see that the order of the High Court is strictly implemented. Coming as it does. from the Hon'ble High Court, the genuineness of the issues faced by us is beyond any shadow of doubt and it also shows the seriousness of the Management's problems.
9. This order was also not obeyed in letter and spirit. Instead the Union played "ducks and drakes and advised the workmen to remain inside the Factory until their demand for reinstating the six workmen was met.
10. Ultimately, after repeated requests, the Police intervened on 25.2.2013 and their effort to escort the workmen out went in vain on that day.
11. a) The workmen thus stayed inside the Factory premises unlawfully for more than 50 days from 24.1.2013 to 15.3.2013. The production activities had come to a grinding halt abruptly on 24.1.2013; all the planned
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NC: 2024:KHC:35683 WP No. 39433 of 2013 activities for the month of January 2013 onwards could not be undertaken. Major damage to machineries and loss was observed in all areas of the Factory with consequential losses. Not only this, during the stay-in- strike, the workmen had resorted to sabotage activities like causing extensive damage to plant and machineries, setting fire to corrugated boxes etc. Raw materials which are perishable by nature, in- process and semi-finished material became unfit for the purpose they are intended to use as the workmen forcibly stopped the material movement in the Factory. It is needless to say that the machineries now cannot be used without extensive repairs which again will involve huge expenses.
b) Finished products could not be moved out and remained in the Factory for 50 days as the Factory was under complete siege by the workmen. As biscuits and confectionary are mostly consumed by children as being packed food, parents would like to give hygienic food products but due to deliberate mishandling of packaging materials by the workmen, the Company could not use them and had to scrap about 1.9 metric tons of
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NC: 2024:KHC:35683 WP No. 39433 of 2013 such packaging material causing serious loss to the Company.. Further, the finished products too being food items, those products also have short shelf-life. Those products could not be moved out due to the seizure and illegal occupation of the Factory by the workmen as a result of which about 4.88 metric tons of finished goods had to be destroyed causing further irreparable loss to the Company. There were consequential losses like incurring additional freight etc., as several materials were in transit and had to be diverted to other locations, etc.
c) On account of the above, the Company suffered huge financial loss which is directiv attributable to the unlawful and illegal acts of stay-in-strike by the workmen and the Union between 24.1.2013 and 15.3.2013. The total loss incurred for this period alone is more than One Crore.
d) One issue needs to be specially brought to your kind notice. On 15.3.2013, when the police personnel evicted the striking workmen who were unlawfully staying inside the Factory about 15 to 20 workmen had locked themselves inside the printing section after blocking all entrances leading to that
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NC: 2024:KHC:35683 WP No. 39433 of 2013 section. They spilled Ethyl Acetate all over the flooring near the windows and shutters. They had also kept highly inflammable film roles in front of all entries, thus blocking entry to that place. The police had to enter the printing section by breaking open the window mesh and thereafter they evicted the striking workmen. On Inspection in the printing section, it was found that electrical wiring connections to the printing machinery were found disconnected and kept open. The electrical main was switched off at that point of time. If those mains were to be switched on, without noticing the disconnected wiring mentioned above, there could have been a serious fire disaster in which event not only in the Factory and its personnel but also the public and residents in the area in general would have also lost their lives and properties. One can hardly condone such sabotage. Considering all the above factors and with a view to ensuring safety of plant and Company's personnel and public safety, it was decided to lock out the Factorv from 15.3.2013. The details regarding damages of Plant Machineries is given in Para 53 of Annexure-D hereto, which may be read as part and parcel of this letter. All the above
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NC: 2024:KHC:35683 WP No. 39433 of 2013 incidents will go to establish, without anything more, the seriousness of the situation faced by the Management.
12. The advice tendered by the Asst. Commissioner of Police on 5th and 7th March, 2013, to workmen also fell in deaf ears and they continued their stay-in-strike. In the circumstances, the police forcibly evicted the workers on 15.3.2013. At that time, the workmen resorted to violence by setting fire to corrugated boxes, breaking the window glass panes and damaging other property, etc. Creating conditions for setting fire inside the Factory premises and to make it look like an accidental one especially in a place, where 40 tons on LPG is stored is a very serious offence and that could have caused untold damages not only to the Company but to the public and their property as well, given the location of the Factory. Not satisfied with this, the workmen prevented the Boiler inspection personnel from inspecting the boiler and other equipments as well on 21.02.2013 thus prevented statutory boiler inspection activity, Where the orders of the Judiciary and the high police officials and other government functionaries are obeyed in breach and in defiance and where wantonly the
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NC: 2024:KHC:35683 WP No. 39433 of 2013 workmen are striking with dis-connecting electrical equipments, inflammable materials and fire, we feel that those very acts are compelling reasons enough for us to conclude that we should close down the business here.
13. Given this back-ground, we were left with no alternative but to impose a lock-out from 8am on 15.3.2013 which has continued till date. And all this while we have suffered a loss of more than a crore of Rupees with no end in sight to our troubles. We feel that our losses will only continue to mount and we have lost our "desire to be in business at the above Factory at Bangalore. The total Investment is about Rs.70 Crores in Bangalore with a State of Art infrastructure and technology. Yet during the last 12 years our profits are negligible and over the last 2 to 3 years, the Unit has become unviable due to various factors mentioned above."
4. The reason seeking for closure of the factory is the financial loss that has been suffered by the factory was beyond the power and control, the law and order is not in the hands and the Union is more than answerable for this situation, that the factory does not want to be in a situation where the interest of the general public will be
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NC: 2024:KHC:35683 WP No. 39433 of 2013 hurt because explosive materials are stored and they have no control over the workers, functioning of the factory in the face of extensive damage to plant and machineries is beyond the ability and capacity of the management and hence, a request for permission to close the factory was genuine and no other suitable adequate measure available to the factory.
5. The factory had approached this Court in WP No.5056-60/2013 seeking writ of mandamus directing the police authority to grant protection to the petitioner's factory and also to facilitate for maintaining law and order inside the factory by evicting the workmen, who are unauthorizedly assembled, this Court disposed of the writ petition with direction to the members of the Union to obey the interim order passed by this Court in MFA No.1642/2012 dated 06.02.2012 and made it clear that there is any violation of the interim order in future, it is open for the petitioner to take such action as is open to him in law.
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NC: 2024:KHC:35683 WP No. 39433 of 2013
6. By the impugned order, taking into consideration all the aspects and consideration of the application submitted by the factory, respondent No.1 has allowed the application for permission of closure under Section 25(O) of the ID Act, holding that after due and diligent enquiry, the permission to the factory is granted to closedown the industrial undertaking with effect from 09.09.2013.
7. Learned counsel for the petitioner reiterating the averments made in the writ petition would mainly urge the following grounds:
i. Section 25(O)(2) of the ID Act provides that the appropriate permission to closedown an undertaking would be granted, only after making an enquiry, if it thinks fit, and after affording a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure, having regard to the genuineness and adequacy of the reasons stated by the employer would grant such permission. In support of
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NC: 2024:KHC:35683 WP No. 39433 of 2013 his contention, reliance is placed on the following decisions:
a) Orissa Textile and Steel ltd. Vs. State of Orissa and Ors1.
b) Union of India Vs Stumpp, Scheule and Somappa ltd2.
c) Laxmi Starch ltd. and Ors. Vs Kundara Factory Workers' Union and Ors3.
d) Maharashtra General Kamgar Union Vs Vazir Glass Works ltd. and Ors4 (Vazir Glass Works ltd).
e) National Textile Workers' Union and Ors Vs. and Ors5.
ii. That the Union was not granted reasonable opportunity and is in violation of Section 25(O)(2) of the ID Act, elaborating his submission, learned counsel submits that hearing was held before respondent No.1, only on 1 AIR 2002 SC 708.
2(1989) II LLJ 4.
31992 Lab IC 1337.
4(1998) III LLJ 231 BOM.
5(1983) 1 SCC 228.
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NC: 2024:KHC:35683 WP No. 39433 of 2013 24.07.2013, after which the matter was posted on 01.08.2013 and despite the petitioner seeking for an earlier date as period of 60 days comes to an end, no earlier date was granted, in the hearing on 01.08.2013, respondent No.2-management filed its rejoinder and the petitioner could not make their submission and there was no opportunity to respond to the rejoinder of the management and hence, the reasonable opportunity as mandated under Section 25(O)(2) has not been provided to the petitioner.
iii. The impugned order does not comply with Section 25(O) of the ID Act, as respondent No.1 has failed to conduct any enquiry regarding genuineness and adequacy of the reasons stated by the employer.
iv. That the order does not enquire regarding the genuineness and correctness of the facts nor there is any finding given by respondent No.1 regarding the statement made by respondent No.2-factory.
v. That the conduct of the management-respondent No.2, to seek for closure of factory was only to destroy the
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NC: 2024:KHC:35683 WP No. 39433 of 2013 leadership of the union and remove permanent workmen by entrusting the whole factory to the contractors.
vi. That the repercussions to the lives and livelihood of the workers and the result of closure was not considered by respondent No.1, while passing the impugned order.
Stating these grounds, learned counsel submits that the impugned order passed by respondent No.1 takes away the livelihood and without consideration of the relevant aspects there is a grave impact on the workers and the impugned order is contrary to Section 25(O) of the ID Act warranting interference by this Court.
8. Per contra, learned counsel for respondent No.1 reiterating the objections filed by the management would mainly contend the following grounds:
i. Industrial Relation Scenario from 2007 till 2010:
a. The industrial climate in the factory started to deterioration right from the year 2007, the workmen at the instance of the Union started
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NC: 2024:KHC:35683 WP No. 39433 of 2013 agitating disrupting the production, the workmen went on strike for nearly 3 and 1/2 months from 31.10.2007, the Government while referring the matter of charter of demands for adjudication also prohibited the continuance of alleged lock out vide order dated 18/24.12.2007, though the management did not declare any lock out, the prohibited order issued by the Government was quashed by this Court in WP No.384/2008, directing the Union to give collective undertaking to the management assuring that they would maintain normal production and also maintain industrial discipline.
b. That the Union and the workmen did not keep up the undertaking given to the management after commencing the work from 11.02.2008, the management had to face one or the other industrial unrestness
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NC: 2024:KHC:35683 WP No. 39433 of 2013 right from the year 2008, non-co-operation and non-attending to the allotted work by the Office Bearers of the Union.
ii. Industrial Relations situation from 13.08.2011 to 27.09.2012:
a. That on 13.08.2011 one of the workmen, Sri.Honnappa had indulged in abusing and threatening the personnel Officer with dire consequences and he was kept under suspension pending disciplinary proceedings.
On 17.08.2011 the workmen who were the office bearers of the Union entered the production shop floor and stopped the production, caused extensive damage to the in-process material and production and also finished products, protesting the decision of the management to keep the above said workman under suspension.
b. That the workman after entering in the factory and making their attendance through
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NC: 2024:KHC:35683 WP No. 39433 of 2013 the system did not attend to their work in all the shifts and the situation continued from 17.08.2011 to 20.08.2011.
iii. Industrial Relation Scenario from 28.09.2012 to 15.03.2013:
a. That the absenteeism rate was increased, some of the workers were wearing rings, chains, threads, not maintaining good hygiene practice and also were using mobile phone while working at the shop floor, and were indulged in several acts defective packets, unfinished stock of Krack Jack inner packet generation was accumulating, Union member workmen were deserting their work place and loitering in the premises, discipline at the shop floor was deteriorating day by day.
iv. The situation continued from 15.03.2013, the compelling reasons have made the management for declaring lock out and the management filed an application on 06.06.2013 seeking permission under
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NC: 2024:KHC:35683 WP No. 39433 of 2013 Section 25(O) of ID Act to close the factory, the genuine and adequate reasons are mentioned. It is submitted by the learned counsel that the management always wanted to have negotiation in respect of the charter of demands. However, in spite of several sittings between the management and the Union, there was continuous industrial unrestness and though the management insisted the individual undertaking for maintaining proper discipline and the coram in the shop floor insisting for such an undertaking would not amount to declaring lock out in spite of that, the behavior of the members of the Union let to the management to declaring the lock out and that the petitioner had to approach this Court, seeking police protection for the activities that was conducted by the workmen in the factory and this Court has directed the petitioner-workmen to adhere / obey the interim order passed by this Court in MFA No.1642/2012.
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NC: 2024:KHC:35683 WP No. 39433 of 2013 v. Taking this Court to Section 25 (o) of the ID Act submits that the question of closure of an Industrial Unit would remain in force for a period of one year from the date of such order and its finality is subject to the provisions of sub Section 5, which in turn contemplate that the appropriate Government may either on its own motion or on an application made by the employer or any workman review its order made under sub Section 2 or refer the matter to the Tribunal for adjudication. That the decision taken on the application for closure has been made operative for one year only, after expiry of one year from the date of the order of respondent No.1.
9. The enquiry and procedure as contemplated under Section 25(O) of the ID Act has been followed by respondent No.1 and the impugned order does not warrant any interference.
10. Learned counsel for respondent No.2 has placed reliance on the following judgments:
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NC: 2024:KHC:35683 WP No. 39433 of 2013 a. Vazir Glass Works ltd. Vs. Maharashtra General Kamgar Union and another6 (Vazir Glass Works ltd.).
b. Britannia Industries ltd. Vs. Maharashtra General Kamgar Union and Another7(Britannia Industries ltd.).
c. I.L. Naidu and Others Vs. Union of India and Others8 (I.L. Naidu ).
11. Having heard the learned counsel for the parties, the point that arises for consideration is that:
"Whether the opinion found by the appropriate Government is justified and the closure order by respondent No.1 is on following procedure contemplated under Section 25(O) of the ID Act warrants any interference in the present facts and circumstances of this case?"
12. Section 25(O) of the ID Act reads as under:
"25-O. Procedure for closing down an undertaking.-(1) An employer who intends to close 6 AIR 1996 SC 1282.7
2009 III LLJ 275.8
2003 II LLJ (HC-AP).
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NC: 2024:KHC:35683 WP No. 39433 of 2013 down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work.
(2) Where an application for permission has been made under sub-section (1), the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.
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NC: 2024:KHC:35683 WP No. 39433 of 2013 (3) Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order.
(5) The appropriate Government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub- section, it shall pass an award within a period of thirty days from the date of such reference.
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NC: 2024:KHC:35683 WP No. 39433 of 2013 (6) Where no application for permission under sub-section (1) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.
(7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.
(8) Where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is deemed to be granted under sub-section (3), every workman who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to fifteen days' average pay for every
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NC: 2024:KHC:35683 WP No. 39433 of 2013 completed year of continuous service or any part thereof in excess of six months.]"
13. Sub-Section 1 to Section 25(O) envisages an employer intending to close down an undertaking or an industrial establishment to which the chapter is applies, is required to apply to the "Appropriate Government" in the prescribed manner for permission to close down the establishment or undertaking within 90 days on which the closure has to become effective, employer is required to state the reasons for intended closure in the application and to serve a copy of the application on the representatives of the workman in the prescribed manner.
Rule 76(c)(2) prescribes that an application under the Section shall be in Form -QB while sub-Rule 3 requires the application to be made in triplicate and Sub-Rule 4 enjoys the employer to furnish to the Central Government, such further information as the government may consider necessary and call from him for arriving at the decision on the application.
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14. Sub-Section 2 of Section 25(O) envisages that the appropriate government is vested with a discretion to grant permission to the employer to close down his undertaking. But before granting or refusing permission, the government is required to:
i. Make necessary inquiry into the facts and circumstances of the case, as it may think fit necessary:
ii. Give reasonable opportunity of being heard;
a. The employer;
b. The workman; and c. The persons interested in such closure.
iii. Consider :
a. Genuineness and adequacy of the reasons for the closure stated by the employer; b. The interest of general public; and c. Other relevant factors.
iv. Pass an order in writing refusing or grant permission applied, by stating reasons therein for grant or refusal to grant permission and
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NC: 2024:KHC:35683 WP No. 39433 of 2013 v. Communicate the order to the employer and the workman.
15. Sub-Section 3 to Section 25(O) envisages that on an application made by the employer seeking permission for closure, the government does not pass any order within 60 days resulting in the deemed grant of permission to close down the undertaking.
16. Sub-Section 5 of Section 25(O) envisages review or adjudication of the order passed by the appropriate Government. This provisions vests two fold power on the appropriate Government: a) itself to review, suo-moto or an application made by the employer or any workman, its order granting or refusing to grant permission under Sub-Section 1 and b) To refer the question of granting or refusing permission to an industrial tribunal for adjudication.
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17. Sub-Section 6 states about the consequences of closure without permission, which is not relevant for the adjudication of the present dispute.
18. Sub-Sections 7 and 8 is a power to exempt and compensation which correspondence to Sub-Section 1 of Section 25FFF.
19. From the above provisions stated under Section 25(O), the present facts of the case needs to be looked into as to whether the appropriate Government has followed the procedure as contemplated under Section 25(O) for granting permission to respondent No.1 to close the factory.
20. Respondent No.1 framed the following issue for consideration:
"1. Whether the petitioner Management as followed the procedures laid down under Section 25(O) of the Industrial Disputes Act, 1947 read with Rule 77 (c) (1) of The Karnataka Rules 1957?
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2. Whether the copy of the application has been served on the representative of the workmen?
3. Whether the Management illustrates clearly the intended closure of the undertaking as well as 'the genuineness and adequacy' of the reasons?"
21. While answering issue No.1, held that the management has followed the procedures laid down under Section 25(O) of the ID Act r/w Rule 7(c)(1) of the Karnataka Rules 1957 and while answering issue No.2 held that the copy of the application has been served on the representative of the workmen, issue No.3 was regarding the genuineness and adequacy of the reasons stated for seeking closure in favour of respondent No.2.
22. The principle issue before respondent No.1 was whether the workmen, the management and the interested persons concerned were heard and whether an enquiry regarding the genuineness and adequacy of the reasons stated by the employer was considered.
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23. Perusal of the papers would indicate that the petitioner-Union was heard and the impugned order was passed, the genuineness and adequacy of the reasons stated by the factory was stay-in-strikes, loss of man-
hours resulting in loss in the production and efforts to the factory. The bonafide, which is one of the essential factors while considering 25(O) of the ID Act.
24. The reasons indicated were not one reason but it is from 2007 to 2013 and also there was a dispute regarding the lock out, complaint was lodged, the factory was also not functioning continuously from 17.08.2011 except for three months 25 days, i.e., from 28.10.2012 till 28.12.2012 and the factory was not in function continuously from 15.03.2013 on account of lock out and there was grinding halt of all the activities of the factory.
25. The decision placed by the petitioner counsel, this Court has absolutely no quarrel to the settled proposition of law, but in the present circumstances, the genuineness and adequacy reasons, which were accruing
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NC: 2024:KHC:35683 WP No. 39433 of 2013 in Section 25(O)(2), which is of great importance is available in the present facts and which was absent in the decision placed reliance by the petitioner counsel and in that circumstances, the decision placed reliance is not applicable to the present facts.
26. The Apex Court in the case of Vazir Glass Works ltd. has held that Whenever an application for closure of an industrial Unit is made by an employer, the State Government before whom such an application is made, is required to be dispose of such application within sixty days from the date of making the application and communicate it's decision with the said period of sixty days so that an employer does not suffer any hardship on account of failure on part of the Sate Government to dispose of the application for permission for closure expeditiously. Further held that review by the State Government of its decision on the application of closure either on its own motion or on the basis of application to be made by the aggrieved party. Further that the decision
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NC: 2024:KHC:35683 WP No. 39433 of 2013 taken on the application for closure has been made operative for one year only, so that after such period, if an employer still desires that the industrial unit should be closed, it may made a fresh application for permission to close the said unit. It further held that the scheme of 25(O), the review application is to be made before expiry of the said time frame of one year and such application is to be disposed of within such time frame otherwise such review application will become infructuous. The argument that a party should not be made to suffer simply on account of failure on the part of statutory authority in disposing the review application within a time frame and thereby rendering it infructuous, is not tenable because after expiry of the said time frame of one year, the party aggrieved has a right to make a fresh application by incorporating all the material factors germane for consideration of its application for permission to close, including the factors indicated in review application.
Further it held that the State Government would ceased to have jurisdiction to review its own order on the application
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NC: 2024:KHC:35683 WP No. 39433 of 2013 for closure of industrial unit after expiry of one year from the date of rejection of the application for permission to close is correct.
27. The Apex Court in the case of Britannia Industries Ltd., held at paragraph Nos.14, 17, 19, 24 and 28 as under:
"14. The order passed by the appropriate Government granting or refusing to grant permission to close is final and binding on the parties and would remain in force for a period of one year from the date of such order. Its finality is subject to the provisions of sub-section (5) which in term contemplates that the appropriate Government may either on its own motion or on an application made by the employer or any workman review its order made under sub- section (2) or refer the matter to the Tribunal for adjudication. Where the appropriate Government chooses to refer the matter to a Tribunal then the Tribunal shall pass an award within 30 days from the date of such Reference. In other words, an order made is capable of being altered by exercise of a power of review vested in the appropriate Government or upon adjudication by the Tribunal when the Government instead of reviewing chooses to make a Reference to the Tribunal.
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NC: 2024:KHC:35683 WP No. 39433 of 2013 Subject to the provisions of sub-section (5), the order is final and binding. This is the essence of Section 25-0(4).
17. The phrase "Subject to" other provisions, therefore, has to be given a reasonable interpretation and an interpretation which would carry out the intention of makers of the law and also avoid conflict and impracticability. In the light of these principles, all that can be said is that an order passed by the appropriate Government under Section 25-O(2) shall be final and binding on all parties unless it is reviewed by the appropriate Government or is confirmed and/or disturbed by the Tribunal upon a Reference made to it by the appropriate Government in terms of Section 25-O(5). What is the scope and meaning of the words "review" and "referred the matter to the Tribunal" is the other question that arises for consideration which we shall shortly proceed to discuss.
19. What is to be reviewed by the appropriate government is the order passed earlier under sub- section (2) of Section 25-O. The language of sub- section (5) of Section 25-O where it mentions of "review its order" makes it amply clear that the order passed earlier is the very foundation for seeking the review to be done in exercise of power of review vested in an appropriate Government.
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NC: 2024:KHC:35683 WP No. 39433 of 2013 Existence of an order under sub-section (2) of Section 25-O, thus, is the condition precedent for exercise of review jurisdiction in terms of Section 25-O(5) of the Act. A final order is quite distinct and different than an interlocutory order. An order that disposes off the entire case will be a final order. Thus, the final order under Section 25-O(2) which the appropriate Government would pass, of course, would attain finality, subject to the provisions of sub-section (5). But that by itself does not mean that the order passed by the appropriate Government and of which review is sought for at the first instance becomes automatically inoperative and ineffective. The doctrine of eclipse or principle of abeyance operates by a specific Act and does not become operative of its own. A final order may attain finality in given circumstances and subject to some compliance but the order does not cease to exist or come to an end merely by invocation of a remedy available under the statute. In this regard, most commonly known and accepted example can be under the provisions of Order 41 Rule 5 of the Code of Civil Procedure which specifically commands that filing of an appeal shall not operate as a stay of the proceedings under a decree or order appealed from except insofar as the stay of execution is specifically directed by the
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NC: 2024:KHC:35683 WP No. 39433 of 2013 Appellate Court. It is also a known fact that during pendency of the appeal, decrees are executed in accordance with law. Merely because a statutory remedy of an appeal is availed by a party by itself would not mean that the judgment and decree passed by the Court becomes inoperative, gets eclipsed or is kept in abeyance by mere invocation of the specified remedy.
24. The doctrine of eclipse as stated in THE LAW LEXICON BY P. RAMANATHA AIYAR, (General Editor Justice Y.V. CHANDRACHUD, Former Chief Justice, Supreme Court of India, 1997 Edition,) is explained to mean "an existing law inconsistent with a fundamental right though becomes inoperative from the date of the commencement of the Constitution is not dead altogether." When the appropriate Government is exercising its discretion to review its earlier order, the order thus is neither kept in abeyance nor is eclipsed automatically. In fact it is is very much in existence and that very order which is to be reviewed, is the basic and fundamental question falling for consideration before the Appropriate Government which has to exercise powers in terms of Section 25-O(2) and (5) respectively.
28. This has further been buttressed by the period of one year indicated under the provisions of Section
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NC: 2024:KHC:35683 WP No. 39433 of 2013 25-O which is to be reckoned from the date of passing of the initial order 47 and not the subsequent order. The words "remain in force for one year from the date of such order" clearly indicate that a Reference is made to a specific order i.e. the first order passed by the Appropriate Government in exercise of powers vested in it under Section 25-O(2) of the Act. The purpose of providing a limitation of 30 days under the proviso to Section 25-O(5) is again suggestive of the fact that the proviso to Section 25-O(5) does not suggest that prescription of 30 days period from passing of an award renders the earlier order non existent during the pendency of the proceedings. We have already noticed that the review is of its order by the Appropriate government and therefore it is essential that the order must be treated as in force since its passing and the period of one year would not stand extended even if the order is reviewed or affirmed."
28. The management has filed the application under Section 25(O) of the ID Act, seeking for permission for closing the factory with effect from 09.09.2013, after hearing the petitioner-Union and the employer, regarding the genuineness and adequacy of the reasons stated by
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NC: 2024:KHC:35683 WP No. 39433 of 2013 the employer and feeling it substantially and adequately proved beyond doubt, intention of the employer not to be in the business and suffer further financial loss, the industrial unrest in the unit, respondent No.1 has rightly after application of mind allowed the application and accordingly, the point framed for consideration is answered in favour of respondent-Management and this Court pass the following:
ORDER i. The writ petition is dismissed.
ii. The impugned order passed by respondent No.1 stands confirmed.
Sd/-
(K.S. HEMALEKHA) JUDGE AT List No.: 1 Sl No.: 21