Gujarat High Court
Mundra Port And Special Economic Zone ... vs Yogeshbhai Zala on 13 September, 2022
Author: Biren Vaishnav
Bench: Biren Vaishnav
C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 15134 of 2019
==========================================================
MUNDRA PORT AND SPECIAL ECONOMIC ZONE LTD.
Versus YOGESHBHAI ZALA ========================================================== Appearance:
MR DIPAK R DAVE(1232) for the Petitioner(s) No. 1,2,3 MR K I KAZI(5030) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE BIREN VAISHNAV Date : 13/09/2022 CAV ORDER
1. The petitioner employer has filed this petition challenging the award dated 02.03.2019 passed by the Labour Court, Ahmedabad in Reference (T) No. 383 of 2015. By the impugned award, the Labour Court has directed that the respondent be reinstated in service with 25% backwages.
2. Facts in brief would indicate that the respondent was appointed as an Operator with the petitioner no. 1 -
Mundra Port and Special Economic Zone Limited by an appointment letter dated 28.09.2006. He was initially Page 1 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 appointed on probation for a period of one year. After completion of probation, the respondent was discontinued with effect from 31.08.2007. By a communication dated 01.09.2007, the respondent was appointed as Operator, Dry Cargo on a remuneration of Rs.17,500/- per month.
On completion of six months of probation, he was entitled to be confirmed in service.
2.1 It was the case of the respondent before the Labour Court that he was granted increments from time to time and also granted grade restructuring vide letter dated 09.08.2010 by placing him in grade T4 as Senior Equipment Operator with immediate effect. Since the services of the respondent were not required at Mundra Port, in the statement of claim it is stated by respondent that he was transferred to Belekeri Port, Karnataka. He accepted his appointment at the transferred place.
According to the respondent increments were continued to be paid by the company - petitioners no. 2 and 3 and letters one of which dated 28.05.2012 under the Page 2 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 signature of the Head, Human Resources, Adani Enterprises Limited, according to the respondent, made it evident that though the respondent was transferred to the Belekeri Port it was under the flagship company of Adani Enterprises.
2.2 By a letter dated 09.08.2013, the respondent employee was informed that since the services at the Belekeri Port were closed, it was decided to treat the service of the respondent as redundant and he was paid compensation in accordance with the clauses of his appointment order and relieved from his services. This became the subject matter of challenge before the Labour court.
2.3 The petitioner employer filed a reply to the statement of claim disputing the stand of the respondent workman. In the written reply filed by the employer, it was the case of the employer that the respondent cannot be said to be a workman as he was in the Supervisory Page 3 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 Grade. It was the further case of the petitioner employer that by way of full and final settlement, since the port activities at Belekeri closed, the petitioner offered compensation which the respondent did not accept. That there was no violation of provisions of Section 25F of the Industrial Disputes Act, 1947 (for short 'the Act') but in fact it was a closure in accordance with the provisions of Section 25FFF of the Act, compliance of the provisions were made and therefore it cannot be said that the respondent employee was entitled to reinstatement.
2.4 The Labour Court on the appreciation of oral evidence of the workman and that of the manager of the petitioners who was examined at Ex. 17 came to the conclusion that the petitioner did not discharge its burden of proving the fact that there was closure; that the letters of appointment and the letters of increment produced by the workman indicated that the Belekeri project was essentially under the flagship enterprise of Adani Limited; that there was no simultaneous offer of Page 4 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 compensation and therefore there was violation of section 25FFF of the Act which entitled the respondent to be reinstated in service with 25% of backwages.
3. Mr. Dipak Dave, learned counsel for the petitioner would submit that on account of the fact that the Belekeri port where the respondent was working was closed down, in terms of the appointment order the services of the respondent employee were dispensed with. He would submit that despite the fact that the termination order was issued at the Belekeri port, Karnataka, the respondent workman raised an industrial dispute at Ahmedabad which had no jurisdiction to receive or adjudicate the dispute. In support of his submission, Mr. Dave relied on a decision of the Apex Court in the case of Ashok Khanna and Others vs. T.T.K Pharma and others reported in (2009) 4 SCT 544.
3.1 Mr. Dave would submit that the respondent workman cannot be termed as 'workman' within the Page 5 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 meaning of Section 2(s) of the Act since the respondent was serving in the supervisory capacity as an Operator with monthly salary of Rs.24,493/-. The grade of the respondent was in T4 and therefore it could not be said that the respondent was a 'workman'.
3.2 On merits, Mr. Dave, learned advocate for the petitioners would submit that the respondent was not entitled to the relief of reinstatement because it has come on record by way of a purshis at Ex. 16 tendered before the Labour Court on 07.02.2018 by which an offer was made by the employer to offer employment at Parsa East and Kanta Basan OpenCast Mine at Chhatisgarh, the respondent did not show any interest in resuming duty.
Moreover, it had come to the notice of the employer that the respondent was working as a Fork Lift Operator through PG Terminal in Mundra through Dedha India HR Solutions Pvt. Ltd. He submitted that therefore the respondent is not entitled to reinstatement.
Page 6 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 3.3 Mr. Dave would further submit that it was on account of closure of the port and it was an admitted fact in the cross examination of the respondent that his termination was on account of closure; that he was issued a cheque of terminal benefits which he did not accept and therefore the findings of Labour Court that there was violation is contrary to law. He would rely on the decision of Hathisingh Manufacturing Company vs. Union of India [AIR 2016 SC 923] and District Red Cross Society vs. Babita Arora [(2007) 7 SCC 366].
3.4 Mr. Dave would also submit that the petitioner is ready and willing to offer lumpsum compensation and/or permit the respondent to resume his duties at Chhatisgarh pursuant to the pursis at Ex. 16 and therefore there is no objection to complying with the award of reinstatement.
4. Mr. K.I Kazi, learned counsel for the respondent would support the award impugned. He would submit Page 7 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 that the Labour Court rightly has appreciated the chain of appointment letters at Exs. 11 and 12 and the letters to indicate that in fact it was Adani Enterprises Limited -
the flagship which had continued the services of the respondent, given him grade restructuring and increments while he was at Belekeri and therefore the award of the Labour Court holding that there was violation of the provisions of Section 25FFF of the Act cannot be faulted.
4.1 Mr. Kazi would submit that it was evident from the letter dated 28.05.2012 which was a part of the record that even if the respondent employee was at Belekeri Port, Karnataka, increments were paid by the office at Ahmedabad and therefore the closure was just an excuse to put the services of the respondent to an end.
5. During the course of the consideration of the matter from time to time, on 21.11.2019, this court passed the following order:
Page 8 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 "Learned advocate Mr. Dipak Dave appearing for the petitioners submit that, without prejudice to the rights and contentions which have been raised in this petition and which are available to the petitioners, the proposal has given to the otherside to forgo 25% of the backwages and he would be reinstated in the service. He has also further proposed to give lumpsum compensation in lieu of the reinstatement and other rights.
Learned advocate Mr. K.I. Kazi, who has on caveat before this Court requires time to take instructions.
With the joint request, matter is kept on 28th November, 2019."
5.1 In response thereto, this court also attempted to bring out a settlement and the matter was placed in mediation on 09.12.2019. It appears that the mediation failed and the matter was therefore relisted for hearing.
During the course of several adjournments to bring about a reasonable settlement, it was impressed upon the parties to bring about a settlement by paying lumpsum amount of compensation. Initially, the learned counsel for the petitioner took instructions and came back with an offer to pay Rs. 5 lakhs compensation to the respondent Page 9 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 employee. This court requested Mr. K.I.Kazi, learned counsel for the respondent to impress upon the respondent to accept the compensation in light of the fact that it had come on record during the Labour court hearing though an offer was made for reinstatement the respondent did not accept the offer and there was no dispute on the fact that the respondent was engaged as a Fork Lift Operator in some other company. The respondent during the course of arguments was also personally present. However, since the respondent refused to accept compensation, the court proceeded to hear the matter even when the petitioner's counsel on instructions was ready and willing to enhance the compensation amount to Rs.7 lakhs.
6. In light of these developments, the court heard the matter on merits. Perusal of the award of the Labour Court would indicate that the Labour Court came to the conclusion based on the letters produced of appointment, award of increment and the letter of transfer of the Page 10 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 respondent to Belekeri together with the communication dated 09.08.2013 by which as a result of closure the services of the respondent were put to an end, that in fact the appointment was by the flagship company Adani Limited and therefore even if there was closure, there was no simultaneous offer of compensation together with the letter dated 09.08.2013 and compensation cheque was not offered with the letter but in fact was sent by registered post AD separately on 27.09.2013. This prompted the Labour Court to hold that there was procedural violation of the provisions of Section 25FFF of the Act and therefore the Labour Court ordered reinstatement with 25% backwages.
7. Not getting into the submission made by the learned counsel for the petitioner with regard to the jurisdiction of the Labour Court inasmuch as the termination was at Belekeri and the Labour Court, Ahmedabad had adjudicated the dispute, in light of the letter of closure and termination was by Adani Enterprises Ahmedabad, Page 11 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 the question that needs to be considered is whether the Labour Court was right in its perception to award reinstatement.
7.1 Section 25FFF of the Act particularly sub section (1) provides that where an undertaking is closed down for any reason, every workman who has been in continuous service for not less than one year in that undertaking is entitled to notice and compensation in accordance with the provisions of Section 25F of the Act as if the workman had been retrenched. There is between the text of Section 25F and Section 25FFF of the Act a significant difference in phraseology. Section 25FFF(1) of the Act merely imposes liability to give notice and to pay compensation on closure of the undertaking which results in termination of employment of the workman. Evidently, therefore, payment of compensation is the only relief that can be granted.
7.2 In the case of Hathising Manufacturing Company Page 12 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 Ltd. (supra), the Apex Court appreciating the provisions of Section 25FFF has held as under:
"20. Does the impugned provision impose an unreasonable restriction because it imposes liability to pay compensation which is not related to the capacity of the employer ? Before the impugned section was enacted, the industrial tribunals undoubtedly decided the individual claims for compensation for termination of employment submitted to them on their merits and sometimes refused compensation if it was found that the closure was bona fide and was in part due to irresponsible conduct of the workmen concerned. The decisions of the industrial tribunals before the impugned section was enacted again show that even where compensation was allowed, there was no fixed standard or principle on which the compensation was awarded. Where the business is continuing its capacity to meet the obligation to pay dearness allowance, gratuity and provident fund, etc., may have to be taken into account ; the reason being that if the capacity to pay is not taken into account, the business itself may come to an end and the very purpose of industrial adjudication in the matter of fixation of wages, payment of dearness allowance and the schemes of gratuity and provident fund which are intended for the amelioration of the conditions of labour may be frustrated. But where a business is closed, the capacity to pay is not a relevant consideration.Page 13 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022
C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 Normally, if the business is capable of meeting the obligation to pay the wages of the workmen and to meet the other expenses necessary for its continuance, it would not be closed down. Capacity to pay has therefore to be taken into account in the case of a running business in assessing liability to fix wages or gratuity or dearness allowance. Once the undertaking is closed and liability to pay compensation under the impugned section is not made a condition precedent, the amount which the workmen may be able to recover must depend upon the assets of the employer which may be available to meet the obligation. The workmen would be entitled to recover compensation only if the employer is able to meet the obligation; otherwise they would have to rank pro-rata with the other ordinary creditors of the employer.
21. The legislature has imposed restricted liability in cases where closure is due to circumstances beyond the control of the employer. By the proviso to sub-s. 1 of s. 25FFF, where the undertaking is closed down on account of circumstances beyond the control of the employer, the compensation to be paid to the workmen is not to exceed his average pay for three months. If the principal provision is not unconstitutional as imposing an unreasonable restriction, it is not suggested that the proviso is on any independent ground unconstitutional.Page 14 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022
C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022
22. However, the explanation to s. 25FFF proviso is, it is submitted, unreasonable. The explanation provides :
"An undertaking which,, is closed down by reason merely of financial difficulties (including financial losses) or accumulation of undisposed of stocks shall not be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub- section."
23. The effect of the impugned section along with the proviso is to classify the undertakings into two classes, viz., (1) those which are closed down on account of unavoidable circumstances beyond the control of the employer and (2) the remaining. When the closure of an undertaking is due to circumstances beyond the control of the employer, the maximum limit of compensation is average pay for three months, irrespective of the length of service of the workmen; in the residuary class, the liability is unrestricted. The explanation is in substance a definition clause which sets out what shall not be deemed to be closures on account of circumstances beyond the control of the employer. By this explanation, employers who had to close down their industrial undertakings merely because of financial difficulties including financial losses or accumulation of undisposed of stocks are excluded from the Page 15 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 benefit of the proviso to s. 25FFF(1). The proviso restricts the liability of employers who are compelled to close down their undertakings on account of unavoidable circumstances beyond their control, but in the view of the Parliament, in that category are not to be included employers compelled to close down their undertakings merely because of financial difficulties or accumulation of undisposed of stocks. Closure of an undertaking attributable merely to financial difficulties or accumulation of undisposed of stocks, is by the explanation, excluded from the benefit of restricted liability; but coupled with other circumstances, financial difficulties or accumulation of undisposed of stocks may justify the view that the closure is due to unavoidable circumstances beyond the control of the employer, and attract the application of the proviso notwithstanding the explanation.
24. Where an undertaking is closed down on account of persistent losses due to no fault of the employer or due to accumulation of/stocks having regard to persistent unfavourable market conditions, the closure may normally be regarded as due to unavoidable circumstances beyond the control of the employer. By the explanation, the jurisdiction of the Tribunal which may be called upon to ascertain whether in a given case, the closure was on account of circumstances beyond the control of the employer and whether OD that account the employer was entitled to the benefit of the proviso may be restricted. But it is not provided Page 16 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 that in no case of financial difficulty or accumulation of stocks coupled with other circumstances, the closure is to be regarded as due to unavoidable circumstances beyond the control of the employer. It is only where the closure is " merely " on account of financial difficulties or accumulation of undisposed of stocks that the closure is not to be deemed due to circumstances beyond the control of the employer.
25. A state of financial difficulties or accumulation of undisposed of stocks may be temporary, it may be brought about by past mismanagement directly attributable to the employer or may even be deliberately brought about. The closure on account of financial difficulties or accumulation of undisposed of stocks is accordingly not necessarily the result of unavoidable circumstances beyond the control of the employer. That, in certain events, a statute may impose restrictions which will be irksome and may be so regarded by certain citizens as unreasonable, is not decisive of the question whether it imposes a reasonable restriction. As observed in Mohd. Hanif Quareshi and Others v. The State of Bihar (1) by Das, C. J. :
"In determining that question (the reasonableness of the restriction) the court we conceive, cannot proceed on a general notion of what is reasonable in the abstract or even on a consideration of what is reasonable from the point of view Page 17 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 of the person or persons on whom the restrictions are imposed. The right conferred by sub-el. (g) is expressed in general language and if there had been no qualifying provision like el. (6), the right so conferred would have been an absolute one. To the person who has this right, any restriction will be irksome and may well be regarded by him as unreasonable. But the question cannot be decided on that basis. What the court has to do is to consider whether the restrictions imposed are reasonable in the interest of the general public." Again, as observed in Bijay Cotton Mills Ltd. v. The State of Ajmer (2):
" Individual employers might find it difficult to carry on the business on the basis of the minimum wages fixed under the Act but this must be due entirely to the economic conditions of these particular employers. That cannot be a reason for the striking down the law itself as unreasonable ".
By the explanation, certain persons because of persistent losses or accumulation of stocks, find them selves unable to carry on the business, and may still not be entitled to the benefit of the proviso, but that will not be a ground for holding that the explanation is unreasonable. The tribunal called upon to decide whether the case of an employer is covered by the proviso will certainly be entitled to look into the causes which led Page 18 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 to the financial losses or the accumulation of stocks and ascertain whether the closure was merely on account of financial losses or accumulation of stocks or was on account of circumstances beyond the control of the employer, and in assessing whether the circumstances were beyond the control of the employer, the fact that the employer has suffered financial losses or there is accumulation of stocks is not required by the legislature to be excluded from consideration.
26. The procedure for enforcement of liability to pay compensation, prescribed by s. 33(c)of the Act which makes the amount recoverable as arrears of land revenue cannot, ex facie, be regarded as unreasonable. Undoubtedly, under certain State laws, (e.g., the Bombay Land Revenue Code (Act V of 1879) for failure to pay land revenue, the defaulter may be imprisoned; but because of the special mode of recovery prescribed, the law imposing a civil liability to pay compensation for termination of employment does not become unreasonable."
7.3 Even in the case of District Red Cross Society (supra), the Apex court in paras 8-10 has held as under:
"8. The question which arises for consideration is whether the respondent is entitled to protection of Section 25F and 25G of the Act if Page 19 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 the establishment in which she was working itself has been closed down though certain other wings or units of the appellant District Red Cross Society, Karnal, have not been closed down and are still functioning. Section 25F of the Industrial Disputes Act lays down the conditions precedent to retrenchment of workmen and it reads as under:
25F. Conditions precedent to retrenchment of workmen.- No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until--
(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice:
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay [for every completed year of continuous service] or any part thereof in excess of six months; and
(c) notice in the prescribed manner is served on the appropriate Government [or such authority as may be specified by the appropriate Government by notification in the Official Gazette].Page 20 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022
C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 Section 25FFF deals with compensation to workmen in case of closing down of undertakings. The relevant part of Sub- section (1) of Section 25FFF (omitting the proviso) reads as under : 25FFF.
Compensation to workmen in case of closing down of undertakings.- (1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched:
Provided ............................ Therefore, the legislature has treated closing down of undertakings which automatically result in termination of services of all workmen working therein differently from a retrenchment simplicitor as defined in Section 25F of the Act.
In Workmen of the Indian Leaf Tobacco Development Co. Ltd., Guntur v. The Management of Indian Leaf Tobacco Development Co. Ltd., Guntur AIR 1970 SC 860, it was held as under :
"No Industrial Tribunal, even in a reference under Section 10(1)(d) can interfere with discretion exercised by a company in the matter of closing down Page 21 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 some of its branches or depots. Even if such closure may not amount to closure of business of the Company, the Tribunal has no power to issue orders directing a Company to reopen a closed depot or branch, if the Company, in fact, closes it down and that closure is genuine and real. The closure may be treated as stoppage of part of the activity or business of the Company. Such stoppage of part of a business is an act of management which is entirely in the discretion of the Company carrying on the business. ...................."
In Management of Hindustan Steel Ltd. v. The Workmen & Ors. 1973 Labour & Industrial Cases 461, it was held by this Court as under in para 10 of the reports :
"10. The word undertaking as used in S.25FFF seems to us to have been used in its ordinary sense connoting thereby any work, enterprise, project or business undertaking. It is not intended to cover the entire industry or business of the employer as was suggested on behalf of the respondents. Even closure or stoppage of a part of the business or activities of the employer would seem in law to be covered by this sub-section. The question has indeed to be decided on the facts of each case. ........................."
In workmen of the Straw Board Manufacturing Company Limited v. M/s Page 22 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 Straw Board Manufacturing Company Limited (1974) 1 LLJ 499, this Court laid down the test of closure of a unit by observing that the most important aspect in a case relating to closure is whether one unit has such componental relation that the closing of one must lead to the closing of the other or the one cannot reasonably exist without the other. Functional integrity will assume an added significance in the case of closure.
9. It appears that after the aforesaid decisions of the Supreme Court, the legislature by an amendment made in the year 1982 to the Industrial Disputes Act defined the word "closure" by adding Section 2(cc). Section 2(cc) of the Act reads as under :
2(cc). "closure" means the permanent closing down of a place of employment or part thereof.
It is, therefore, clear that in order to attract Section 25FFF it is not necessary that the entire establishment of an employer should be closed. If a unit or part of an undertaking which has no functional integrity with other units is closed, it will amount to closure within the meaning of Section 25FFF of the Act. In J.K. Synthetics v. Rajasthan Trade Union Kendra & Ors. (2001) 2 SCC 87, it has been observed that the closure need not be of the entire plant. A closure can also be of a part of the plant. In Maruti Udyog Page 23 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 Ltd. v. Ram Lal & Ors. (2005) 2 SCC 638, it was held as under in para 21 of the report :
"21. How far and to what extent the provisions of Section 25F of the 1947 Act would apply in case of transfer of undertaking or closure thereof is the question involved in this appeal. A plain reading of the provisions contained in Section 25FF and Section 25FFF of the 1947 Act leaves no manner of doubt that Section 25F thereof is to apply only for the purpose of computation of compensation and for no other. The expression "as if" used in Section 25FF and Section 25FFF of the 1947 Act is of great significance. The said term merely envisages computation of compensation in terms of Section 25F of the 1947 Act and not the other consequences flowing therefrom. Both Section 25FF and Section 25FFF provide for payment of compensation only, in case of transfer or closure of the undertaking. Once a valid transfer or a valid closure comes into effect, the relationship of employer and employee does not survive and ceases to exist. Compensation is required to be paid to the workman as a consequence thereof and for no other purpose."
The position in law is, therefore, well settled that if the entire establishment of Page 24 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 the employer is not closed down but only a unit or undertaking is closed down which has no functional integrity with other units or undertaking, the provisions of Section 25FFF of the Act will get attracted and the workmen are only entitled to compensation as provided in Section 25FFF of the Act which has to be calculated in accordance with Section 25F of the Act. The Tribunal and also the High Court clearly erred in holding that as other units of the appellant Red Cross Society like Drug De-Addiction-cum- Rehabilitation Centre, Family Planning Centre and Viklang Kendra were functioning, the termination of services of the respondent would amount to retrenchment. The Maternity Hospital was functioning as a distinct entity. It was not receiving any grant from the Government and was being run entirely on charitable basis from donations received from public. Due to financial stringency, the Maternity Hospital had to be closed down. The other three units, viz., Drug De-Addiction- cum- Rehabilitation Centre, Family Planning Centre and Viklang Kendra are receiving grants from government and are functioning as separate entities and the mere fact that they have not been closed down, cannot lead to the inference that the termination of services of the respondent was by way of retrenchment which was illegal on account of non-
Page 25 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 compliance of the provisions of Section 25F of the Act.
10. In view of the findings recorded above, the respondent would be entitled to compensation only in accordance with Section 25FFF of the Act and the award for reinstatement in service with back wages passed by the Tribunal which was affirmed by the High Court cannot be sustained and must be set aside."
7.4 Accordingly, what is the relief that a Labour Court can grant on holding violation of such provisions is compensation.
8. There is another reason why this court would want to substitute the award of reinstatement with 25% backwages with compensation. At Ex. 16, the employer had filed a purshis before the Labour Court (page 91 of the petition) that the petitioner is willing to reinstate the respondent employee at Adani Enterprise Limited, Parsa East Kanta Basan OpenCast Mine at Chhatisgarh. The respondent refused that offer during the pendency of the proceedings before the Labour Court. To a statement made by learned counsel for the petitioner that even at Page 26 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022 C/SCA/15134/2019 CAV ORDER DATED: 13/09/2022 present the respondent was gainfully employed as a Fork Lift Operator with another company at Mundra, there was no denial. Therefore on two grounds that is on the question of position of law as enunciated by the judgements of the Apex Court and on the conduct of respondent, this court is of the opinion that the award of the Labour Court needs to be modified so as to award compensation.
9. As has been reflected in the earlier part of this order, learned counsel for the petitioner on instructions, had submitted that the petitioner is willing to fully and finally settle the issue by awarding Rs. 7 lakhs as compensation, the award of the Labour Court dated 02.03.2019 in Reference (T) No. 383 of 2015 is modified.
The award of reinstatement with 25% backwages is modified to the effect that the petitioner shall pay compensation of Rs.7 lakhs to the respondent employee within a period of four weeks from the date of receipt of the copy of this order.
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10. Petition is allowed to the aforesaid extent. Rule is made absolute.
(BIREN VAISHNAV, J) DIVYA Page 28 of 28 Downloaded on : Tue Sep 13 21:06:25 IST 2022