Madras High Court
Federation Of Medical And Sales vs The Government Of Tamilnadu on 14 July, 2025
Author: P.T. Asha
Bench: P.T. Asha
W.P.No. 6312 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 26.06.2025
PRONOUNCED ON : 14.07.2025
THE HONOURABLE Ms. JUSTICE P.T. ASHA
W.P.No. 6312 of 2024
&
W.M.P.No.7015 of 2024
Federation of Medical and Sales
Representatives Association of India,
Represented by its President
No. 3 Kambar street, Abith Colony,
Saidapet
Chennai 600 015 … Petitioner
Vs.
1.The Government of Tamilnadu
rep. by its Additional Chief Secretary,
Labour Welfare and Skill Development
Fort st. Goerge,
Chennai 600 009
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W.P.No. 6312 of 2024
2.The Commissioner of Labour
The Government of Tamilnadu,
DMS compound,
Teynampet
Chennai 600 006
3.The Assistant Commissioner of Labour ((Concilation) -3
Third Floor, Kuralagam,
Chennai 600 108
4.The Management of TTK Healthcare Limited
No. 6 Cathedral road,
Chennai 600 086 ... Respondents
Prayer: Writ Petition is filed under Article 226 of the Constitution of
India Writ of Certiorarified Mandamus, calling for the records relating
to G.O (D) no 670 dated 15.12.2023 of the Labour Welfare and Skill
Development Department, issued by the 1st Respondent herein
declined to refer the Industrial dispute raised by the petitioner for
adjudication and quashing the same and consequently directing the 1st
Respondent to refer the dispute dated 07.12.2022 raised by the
petitioner Association for adjudication.
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For Petitioner : Mr. K.Elango
For Respondents : Mrs. M.Jayanthi
1 to 3 Additional Government Pleader
For Respondent 4 : Mr. Ravi
Senior Counsel
For M/s. Ravi Law Chambers.
ORDER
Aggrieved by the refusal of the Appropriate Government, namely, the 1st respondent to refer the Industrial Dispute raised by the petitioner union for adjudication, they are before this Court. The short facts which are required to address the grievance of the petitioner is herein below set out. The petitioner is a registered union registered under the Trade Union Act, 1926 on 28.12.1963.
2. The 4th respondent company is involved in the business of Pharmaceuticals and Health Care related products and it employs more than 1000 sales promotion employees who shall herein after be referred to as SPEs. The 4th respondent is divided into many divisions and one 3/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 of them is the Human Pharma Division. This division has further sub divisions and the work of the SPEs is to promote the products of the company to the Medical and Health Care Professional. The SPEs working under the 4th respondent are members of the petitioner union.
3. The working and service conditions of the SPEs are negotiated by the members of the negotiating committee and welfare committee of the petitioner with the company. The two committees are selected by the members of the petitioner union. These committees are recognised by the management and they have entered into settlement with the management under Section 18 (1) of the Industrial Dispute Act, herein after referred to as the ID Act.
4. In the last two decades the company and the committee have entered into over 7 bilateral wage settlements the last of which settlement was signed on 07.05.2022 for the period of 01.01.2021 to 30.06.2022 on behalf of the three divisions of the Human Pharma 4/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 Division, namely, Endura, Excella and Gynova Divisions. The settlement entered into covers nearly 450 SPEs.
5. On 21.03.2022, the management had announced through the media that the Human Pharma Division was slated for a slump sale to M/s.BSV Limited and the details of financial consideration covering the agreement was also made public. However, it is the contention of the petitioner that this decision was made without keeping the union committee informed. On coming to learn about this decision of the management the petitioner had sent a representation on 23.03.2022 to the management voicing their concern about the job security. Thereafter, the 4th respondent / management had issued a circular dated 28.03.2022 informing them about the sale proceeds but however not addressing the employees future.
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6.Meanwhile, on 03.05.2022 the negotiating committee was called upon by the management to discuss and finalise the ongoing wage negotiations on the basis of the Charter of Demands placed by the petitioner union on 26.12.2020. After negotiation, memorandum of settlement deed dated 07.05.2022 was entered into between the union and management and the settlement was to be in force from 01.01.2021 till 30.06.2022. During the negotiation, the committee had raised the issue of job protection for the employees who were affected by the slump sale agreement. They were given assurance that all the employees will be transferred to the new employer and this assurance was believed by the petitioner.
7. However, contrary to the assurance and during the currency of the above said settlement, the 4th respondent by its letter dated 09.05.2022 had retrenched over 250 SPEs across the country including 38 employees from Tamil Nadu. These employees were given individual letters informing them that their service had been terminated 6/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 under Section 25 FF of the ID Act as their new employer was unwilling to provide them employment.
8. It is the contention of the petitioner that this act amounts to retrenchment and the said communication was a rude shock to the employees since the assurance given to the negotiating committee with reference to the job security had been flouted.
9. Further, it is the contention of the petitioner that the action of the 4th respondent management in terminating the services went against the provisions of Section 25 N of the ID Act. The persons who have been retrenched have put in over 10 to 30 years of unblemished service and many of them crossed 40 years of age. Therefore, the petitioner would contend that the respondent / management ought to have taken the permission from the Government before terminating the services of the employees.
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10. They would contend that neither was the said permission sought for nor was the 3 month notice in writing given to the employees indicating the reasons for retrenchment issued. Therefore, the retrenchment was contrary to the provisions of the ID Act and in violation of the terms of Section 18 (1) settlement dated 07.05.2022.
11. On 11.05.2022, the petitioner had given a representation to the 2nd respondent requesting him to intervene in the unilateral and arbitrary action of the management and a similar letter was sent to the 1st respondent dated 13.05.2022. The 3rd respondent was directed to conciliate between the petitioner and the 4th respondent. On 30.05.2022 the respondent management had sent a reply stating that they had not committed any illegal act. They requested the 3 rd respondent to close all further proceedings.
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12. The petitioner had issued a rejoinder dated 07.06.2022 denying the contentions raised by the management and praying that the 3rd respondent prosecute the management for violation of Section 25 N of the ID Act. The 3rd respondent, during the course of the conciliation, had advised the petitioner and the 4th respondent to have mutual discussions and arrive at a amicable settlement. Though the 4th respondent had agreed to do so before the Conciliation Officer, namely the 3rd respondent, however they neither took the initiative in this regard nor did they respond to the petitioner's call for a meeting.
13. Taking into account this stubborn stand of the management on 07.12.2022 the petitioner had raised an industrial dispute under Section 2 (k) of the ID Act before the 3rd respondent. The management, the 4th respondent gave a reply on 19.01.2023 reiterating its stand. Since the conciliation had failed the 3rd respondent had sent a failure report to the 1st respondent. The petitioner were awaiting communication from the 1st respondent informing them about the 9/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 dispute having been referred, however to their shock, surprise and dismay the 1st respondent had rejected the request for sending the dispute for adjudication before the Industrial Court. Aggrieved by the same the petitioner is before this Court.
14. The 4th respondent management had filed a counter affidavit inter alia denying the very claim of the petitioner. The 4th respondent would contend that as on February 2022 their Human Pharma Division had about 1262 employees comprising of both field as well back office employees. The 4th respondent had taken an administrative and commercial decision to sell the Human Pharma Division of the 4th respondent which is a separate undertaking on a slump sale basis to M/s. BSV Limited and after negotiations, the 4th respondent company sold its Human Pharma Division to M/s. BSV Limited. 10/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024
15. As per terms of the aforesaid agreement M/s. BSV Limited had agreed to take on its roll only such of those employees that M/s. BSV Limited had identified and notified in writing to the 4th respondent. This constituted nearly 62% of the total number of employees as on 28.02.2022. In other words M/s. BSV Limited had agreed to take 733 employees of the Human Pharma Division owned by the 4th respondent. Around 124 employees learning about the transfer had resigned and left the employment of the 4th respondent. The remaining 405 employees who had not been taken over by the M/s. BSV Limited were deemed to be retrenched and they were paid retrenchment compensation and the notice of pay in tune with Section 25 FF of the ID Act.
16. These 405 terminated employees would constitute of 261 employees who are medical sale representatives and the remaining 144 were managers and above that category. Out of this 261 sales representatives 175 belonged to Endura and Excella Division and were 11/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 affiliated to the petitioner's association.
17. The 4th respondent would further submit that all employees were given intimation about the transfer of the Human Pharma Division to M/s. BSV Limited vide circular dated 28.03.2022 and those of the transferred employees were all given letters dated 09.05.2022 stating that they stood transferred to M/s. BSV Limited limited with effect from 09.05.2022. The remaining employees were deemed to have been retrenched and they were also issued with notice dated 09.05.2022, the notice pay, retrenchment compensation, gratuity and other dues payable have also been credited in their respective bank accounts.
18. Despite the 4th respondent following the procedure contemplated under the ID Act, the petitioner union had raised a dispute under Section 2(k) of the ID Act before the 3rd respondent Conciliation Officer on 07.12.2022. The same ended in a failure and 12/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 the Appropriate Government declined to refer the dispute for adjudication which has constrained the petitioner union to approach this Court invoking the provisions of Article 226 of the Constitution of India.
19. The respondent would deny the allegations contained in the affidavit filed in support of the Writ Petition. It is their contention that out of 405 terminated employees only 174 employees belonged to the petitioner association. They would however deny the allegation that the negotiation which culminated in the Section 18 (1) settlement had taken place only for these retrenched employees in order to alleviate the hardship caused due to the sudden retrenchment and in order to give them a better emolument / salary. Section 18 (1) is totally unrelated to the sale of the Human Pharma Division. They would contend that the settlement was for all the employees of the 4th respondent company.
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20. In this regard the 4th respondent would submit that they had been held negotiation with the petitioner union for over years and it was during this negotiation that the 4th respondent had entered into agreement with M/s. BSV Limited for the sale of the Human Pharma Division. The allegation that the decision was taken without keeping the workmen informed was denied as false as they were already aware about the same.
21. The 4th respondent had denied the contention of the petitioner union that the management had given them assurance that all employees would be absorbed by the new company, namely M/s. BSV Limited. In fact in the agreement M/s. BSV Limited had made it clear that they would absorb those employees identified by them and whose names they notify in writing.
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22. The respondent would further submit that the failure to comply with the provisions of Section 25 N will not be fatal since the retrenchment was only on account of the transfer of undertaking and the 4th respondent had followed all the conditions before terminating the services of the employees. The question of obtaining prior permission of the Government under the provisions of Section 25 N of Chapter V – B of the ID Act is not applicable to the transferred Human Pharma Division as the termination is only on account of the transfer and the conditions contemplated under Section 25 FF has been complied with by the 4th respondent in letter and spirit. Therefore they would pray for the dismissal of the Writ Petition.
23. Heard Mr. K.Elango for the petitioner, Mrs.M.Jayanthi, Additional Government Pleader for respondents 1 to 3 and Mr. Ravi, Senior Counsel, for M/s. Ravi Law Chambers for the 4th respondent. 15/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024
24. The learned counsels on the either side made an oral submission and have submitted their written submissions as well and this Court is extracting the written submissions made on either side.
25. The petitioner union would reiterate the contents of the writ petition and they would submit that the management had failed to take the permission of Government in order to given three months notice in writing to the employees indicating the reasons for retrenchment.
26. The petitioner would submit that the 4th respondent has violated the terms of Section 18 (1) settlement dated 07.05.2022 since it was during currency of the settlement that the employees have been retrenched. The petitioner would contend that the reasons for refusing to refer the dispute for adjudication is totally arbitrary and suffers from a total non application of mind on the part of the 1st respondent Appropriate Government. They have refused to refer the dispute for adjudication on the ground that the 4th respondent is not an industrial 16/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 establishment as contemplated under Section 25 L of the Chapter V B of the ID Act. Therefore, the question of obtaining prior permission from the Government for retrenchment as per Section 25 N does not arise.
27. It is the further contention of the petitioner that the question whether the fourth respondent company is an industrial establishment under Section 25 L of the ID Act needs to be decided by letting in evidence before this Industrial Court. Therefore, the 1st respondent exceeded its jurisdiction and had adjudicated the dispute which is impermissible in law.
28. The petitioner would further submit that retrenchment was not in conformity with the provisions of Section 25 N of the ID Act and this question required adjudication by Industrial Court to examine its correctness and legality. The petitioner would further submit that the impugned order is bad in law as the 1st respondent failed to take 17/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 note of the fact that the 4th respondent had failed to comply with the provisions of Section 25 F of the ID Act.
29. The petitioner would rely upon the Judgement reported in 1989 (2) LLJ 558 – Telco Convoy Drivers Mazdoor Sangh and another Vs. State of Bihar and others, in support of the argument that when exercising power under Section 10 (1) of the Act the function of the Appropriate Government is only an administrative function and not judicial or quasi judicial function.
30. They would also rely upon the Judgement reported in 2015 II LLJ 513 – Ariane Orgachem Pvt., Ltd., Vs. Wyeth Employees Union and others, in support of the argument that the failure report of the conciliation proceedings is not the material evidence for the State Government to refuse reference. Therefore, the petitioner has prayed to quash the impugned order and direction be issued to the 1 st respondent to refer the dispute dated 07.12.2022 for adjudication. 18/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024
31. The 4th respondent has submitted the following written submissions. It is the contention of the 4th respondent that two issues arise for consideration in the present Writ Petition:
Issue No.(i): Whether the 1st respondent has by itself adjudicated on the merits of the dispute or has only recorded valid and justified reasons for non-reference of the dispute to the Industrial Court for adjudication?
32. The 4th respondent would answer the above issue by contending that under Section 12 (5) of the ID Act once the Conciliation Officer submits its failure report to the Appropriate Government and if on a consideration of the report so submitted the Appropriate Government is satisfied that there is a case for reference then it may make such reference. But where the Appropriate Government is of the opinion that reference need not be made then it shall record and communicate to the parties concerned the reasons for 19/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 its refusal
33. On a reading of Section 12 (5) r/w Section 10 (1) it is clear that discretionary power has been given to the Government to decide the issue as to whether it is necessary to refer a dispute to the Court or not and while refusing to refer dispute the reasons for the same should be recorded.
34. In the instant case the 1st respondent has considered the report of the Conciliation Officer and taken note of all the other factors for deciding that the dispute does not require a reference for adjudication. A mere reading of the impugned order would clearly show that the 1st respondent has not adjudicated on the issue on merits but has considered the request for reference and recorded the reasons for non referring the dispute which is as per the mandate of Section 12 (5) of the Act.
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35. The 4th respondent would rely upon the Judgement of the Hon'ble Supreme Court reported in 1960 (2) LLJ 592 – State of Bombay Vs. K.P.Krishnan, wherein the Hon'ble Supreme Court has held that the discretion to consider all relevant facts has been conferred upon the Appropriate Government by Section 10 (1) and the same should be exercised by the Appropriate Government even while dealing with the cases under Section 12 (5) of the Act provided that the discretion is exercised bonafidely.
36. This principle of law was reiterated in the case of Workmen of Sundaram Industries Ltd., Vs. Sundaram Industries Ltd., reported in 1997 (3) LLN 346.
37. The 4th respondent would further contend that the petitioner association has not challenged the genuineness or correctness of the transfer of the Human Pharma undertaking. They have therefore accepted that the transfer of the division to M/s. BSV Limited as 21/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 bonafide and done in good faith. This is amply evident from the fact that the petitioner has not challenged the re-employment of 733 employees by M/s. BSV Limited.
38. The 4th respondent would further submit that the contention of the petitioner that there has been an illegal closure is absolutely misconceived since there is no closure of the division but only a transfer of the undertaking. That it is a bonafide transfer having been accepted by the petitioner they cannot now turn around and state that there has been a closure, retrenchment and termination.
39. The 4th respondent would further submit that the reasoning of the 1st respondent for coming to the conclusion that the 4th respondent is not an Industrial Establishment is correct since Human Pharma Division was neither a factory nor a mine or a plantation. The dispute which has been raised by the petitioner does not even allege that the SPEs of the Human Pharma Division were employed in a factory or 22/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 mine or plantation.
40. They would contend that the 1st respondent had exercised its administrative authority and has not acted as a Judicial authority. Therefore, the order of the 1st respondent declining to make reference is perfectly in order.
Issue No.(ii): Whether the provisions of section 25 N of Chapter V B of the ID Act are applicable to termination of workmen on account of transfer of undertaking covered by Section 25 FF of the ID Act?
41. In this issue the petitioner seeks to raise a contention that the termination of the service of the workmen consequent to the transfer of the undertaking would amount to retrenchment and that there is a violation of the provisions of Section 25 N of the ID Act. Therefore, they would submit that it has to be considered whether there has been 23/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 transfer of undertaking whereby the service of some workmen have been terminated would amount to retrenchment.
42. To answer this issue the 4th respondent has relied upon the Judgement of Hon'ble Supreme Court reported in 1962 (2) LLJ 621 – Ankapalle Cooperative Agricultural and Industrial Society Limited Vs. Workmen and others. The Hon'ble Supreme Court has observed that where there is a transfer of undertaking it is the provision to Section 25 FF that would apply and not Section 25 F of the Act.
43. This decision has been followed by the Hon'ble Supreme Court in the case of Maruti Udyog Limited Vs. Ram Lal reported in 2005 (2) SCC 638.
44. The above observation of the Hon'ble Supreme Court would clearly indicate that the termination of the workmen of the 4th respondent does not amount to retrenchment and is treated as 24/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 retrenchment only for the limited purpose of payment of compensation to the terminated employees consequent to the transfer of the undertaking.
45. They would further submit that Section 25 N of the ID Act provides for the conditions that have to be complied with before the retrenchment of workmen in industrial establishment to which Chapter V B of the ID Act applies. Once it is proved that the termination of the workmen is covered under Section 25 FF of the ID Act, then the question of Section 25 N being applicable will not arise.
46. They would in this regard rely upon the Judgement reported in 1993 (2) LLN 173 – Workmen of Deccan Sugars Vs. Nava Bharat Ferro Alloys Ltd., wherein this Court has held that the provisions of Section 25N of the Act will not apply to the cases covered by Section 25 FF of ID Act. Therefore, it is the contention of the learned senior counsel that the refusal to refer the adjudication of the 1st respondent is 25/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 perfectly in order and the Writ Petition deserves to be dismissed. Discussion:
47. The issues that are placed for the consideration of this Court are as follows:
(a)Whether the 1st respondent, the Appropriate Government has exceeded the jurisdiction vested on it under Section 12 (5) r/w Section 10 (1) of the ID Act by adjudicating on the merits of the dispute or has refused the reference by providing justifiable reasons?
(b)Whether the provisions of Section 25 N of Chapter V B of the ID Act would be applicable or the provisions of Section 25 FF would be applicable to the termination of the 175 workmen by reason of the Transfer of the Undertaking?
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48. Before answering the above issues it would be apposite to extract certain provisions of the ID Act that are relevant for the discussion.
49. Section 2 (oo) defines Retrenchment as follows:
“retrenchment means the termination by the employer of the service of a workmen for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include
(a)voluntary retirement of the workmen; or
(b)retirement of the workmen on reaching the age of superannuation if the contract of employment between the employer and the workmen concerned contains a stipulation in that behalf; or (bb)termination of the service of the workmen as a result of the non-renewal of the contract of employment between the employer and the workmen concerned on its 27/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 expiry or of such contract being terminated under a stipulation in that behalf contained therein ; or
(c)termination of the service of a workmen on the ground of continued ill-health”.
50. Section 10 deals with the reference of disputes to Boards, Courts or Tribunals and Section 10 (1) reads as follows:
“10. Reference of disputes to Boards, Courts or Tribunals.- (1) 1[Where the Appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time], by order in writing,-
(a) refer the dispute to a Board for promoting a settlement thereof; or
(b) refer any matter appearing to be connected with or relevant to the dispute, to a Court for inquiry; or 2[(c) refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, if it relates 28/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 to any matter specified in the Second Schedule, to a Labour Court for adjudication; or
(d) refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, whether it relates to any matter specified in the Second Schedule or the Third Schedule, to a Tribunal for adjudication:
Provided that where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than one hundred workmen, the Appropriate Government may, if it so thinks fit, make the reference to a Labour Court under Clause (c);] 3[Provided further that] where the dispute relates to a public utility service and a notice under Section 22 has been given, the Appropriate Government shall, unless it considers that the notice has been frivolously or vexatiously given or that it would be inexpedient so to do, 29/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 make reference under this sub-section notwithstanding that any other proceedings under this Act in respect of the dispute may have commenced:
4[Provided also that where the dispute in relation to which the Central Government is the Appropriate Government, it shall be competent for the Government to refer the dispute to a Labour Court or an Industrial Tribunal, as the case may be, constituted by the State Government;]
51. Section 12 deals with the Duties of the Conciliation Officers or the procedure to be followed by them where an industrial dispute exists or is apprehended:
“12. Duties of conciliation officers:- (1) Where any industrial dispute exists or is apprehended, the conciliation officer may, or where the dispute relates to a 30/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 public utility service and a notice under Section 22 has been given, shall, hold conciliation proceedings in the prescribed manner.
(2) The Conciliation Officer shall, for the purpose of bringing about a settlement of the dispute, without delay, investigate the dispute and all matters affecting the merits and the right settlement thereof and may do all such things as he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute.
(3) If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceedings the conciliation officer shall send a report thereof to the Appropriate Government 5[or an officer authorised in this behalf by the Appropriate Government] together with a memorandum of the settlement signed by the parties to the dispute. 31/60
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 (4) If no such settlement is arrived at, the conciliation officer shall, as soon as practicable after the close of the investigation, send to the Appropriate Government a full report setting forth the steps taken by him for ascertaining the facts and circumstances relating to the dispute and for bringing about settlement thereof, together with a full statement of such facts and circumstances, and the reasons on account of which, in his opinion, a settlement could not be arrived at.
(5) If, on a consideration of the report referred to in sub-section (4), the Appropriate Government is satisfied that there is a case for reference to a Board, 1[Labour Court, Tribunal or National Tribunal],it may make such reference. Where the Appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor.
(6) A report under this section shall be submitted 32/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 within fourteen days of the commencement of the conciliation proceedings or within such shorter period as may be fixed by the Appropriate Government:
2[Provided that, 3[subject to the approval of the conciliation officer] the time for the submission of the report may be extended by such period as may be agreed upon in writing by all the parties to the dispute].
52. Section 25 F and Section 25 FF of the ID Act would reads as follows and they are covered in Chapter V A of the ID Act. Section 25 L and 25 N on the other hand are found in Chapter V B. These are the provisions that deal with the procedure for retrenchment.
53. Section 25 F reads as follows:
“25F. Conditions precedent to retrenchment of workmen.- No workmen employed in any industry who has been in continuous service for not less than one year 33/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 under an employer shall be retrenched by that employer until- (a) the workmen has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workmen has been paid in lieu of such notice, wages for the period of the notice:
1[***]
(b) the workmen has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay 2[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 3[or such authority as may be specified by the Appropriate Government by notification in the Official Gazette.] 34/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024
54. Section 25 FF reads as follows:
“4[25FF. Compensation to workmen in case of transfer of undertakings.- Where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workmen who has been in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of Section 25-F, as if the workmen had been retrenched:
Provided that nothing in this section shall apply to a workmen in any case where there has been a change of employers by reason of the transfer, if- (a) the service of the workmen has not been interrupted by such transfer; 35/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024
(b) the terms and conditions of service applicable to the workmen after such transfer are not in any way less favourable to the workmen than those applicable to him immediately before the transfer; and (c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workmen, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.
55. Section 25 L describes an industrial establishment as follows:
“(a) “industrial establishment” means-
(i) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948); (ii) a mine as defined in clause (j) of sub-section (1) of Section 2 of the Mines Act, 1952 (35 of 1952); or (iii) a plantation as defined in clause (f) of section 2 of the Plantations 36/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 Labour Act, 1951 (69 of 1951);
(b) notwithstanding anything contained in sub-
clause (ii) of clause (a) of Section 2,-
(i) in relation to any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or
(ii) in relation to any corporation not being a corporation referred to in sub-clause (i) of clause (a) of section 2] established by or under any law made by Parliament, the Central Government shall be the Appropriate Government.
56. Section 25 N deals with the conditions that have to preceed the retrenchment of workmen employed in an Industrial Establishment to which Chapter V B applies reads as follows:
“1[25N. Conditions precedent to retrenchment of workmen.- (1) No workmen employed in any industrial 37/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until,-
(a) the workmen has been given three months' notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workmen has been paid in lieu of such notice, wages for the period of notice;
and
(b) the prior permission of the Appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereafter in this section referred to as the specified authority) has been obtained on an application made in this behalf.
(2) An application for permission under sub-section (1) shall be made by the employer in the prescribed 38/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be served simultaneously on the workmen concerned in the prescribed manner.
(3) Where an application for permission under sub- section (1) has been made, the Appropriate Government or the specified authority, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the person interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen 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. (4) Where an application for permission has been made 39/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 under sub- section (1) and the Appropriate Government or the specified authority 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.
(5) An order of the Appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub-section (6), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order.
(6) The Appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workmen, review its order granting or refusing to grant permission 40/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 under sub-section (3) or refer the matter or, as the case may be, cause it to be referred, 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.
(7) Where no application for permission under sub- section (1) is made, or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workmen and the workmen shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him.
(8) Notwithstanding anything contained in the foregoing provisions of this section, the Appropriate Government may, if it is satisfied that owing to such 41/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 exceptional circumstances as accident in the establishment 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 establishment for such period as may be specified in the order.
(9) Where permission for retrenchment has been granted under sub- section (3) or where permission for retrenchment is deemed to be granted under sub-section (4), every workmen who is employed in that establishment immediately before the date of application for permission under this section shall be entitled to receive, 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.] 42/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024
57. Coming to the first issue of the appropriate government exceeding its jurisdiction, it would make useful reading to peruse the petition under Section 2 (k) raised by the petitioner Association before the Assistant Commissioner of Labour 3 (Conciliation) Chennai. The dispute is raised alleging an illegal and unfair retrenchment of 250 sales promotion employees pan India w.e.f., 09.05.2022 in clear violation of the statutory provisions of the ID Act governing retrenchment. In this writ petition, however, the petitioner has apart from alleging an illegal retrenchment has further stated that these employees have decided to challenge the “illegal closure” of their pharmaceutical division and subsequent retrenchments. The grievance is that before the order of retrenchment of a workmen is passed the procedure prescribed under Section 25 F(c) of the ID Act has to be mandatorily fulfilled which however were not followed while “declaring closure of their pharmaceutical division and subsequent retrenchments”. Therefore, through the complaint the petitioner union 43/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 seeks to ventilate the fact that there is an “illegal closure” of the division before which the provisions of Section 25 F has been given a go by.
58. The records would reveal that even prior to the formal announcement of the transfer of the Human Pharma Division to M/s.BSV Limited the petitioner union has addressed the 4th respondent company quoting media reports about the transfer and ultimately requesting the management to apprise the welfare committee of “continuity and security of jobs to the Sales Promotion employees”.
59. On 28.03.2022, i.e., 5 days after the above referred letter of the petitioner union the 4th respondent informs the sale of human pharma division. An assurance is given that all entitlement such incentives Star Club Awards, gratuity etc., are fully protected and would be paid as and when they are due and payable. There is however no mention about continuance of the employment under the Transferee 44/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 company.
60. It is after this letter that the Section 18 (1) settlement has been entered into between the petitioner and the 4th respondent company. This is followed by letter dated 09.05.2022 informing some about their becoming an employee of the transferee company while others were informed that they stood retrenched with effect from 09.05.2022 with a retrenchment compensation and stating that the termination was under
Section 25 FF of the ID Act.
61. Thereafter, on 11.05.2022 and 13.05.2022 the petitioner addressed the Commissioner of Labour, Chennai and Secretary to Government, Labour and Employment Department, Chennai respectively wherein they have stated as follows:
“We are of the firm opinion that this action of the management is in violation of Section 25 N of the Industrial Disputes Act, as they have not served any 45/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 notice to the employees nor seem to have taken any permission from the Government. The law prescribes that the reasons for the retrenchment has to be communicated to the Government, with copy to the employees concerned 3 months in advance indicating the reasons for retrenchment which would enable the workmen to raise any objections and the retrenchment process would legally thereafter, if the permission is granted.”
62. In its first representation the petitioner union has sought for continuity and security of jobs. After the sale is informed and employees are retrenched they would state that during negotiation the committee had raised the issue of job protection and the management had assured the same but the assurance has been breached.
63. However in the 2 (k) petition the petitioner union would contend that the conditions of Section 25 F (c) have not been complied 46/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 with before declaring closure of the pharmaceutical division. They have also enclosed the letter dated 13.05.2022 along with this petition where the stand taken by the petitioner is that the provisions of Section 25 N have not been followed. Therefore, the contention of the union is that the provisions of Section 25 F and 25 N of the ID Act have not been complied with.
64. Let us now examine these two provisions and Section 25 FF. Section 25 F applies to workmen employed in any industry whereas Section 25 N applies to workmen employed in an industrial establishment to which Chapter V B applies. Both these sections operate on different planes. Section 25 FF however applies to workmen whose services have been terminated owing to the transfer of an undertaking either by agreement or by operation of law.
65. The main ground of challenge to the impugned order by the petitioner union is the observation of the 1st respondent that the 4th 47/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 respondent company is not an Industrial Establishment as contemplated under Section 25 L of Chapter V B and thereby holding that the conditions contemplated u/s Section 25 N does not arise is a transgression into the judicial / quasi judicial function which is not contemplated while considering the issue as to whether a dispute should be referred for adjudication.
66. As already discussed in the foregoing paragraphs the petitioner union has raised a plea that the conditions of Section 25 N has not been complied with and the 4th respondent has taken a stand that the retrenchment is only on account of the transfer of the undertaking and therefore the provisions of Section 25 FF alone would apply. The petitioner union has no where challenged the transfer of the undertaking or the fact that 733 workmen of the 4th respondent had been absorbed by M/s. BSV Limited. Therefore, they have admitted the transfer of the undertaking. In the above circumstances the issue which engaged the 1st respondent's attention for considering the request 48/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 for reference of the dispute was whether the retrenchment would fall within Section 25N or Section 25 FF. In these circumstances the 1st respondent necessarily has to prima facie decide on the nature of the industrial establishment and the nature of transfer. This cannot be stated to be an adjudication on the merits and a reading of the impugned order would clearly show that the 1st respondent has not relied only on the failure report of the 3rd respondent but also the documents submitted by the parties. The reference under Section 10 (1) is commenced by the Appropriate Government itself whereas the reference under Section 12 (5) is based on the Failure report submitted by the conciliation officer. In the Judgement of the Hon'ble Supreme Court in the case of the State of Bombay Vs. K.P. Krishnan and others – 1962 (2) LLJ 592, the Hon'ble Supreme Court held as follows:
“Section 12(5) with which we are concerned in the present appeals provides that if, on a consideration of the report referred to in sub-section (4), the Appropriate Government is satisfied that there is a case for reference 49/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 to a Board, Labour Court, Tribunal or National Tribunal, it may make such reference. Where the Appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefore. This section requires the Appropriate Government to consider the report and decide whether a case for reference has been made out. If the Government is satisfied that a case for reference has been made out it may make such reference. If it is satisfied that a case for reference has not been made out it may not make such a reference; but in such a case it shall record and communicate to the parties concerned its reasons for not making the reference which in the context means its reasons for not being satisfied that there is a case for reference. The High Court has held that the word "may" in the first part of s. 12(5) must be construed to mean "shall" having regard to the fact that the power conferred 50/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 on the Government by the first part is coupled with a duty imposed upon it by the second part. The appellant and the company both contend that this view is erroneous. According to them the requirement that reasons shall be recorded and communicated to the parties for not making a reference does not convert "may" into "shall" and that the discretion vesting in the Government either to make a reference or not to make it is as wide as it is under s. 10(1) of the Act. Indeed their contention is that, even after receiving the report, if the Government decides to make a reference it must act under s. 10(1) for that is the only section which confers power on the Appropriate Government to make a reference.
67. When the case of the petitioner union is that the retrenchment is bad as it violates the provision of Section 25 N then prima facie the 1st respondent has to consider as to whether the industrial establishment 51/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 fell within the definition as provided under Section 25 L particularly when the 4th respondent's contention is that the retrenchment is governed by the provisions of Section 25 FF. Therefore, the dicta laid down in the Judgement in Telco Convoy Drivers Mazdoor Sngh and another supra may not strictly apply to the facts of the instant case.
68. Having held that Section 25 N would not be applicable to the retrenchment in issue the next question that requires an answer is the appropriate provision that would be applicable for the retrenchment of the 175 members. The petitioner union having admitted the transfer of the undertaking the provisions of Section 25 FF would be applicable and not Section 25 F (c) as contended by the petitioner union. The Hon'ble Supreme Court has answered this in its Judgement reported in the case of Ankapalle Cooperative Agricultural and Industrial Society Limited Vs. Workmen and others, where the Hon'ble Supreme Court had discussed the enactment of Section 25 FF and its various amendments in paragraph Nos. 11 to 15 and had held as follows: 52/60
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 “16...........The words "as if " bring out the legal distinction between retrenchment defined by s. 2(oo) as it was interpreted by this Court and termination of services consequent upon transfer with which it deals. In other words, the section provides that though termination of services on transfer may not be retrenchment, the workmen concerned are entitled to compensation as if the said termination was retrenchment. This provision has 'been made for the purpose of calculating the amount of compensation payable to such workmen; rather than provide for the measure of compensation over again, s. 25-FF makes a reference to s. 25-F for that limited purpose, and, therefore, in all cases to which s.25-FF- applies, the only claim which the employees of the transferred concern can legitimately make is a claim for compensation against their employers. No claim can be made against the transferee of the said concern.? 53/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024
17.The scheme of the proviso to s. 25-FF emphasises the same policy. If the three conditions specified in the proviso are satisfied, there is no termination of service either in fact or in law, and so, there is no scope for the payment of any compensation.
That is the effect of the proviso. Therefore, reading section 25-FF as a whole. it does appear that unless the transfer falls under the proviso, the employees of the transferred concern are entitled to claim compensation against the transferor and they cannot make any claim for reemployment against the transferee of the undertaking. Thus, the effect of the enactment of s.25-FF is to restore the position which the Legislature had apparently in mixed when s. 25-FF Was originally enacted on September 4, 1956. By amending s. 25-FF, the Legislature has made it clear that if industrial 54/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 undertakings are transferred, the employees of such transferred undertakings should be entitled to compensation, unless, of course, the continuity in their service or employment is not disturbed and that can happen if the transfer satisfies the three requirements of the proviso.
69. This decision has been followed in the case of Maruti Udyog Ltd., Vs. Ram Lal and others – 2005 (2) SCC 638. The Hon'ble Supreme Court has held as follows:
“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 55/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 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 takes effect. Compensation is required to be paid to the workman as a consequence thereof and for no other purpose.?
70. The learned Judges further observed as follows:
“26.The aforementioned provisions clearly carve out a distinction, that although identical amount of compensation would be required to be paid in all 56/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 situations but the consequence following retrenchment under Section 25 F of the 1947 Act would not extend further so as to envisage the benefit conferred upon a workman in a case falling under Section 25 FF or 25 FFF thereof. The distinction is obvious in as much as whereas in case of retrenchmentt simpliciter a person loses his job as he becomes surplus and thus, in the case of revival of chance of employment, is given preference in case new persons are proposed to be employed by the said undertaking; but in a case of transfer or closure of the undertaking the workman concerned is entitled to receive compensation only. It does not postulate a situation where a workman despite having received the amount of compensation would again have to be offered a job by a person reviving the industry.” 57/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024
71. Therefore, from a conspectus of the above it cannot be stated that the order of the 1st respondent suffers from any infirmity. In the result, the Writ Petition is dismissed. Consequently, the connected miscellaneous petition is closed. No costs.
14.07.2024 Index: Yes/No Speaking order/non-speaking order Neutral Citation: Yes/No kan 58/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 To,
1.The Government of Tamilnadu rep. by its Additional Chief Secretary, Labour Welfare and Skill Development Fort st. Goerge, Chennai 600 009
2.The Commissioner of Labour The Government of Tamilnadu, DMS compound, Teynampet Chennai 600 006
3.The Assistant Commissioner of Labour ((Concilation) -3 Third Floor, Kuralagam, Chennai 600 108 59/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm ) W.P.No. 6312 of 2024 P.T.ASHA, J., kan Pre Delivery Order in W.P.No. 6312 of 2024 14.07.2025 60/60 https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/07/2025 05:25:39 pm )