Madhya Pradesh High Court
Factory Manager Century Yarn/ Denim ... vs Textile Mazdoor Union Khargone (Aituc) ... on 25 November, 2019
Author: S.C.Sharma
Bench: Shailendra Shukla, S.C.Sharma
Misc. Petition No.2248/2019
-1-
HIGH COURT OF MADHYA PRADESH, BENCH AT INDORE
Division Bench : HON'BLE MR. JUSTICE S. C. SHARMA AND
HON'BLE MR. JUSTICE SHAILENDRA SHUKLA
Misc. Petition No.2248/2019
Factory Manager, Century Yarn/Denim Divisions of
Century Textile and Industry Ltd. & Anr.
Vs.
Textile Mazdoor Union, Khargone & Ors.
Shri Sudeep Bhargava, learned counsel for the
petitioners.
Shri A. M. Mathur, learned Senior Counsel with Shri
Pratyush Mishra, learned counsel for the
respondents No.3 to 8.
O R D E R
(Delivered on this 25th day of November, 2019) Per : S. C. Sharma, J.
The petitioner before this Court Century Yarn / Denim Divisions of Century Textile and Industry Ltd. is a Company registered under the Companies Act has filed present petition being aggrieved by award dated 22/01/2019 declared on 06/02/2019 and 16/03/2019 passed by Chairman, Madhya Pradesh Industrial Tribunal, Indore in Complaint No.01/IDA/2018 and M.A.No.2/ IDA/2019 respectively by which a direction has been issued to run the Units of the petitioner Company.
02- The facts of the case reveal that the petitioner Company vide Business Transfer Agreement (BTA) dated 22/08/2017, sold its business to respondent No.2 - Wearit Global Limited. The respondent Misc. Petition No.2248/2019 -2- No.1 - Textile Mazdoor Union, Khargone along with other Union raised a industrial dispute, which was referred for adjudication and the same has been registered as reference No.41/IDA/2017. 03- During the pendency of the aforesaid reference, the respondent No.1 - Textile Mazdoor Union filed a complaint alleging that petitioner Company is changing service conditions of the workmen. The respondent No.2 - Wearit Global Limited also preferred an application for grant of ad interim relief. The complaint was registered as complaint No.1/IDA/2018.
04- The petitioners submitted a reply to the complaint and the Industrial Tribunal allowed the prayer for interim relief vide order dated 17/05/2018, the relief granted was beyond the relief prayed for, however, it has been stated that the petitioner Company complied with the order and paid all wages to the workmen. Statutory bonus has also been paid.
05- The writ petition further reveals that Business Transfer Agreement for transferring the business unites to respondent No.2 - Wearit Global Ltd. was cancelled in light of order passed by this Court in Writ Petition No.1680/2017 on 06/04/2018. This Court has held that Business Transfer Agreement between the parties is not a genuine agreement. The petitioner has further stated that Units, thereafter, are under the control of the petitioners as the Business Transfer Agreement is no longer in existence.
Misc. Petition No.2248/2019-3- 06- The petitioners have further stated that Chairman, Madhya Pradesh Industrial Tribunal after hearing the parties has passed the impugned order (Annex.-P/1). It has been further stated that wages to the workmen have been paid w.e.f. 01/01/2018 to 30/04/2018 as directed vide impugned order. The wages w.e.f. 01/01/2018 to 30/04/2018 along with statutory bonus has also been paid.
07- It has been further stated that subsequently wages and statutory bonus for subsequent period has also been paid and the petitioners are paying wages till date. There are no dues of the workmen. The petitioners have further stated that an application (Annex.-P/9) was preferred for recalling the impugned order and the same has also been dismissed by an order dated 16/03/2019. The petitioners' grievance is that Industrial Tribunal in spite of the fact that wages have been paid to the workmen has directed the petitioners to run the Unit and the Unit is running in great financial loss and such a direction could not have been given in the manner and method it has been given by the Industrial Tribunal.
08- It has been stated that the plant and machinery is 22 years old and lying closed for two years. If the plant is made operational, it will pose a huge safety risk to the workmen. It has been stated that since the petitioners are paying wages to the workmen, there is no change in condition of their service conditions and Misc. Petition No.2248/2019 -4- therefore, the impugned order deserves to be quashed. 09- A reply has been filed on behalf of the respondent No.3 in the matter and the respondent No.3 has stated that the question of quashing the direction given by the Tribunal to run the Unit and to operate the Unit does not arise. It has been further stated that the petitioner Company has entered into a Business Transfer Agreement with the respondent No.2 on 22/08/2017 and the moment the workmen came to know about the Business Transfer Agreement, they agitated the issue before the Deputy Labour Commissioner, Indore and the Deputy Labour Commissioner has made an attempt for reconciliation. However, as the conciliation failed, a reference was made on 13/10/2017.
10- The respondents have not disputed the fact that Business Transfer Agreement has been recalled and it is not in existence, however, they have stated that during the existence of Business Transfer Agreement a complaint was submitted under Section 33-A of the Industrial Disputes Act, 1947 and as there was a change in status of the workmen, the Tribunal was justified in passing the impugned order.
11- It has been stated that the petition before this Court is not maintainable as its a writ petition under Article 227 of the Constitution of India and as there is no illegality or procedural defect in the award, the question of interference does not arise.
Misc. Petition No.2248/2019-5- 12- Heard learned counsel for the parties at length and perused the record.
13- The present petition is arising out of award dated 22/01/2019 pronounced on 06/02/2019 in Complaint No.01/IDA/2018. The complaint was preferred under Section 33-A of the Industrial Disputes Act, 1947. The complaint was filed during the pendency of a reference and undisputedly, a Business Transfer Agreement took place between the petitioner Company and respondent No.2 - Wearit Global Limited. The Tribunal while deciding the complaint in paragraphs No.29 and 30 has held as under:-
"29. As far as restrain of entry into factory premises of workmen is concerned, when we go through the reply of opponents Nos.1 & 2, from para (6) we can easily gather that opponents Nos.1 & 2 have pleaded that units have become sick and unviable, therefore, they are unable to run and operate units and continue to provide employment to workmen. In other words, they are going to close the units without adopting due course under Section 25-O of the I.D.Act. In these circumstances, till adopting due course of law, opponents Nos.1 & 2 should run and operate units and they cannot be allowed to close down the same.
30. Consequently, opponents are directed to allow workmen to enter in to factory premises and allow them to work. They are further directed to pay remaining amount of wages from October, 2017 to December, 2017."
The Tribunal has directed the petitioner to keep the Unit operational, meaning thereby, to run the factory. 14- Undisputedly, the petitioners are paying wages regularly to the workmen employed in the industry and they have given an undertaking before the Tribunal that they will continue to give full wages to the workmen every month unless and until further steps are Misc. Petition No.2248/2019 -6- taken by the petitioner Company in accordance with law. It was brought to the notice of the Tribunal that the petitioner Company is not able to run the Unit on account of massive and mounting losses, adverse market conditions, lack of purchase orders and complete unviability of the said Units.
15- It was also stated that machines became old and they are not functional for the last two years and in spite of the aforesaid fact the Tribunal has directed the petitioners to run the Units. The petitioners have stated that in case they are closing down the Units permanently, they shall be taking action under the law and it has also been stated that they are paying wages regularly to the workmen. 16- The apex Court in the case of Excel Wear Vs. Union of India and Others reported in (1978) 4 SCC 224 in paragraphs No.26, 27, 30 and 34 has held as under:-
"26. We were asked to read in section 25-o(2) that it will be incumbent for the authority to give reasons in his order and we were also asked to cull out a deeming provision therein. If the Government order is not communicated to the employer within 90 days, strictly speaking, the criminal liability under section 25-R may not be attracted if on the expiry of that period the employer closes down the undertaking. but it seems the civil liability under section 25-o(5) will come into play even after the passing of the order of refusal of permission to close down on the expiry of the period of 90 days. Intrinsically no provision in Chapter VB of the Act suggests that the object of carrying on the production can be achieved by the refusal to grant permission although in the objects and Reasons of the Amending Act such an object seems to be there, although remotely, and secondly it is highly unreasonable to achieve the object by compelling the employer not to close down in public interest for maintaining the production.
27. The order passed by the authority is not subject to any scrutiny by any higher authority or tribunal either in appeal or revision. The order cannot be reviewed either. We were again asked to read into the provisions that successive applications can Misc. Petition No.2248/2019 -7- be made either for review of the order or because of the changed circumstances. But what will the employer do even if the continuing same circumstances make it impossible for him to carry on the business any longer ? Can he ask for a review ?
30. In case of fixation of minimum wages the plea of the employer that he has not got the capacity to pay even minimum wages and, therefore, such a restriction on his right to carry on the business is unreasonable has been repeatedly rejected by this Court to wit U. Unichoy and Ors. v. The State of Kerala [AIR 1962 SC 12]. But the principle, rather in contrast, illustrates the unreasonableness of the present impugned law. No body has got a right to carry on the business if he cannot pay even the minimum wages to the labour. He must then retire from business. But to tell him to pay and not to retire even if he cannot pay is pushing the matter to an extreme. In some cases of this Court, to wit Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union [AIR 1957 SC 95] it has been opined that where the industry had been closed and the closure was real and bona fide, there cannot be an industrial dispute after closure. At page 881 Venkatarama Ayyar J., has said:-
"Therefore, where the business has been closed and it is either admitted or found that the closure is real and bona fide, any dispute arising with reference thereto would, as held in K. N. Padmanabha Ayyar v. The State of Madras (supra), fall outside the purview of the Industrial Disputes Act. And that will a fortiori be so, if a dispute arises-if one such can be conceived-after the closure of the business between the quondam employer and employees."
But the observations at page 882 indicate that if the dispute relates to a period prior to closure it can be referred for adjudication even after closure. The very apt observations are to the following effect:-
If the contention of the appellant is correct, what is there to prevent an employer who intends, for good and commercial reason, to close his business from indulging on a large scale in unfair labour practices, in victimisation and in wrongful dismissals, and escaping the consequences thereof by closing down the industry ? We think that on a true construction of s. 3, the power of the State to make a reference under the section must be determined with reference not to the date on which it is made but to the date on which the right which is the subject-matter of the dispute arises, and that the machinery provided under the Act would be available for working out the rights which had accrued prior to the dissolution of the business.
It would thus be seen that in the matter of giving appropriate and reasonable relief to the labour even after the closure of the business the facts which were in existence prior to it can form the Misc. Petition No.2248/2019 -8- subject matter of an industrial dispute. Even assuming that strictly speaking all such matters cannot be covered in view of the decisions of this Court we could understand a provision of law for remedying these drawbacks. The law may provide to deter the reckless, unfair, unjust or mala fide closures. But it is not for us to suggest in this judgment what should be a just and reasonable method to do so. What we are concerned with at the present juncture is to see whether the law as enacted suffers from any vice of excessive and unreasonable restriction. In our opinion it does suffer.
34. Mr. Deshmukh's argument that a right to close down a business is a right appurtenant to the ownership of the property and not an integral Art of the right to carry on the business is not correct. We have already said so. The properties are the undertaking and the business assets invested therein. The owner cannot be asked to part with them or destroy them by not permitting him to close down the undertaking. In a given case for his mismanagement of the undertaking resulting in bad relationship with the labour or incurring recurring losses the undertaking may be taken over by the State. That will be affecting the property right with which we are not concerned in this case. It will also be consistent with the object of making India a Socialist State. But not to permit the employer to close down is essentially an interference with his fundamental right to carry on the business."
The apex Court in the aforesaid case has held that an employer is certainly lawfully entitled to closed down a Unit. It has been held that right to carry on any business includes the right to close it down and therefore, the Tribunal has erred in law and facts in issuing mandamus in light of the aforesaid judgment.
17- The apex Court in the case of Naba Krishna Chakrabarty and Others Vs. The Calcutta State Transport Corporation and Others reported in 1979 SCC OnLine Cal 343 was again dealing with Section 33 of the Industrial Disputes Act, 1947 and in light of the aforesaid judgment it can be safely gathered that the Tribunal has transgressed its jurisdiction by directing the petitioners to Misc. Petition No.2248/2019 -9- run the Units.
18- In the considered opinion of this Court, the Tribunal has certainly erred in law and facts by directing the petitioners to run the Units and to operate the Units. As stated in the writ petition, Units are sick and unviable, the Company has suffered a loss of more than Rs.100 Crores as informed while arguing the matter, salaries have been paid to the workmen and therefore, the order passed by the Tribunal to run the Unit would result in further accumulation of losses and no such mandamus could have been issued by the Tribunal keeping in view the peculiar facts and circumstances of the case, specially when the basic agreement i.e. Business Transfer Agreement dated 22/08/2017 is not in existence.
19- In light of the aforesaid, this Court is of the opinion that the order passed by the Tribunal to run the plant and machinery, which is 22 years old and which is lying closed for the last two years, deserves to be quashed and is accordingly quashed. The directions given by the Tribunal in paragraphs No.29 and 39 of the impugned order dated 22/01/2019 are quashed. However, the petitioner Company shall continue to pay the workmen as per the agreement. With the aforesaid, writ petition stands allowed.
Certified copy as per rules.
(S. C. SHARMA) (SHAILENDRA SHUKLA)
JUDGE JUDGE
Tej
Digitally signed by
Tej Prakash Vyas
Date: 2019.11.30
12:17:54 +05'30'