Punjab-Haryana High Court
Lal Jhanda Rockman Cycle Industries ... vs State Of Punjab And Ors. on 29 September, 2006
Equivalent citations: (2007)145PLR359
Author: J.S. Narang
Bench: J.S. Narang
JUDGMENT J.S. Narang, J.
1. Petitioner i.e. Lal Jhanda Rockman Cycle Industries Worker's Union, has invoked the extraordinary jurisdiction of this Court under Articles 226/227 of the Constitution of India, for issuance of a writ in the nature of certiorari quashing the impugned order dated 2.11.2006, copy annexure P17 and dated 15.12.2005, copy Annexure P20, vide which the permission has been granted to respondent No. 3 for closure of their establishment under Section 25-O of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act).
2. The brief facts which need to be noticed are that Rockman Industries Limited-respondent No. 3, is a part of Hero Group of Industries. It consists of two divisions i.e. (i) Cycle Division (ii) Auto Division. The company-respondent No. 3 was set up in the year 1961 and started manufacturing bicycle chains in the year 1961. The workers were shifted from the original set up to A-7, Focal Point, Ludhiana. It has been averred that Cycie Division has approximately 850 permanent workers, out of which 550 workers are engaged in the manufacturing of cycle chains and hubs. They are occasionally required to work in the auto division as well. However, the balance workers/staff i.e. 300 are common for cycle division as well as auto division. The endeavour is to show that for both the divisions there is a common union of the workeRs.
3. Respondent No. 3 submitted an application dated May 25, 2005 under Section 25(O) of the Act before the State Government for seeking permission for closing the undertaking i.e. Cycle Division of respondent No. 3, with effect from August 25, 2005. The plea put forth has been that the unit has suffered continuous losses, which occurred due to indiscipline of the workers in the factory, disobedience of the lawful orders of superiors by the workers in the factory; threatening to stop production on one pretext or the other. Another reason spelt out is that there has been no decrease in the strength of the employees but the production of bicycle chains and hubs had deceased considerably. The State Government granted permission to respondent No. 3 with effect from October 31, 2005. Copy of the order dated November 2, 2005, has been appended as Annexure P-17.
4. The petitioners felt aggrieved of the order and submitted an application under Section 25-O(5) of the Act, for seeking review of the order dated 2.11.2005. Respondent No. 3 filed a detailed reply to the same. The State Government dismissed the application vide order dated December 15, 2005, copy Annexure P20.
5. It is the plea of the petitioner that while granting permission to close down the establishment, the State Government has acted in a casual and perfunctory manner. No options for making the unit economically viable have been explored; production of bicycles of the establishment vis-a-vis consumption thereof for its own cycle producing unit had not been kept in view. Thus, without considering the totality of the facts and circumstances, permission has been granted for closing the cycle division; the interest of the general public; the genuineness and adequacy of reasons stated by the employer had not been kept in view in correct perspective; the loss of work by approximately 850 workers, has not been kept in view, which would certainly affect the bread and butter of about 2000 people; no opportunity of being heard had been granted to the workmen, as no notice was served upon the petitioner. It is also contended that the inquiry report submitted by the labour authorities had been made the basis for granting the permission for closure of the division; the workers had not been associated in the aforesaid inquiry and that the same had been conducted behind the back of the workmen, who are vitally effected upon the closure of the division. The reviewing authority also did not give the opportunity of being heard for putting-forth the claim of the workman whose bread and butter was at stake.
6. Notice of motion was issued by a Division Bench of this Court vide order dated January 19, 2006. Written statement has been filed by respondents No. 1 and 2. It is the stand that the State Government had given the appropriate opportunities to both the parties to present their view points. After considering all the view points and the possibilities submitted by the union as well as the employer and upon scrutinising the totality of the circumstances, the permission to close down the division/unit had been granted vide order dated 2.11.2005. The review application had also been dismissed correctly as no new point had been raised for seeking review of the order.
7. Further, a detailed written statement has been filed by respondent No. 3. A preliminary objection has been taken that the petitioner has no locus standi to challenge the order dated November 2, 2005 and December 15, 2005 as on the date of the order, no union existed and that in fact the order was made operative with effect from 31.10.2005. It is the settled law that no union in relation to an industry can come into existence after the industry has already closed its operation. It is also the case of the employer that when the application had been filed and the proceedings were initiated before the government, there was no union in existence and that when the union was not a party to the decision, the subsequent creation thereof shall not confer any right or locus standi upon such union, for assailing the order passed prior to its existence.
8. Dehors the above, the appropriate authority, which examined all the facts in details and that the contentions of the employer and the employees had been taken into consideration, while passing a speaking order dated 2.11.2005. It is also the contention that not only the view points of the employer and the employees had been taken into account but a report from the Labour-cum-Conciliation Officer had been called which found merit in the stand of the management. The factual status stands reverberated in the report made by the Labour Commissioner. It is also the plea that once the entrepreneur chooses to close down his business, such right is an integral part of the right to carry on the business under Articles 19(1)(g) of the Constitution of India. No compulsion can be made by any quarters for continuing the business, which is not found viable by the entrepreneur. The plea of common workmen of both the divisions has been emphatically denied and controverted while submitting reply on merit. The interchangeability of the workers is nothing but a figment of the mind of the petitioner, which is neither here nor there.
9. The petitioner has submitted replication to the written statement submitted by respondent No. 3, reiterating the pleas contained in the petition and controverted the preliminary objections. However, there is no categoric denial that the petitioner-union had not come into existence on the date of the order i.e. 2.11.2005 and especially the commencement of the order with effect from 31.10.2005, except for the bald statement that the petitioner union has the locus standi to challenge the aforesaid. It has also been pleaded that the union was a party in the review proceedings before respondent No. 2 and that a reply to the application was filed by respondent No. 3.
10. Learned Counsel for the petitioner has argued that the petitioner had not been given the opportunity by the government for putting-forth its view point. It is further contended that the petitioner espoused the cause of the workers and that the union having not been heard by the government at the time of passing the order dated November 2, 2005, the order is not sustainable under law. The petitioner submitted a review application against the aforesaid order passed under Section 25(O) of the Act. The review application has also been dismissed vide order dated December 15, 2005, without considering the factual status that the petitioner had not been heard at the time of passing the order under Section 25(O) of the Act. It is further contended that at the time of obtaining the report from the Inquiry Officer in regard to the facts stated by the management, no notice of hearing was given to the petitioner or any other workmen were associated while examining the status projected by the management. It is settled law that the union of the workers being an essential constituent of the unit being run by the management, for closing the same the view points of the workers ought to be entertained and considered in the light and correct perspective as the bread and butter of the workman and their families are involved in a big way. The allegations levelled that the workmen adopted the principle of "slow down production" is not at all tenable as the facts and figures of production had to be taken into consideration by keeping in view the total turnover of the unit. For less production there are various factors, which are responsible and that the workmen cannot be held liable or responsible in this regard. This fact was never ever considered by the government at the time of passing the principle order and also at the time of passing the order on review application submitted by the petitioner.
11. So far as registration of a union is concerned, that would not be material, the registered union cannot espouse the cause of the workmen in a better way than the unregistered union of the workmen. It is contended that the Hon'ble Supreme Court has opined on a number of occasions that the registration of a trade union would not give ipso facto right to be recognised or heard accordingly and at the same time an unregistered union which may espouse the cause of the workmen legalistically established and recognised, cannot be denied the right to be heard. In support, of his contention, learned Counsel for the petitioner has placed reliance upon various judgments of the Hon'ble Supreme Court rendered in Re: Newspapers Ltd., Allahabad v. U.P. State Industrial Tribunal and Ors. , State of Bihar v. Kripa Shankar Jaiswal and Indian Oxygen Ltd. v. Workmen as represented by Indian Oxygen Karamchari Union , and has also placed reliance of the judgment of Calcutta High Court rendered in re: Board of Trustees, Port of Calcutta v. Haldia-Calcutta Port & Dock Sharmik Union and Ors. 1994 L.L.J. 575 and Kalinga Tubes Ltd. v. Kalinga Tubes Mazdoor Sangh and Ors. 1981 L.A.B.I.C. 277.
12. It is contended that the union having not been granted the appropriate opportunity of being heard before granting permission of closure of unit by the government and the review application having been dismissed summarily, both the orders deserve to be quashed and the matter needs to be re-examined by taking into consideration the view points of the petitioner, which is espousing the cause of the workmen.
13. On the other hand, learned Counsel for the respondents has argued that the petitioner is not a recognised union and, therefore, is not entitled to maintain the petition under Article 226/227 of the Constitution of India. It is settled law that for invoking extraordinary jurisdiction under the Constitution of India, a right must be established, which has to be tempered with the locus standi of the petitioner as well. It is admitted case that the majority of the workmen were represented before the government when the application under Section 25(O) of the Act, had been filed by the management for seeking permission to close down the Cycle Division, as the same was incurring irretrievable financial losses. A division/unit, which becomes inviable cannot be forced to continue by incurring the liabilities by way of wages of the workmen etc. Any expenditure, which becomes the liability and cannot be met with by the turnover achieved by a unit, the unit cannot be forced to continue its production by keeping in employment the workmen. It is the settled principle that for production it is necessary and essential to achieve break even point. If the break even point is not achievable or cannot be achieved in future, the closure of the unit shall never ever be considered incorrect decision on the part of the management. In the instant case, the Inquiry Officer, i.e. the la-bour-cum-Conciliation Officer, had submitted a detailed report by categorically opining that the production in the factory had decreased and the undertaking had been incurring heavy losses. The government has given unchallengable decision based on the aforesaid facts and also relying upon the dicta of the Hon'ble Supreme Court rendered in re: Excel Wear v. Union of India 430 (Factories Journal Report) (September 29, 1978). whereby it has been opined that "no jurisprudence of any country recognises that the concept of injury is widened and the area of restraint is broadened to an extent that it may result in the annihilation of the person affected by the restraint. Not to permit an employer to close down his business is essentially an interference with the fundamental right to carry on the business".
14. Further, reference has been made to the dicta of the Hon'ble Supreme Court in re: Kalinga Tubes Ltd v. Their Workmen FJR Vol.34 Page 393 (May 3, 1968) whereby it has been opined "The employer may decide to close down when he faces a situation in which it is considered either dangerous or hazardous from the point of view of the safety of the administrative staff or members of the management or even the employers themselves to carry on the business. The essence of the matter is, the factum of closure by whatever reason motivated".
15. Further, reliance has been placed upon a judgment of this Court rendered in re: Bhatia Electric Steel Co. Ltd, v. State of Haryana and Ors. C.L.R. 1168 (July 21, 1997) whereby it has been opined "seeking permission to close down loss making unit is justified, even if there is another unit in which there is profit. The principle of Section 25(O) is certainly not that the government can rob Paul to pay Peter. It is bad logic and bad economics to say that the petitioner company should continue to suffer losses till other units have to be closed down".
16. It is further contended that the petitioners are absolutely incorrect in saying that the workmen had not been heard at length. In fact, they had submitted written comments on October 24, 2005, for opposing the grant of permission to the management for closing down the undertaking. The reasons/objects have been noticed by the government while passing order dated November 2, 2005, the exert of which reads as under:
That the management has filed the application with mala fide intention.
That the workers are in no way responsible for any financial loss to the company either in production or for any indiscipline. Instead, the workers have been struggling for their lawful rights which are being ignored/violated by the management since long.
That the record attached by the management in support of their closure application is not genuine, rather the management is trying to mislead the appropriate authority by giving the forged list of employees/workers working in cycle division of Rockman Industries Limited. That the management has shown losses due to decrease production since 2001-2005 though it is pertinent to mention here that the production is not less as has been shown in the application. The workers have been working intentionally maneuvered to slow down the production of the Cycle parts only to make an excuse for closing down this division.
That the workers never went on any strike of 20 days in 2003-04. That during 2004-2005, there was lock out by the management for about 75 days and the workers were forced to remain out of the factory and, it was ultimately with the intervention of Assistant labour Commissioner, that a settlement under Section 12(3) was arrived at on 24.05.2004.
XXX XXXX XXXXX XXXX.
17. The Labour-cum-Conciliation Officer submitted a categoric report by giving the facts and figures and opining categorically that there was a strike in the year 2004-05; the industrial unit unrest effected the production in the factory; it had also received complaints of "slow down" by the workers in the factory; it was also correct that the rates of raw material had increased resulting in the increased production costs even though the sale price did not increase, which ultimately resulted into huge financial losses, which of course are irretrievable. Thus, it had been found that it is not possible to run the factory. The Inquiry Officer further opined that the Cycle Division of the factory had been suffering continuous losses every year and if this division is not allowed to close down, there was every likelihood that it would adversely effect the viability of the unit as a whole and especially Auto Unit as well. This, in fact, would result in loss of employment of the workmen of that unit as well. It has also been noticed that the workmen had been given hearing in person as well but they have not been able to provide any answer to the aforesaid reasons noticed by the Inquiry Officer. Resultantly, the appropriate government has taken the correct decision while granting permission to the management to close down the Cycle Division. Further, the workers, the specific emphasis has been made to the petitioner, have not been able to spell out any reasons factual or otherwise, that the order dated November 2, 2005 was required to be reviewed by the competent authority. Even in the instant petition, the petitioner has not been able to spell out as to what manner and methodology can be adopted so that fiscal losses can be met with or the earlier losses suffered can be retrieved. Finances are the blood-line of a unit and once the finances are lost the blood is lost and that the machinery cannot function. It is the settled law that if a particular rotation of the finances is not achievable by the undertaking, it would be in the fitness of the things that such unit should be closed down. These facts having been found as a matter of fact, as is evident from the report submitted by the Inquiry Officer, the irresistible decision was and is that the Cycle Division could not be and cannot be run and the same ought to be closed down. Thus, on all counts, the petition deserves to be dismissed.
18. We have heard learned Counsel for the parties at length and have also perused the order dated 2.11.2005, copy Annexure P17 and order dated December 15, 2005, copy Annexure P20.
19. Learned Counsel for the petitioner has very fairly admitted that the petitioner had submitted the application for registration of the union but the registration was granted on 2.11.2005. He has contended that in fact the union had been formed much prior i.e. in November, 2002. Thus, the union shall be taken to have come into existence in the year 2002 for all practical purposes but the recognition was granted in November, 2005. We have pondered over the matter and have also gone through the dicta of the Hon'ble Supreme Court rendered by virtue of various judgments given from time to time. Hon'ble Supreme Court has observed while rendering judgment in re: Raja Kulkarni v. State of Bombay 1954 1 L.L.J 1 that the right to be recognised or the right to represent the workmen is not an absolute right guaranteed to a Trade Union by Article 19(1)(e) of the Constitution of India. The aforesaid right is subject to reasonable restrictions. Even if the qualifications are laid down for being eligible for recognition, the reasonableness of such restriction would a matter to be re-examined by the Court and that a straight jacket formula could not be laid down that such restriction was ipso facto bad. It has also been noticed by the Hon'ble Supreme Court in re: Kerala Minerals and Employees Congress v. Assistant Municipal Commissioner and Ors. 1983 1 LLJ 424 wherein it has been held that there is no statutory right vested in any union to compel the management to recognise it. The union could raise an industrial dispute regarding the non-recognition but there is a difference vis-a-vis the right to be recognised and right to present the workers for raising a dispute under the Act. There is a distinction between the two, meaning thereby that "raising the industrial dispute is completely a different aspect that than compelling the administration to allow a particular union to be recognised for negotiations on wages etc. at the national level. Thus, invoking the extraordinary jurisdiction of the High Court under Articles 226/227 of the Constitution of India, shall have to be examined in the facts and circumstances of each case; if the union espouses the cause of workmen for raising an industrial dispute before a Court or a tribunal under the Act; upon reference made in regard to such industrial dispute, such unions and organisations shall be deemed to be parties before the industrial courts or Tribunal as it thought to look after and to maintain and further the interest of the workmen. The totality of the circumstances would be that right of representation has to be tempered with a legally enforceable right invoking the extraordinary jurisdiction under Article 226/227 of the Constitution of India. In the instant case, the issue is that what kind of a right is being claimed by the workmen. Admittedly, the workmen were present before the appropriate authority to agitate their view points by submitting written objections to the application submitted by the management for seeking permission to close down the Cycle Division on the ground of various situations and reasons spelt out in the application, which had been prima facie determined by the Inquiry Officer by the La-bour-cum-conciliation Officer. This report has not been challenged in the right and correct perspective as none has been spelt out before the appropriate authority i.e. Government while dealing with the application under Section 25(O) in the first instance and secondly by way of submitting the review application. In the instant case as well, the petitioner has not been able to spelt out any illegality in the report of the Inquiry Officer. No case has been made out as to why and how the government has come in incorrect conclusion by ignoring certain facts and figures, as none has been put-forth on record before this Court. It is the admitted principle that no authority can rob Paul for paying Peter. The principle is that you have to have something to pay to the person who works for you and if the person required to pay does not have anything to pay; can he be forced and to engage the person to work for him; the answer is "No". The petitioner has not been able to show any mala fide intention on the part of the management for closing the Cycle Division. It has been categorically averred and opined by the authorities that the Cycle Division suffered huge fiscal losses, which are irretrievable and there is no scope in future to earn for bringing the net worth positive, which has depleted beyond recovery. The petitioner has not been able to show as to what is the mathematics, which has brought the unit to such a brink and who is at fault. On the other hand, it has been found as a matter of fact that the workmen had gone on strike and they had submitted complaint for adopting the "slow down policy", which has become the route and cause for the financial disfiguration.
20. Learned Counsel for the petitioner has laid emphasis on the ground that the union had not been given the opportunity of being heard. We are afraid this argument is not at all tenable. It is the admitted case from the record, as has been noticed by the appropriate authority while deciding application under Section 25(O) of the Act that the workmen had submitted their view points by way of raising the objections in writing. It cannot be accepted adversely that the workmen who had appeared before the appropriate authority were not recognised as union. This would not help the petitioner in any manner. Learned Counsel for the petitioner has placed reliance upon the dicta of the Hon'ble Supreme Court as also the judgment of the Calcutta High Court vide which it has been opined that recognition of a union cannot be imposed upon the management but in case where the workers are able to spell out justifiable legal right the indulgence would be grantable in the facts and circumstances of each case. In the case at hand, the workmen were there before the appropriate government. Thus, it cannot be said that appropriate opportunity of being heard was not granted to the workmen. According to our opinion, the union has been registered now that is the date on which the review application has been dismissed with the sole objective that the union had not been given the opportunity of being heard. This approach certainly is not appropriate. The fact of the matter is that the workmen were given appropriate opportunity of being heard.
21. The workmen have not been able to spell out or give any mathematical calculations by which it could be inferred that the opinion formed by the management, which is further testified by the Inquiry Officer and which has been further affirmed by the government, suffers from tactical irregularities, illegalities, infirmities and/or is against the principles of natural justice. They have also not been able to show that given the opportunity, the workmen collectively would be able to run a unit profitably and shall be able to achieve the net worth of the Cycle Division as positive. The petitioner, as a union as well has not been able to spell out other aforesaid retrievable situation.
22. In view of the above, on all counts, the petitioner has not been able to make out any case for earning the relief under the extraordinary jurisdiction of this Court under Article 226/227 of the Constitution of India.
23. Resultantly, we find no infirmity in the permission granted by the government for closing down the Cycle Division/Unit as the same has been held "not viable".
Dismissed.