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Sri Arunachaleswarar Mills Represented By Its Partner S. Natarajamoorthy Krishnapuram Udumalaipettai v/s The Joint Secretary Department Of Industries And Labour Secretariat Chennai & Others

    W.P.No.24564 of 2009, M.P.Nos.1 and 2 of 2009

    Decided On, 18 January 2010

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE K. CHANDRU

    For the Petitioner: A. Swaminathan, Advocate. For the Respondents: C.K. Vishnupriya, AGP. V. Prakash, Senior Counsel M/s Ramapriya Gopalakrishnan .



Judgment Text

(Prayer :Writ Petition under Article 226 of the Constitution of India praying for a Writ of Certiorari to call for the records pertaining to the Award dated 08.03.2006 in I.D.No.28 of 2000 on the file of 2nd Respondent and consequential G.O.(T) 383 dated 23.06.2009 Labour & Employment (T1) Department and quash the same.)


The petitioner who is a Textile Mill has come forward to challenge the award of the Tribunal dated 08.03.2006 made in I.A.No.28 of 2000 as well as the order of the State Government in G.O(T).No.383, Labour and Employment Department dated 23.06.2009 issued under Section 33 C (1) of the Industrial Disputes Act, 1947.


2. When the matter came up for admission, on behalf of the 3rd respondent M/s Ramapriya Gopalakrishnan took notice and Mr.V.Prakash, learned Senior Counsel leads her in this matter.


3. It is seen from the award that a reference was made to the Labour Court. With reference to the grievance projected by the Workmen, the State Government under Section 10(1) of the Industrial Disputes Act, by its order in G.O.(D).No.105 Labour and Industries Department dated 10.02.2000 referred two issues for adjudication by the 2nd respondent Tribunal. The first issue related to whether the action of the Management on the petitioner Mills in denying work by closing the factory from 10.08.1998 onwards even though the workers were ready and willing to report for work is justified, if not to what relief the workers are entitled to? The 2nd issue was whether the settlement between the South India Mills Association (SIMA) and the four Trade Unions under Section 18(1) of the Industrial Disputes Act dated 12.10.1998 will apply to the petitioner Mills and in terms of the said settlement whether the workers are entitled for bonus and ex-gratia payment for the accounting year 1997-98? If the payment is justified, what is the relief to which the workers are entitled to? otherwise, what is the quantum of bonus and ex-gratia payment to which the workmen are entitled?


4. The said reference was taken on file by the 2nd respondent Tribunal as I.D.No.28 of 2000 and notice was ordered to the parties. The various Trade Unions have filed claim statements and the petitioner Mills filed a counter statement. In the counter statement filed by the petitioner Mills, it was stated that there was initially an intention to start the Mill and provide employment as well as to settle dues to the workmen. Pursuant to the Management's intention 147 workmen have entered into a settlement under Section 18(1) of the Industrial Disputes Act and also signed on individual basis with full knowledge, consent and awareness. The Trade Unions have no role in the matter of settlement between individual workers and the Management. When the settlement was in force, the Unions cannot come up with different contention. The settlement is binding on all and therefore, the reference is not valid in law.


5. Before the Tribunal on behalf of the Management one P.R.Ramasamy was examined as M.W.1 and the settlement under Section 18(1) of the Industrial Disputes Act dated 15.06.2001 was filed as Ex.M.1. The Tribunal held that such a settlement cannot efface the rights provided under Chapter V-B of the Industrial Disputes Act and inasmuch as Section 25-O prohibits any closure of the Mills without the prior approval of the Government. The said closure is void and under Section 25-O(6) it has been clearly indicated that if no application for permission is made within the period specified therein or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be deemed to be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.


6. In the present case, admittedly there is no approval by the State Government and no such application has also been made. Therefore, the Tribunal held that any settlement signed between individual workers to compromise their right under Chapter V-B was totally illegal. In this context, the Tribunal also referred to the Judgment of the Supreme Court reported in (2005) 3 SCC 224, wherein it is clearly indicated that an agreement which opposed to public policy as laid down in terms of Section 25-O of the Industrial Disputes Act would be void and of no effect. The parliament had acknowledged the governing factors of such public policy. The Tribunal after referring to Ex.R.1 held that the workers agreed to forgo their wages was clearly unconscionable contrary to Section 25-O(6).


7. Therefore, in respect of issue No.1, the Tribunal held that the petitioner Management refusing to give work to the workers from 16.08.1998 even though the workmen were ready and willing to work was not justified and the workers are entitled to the benefits under Section 25-O(6) of the Industrial Disputes Act.


8. In respect of issue No.2, the Tribunal held that since the Mill was not functioning and was under closure, there could not be any surplus income which could result in payment of bonus. Therefore, by virtue of Section 10 of the Payment of Bonus Act, 1965, the workers are eligible only for minimum bonus.


9. By answering these two issues, the Tribunal passed an award dated 08.03.2006 in favour of the workmen as set out above. The Management of the petitioner Mill did not challenge the said award within a reasonable period. Vexed by the action of the Management, the workmen moved the State Government with an application under Section 33-C (1) of the Industrial Disputes Act seeking to recover the dues from the employer to the workmen.


10. The State Government accepted the computation of wages and issued a show cause notice to the petitioner Mills. With reference to the said show cause notice, the petitioner did not sent any reply and therefore, having satisfied with the claim made by the workmen, a certificate under Section 33-C (1) in G.O.(T)No.383, Labour and Employment Department, dated 23.06.2009 was issued by the State Government. It is only after the issuance of the revenue recovery certificate in the year 2009, the petitioner Mill thought of challenging the award which was passed as early as March 2006. In respect of delay, there is no satisfactory explanation in the affidavit filed in support of the writ petition.


11. Mr.Swaminathan, learned counsel for the petitioner sought to impeach the award on the following grounds.


(i) The present person who is operating the Mill was only a lessessee and that he was not responsible for the closure of the Mills.


(ii) As per settlement under Section 18(1) of the Industrial Disputes Act, the workmen have agreed to give away the wages from the date of closure till the date without resuming work and there is nothing wrong in the said settlement. Finally, he submitted that the Tribunal ought to have gone into the merits of the closure and since it had failed to do so, went on technical grounds and hence the award is liable to be set aside. He also submitted that under Section 25 FFF of the Industrial Disputes Act, the legislature itself has given certain pre condition wherein the compensation amount cannot also be reduced. The Tribunal ought to have embark upon the merits of the reasons behind closure.


12. The contention raised by Mr.V.Prakash, learned Senior Counsel for the petitioner fully support the terms of the award.


13. The contention raised by the learned counsel for the petitioner cannot be countenanced by this Court for more than one reason. It is immaterial whether the present Mill is operated by a partnership Firm, which has chosen to file the present writ petition. The relationship between the present partners and the previous Management of the Mill is immaterial.


14. Insofar as the application of Chapter V-B is concerned, it only deals with an undertaking. Insofar as the Textile Mill is concerned, it is an undertaking covered by Chapter V-B and when that is sought to be closed, then Section 25-O (1) obliges the employer to seek prior permission. Without such prior permission, any decision taken is not binding on the workers. The Supreme Court dealt with extensively the scope of Section 25-O and the social philosophy of introduction of such provision under the Industrial Disputes Act. The very Chapter itself was introduced so as to protect the workmen from being rendering job less by the arbitrary action of the employer and the State wants to have a control over such illegal closures. Therefore, it is open to the employer to satisfy the competent authority before getting permission for the closure. The virus of the said provision has been upheld by the Supreme Court vide its Judgment in Oswal Agro Furane Limited and another vs.Oswal Agro Furane Workers Union and Others reported in (2005) 3 Supreme Court Cases 224, wherein the Supreme Court in paragraphs 15 to 19 has held as follows:-


15. A settlement within the meaning of Section 2(p) read with sub-section (3) of Section 18 of the Act undoubtedly binds the workmen but the question which would arise is, would it mean that thereby the provisions contained in Sections 25-N and 25-O are not required to be complied with? The answer to the said question must be rendered in the negative. A settlement can be arrived at between the employer and workmen in case of an industrial dispute. An industrial dispute may arise as regards the validity of a retrenchment or a closure or otherwise. Such a settlement, however, as regards retrenchment or closure can be arrived at provided such retrenchment or closure has been effected in accordance with law. Requirements of issuance of a notice in terms of Sections 25-N and 25-O, as the case may be, and/or a decision thereupon by the appropriate Government are clearly suggestive of the fact that thereby a public policy has been laid down. The State Government before granting or refusing such permission is not only required to comply with the principles of natural justice by giving an opportunity of hearing both to the employer and the workmen but also is required to assign reasons in support thereof and is also required to pass an order having regard to the several factors laid down therein. One of the factors besides others which is required to be taken into consideration by the appropriate Government before grant or refusal of such permission is the interest of the workmen. The aforementioned provisions being imperative in character would prevail over the right of the parties to arrive at a settlement. Such a settlement must conform to the statutory conditions laying down a public policy. A contract which may otherwise be valid, however, must satisfy the tests of public policy not only in terms of the aforementioned provisions but also in terms of Section 23 of the Indian Contract Act.


16. It is trite that having regard to the maxim ?ex turpi causa non oritur actio?, an agreement which opposes public policy as laid down in terms of Sections 25-N and 25-O of the Act would be void and of no effect. Parliament has acknowledged the governing factors of such public policy. Furthermore, the imperative character of the statutory requirements would also be borne out from the fact that in terms of sub-section (7) of Section 25-N and sub-section (6) of Section 25-O, a legal fiction has been created. The effect of such a legal fiction is now well known. (See East End Dwellings Co. Ltd. v. Finsbury Borough Council6, Om Hemrajani v. State of U.P.7 and Maruti Udyog Ltd. v. Ram Lal8.)


17. The consequences flowing from such mandatory requirements as contained in Sections 25-N and 25-O must, therefore, be given full effect. The decision of this Court in P. Virudhachalam2 relied upon by Mr Puri does not advance the case of the appellant herein. In that case, this Court was concerned with a settlement arrived at in terms of Section 25-C of the Act. The validity of such a settlement was upheld in view of the first proviso to Section 25-C of the Act. Having regard to the provisions contained in the first proviso appended to Section 25-C of the Act, this Court observed that Section 25-J thereof would not come in the way of giving effect to such settlement. However, the provisions contained in Sections 25-N and 25-O do not contain any such provision in terms whereof the employer and employees can arrive at a settlement.


18. In Engg. Kamgar Union3 the question which fell for consideration of this Court was as to whether in relation to an industry which was governed by the State Act, the provisions of Section 25-O would be attracted. This Court held that having regard to the provisions contained in Article 254 of the Constitution, the provisions of the State Act shall prevail over the parliamentary Act as the former received the assent of the President of India stating: (SCC p. 54, para 40)


?40. The contention of Mr Banerji to the effect that Section 25-J of the Central Act has been incorporated by reference in Section 25-S cannot be accepted. Section 25-S does not introduce a non obstante clause as regards Chapter V-A. Furthermore, Section 25-J is not a part of Chapter V-B. By reason of Section 25-S, the provisions of Chapter V-A were made applicable only in relation to certain establishments referred to in Chapter V-B. Parliament has deliberately used the words ?so far as may be? which would also indicate that provisions of Chapter V-A were to apply to the industrial establishments mentioned in Chapter V-B. The non obstante clause contained in Section 25-J does not apply to the entire Chapter V-B. Applicability of Chapter V-A in relation to the industrial establishments covered by Chapter V-B in terms of Section 25-J vis--vis Section 25-S is permissible but the contention cannot be taken any further so as to make Section 25-O of the Central Act prevail over the State Act by taking recourse to the non obstante clause. Non obstante clause contained in Section 25-J is, thus, required to be kept confined to Chapter V-A only and in that view of the matter we have no hesitation in holding that Chapter V-B does not have an overriding effect over the State Act.?


19. Indisputably, in this case, the industrial undertaking belonging to the appellant herein attracts the provisions of Chapter V-B of the Act and consequently the provisions referred to in Section 2(s) including Section 25-J shall apply in relation thereto'.


15. Under Section 25-J(2) of the Industrial Disputes Act, only the terms rendered by the employer in respect of the provisions of Chapter V-A and V-B. If they are more favourable, that alone is protected. Otherwise, Section 25-J (1) over rides inconsistent provisions contained in any othe

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r law for the time being in force. Therefore, the argument that the present partnership firm which is running the Mill has no role for the closure and that the settlement between the individual workers and the Management is binding on them does not stand to reason. 16. Further, when Section 25-O makes it clear that the workmen are entitled to get wages if there is no prior permission or when the permission is refused, the parliament itself has given a declaratory relief to the workers and therefore it is unnecessary even for the workers to raise a dispute in such contingencies. If there is no prior permission before effecting the closure, the workmen can even apply directly to the State Government for appropriate revenue recovery certificate under Section 32/76 with effect from 05.03.1976. The Supreme Court vide its Judgment in Fabril Gasosa vs. Labour Commissioner and others reported in 1997 (3) SCC 150 has held that in such cases the workmen can apply directly to the State Government for the Revenue Recovery Certificate without any judicial adjudication on the issue relating to closure. Therefore the contention made by the petitioner's counsel that the Tribunal ought to have gone into the merits of the closure does not stand to reason. 17. In the present case, as already pointed out there is no satisfactory explanation as to why the petitioner Management did not challenge the award for the last three years. Therefore, both on the ground of delay as well as on merits, the writ petition will stand dismissed. However, there will be no order as to costs. Consequently, connected miscellaneous petitions stand closed.
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