IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF AUGUST, 2019 BEFORE THE HON’BLE MR. JUSTICE L. NARAYANA SWAMY WRIT PETITION NO.30314 OF 2017 (L-RES) BETWEEN:
THE GENERAL SECRETARY BOMBAY RAYON FASHIONS LTD., KARMIKARA SANGHA (R) KIADB APPAREL PARK NEAR RAILWAY STATION, DODDABALLAPURA BANGALORE RURAL DISTRICT – 561 203 REPRESENTED BY SRI.SRINIVASA D H PRESIDENT AGED ABOUT 46 YEARS ... PETITIONER (BY SRI.ANANTHARAM T S, ADV.) AND:
1. THE MANAGEMENT OF BOMBAY RAYON FASHIONS LTD., KIADB APPAREL PARK NEAR RAILWAY STATION, DODDABALLAPURA, BANGALORE RURAL DISTRICT- 561 203 REPRESENTED BY ITS PRESIDENT-OPERATIONS 2. M/S KIRAN WEAVERS PART S-21 TO S-32 (P), KIADB APPAREL PARK, DODDABALLAPURA – 561 203 REPRESENTED BY ITS VICE PRESIDENT-OPERATIONS ... RESPONDENTS (BY SRI.S.S.NAGANAND, SENIOR COUNSEL FOR SRI. B C PRABHAKAR, ADV. FOR R1; SRI.J.KANIKARAJ, ADV. FOR R2) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE AWARD DATED 21.04.2017 OF THE ADDL. INDUSTRIAL TRIBUNAL, BANGALORE IN AIDK NO. 32/2014 AT ANNEX-L AND DIRECT R-1 TO REINSTATE ALL 153 RETRENCHED WORKMEN INTO THEIR SERVICE WITH FULL BACK WAGES, CONTINUITY OF SERVICE AND ALL OTHER CONSEQUENTIAL BENEFITS FROM 8.11.2014 TILL THE ARE REINSTATED, AND ALSO CALL FOR THE RECORDS FROM THE ADDITIONAL INDUSTRIAL TRIBUNAL BANGALORE CONNECTED TO AID NO.32/2014 ON THE FILE OF THE ADDL. INDUSTRIAL TRIBUNAL, BANGALORE.
THIS PETITION COMING ON FOR PRONOUNCEMENT OF ORDER THIS DAY AFTER HAVING HEARD AND RESERVED FOR ORDER ON 25.04.2018 , THE COURT MADE THE FOLLOWING:
O R D E R This writ petition is filed by the petitioner union against the judgment and award dated 21.04.2017 passed by the Additional Industrial Tribunal, Bengaluru in AID No.32/2014 holding retrenchment of 153 workmen on 8.11.2014 from M/s.Bombay Rayon Fashions Limited, hereinafter referred to as `the management’ forshort, from weaving department is justifiable and petitioner is not justified in stating, it is not retrenchment but a closure. The points of reference were as follows:
“1. Whether M/s.Bombay Fashion Employees Union, S21 to S(32P) KIADB Apparel Park, Doddaballapura, Bangalore 561 203 which represents the labourers proves that the retrenchment made to the 153 number of labourers shown in Annexure-A of weaving division with effect from 08.11.2014 by the Management M/s.Bombay Rayon Fashions Limited, S21 to S(32P),KIADB Apparel Park, Doddaballapura, Bangalore 561 203 is not justifiable?
2. Whether M/s.Bombay Fashion Employees Union, S21 to S(32P) KIADB Apparel Park, Doddaballapura, Bangalore – 561 203which represents the labourers proves that the retrenchment made to the 153 number of labours by the Management M/s.Bombay Rayon Fashions Limited, S21 to S(32P) KIADB Apparel Park, Doddaballapura, Bangalore 561 203 is not retrenchment but a `closure’?
3. If proved, for what relief the labourers are eligible.”
2. The brief facts of case of the petitioner are that in the year 2012, yarn dyeing operations were reduced and November, 2013 complete operations of yard dyeing closed. An understanding was reached between Management and the Union on 25.11.2013 and all the 60 workmen in that division transferred to weaving and process divisions. On the job training in Weaving and Processing operations, they used to be given probationary orders and after six months successful completion of probationary period, workers are issued with confirmation orders. They are governed by the certified standing orders of the company. The wages and other service conditions of the workmen are governed by the memorandum of settlement dated 15.2.2010 entered into between the management and the union under Section 12(3) of the Industrial Disputes Act, 1947, hereinafter referred to as `the Act, which was valid for a period of four years and expired on 31.03.2012.
3. It is stated, the whole company was considered as one unit for the purpose of seniority and accordingly, seniority list has been given to the Union. Category and designation of permanent workmen was only two viz., Technical Assistants and Assistants.
4. In August, 2014, as mentioned in the Application of the Company to the Labour Commissioner for retrenchment, there were 395 Technical Assistants and 29 Assistants, of whom retrenchment of 155 Technical Assistants and 8 Assistants was sought for. They were belonging to Weaving Department and nobody from that section was left out from retrenchment.
5. The 2nd party also takes job work from other companies in Karnataka for bleaching, dyeing, printing and the finished products are given back to the companies, charging them for the job work. The fabrics sent directly to garment units and though marketing head quarters at Bevandi & Tharapur are at cost price. Due to this, the management’s books of accounts have always been showing either loss or low profit and the huge profits derived in export transactions through units, are not reflected in the books of accounts of Bengaluru Unit.
6. In the year 2010, the Management had entered into Memorandum of Settlement with the erstwhile leadership and the Legal Advisor and a fixed salary of Rs.3600/- distributed over a period of four years at the rate of 35%, 30%, 20% and 15% as agreed in the settlement. The demand for variable dearness allowance (V.D.A) was dropped. During the course of validity period of the settlement, workers suffered due to dropping of V.D.A demand. There was no rise in wages linked to consumer price index and real wages of the workmen was eroded due to price rise and due to fixed increase in salary given to the workmen in the salary were set at naught during the period of four years. There was change in the leadership of the Union in May, 2012 which was not liked by the Management. The Management wanted continuance of erstwhile leadership to settle the ensuring charter of demands also giving up cost of living linked Dearness Allowance (V.D.A.).
7. The petitioner union submitted its 2nd charter of demands dated 18.2.2013 for revision of wages and other service conditions and also for payment of variable dearness allowance. In bilateral negotiations, the Management did not come forward with reasonable offer for settlement of Charter of Demands. They were not ready to give variable dearness allowance linked to Consumer Price Index and wanted to continue the system of fixed payment of wages for three more years. This was not acceptable to the petitioner since in such an arrangement real wages of the workmen would be eroded and the increase in wages would get set-off against price increased. On a further discussion in January, 2014, the Management offered only fixed increase in wages at Rs.1200/- with effect from 01.04.2013, Rs.1800/- with effect from 1.4.2014 and Rs.1800/- with effect from 01.04.2015 per month. This was not acceptable to the Union and the workmen since the Management was not willing to introduce Variable Dearness Allowance linked to Bengaluru Consumer Price Index.
8. With a view to pressurize the workers, the Management started issuing individual notices on false allegations in February, 2014. They also put up notice pleading their financial difficulties and heavy expenditure they were compelled to incur for purification of Effluent Treatment Plant due to Government’s inaction to install a big purification plant to all the Companies of Apparel Park and their inability to bring the required quantity of raw materials due financial crunch and appealed to the workers to accept their offer of Rs.1200/- per month for 1st year, Rs.1800/- per month for 2nd year and another Rs.1800/- during third year. In the meantime, they obtained an order of temporary injunction in O S No.480/2013 dated 21.12.2013 restraining the workers from causing interference outside the factory.
9. During negotiations, based on the documents produced by the respondent, the petitioner was able to show that the respondent was siphoning of its profits to its other units by transferring its products more or less on cost price and getting it exported to other countries through those of its garment units with high margin. Due to this, the respondent in their Unit Balance Sheets was showing loss/lower profits. Thus the legitimate aspirations of the workmen for higher salary were denied and they were kept at just above the statutory minimum level of wages.
10. The petitioner approached the Deputy Labour Commissioner and Conciliation Officer to intervene in the matter. During the period of conciliation meeting on the Charter of demands, the Management promised to consider the main demand i.e., payment of variable Dearness Allowance linked to Bangalore City Consumer Price Index Numbers and wanted the Union to reduce their expectations for settlement. The Union submitted its reduced demand, 1st year at Rs.7500/-, 2nd year Rs.2500/- and 3rd year Rs.2500/- to which both the parties agreed to arrive at an amicable settlement. The respondent did not keep up the promise of bringing in assured raw materials. But they wanted 1,20,000 meters semi finished fabrics to be sent out for its finishing in other units for sales and also 53,000 meters for washing. Believing the statement issued by the respondent Management, the workers continued their cooperation in production process. However, the respondent after emptying the fabrics of semi-finished and finished goods and also raw materials on Sunday, the 16.3.2014 declared a lockout of the factory in the early morning on 17.3.2014. In the lockout notice, the Management repeated the allegations made against the workers earlier. The Management did not attend the conciliation meeting on 18.3.2014 and 22.3.2014. At the instance of the respondent, next date was fixed on 1.4.2014. The workers peacefully protested the illegal and unjustified lockout with the hope the Management would attend the meeting on 01.04.2014 and settle the charter of demands. Vast majority of workers of Weaving Department were from Doddaballapur itself and they were in forefront of the agitation. The President of the Union was also working in the Weaving Department and almost all the workers of the Weaving Department voted in his favour in the election. At the meeting on 01.04.2014 the petitioner gave a detailed statement to the conciliation officer denying the allegations made against the workmen. It was assured that the workers would ensure normal production and discipline on lifting the lockout. The meeting on 09.04.2014 adjourned to 15.4.2014 and on 15.4.2014, management wanted some more time up to 23.4.2014 to take a decision regarding lifting of lockout. The petitioner union protested against this stand of the management and requested the Conciliation Officer to recommend for prohibition of lockout. The conciliation meeting was closed on that day.
11. The Management issued notice dated 22.4.2014 enclosing a format of undertaking announcing that the lockout will be lifted in respect of such employees who agree to give the said undertaking.
12. On 25.4.2014 the petitioner addressed letter to the Commissioner of Labour to take immediate steps for reference of the dispute regarding charter of demands and lockout for adjudication and prohibit continuance of lockout. Under Section 10-B of the Act, Commissioner was requested granting Rs.2,000/- per month as interim relief pending adjudication. On 2.5.2014 a complaint was given to Deputy Director of Factories and Boilers enclosing statement of illegally withheld salary of 525 workmen and ensuring payment of the said money immediately and also to prosecute the Management for violation of payment of wages Act.
13. In response to Management’s notice dated 22.4.2014, the Union addressed a letter dated 2.5.2014 that individual undertaking by workmen in the format would amount to unfair labour practice, workers would be ready to resume work if the lockout is lifted unconditionally without insisting on any individual undertaking.
14. The State Government passed two government orders dated 09.05.2014 referring the dispute regarding charter of demands and lockout for adjudication. It also prohibited continuance of lockout simultaneously.
15. The dispute regarding charter of demands was registered as A.I.D.No.22/2014. The lockout was declared during pendency of conciliation proceedings on Charter of Demands which commenced on 26.2.2014. On that day, the Management agreed to resolve the issue having bilateral discussion and the Union agreed to cooperate with the Management in production and also allow the semi-finished goods to Tarapur Unit for urgent manufacturing and allowed them to take out raw materials and semi-finished goods for that purpose to avoid delay and penalty of Rs.19,76,000/-. Prolongation of lockout was to force the workmen to accept their unfair letters. Immediately after lifting of the lockout in the month of May, 2014, the Management decided to close down the Weaving Division and get rid of active members of the Union most of them were local recruits from Doddaballapur. The Management went even to the extent of transferring few workmen from Process Division to Weaving Division against their wishes. That an application dated 8.8.2014 u/s 25-N of the Act was made to the Commissioner of Labour in Karnataka, in which the Management sought permission to retrench all the 163 workmen of the Weaving Division on the grounds, the weaving division has not been functioning since long, weaving business is not viable.
16. It is the case of petitioner that the Mangement submitted application under Section 25N and Rule 77A of the Act and Rules instead of submitting it u/s 25-O and Rule 77C of the Act and Rules. In Form P-A, name of the undertaking is shown as Bombay Rayons Fashions Limited, but the application is made on behalf of Bombay Rayons Fashions Limited (Process Division) and so also notices to 163 individual workmen in that name. The balance sheets were not audited and they did not contain Auditor’s report as required under item 10 of the Form P-A. The seniority list and categories of workmen as required under item 17 of Form P-A was not maintained/furnished by the Management. The reasons assigned under item 18 was that “since there were no orders for weaving department for the past four months, 163 workmen of this section are proposed to be retrenched,” which is not genuine and adequate. It is stated in Para 2 that BRFL as a group of companies, introduced new product mix, washing of garments and other additional work of the Mills Division, only to keep the employees of the Mills Division engaged and to protect their interest and despite this, the business scenario, could never be improved due to various other factors which are beyond the Group’s reach, are not sincere and authentic. The loss shown for the last three years are fictitious because it is a loss shown in book adjustments between the group companies. In Para 6 as far as Doddaballapur Mills division is concerned, it proposed to retrench workmen. Nowhere else, either question of retrenchment or closure of business had occurred. After submission of charter of demands, the management took steps to reduce and outsource the work and emptied the whole Mills and declared lockout the next day, instead of continuing its participation in conciliation meeting fixed for that day. It is a deliberate vindictive action on the part of management to force the workers to accept unreasonable terms and accept stagnant wages without linkage to consumer price index and thereby making attempts to reduce the Real Wages of the workmen. With a view to cow down the workers, the above retrenchment is thrust upon 40% of the total permanent workmen. Operational cost of Effluent Treatment Plant is an irrelevant reason for retrenchment because that process is utilized for process plant and not for weaving plant. Reasoning that if retrenchment is not permitted, the Mills Division as a whole will sink altogether along with remaining 260 workmen and in such an event, those remaining workmen would lose employment, is not genuine. In spite of specific request from petitioner, the Commissioner of Labour in Karnataka did not call upon the management to produce the category- wise seniority list of all the 424 workmen of the factory. The retrenchment of all the workmen from the weaving department has caused them grave injustice and loss of jobs illegally. The management had closed yearn dyeing section in the year 2013 and absorbed 25 workmen in weaving department and 35 workmen in process department and three had resigned. However, in the instant case, the management had not bothered to absorb them in the process department in spite of the fact that 101 contract workmen and 10 management staff have been doing the work of the permanent workmen since the past several months and 81 workmen had resigned from the process department. It is stated, the financial crisis and insufficient orders etc., are not genuine and adequate for granting permission for retrenchment. The hidden real reason for the retrenchment is the pursuit of Charter of demands dated 18.02.2013 for revision of wages and other service conditions of the workmen, particularly the demand for variable dearness allowance linked to Consumer Price Index. Thus it was prayer of the petitioner to allow their claim statement as prayed for.
17. The respondent filed counter statement. It is stated, the group sought for Corporate Debt Restructure – CDR from consortium of Banks and got approved the CDR I 2013 with a firm direction to consolidate various operations and bring back viability and profitability. Accordingly, many unviable operations were suspended all over the country. The business segments, which were not making any profits and were not viable were consolidated to one single location with a view to utilize the capacity fully. The Mills division at Doddaballapur was facing multiple problems right from inception and incurring losses on account of various factors. Several economy measures to curtail expenditure to minimize the loss did not yield any result as there has been no orders and the capacity utilization could not be achieved to the extent required for making the unit viable.
18. The company announced an internal VRS scheme in the year 2012. The response to the internal VRS was not on the expected lines. The manpower was in excess of the requirement particularly in Weaving Section and the employees were being paid wages without full days’ work. The management offered alternative jobs by transferring the workmen to the other weaving units in Maharashtra near Karnataka border. It was assured to the workmen that they would be provided with rent free residential accommodation and appropriate increase in wages in the event they agree for the alternate job. The workmen rejected the said offer outright. The Mills Division has been consistently incurring loss year after year and the cumulative loss has been Rs.550.00 crores and therefore it was not a viable unit. In order to make it viable, it is stated, since the weaving operations are available plenty in and around Doddaballapur as unorganized sector, the cost of production for items of unorganized sector is very less and they could sell at low cost. The cost of operations was high in an organized sector like the first respondent. Also, the customers stopped placing orders for weaving because of the high cost and the weaving orders became nil. Despite all the efforts no viability was evident. Hence weaving operations which is highly specialized manufacturing activity had to be stopped until the processing plant is revived fully and the workmen engaged in weaving section were required to be retrenched.
19. It is stated, considering all the compelling circumstances, it became inevitable for the respondent management to approach the Government seeking permission to retrench all the workmen working in weaving plant. The Management filed application under Section 25-N(1) of the Act seeking permission for retrenchment of 163 workmen working in weaving plant after giving necessary notice to them. The petitioner filed objection opposing the retrenchment. During pendency of proceedings before the Labour Commissioner, 10 workmen of Weaving Section had availed voluntary retirement benefits and proceeding was confined to 153 workmen. The Labour Commissioner accorded permission to retrench 153 workmen by the order dated 10.10.2014 paying the compensation in accordance with law. Accordingly, the Management retrenched 153 workmen by the order dated 8.11.2014 and all of them have been paid compensation in terms of Section 25-N(9) of the Act.
20. The petitioner contended before the Specified Authority that action of the Management was nothing but an application for partial closure of the Industrial Establishment and hence the application under Section 25-N of the Act in Form P-A was not maintainable. The management justified its action saying, Management undertaken to reemploy the retrenched workmen in the event Weaving Section recommences its operation. It was further clarified that if it were to be a closure, such undertaking would not have been there. It is stated, the authority has rightly held that action of the Management was retrenchment and not partial closure.
21. The Management has stated that unit at Doddaballapur the Mills division consisted of two divisions and not three divisions as contended by the petitioner. In the processing department the activities carried out are bleaching, dyeing, printing, finishing and yarn dyeing. The operations at the Yarn Dyeing Unit were stopped and workmen working in the said division were re-deployed in other Divisions after arriving at an understanding with the Union.
22. All the workmen working in the weaving section were proposed for retrenchment and no one was left out in the department. The contention of the petitioner that seniority of the workmen working in the weaving section and the processing section should be taken into account for retrenchment and carried out on the principle of last come first go is not correct. It is stated, the weaving activity is a highly specialized and sophisticated activity with special skills involved in it. Assuming without admitting, in the event combined seniority list of all the sections is prepared for the purpose of retrenchment, the entire unit will collapse automatically by default as the workmen in all the sections will be retrenched either in whole or in part and none of the sections/departments will be able to function without adequate skilled workforce. If this approach was adopted, whole effort of the management to revive the unit would have gone futile forcing to close the entire unit. About submission of 156 resignations by the workmen, it is submitted that the management in order to revive the plant and to avert retrenchment had offered voluntary retirement scheme and in all more than 156 workmen had availed the voluntary retirement benefits under COOL system. As the weaving department continued to be the economic dead weight, the company was constrained to make application to retrench the workmen of the weaving section. Out of 156 workmen who opted for VRS, 81 workmen were from processing department. These 81 workmen left the services after availing benefits under the scheme. Therefore, no vacancies did arise on account of the separation of the employees due to voluntary retirement scheme. The averment that management engaged contract workers for carrying out manufacturing activities is not correct. Few peripheral works such as housekeeping, cleaning, loading and unloading works were given to independent contract agencies.
23. The Management did not receive any order for weaving section from May 2014 and the workmen were paid idle wages. The workmen were also exempted from attending work from 1.8.2014. If the operations of the weaving section were continued, the same would have had adverse impact on the processing section also. The audited balance sheet of Doddaballapur Unit had been produced along with the application submitted to the specified authority. The audited balance sheet of the company as a whole would not reflect the financial position of Doddaballapur Unit. For the purpose of application seeking permission to retrench the workmen, the balance sheet of Doddaballapur unit was relevant and the same had been produced. The consolidated audited balance sheet of the company as a whole was produced before the specified authority during the course of proceedings. The averment that balance sheet produced by the management are not real but concocted one with an intention to mislead the authority is not correct. The Management produced group level balance sheet of Doddaballapur Unit. The profit and loss mentioned in the rejoinder dated 30.9.2014 by the management, it related to the group as a whole and not the performance of the individual unit. The performance of the individual unit is also given which shows the loss sustained by the Doddaballapur Unit in the past three years. With the object of protecting the remaining workmen at the factory the management decided to retrench the workmen working in the Weaving Section.
24. It is submitted by the Management that it has leased out the Weaving Department to Kiran Weavers, the second respondent for a period of five years. The Lessee has obtained licence under the Factories Act to run the Weaving Factory and also obtained VAT Registration Certificate, certificate as a Small Scale Unit from District Industries Centre, ESI Code and PF code number to cover its employees under the scheme. The Management had sent individual letters to the retrenched workmen about the lease given to second respondent so that they can approach it for employment. However, the petitioner demanded continuity of service, full back wages and all other consequential benefits. As such there was no justification in the claim made by the petitioner. The retrenched workmen did not approach Kiran Weavers for employment and they did not report for work there. Thus they prayed for dismissal of the reference.
25. Before the Industrial Tribunal, WW-1 was examined and got marked Ex.W1 to W49 on behalf of the workmen. On behalf of management, MW-1 & MW-2 were examined and got marked Ex.M1to M81. The Industrial Tribunal by the judgment and award dated 21.04.2017 in AID No.32/2014 upheld retrenchment of 153 workmen and further held that petitioner is not justified in contending that it is not a retrenchment but a closure. Being aggrieved, the present writ petition is filed.
26. I have heard the learned counsel for the petitioner and learned Senior Counsel for respondent No.1 and learned counsel for respondent No.2 and perused the impugned judgment and award.
27. The learned counsel for the petitioner has raised the following contentions in support of the writ petition.
(a) The first respondent management in order to pressurize the workmen, divided two groups among 525 workmen terming as “Weaving” and “Processing” groups and all the 153 workmen who were termed as “Weaving” group were retrenched.
(b) The illegal lockout during 2014 and fresh charter of demands were referred for adjudication to the Additional Industrial Tribunal in AID No.22/2014. The lockout was a retaliatory measure on the part of the management to exert undue coercion on the workers to settle the charter of demands.
(c) Immediately after lifting lockout in May, 2014, decision to close down the weaving division is to get rid of active members of the union, most of whom, were local recruits from Doddaballapura. Few workmen from process division were transferred against their wishes to the weaving division.
(d) Financial crisis claimed by the first respondent for closure of weaving section is fictitious. They filed application u/s 25-N of the Act instead of under Section 25-O, which was not maintainable.
(e) The first respondent management canvassed that they continued weaving operations through 2nd respondent engaging contract labourers. In spite of the same, holding retrenchment of 153 workmen justifiable is erroneous.
(f) The Industrial Tribunal failed to note actual difference between retrenchment and closure and failed to appreciate the materials and evidence on record. The Tribunal has wrongly come to the conclusion that there was no difference between closure and retrenchment, since in both the cases the only provision is to pay the retrenchment compensation to the workmen. The 2nd respondent only accommodate the retrenched employees on contract basis for which the workmen informed that they were ready to accept reemployment provided their services continued on par with the wages of permanent employees, which was not acceptable for the 2nd respondent. Thus the petitioner prays for allowing the writ petition.
(g) The learned counsel for the petitioner has placed reliance on authorities, which would be referred to in the later part of the order.
28. On the other hand, the learned senior counsel for respondent No.1 submitted, from the inception the respondent incurred losses from 2011-12 till 2013-14 at Rs.40 crores, Rs.51 crores and Rs.77 crores respectively, which is supported by profit & loss account, balance sheet which formed part of application seeking permission to retrench 163 workmen of the weaving department. The operational cost was too expensive at Doddaballpur because of power tariff, water scarcity, increase in material cost and operation of effluent treatment plant within the plant. There was no order for weaving section from May, 2014, 163 workers were paid idle wages from May 2014 till 8.11.2014. The annual sales from 2011-12 to 2013-14 showed downfall figures in the range of Rs.221.15 crores, Rs.173.51 crores and RS.102.22 crores respectively. Though remedial measures such as not revising the salary of management personnel, adding CTC bonus to monthly salary, reducing salary expenditure, suspending encashment of earned leave from 1.1.2014, reducing sales promotion cost, reducing administrative expenses, several management staff left the company opting for COOL System, did not improve the situation. The alternative job offered to the workmen in weaving section by transferring them to other weaving units, was rejected by the workmen.
29. It is contended that the management filed application under Section 25N(1) of the Act consciously seeking permission to retrench the workers of weaving section with an intention to give preference for employment to the retrenched workers in the event of restarting it. The only difference between closure and retrenchment is, in case of retrenchment a person loses his job and will have preference in appointment in case of revival and in case of closure, the person is entitled to receive compensation only. It was the statutory obligation on the part of the management to give such an undertaking while seeking permission to retrenched workmen, which was duly complied. Referring to evidence of MW-2, it is submitted that Kiran Weavers is registered as Small Scale Industry. It has also registered under various Labour enactments. It is a separate legal entity having its own workmen.
30. The learned counsel for respondent No.2 also supported the judgment and award passed by the Industrial Tribunal.
31. On the basis of the rival contentions of the parties, the point that arises for consideration of this court is, whether the Industrial Tribunal has acted illegally and with material irregularity in passing the impugned judgment and award calling for interference under Article 227 of the Constitution of India? My answer would be in the negative for the following reasons.
32. The petitioner submits that retrenchment is illegal and unjustified. It is not a retrenchment but a closure. If it is a closure, the company failed to follow the procedure contemplated under the Act. The application filed under Section 25-N of the Act is not tenable. The lease made in favour of M/s. Kiran Weavers is only a paper lease agreement. The financial position of the entire group is to be taken into consideration and consolidated balance sheet is not produced by the company. The company has not produced documentary evidence in respect of cost price, market condition, raw materials, finished products etc., to show that product cost is high and it was not viable to run weaving department.
33. On the other hand, it is case of the company that there were no orders for weaving department from May 2014. The management had to pay idle wages for 153 workmen from May 2014 to August 2014. The workmen of weaving department were exempted from duties from 28.7.2014 to 8.11.2014. The sales figures for last 3 years were on a downfall. All its efforts to revive did not improve the situation. The mills division had been consistently incurring loss year after year and the cumulative loss has been Rs.550.00 crore and therefore it was not a viable unit. Therefore, it was compelled to move retrenchment application.
34. It emerged from the records that in the year 2010 there was a settlement negotiation between petitioner and first respondent but the management did not agree for variable dearness allowance, wages as demanded by the petitioner workmen. The management had agreed for fixed wages of Rs.1200/- and also agreed for Rs.4800/- increase for a period of three years. But the petitioner did not agree for this Rs.4800/- fixed wages and they demanded consumer index price wages as per the Central Government Notification. The negotiations in this regard failed before the Assistant Labour Commissioner. In the meantime, there was lockout and company declared cool VRS, in which totally 163 workers took benefit of it.
35. The management met with financial crisis from 2011 to 2014 and there was less number in orders and cost of production increased. As is narrated above, the company took several remedial measures, but it did not improve the situation. The unorganized sector was manufacturing similar cloths in a lesser price. Therefore, the respondent management could not able to meet the competition. Hence there was a heavy stock holding of yarn in the company and the company started to incur loss from 2011 to 2014. The company managed to pay wages to its workers for eight months without any work in the company. With all financial crunches, the management could not able to run the business in weaving department and thereby opted to retrench employees working there.
36. The Labour Commissioner issued notice to the workmen, who participated in the proceedings through its President. After enquiry, the Labour Commissioner gave permission to retrench 153 workmen.
37. The petitioner raised a plea that though the company could run the business and manufacture the products, but as they placed charter of demands, the company not interested in materializing it. Therefore, it started hostile attitude and it picked up weaving department workers to victimize and retrenched them. The company followed unfair labour practice leaving processing department workers in the company. The company got profit and if there was no customer order, why it could manufacture heavy fabrics and now it could call as stock, which cannot be accepted. The management has not given any specification of the figures in respect of financial loss and not given any figures in respect of less customer orders. The company is working as a whole unit and it should not be bifurcated from one unit to another unit. In the absence of these documents, the plea of the management could not have been accepted. When 2nd respondent is getting good orders from the first respondent company, it is not correct on the part of the first respondent to say, it was not viable for it to run weaving department.
38. The learned counsel for the petitioner has placed reliance on the decision in Mackinon Machenzes & Co., Ltd. V. Meckinnon Employees Union reported in LAWS (SC) 2015-2- 80 to advance a contention that mandatory provisions of the Act and rules have to be followed strictly. This is with reference to application for retrenchment filed under Section 25-N instead of 25-O of the Act.
39. Relying upon decision in Workmen of Subong Tea Estate, represented by the Indian Tea Employees Union v. Outgoing Management of Subong Tea Estate, & another, reported in AIR 1967 SC 420, it is contended that accepting retrenchment compensation is not a bar for challenging such retrenchment. Such a contention is not raised by the respondent, and therefore the ratio of this decision is of no avail to the petitioner.
40. Further to contend that understanding between respondents No.1 & 2 in entering into lease deed is nothing but a close family arrangement, petitioner has placed reliance on a decision in Kundasamy Spinning Mills Pvt. Ltd., v. Their Workers reported in LAWS (MAD) 2012-10-2015. Para-19 of the said judgment, which was referred, is extracted:
“19. The learned counsel also referred to the judgment of the Supreme Court reported in AIR 1963 SC 1489 (Anakapalla Cooperative Agricultural & Industrial Society Limited v.
Workmen for contending that if industrial undertakings are transferred, the employees of such transferred undertaking will 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 all the three requirements of the Proviso to Section 25-FF of the I.D.Act. However, in the same case, in Para 19, it is observed that if the transfer is fictitious or benami, Section 25-FF has no application.”
41. The learned Senior Counsel placed reliance on a decision in T Nagappa v. T C Basappa & others, reported in AIR 1955 SC 756, H B Gandhi, Excise Taxation v. Gopinath & sons, reported in 1992 Supp(2) SCC 312, Baby v. Travancore Devsom Board, (1998) 8 SCC 310 and Ashok Kumar & others v. Sita Ram, reported in AIR 2001 SC 1692 and State of Uttar Pradesh & others v. Rakesh Kumar Keshari & another reported in (2011) 5 SCC 341 to advance the contention that High Court cannot re-appreciate the primary and perceptive facts found by the fact finding authority under statute, It is a review of decision making process and not of the decision itself.
42. In 1989(1) LLJ 899 Associated Cement Companies Ltd., & others v. Union of India & others, 1961 II LLJ 478 Madras H.C., Workers of Sri Krishna Talkies v. Sri Krishna Talkies and 2001 II LLJ 1547 (SC) Madan Mohan Ghosh v. Infar (India) Limited & another, it is laid down clearly that the tribunal cannot direct the employer to run the business when it is under financial crunch.
43. Keeping the above law on the point, the case on hand is to be examined. WW-1 has admitted in his cross-examination that 156 workers have left the company, but he asserted that they have not left on the reason of Cool system, but because of mental agony and also harassment meted out to them. WW-1 has also admitted that the management has given the house keeping work, loading and unloading work and cleaning works to private contractors. It is also admitted that cost of production of cloth and processing is on higher side in Doddaballapur unit. WW-1 has admitted that if the weaving department is started by the management the preference is given to the retrenched workers. WW-1 has admitted that earlier to retrenchment order the management had offered alternative service in weaving department at Tharapur and Bewandi and he said that they have also stated that they are going to run the weaving department through contract labourers at Doddaballapur unit and therefore they did not agree the offer of alternative appointment.
44. MW-1 is President – Operations of first respondent company.
In the chief examination he has deposed to the counter statement averments. He has spoken that cost of weaving at Doddaballapur plant was very high. It is stated, considering all the compelling circumstances, it became inevitable to approach the government seeking permission to retrench the workmen working in weaving plant. It is deposed, performance of the individual unit is to be taken into consideration while considering justification of retrenchment. The profit and loss account and balance sheet of Doddaballapur unit for the years 2011-12, 2012-13 and 2013-14 were produced along with application for retrenchment showing that the group has sustained loss to the extent of Rs.619.78 crores. He has also spoken about leasing of weaving department to 2nd respondent. To a question put to MW-1, as to what is the link between his company and Kiran Weavers, he has stated that they have leased the premises and he is an outsider. He takes orders from outsiders and from them also. But they have given orders to Kiran Weavers if it is profitable or less price.
45. MW-2 is Vice President of the 1st respondent. MW-2 has stated that it is not true to suggest that they have received the work orders from other customers less than Rs.10 lakhs. He has also spoken about correspondence between workmen and the company.
46. From the above it is clear that the first respondent was compelled to close the weaving department due to compelling reasons. The company felt it was not viable to run the weaving department due to continuous loss incurred in the said unit. The company also took remedial measures but it did not improve the situation. Initially the unit was locked out. The company also paid idle wages to the workmen. Only when it was inevitable and in order to save the other unit and workmen, it thought of closing weaving department and applied for retrenchment. As rightly contended by the respondent management, it was a retrenchment with an undertaking to take back the retrenched employees in case the unit is revived. Therefore, nothing much can be made out by the contention of the petitioner that application ought to have been made under Section 25-O(1) instead of 25-N(1) of the Act. It is true under each of the said provisions, competent authority is different and requirements are different. In the instant case, it is specific contention of the management that with an intention to give re-employment to the retrenched employees, consciously they adopted Section 25-N of the Act and gave an undertaking to that effect. Therefore, it cannot be said that the application for permission to retrench was not maintainable and could not have been entertained.
47. It is not the case of the petitioner that the Management failed to comply the mandatory requirements under Section 25-N of the Act. The Management has complied all the statutory requirements under the said provision giving three months notice to the workmen and seeking permission before the Labour Commissioner for retrenchment and after retrenchment orders, compensation was duly paid to each workman. The decision to retrench the workmen working in weaving department was non-viability. The company is entitled to stop work of part of the unit which is continuously incurring loss. The balance sheet and profit and loss account showed financial loss from 2011 to 2014. Though the petitioner contends that financial crisis is only created story of the management, there is no supporting material to conclude that it is only with an oblique motive or as an unfair labour practice the company decided to stop weaving department. Though it looks like only to dispense the employees of weaving department, such a decision was taken, but when it is the case of the management that it could get the said work at a cheaper rate, it cannot be concluded that action of the company is hit by unfair labour practice or victimization. It is case of the petitioner that when work of weaving department is entrusted to second respondent on lease basis and when that work cannot be dispensed with for running the other branch i.e., processing department, it could as well run the weaving department. But it is the case of the management that it is getting the said work done for a cheaper rate. WW-1 has admitted this position in his deposition. So in order to safeguard the interest of workmen working in processing department, it was inevitable for the management to stop the weaving department.
48. When the employer says that running of the unit or part of it is not viable, which is not tainted with mala fides, it is not for the Tribunal or this Court to compel the employer to run the unit or part of it. The averments made by the company are supported by oral and documentary evidence. The Labour Commissioner has considered in detail the requirements for retrenchment and accorded permission, which is found favour with the Industrial Tribunal. All the workmen in Weaving Department were retrenched and therefore the contention that last come first go principle ought to have been applied, is of no assistance to the petitioner. It is the specific case of the management that if such a principle was adopted, it would have spoiled the working of the other department also as the skilled workers would have gone out and it would not have helped the object with which the company decided to stop working of weaving department and strengthen the other branch. The intention of the management was to at least save and protect the interest of workmen working in processing unit by dispensing the work of weaving department, for which the management was very much entitled unless such a decision was not tainted with victimization or unfair labour practice. Such a thing is not found in the decision of the management to retrench the employees as is done in the instant case.
49. As rightly pointed out, the 2nd respondent is an independent entity. It receives orders from the first respondent as well as others. The orders received from others is less than Rs.10 lakhs is also of no help to the petitioner in any manner. The conclusion reached by the Industrial Tribunal is based on materials. It is too exhaustive an order, where nothing could be made out directly. But as a whole, no fault could be found in the final conclusion. The decision of the Labour Commissioner and that of the Industrial Tribunal is supported by materials. There is no irregularity in decision making process.
50. The Management has also individually informed the retrenched workman about leasing the weaving department with machineries and plant to 2nd respondent and they can go and approach the 2nd respondent for employment. The petitioner put-forth continuation of their service with same scale of pay. Even the employees were offered accommodation in other units of the management with some incentives such as free accommodation etc., that was also not availed by the petitioner workmen.
51. In the circumstances, it is not for this Court to re-appreciate the evidence and to take a different view in this type of matters. The scope of this court under Article 227 of the Constitution is very limited. When there is no error or irregularity in decision making process either by the Labour Commissioner or the Industrial Tribunal, this Court would be left with very little scope for interference.
52. In that view of the matter, I am of the considered view that decision of the Industrial Tribunal does not suffer with any error or irregularity so as to call for interference by this Court. In the result, this writ petition is liable to be dismissed and it is accordingly dismissed.
akd Sd/- JUDGE