JUDGMENT Rakesh Tiwari, J.
1. Heard Counsel for the parties.
2. The respondent company is engaged in business of Export of Carpets does not have any manufacturing unite of its own.
3. The Carpet manufacturing industry is a cottage industry. Most of the carpets are woven by the weavers at home. The respondent company had set up about 10 looms on experimental basis in the year 1968 at Guria factory, which at the relevant time was a production centre. Services of 48 bunkers/weavers engaged on the experimental looms were terminated by notice dated 12.4.1982, which is appended as Annexure 1 to the writ petition. The reason behind the closure of weaving section at Guria factory, was because of extremely bad economic recession in North America and Western Europe in the beginning of the 1982, which adversely affected the business of the respondents. According to the Employers there was drastic reduction of orders from these countries primarily because of high cost of production of Carpets in India, which resulted in severe financial crises. The loss suffered by the Company in the year 1981-82 was to the tune of Rs. 30.84 lakhs and as such it became necessary for the company to adopt such measures as to effect economy and cut down of cost of production.
4. The cost of weaving on Company experimental looms set up by the Company at Guria was very high and running of weaving activity was not economically viable. The Company, therefore, decided to close down the Weaving Department of Guria factory and issued letter dated 12th April, 1982 terminating the services of 48 bunkers working on the looms for aforesaid trade reasons. The notice dated 12th April, 1982 is as under:-
"As a measure of economy mixed with other reasons the management has decided to close down the Guria Factory Pvt. Looms and as such your services have become surplus to the requirements of the Management and the same arc hereby retrenched with immediate effect.
You are hereby advised and directed to collect your dues, if any, alongwith one month's pay in lieu of one month's notice and retrenchment compensation as required under law today at 10.00 A.M. from the factory office. You are further advised to leave your permanent address with our office so that in event your services are required, you may be called."
5. The stoppage of manufacturing activity on the experimental Looms resulting in termination of services of the weavers having become surplus, gave rise to an industrial dispute. On conciliation proceeding having failed, the dispute regarding termination was referred by the State Government in exercise of its power contained under Section 4-K of the Industrial Disputes Act, 1947. The reference contained the names of 48 employees who had been retrenched and whose termination of services had been challenged by the petitioner Union.
6. On receipt of the reference the case was registered as adjudication case No. 9 of 1982 before the Labour Court, Varanasi. It was thereafter transferred to the Labour Court, Allahabad where it was re-registered as adjudication case No. 19 of 1998.
7. The Labour Court, Allahabad decided the reference case against the workmen. Aggrieved by the award, the present petition has been filed by the Sanyukta Kalin Mazdoor Sabha, which had espoused the case of workmen challenging the validity and correctness of the award.
8. The case of the workmen in this petition is that provisions of Section 6-N, Sub-clauses (a) and (b) of the U.P. Industrial Disputes Act, 1947 lay down the conditions precedents for termination of service or retrenchment, which are mandatory, these have not been complied with by the employer and as such the termination of their service is illegal and they are entitled to continuity of service with full back wages. The contention of the petitioners is that the weaving activity of the respondent company had been stopped due to weavers having become surplus and this stoppage of manufacturing activity does not amount to closure. Further, their case is that stoppage of weaving activity was not relevant as the company continued in trading/marketing of its carpets, by getting the weaving work done through home workers on contract basis. Further, according to the petitioners the Respondent Company had its head office at Mirzapur and was engaged in the business of trading/marketing through its 7 centres situate at different places in which total about 650 workers were employed and that prior permission was not obtained from the State Government under Section 25O of the Industrial Disputes Act (Central), therefore, the alleged closure retrenchment was illegal.
9. The Labour Court by the impugned award gave a finding that weaving centre was a distinct undertaking and was dragging the company (including its service trading/marketing centres) to irrecoverable portion due to heavy losses. The Labour Court has given its findings in this regard as under and has held that:-
"Initially the employers started a production centre at Guria later on 10 looms were installed there in 1968 and thus 48 weavers came in employment between 1968-1972. The Guria factory has a total strength of 72 workmen including these 48 weavers whose services have been dispensed with. As per the company, the weaving undertaking at Guria was closed down on account of the fact that it was uneconomical and dragging the company into the quagmire of intolerable looses. This is established by the testimony of S/Sri T.K. Ram Chandhri and V.R. Sharma. This was distinct undertaking regarding weaving, It has been closed since 12.4.1982 and not revived thereafter till date. This is clear from the admission of S/Sri Hori Lal, WW-1 and Sankoo, WW-2."
10. The crux of the matter lies in the question whether the services of the workmen were terminated by way of retrenchment/termination under Section 6-N of the U.P. Industrial Act, 1947 or due to closure of the factory. The position of law in the above two situations is different. Closure has been defined under Section 2(ee) of the U.P. Industrial Disputes Act, 1947 as well as under Section 2(cc) of the Industrial Disputes Act (Centre). The definition of closure in both the acts, are the same is as under:-
Closure.-"Closure" means the permanent closing down of a place of employment or part thereof;
Section 6-N of the U.P. Industrial Disputes Act is as under :-
Section 6-N.-Termination/retrenchment of services without compliance of provisions of Section 6-N of Industrial Disputes Act, 1947 would be illegal, as the provisions of Sections 6-N (a) and (b) of the U.P. Industrial Disputes Act are mandatory. Retrenchment compensation is to be paid before effecting the termination. In case of closure, the condition of payment of retrenchment compensation is not mandatory. Thus, in case of closure, compensation can be paid to the worker even after termination and would not render such termination illegal.
11. There are two distinctive features between closure and retrenchment. Retrenchment and closure, both result in termination of services of workman but termination is retrenchment if the industry continues whereas closure results in termination of services when industry closes down or place of employment or part thereof is closed resulting in loss of service of all the employee due to which industrial activities at the place of employment of the workman come to a halt. The second distinctive feature is that for taking recourse to the Section 6-N of the Act payment of retrenchment compensation is mandatory and is condition precedent but for closure it is not necessary that closure compensation must be paid before or simultaneously with note of closure. It can be given after declaring and restoring to closure as has been held in Hathi Singh Manufacturing Co., 1980 (2)LLJ 1.
The Labour Court examined whether such stoppage of activity would fall within the definition of closure or within the ambit of Section 25FFF of the Industrial Disputes Act. The Labour Court after considering the law on the subject held:-
"Closure" means of the permanent closing down of a place of employment or part thereof. The Supreme Court in Pipraich Sugar Mills Ltd. v. P. Sagar Mills Mazdoor Sabha, 1975(1) LLJ 235 and Indian Hume Pipe Co. v. Workmen, 1969(1) LLJ 242, held about the question of permanent closure. The finding of the Labour Court is that weaving 'Under taking' of the Company has been permanently closed down and only the production centers work continues. The Weaving activity has not been revived: It is not established that this activity has been closed in a malafide manner of as an unfair labour practice for victimization of workers. It has been so done for proper and adequate reasons of economy and to avoid stupendous losses. Closure or stoppage of a part of the business or activity of the employer is legal, in law, relied in this regard on the observations in the case of Hindustan Steel Ltd. v. Workmen, 1973 LIC 461, Workmen of Indian Leaf Tobacco Dev. Co. v. L.T.D. Co. Ltd., 1970(I) LIU 343 and Isha Steel Treatment, Bombay v. Assn. of Engineering Workers, 1987(I) LLJ 427."
12. From the finding of the Labour Court it is clear that:
(a) Weaving undertaking had been permanently closed down which has not been revived.
(b) Malafide victimization of worker could not be established by the Union in the closure by the management.
(c) The closure was permanent and for proper and adequate reasons; and
(d) Closure of part of place of employment i.e., the experimental looms was in accordance with the law.
13. The Labour Court has given a categorical finding of fact based on evidence that the case of Union was not of retrenchment under Section 6-N of the U.P. Industrial Dispute Act but it was a case of permanent closure. The company had not revived the weaving activities, it cannot be disturbed in writ jurisdiction in Article 226 of the Constitution of India until and unless the petitioners can assail the findings as perverse and based on no evidence. This is not the case in the writ petition as workers own witness Hori Lal (WW-1) and Sankoo (WW-2) have stated that closure is permanent and the manufacturing has not revived and findings of the Labour Court cannot be said to be either perverse or not based on any evidence.
14. The Labour Court also has on the basis of the evidence and pleadings of the parties held that there was no illegality in the termination of services of workers and it was in accordance with law even if compensation was not simultaneously offered to the workmen at the time of retrenchment, as their services came to an end due to closure of the factory. It also held that the suggestion thrown on behalf of workmen appears to be only hairsplitting and there can be no escape from the conclusion that the amount of Rs. 4.25 Lakhs had been arranged in advance by the company for payments to these workmen and was available for disbursement on 12.4.82. When the workmen did not accept the payment, the same was remitted by money orders. The bonafides of the employer in offering or tendering amounts are not in doubt and that as a matter of fact notice pay and retrenchment compensation had been offered to the workmen in accordance with the law.
15. There is another aspect of the matter, which cannot be left untouched. Out of 48 workers, 28 workers entered into a settlement with the employer and accepted the termination payments and 5 other workers are said to have resigned. None of these have come forward to deny the settlement or their resignation, which was filed before the Labour Court. The Labour Court in respect of these 33 workers has held all of them were party to the agreement dated 2.9.1982.
16. Majority of the workers have settled their dispute. The agreement was assailed by about 15 workmen, which had been enforced, almost 20 years have passed. The amount awarded by the Labour Court has been held to be a closure income.
17. So far as the taking of prior permission under Section 25N is concerned, the employers have denied that they were employing 650 employees. The Labour Court, after appreciation of the evidence and material on record, came to the conclusion that manufacturing "undertaking" was distinct and separate from the seven trading/marketing centers of the Company. Provisions of Section 25FFF of the Industrial Disputes Act (Central), apply to U.P. Act by virtue of Section 25J of the Act. Retrenchment compensation admissible to them under the provisions of Section 25FFF of the Industrial Disputes Act was offered and the company had withdrawn huge amount for being disbursed to the workmen towards notice pay and retrenchment compensation. One of the workmen took his notice pay and retrenchment compensation on the same day but the others did not accept it and was sent to the workers by money order which also they did not accept.
18. For the reasons given above that the petitioners have failed to establish any illegality or perversity in the award in which findings of facts have been recorded by cogent reasons that termination of the services of the workmen was due to closure of the factory and not due to non-compliance of under Section 6-N of the U.P. Industrial Disputes Act, 1947. This is not a fit case for interference in findings of fact under Article 226 of the Constitution of India. The writ petition is accordingly dismissed. No order as to costs.