HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHY WRIT APPEAL No.833 OF 2005
Date: 04-07-2014
Between:
The workmen of M/s. Calama Process Pumps, Balanagar, Hyderabad, Rep. by Bachu Kumar Singh, S/o.Ranjeet Singh and 16 others. - - - Appellants.
And The Industrial Tribunal-I, Rep. by its Chairman, Chandravihar Building, I Floor, M.J. Road, Hyderabad and 2 others. - - - Respondents.
This Court made the following :
HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHY WRIT APPEAL No.833 OF 2005
JUDGMENT: (Per Hon’ble Sri Justice M. Satyanarayana Murthy)
Aggrieved by the order dated 14.10.2004, passed by a learned single Judge of this Court in Writ Petition No.26467 of 1998, the unsuccessful petitioners therein preferred this Writ Appeal.
2. For the sake of convenience, the parties are referred to as arrayed in writ petition No.26467 of 1998.
3. The petitioners, workmen of M/s. Calama Process Pumps, Balanagar, Hyderabad, challenged the Award dated 17.01.1998, passed in I.D. No.138 of 1996 by the Industrial Tribunal-I, Hyderabad. They raised an industrial dispute in relation to their service. On failure of conciliation, the matter was referred by the Government to the Tribunal under Section 10(1)(d) of the Industrial Disputes Act, 1947 (for short, ‘the Act’) by framing the following question :
“Whether M/s.Calama Process Pumps, Balanagar, Hyderabad is part of Calama Process Industries Group, Bombay and its closure from 13-02-1996 is legal?
If not, to what relief the workers are entitled”
4. M/s. Calama Process Pumps, which is an All India Organization with three manufacturing units at Hyderabad, Ahmedabad and Bombay allegedly, engaged 25 workers in Hyderabad Unit for the last more than 20 years. Some of those employees have put in 7 to 10 years of service by the date of closure of the unit on 13.02.1996. The unit was closed by citing certain reasons. Since there were more than 100 workers in all the three units put together, the management was required to pay terminal benefits under Chapter V-B of the Act. The Conciliation Officer had suggested that payment of three months wages and difference of terminal benefits becomes necessary. The management deposited the amount with the Conciliation Officer and asked the workmen to collect the same. According to the petitioners, the closure was not genuine and it was done with a mala-fide intention to deprive the workmen of their employment.
5. The respondent filed counter-affidavit before the Tribunal inter- alia contending that the reference made by the Government is beyond the scope and ambit of the Act. It was pleaded that the unit at Hyderabad is an independent one having legal entity and identity and that workmen were appointed by the Manager of Hyderabad Unit and its management paid the wages. They stated that there were 24 workmen on the rolls as on the date of closure of the unit at Hyderabad and the respondents firm faced severe financial problems from its inception due to adverse market conditions and recurring increase in the price of raw material, as well as acute shortage of power supply and it was decided to close the unit. They stated that the terminal benefits, as required under Section 25FFF of the Act, were paid through a cheque dated 13.02.1996. The respondent has also stated that it has no branches anywhere, and permission of the Government is not necessary for closure of the unit, since the strength of the employees is less than 100 workmen.
6. During course of enquiry, WW.1 was examined and Exs.W.1 to W.11 were marked on behalf of the petitioners and MWs.1 and 2 were examined and Exs.M.1 to M.36 were marked on behalf of the management.
7. After considering the material available on record and argument of learned counsel for both the parties, the Tribunal passed an award holding that the petitioners are not entitled to the reliefs. The same was questioned by filing the writ petition, and the learned single Judge dismissed the writ petition.
8. In this Appeal it is argued by the learned counsel for petitioners that M/s. Calama Process Pumps, Hyderabad, is part of Calama Industries Private Limited, Bombay and if the workers in both the units are considered as one unit, permission under Chapter V-B of the Act from the Government, for closure of the unit becomes essential, and in the absence of any such permission, the closure becomes illegal.
9. Learned counsel for the respondent supported the findings of the Tribunal and the order passed by learned single Judge of this Court.
10. As seen from the material available on record, M/s. Calama Process Pumps, Hyderabad is a separate unit having its legal entity, and 24 workers were engaged in that unit. Nothing is placed before the Labour Court or this Court, in support of the contention that Calama Industries Private Limited at Bombay is part of Calama Process Pumps at Hyderabad and if the total employees working in both the units i.e., at Bombay and Hyderabad are put together, they are more than 100 in number. In such a case, permission under Chapter V-B of the Act is required from the Government for closure of such unit. The petitioners admit that there are only 25 workers in M/s. Calama Process Pumps at Hyderabad and they were being paid by its Manager, which is a separate limited company registered under the Companies Act, 1956. There is nothing to suggest that M/s. Calama Process Pumps, Hyderabad is controlled by Calama Industries Private Limited at Bombay.
11. Voluminous documentary evidence was produced by the respondent, particularly, Ex.M.21, Memorandum and Articles of Association of Calama Industries Private Limited, and the scheme of voluntary retirement introduced in Bombay unit, which was closed in the year 1995, accepted by the Income Tax Officer vide Ex.M.30 and Exs.M.24 to 29 are the applications of 5 workmen seeking voluntary retirement. They establish that the Bombay unit was not even in existence by the date of closure of the unit at Hyderabad. Even otherwise, it is a separate unit, according Ex.M.21, Articles of Association of Calama Industries Private Limited, if those documents are taken into consideration, including payment of tax etc., under Exs.M.31 to 33, these two units cannot be said to be one unit, so that permission under Chapter V-B of the Act is not required to be obtained from the Government for closure of M/s. Calama Process Pumps at Hyderabad.
12. To treat two units as one unit, there must be functional integrity over the management. The Tribunal relied on a decision in Pratap
[1]
Press Vs. Their Workmen , wherein the Apex Court held that the printing press and news-paper run by the same person can be treated as two distinct and separate units. In similar lines, the Apex Court in
[2]
Indian Cable Company Limited Vs. Its workmen held that when a limited company is carrying on business at various places in India, each branch is an independent unit and Section 25(C) of the Act need not be followed in retrenchment of the employees. Thus, the Tribunal discussed the law laid down by various Courts. However, during argument, learned counsel for the petitioners - appellants did not dispute the law laid down by the Apex Court.
13. In Kirloskar Brothers Limited Vs. E.S.I. Corporation[3] the Apex Court while deciding the similar question, but with reference to provisions of Employees State Insurance Act, 1948, held as follows :
“11. ………………………….. The tests of predominant business activity or too remote connection are not relevant. The employee need not necessarily be the one integrally or predominantly connected with the entire business or trading activities. The true test is control by the principal employer over the employee.”
14. Basing on the principle of law laid down by the Apex Court in Kirloskar Brothers ( 3 supra), Full Bench of this Court in Southern Agencies Vs. Andhra Pradesh Employees State Insurance
[4]
Corporation held as follows at Para 11:
“11. …………………………… The true test is control by the principal employer over the employee. That test alone will be the relevant test.”
15. Though the above decisions relate to the provisions of E.S.I. Act, they are very much relevant for this case. In the case on hand, there is nothing on record to establish that the employees working in M/s. Calama Process Pumps at Hyderabad are under the direct control and supervision of Calama Industries Private Limited at Bombay. Therefore, in the absence of any such control over the employees, the two units cannot be said to be one unit for application of the provisions of Industrial Disputes Act. Since each unit is an independent one, particularly, when M/s. Calama Process Pumps is a limited Company having its Articles of Association, marked as Ex.M.21, it can never be termed as part of Calama Industries Private Limited at Bombay. Therefore, we find no illegality in the conclusion arrived by the Tribunal or by learned single Judge of this Court, warranting interference of this Court. Consequently, the Writ Appeal is devoid of merits.
16. During course of argument, learned counsel for the petitioners – appellants brought to the notice of this Court that retrenchment compensation was not paid. Learned counsel for the respondent submitted that the management has to deposit retrenchment compensation, if not already deposited, within a specified date.
In the result, the writ appeal is allowed, in part, upholding the order of learned single Judge as well as the Tribunal, but directing that the amount which was deposited by the management before the concerned authority towards compensation, as mentioned in individual communications dated 03.01.1997, shall be paid to the employees with 9% interest from 1997, within two (2) months from today, if not already paid.
In consequence, miscellaneous petitions, if any, pending in this appeal, shall stand dismissed. There shall be no order as to costs.
L. NARASIMHA REDDY, J M. SATYANARAYANA MURTHY, J Date: 04-07-2014.
Dsh HON’BLE SRI JUSTICE L. NARASIMHA REDDY AND HON’BLE SRI JUSTICE M. SATYANARAYANA MURTHY 253
WRIT APPEAL No.833 OF 2005
(Judgment of the Division Bench delivered by Hon’ble Sri Justice M. Satyanarayana Murthy)
Date.04.07.2014
DSH
[1] 1960 (1) LLJ 497
[2] 1962 (1) LLJ 409
[3] (1996) 2 SCC 682
[4] 1998 (3) ALD 15 (DB)