Vasanta Kundlik Kumbhare & others v. Industrial Court (Maharashtra), Nagpur Bench & others — 1998 DIGILAW 383 (BOM)

JUDGMENT - DESHMUKH D.K., J :---By this petition, the petitioners who are elected representatives of employees under the Bombay Industrial Relations Act, challenge the order dated 23-12-996 passed by the Industrial Court, Nagpur, dismissing their complaint filed under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. 2. The facts giving rise to the controversy between the parties are that : The workers, whom the petitioners represent, were employees of the respondent No. 2 industry. That industry applied closure under section 25-FFF of the Industrial Disputes Act, 1947 (in short the 'Act') with effect from 17-12-1993 and compensation as required by the provisions of the Industrial Disputes Act on closure was also paid to the workmen. It appears that on 23-6-1995, a notice was issued by the respondent No. 2 to its employees whose services were terminated in 1993 informing that the factory is to be restarted and, therefore, the respondent No. 2 is offering the employees concerned the same employment which the employees was holding at the time of closure as a fresh candidate for a period of three months on trial basis. The employees/workers were called upon to report to the Managing Director within seven days from the date of receipt of the letter. According to the petitioner, pursuant---letter dated 23-6-1995, the employees presented themselves on 2-7-1995. At that time, they were given orders of appointment containing some terms and conditions and they were asked of sign them in token of having accepted the appointment on the terms and conditions mentioned in the order. There were two versions of the order which the employees were supposed to sign. One was the Hindi version and the other was English version. According to the petitioners, the respondent No. 2 asked them to sign the appointment orders but refused to give copy of the appointment orders. It may be mentioned here that the closure applied by the respondent No. 2 in 1993 has been challenged by the petitioners before the Labour Court and that case is still pending consideration before the Labour Court. It may be mentioned here that the closure applied by the respondent No. 2 in 1993 has been challenged by the petitioners before the Labour Court and that case is still pending consideration before the Labour Court. As the employees were denied their right to offer an employment, they moved a complaint before the Industrial Court which was registered as Complaint (ULPA) No. 942/95 making a grievance about the conduct of the respondent No. 2 of not offering them an employment in terms of the provisions of section 25-H of the Industrial Disputes Act. That complaint has been decided by the Industrial Court by its order dated 23-12-1996 and the Industrial Court has dismissed the Complaint. This petition is directed against the order of the Industrial Court dismissing the complaint filed by the petitioners. 3. The learned Counsel appearing for the petitioners, Shri Thakur, submitted that, it is clear from the conduct of the respondent No. 2 in issuing the notices dated 23-6-1995 offering employment to the workers, that the offer was being made under section 25-H of the Industrial Disputes Act. In the submission of the learned Counsel for the petitioners, the petitioners were 'retrenched workers' within the meaning of section 25-H of the Act, and therefore, the petitioners were entitled to an offer of employment from the respondent No. 2. The learned Counsel submitted that under the provisions of section 25-H of the Act, an employer is obliged to make an offer of re-employment to the retrenched workers. The learned Counsel submitted that the offer that was made by the respondent No. 2 was not a clear and an unambiguous offer and therefore, it did not amount to an offer within the meaning of section 25-H of the Act and hence in the submission of the learned Counsel, the respondent No. 2 has breached the provisions of section 25-H of the Act. 4. The learned Counsel submitted that on 2-7-1995 the appointment order that was given to the workers and which they were to sign in token of having accepted it, contemplated that they will be paid the wages which the workers were drawing at the time of closure of the factory or minimum wages existing at that time. According to the Hindi version of the same document, however, the workers were to be paid the minimum wages. According to the Hindi version of the same document, however, the workers were to be paid the minimum wages. In the submission of the learned Counsel, thus, there was a marked difference about the vital, clause regarding the payment of wages in the English and Hindi versions of the appointment orders and, therefore, to say the least, the offer made by the respondent No. 2 was confusing. The offer was not such as could be clearly understood by the workers. In the submission of the learned Counsel, therefore, the offer of re-employment that was made by the respondent No. 2 does not amount to an offer within the meaning of section 25-H of the Industrial Disputes Act and, therefore, the respondent No. 2 is clearly guilty of breaching the provisions of section 25-H of the Industrial Disputes Act. 5. The learned Counsel also submitted that, it is an admitted position between the parties that the Bombay Industrial Relation Act, 1946 is applicable to the Undertaking of the respondent No. 2 and, therefore, in the submission of the learned Counsel, reading of provisions of section 3(8-A) of the Bombay Industrial Relations Act together with the provisions of Model Standing Order No. 10, it is clear that the workers were decidedly entitled to an offer of re-employment. 6. Shri Samarth, the learned Counsel appearing for the respondent No. 2, on the other hand, submitted that, in order to show that provisions of section 25-H can be said to apply. It must be shown that the workmen are retrenched. He submitted that the workmen who lose their jobs pursuant to a closure under section 25-FFF of the Act, cannot be termed as 'retrenched employee's and as, in the submission of the learned Counsel, the workmen have lost their jobs in the present case, as a result of closure in terms of provisions of section 25-FFF, the workmen cannot be termed as 'retrenched workmen' and therefore, in the submission of the learned Counsel, the provisions of section 25-H are not attracted. The learned Counsel submitted that the workmen would be entitled to a benefit of section 25-H only in case it is held that the closure applied by the respondent No. 2 was illegal. The learned Counsel submitted that the workmen would be entitled to a benefit of section 25-H only in case it is held that the closure applied by the respondent No. 2 was illegal. He submitted that the question, whether the closure applied by the respondent No. 2 was legal or illegal is pending consideration before the Labour Court and, therefore, while that question remains pending consideration before the Labour Court the complaint filed by the petitioners could not have been considered by the Industrial Court. 7. The learned Counsel further submitted that, even if it is assumed that the provisions of section 25-H are applicable, what the workmen are entitled to is an offer of re-employment and in the present case, such an offer was made by the respondent No. 2 which was not accepted by the workmen and, therefore, in the submission of the learned Counsel, there is no room to disturb the order by the Industrial Court. 8. Now, if in the light of these rival submissions, the provisions of the Statue and the various judgments relied on by the rival sides, the record of the case is perused, it becomes clear that without prejudice to the submission of the respondent No. 2 that section 25-H is not applicable because the respondent No. 2 had applied closure under the provisions of section 25-FFF of the Act and the entire compensation required to be paid by the respondent No. 2 to the workmen under the provisions of section 25-FFF had been paid. The respondent No. 2 made an attempt to comply with the requirements of section 25-H. As stated above, there is a dispute between the parties as to whether, the offer for re-employment was really made or not and what was really offered by the respondent No. 2, whether it amounts to offer for the purposes of section 25-H. Therefore, before considering whether the offer made by the respondent No. 2 amounts to an offer within the meaning of section 25-H of the Industrial Disputes Act, it is necessary to find out whether the respondent No. 2 was obliged to make such offer. In other words, whether the provisions of section 25-H are applicable where an employer applies closure under the provisions of section 25-FFF of the Act and after applying that closure seeks to reopen his business. 9. In other words, whether the provisions of section 25-H are applicable where an employer applies closure under the provisions of section 25-FFF of the Act and after applying that closure seeks to reopen his business. 9. The learned Counsel of both sides have relied on various judgments of this Court as also the Supreme Court in support of their respective submissions. 10. The learned Counsel for the respondent No. 2, firstly, relied on the judgment of the Supreme Court in the case of (Hariprasad Shivshanker Shukla and another v. A.D. Divelkar and others)1, A.I.R. 1957 S.C. 121, in support of his contention that a workman losing his job as a result of the closure cannot be learned as 'retrenched employee'. The learned Counsel also invited my attention to the judgment of the Supreme Court in the case of (Punjab Land Development and Reclamation Corporation Ltd., Chandigarh v. Presiding Officer, Labour Court, Chandigarh and others)2, (1990) 3 S.C.C. 682 . 11. Now, before referring to the judgment of the Supreme Court in Punjab Land Development and Reclamation Corporation's case (supra) which, in my opinion, is a crucial judgment, it would be useful to refer to the provisions of the Industrial Disputes Act which fall for consideration in this case. It is admitted position between the parties for the purpose of the Complaint filed by the petitioners that the closure was applied by the respondent No. 2 under section 25-FFF of the Act which reads as under :- "25-FFF. Compensation to workmen in case of closing down of undertakings.-(1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of section 25-F, as if the workman had been retrenched : Provided that when the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under Clause (b) of section 25-F, shall not exceed his average pay for three months. Explanation.- An undertaking which is closed down by reason merely of.- (i) financial difficulties (including financial losses): or (ii) accumulation of undisposed of stocks; or (iii) the expiry of the period of the lease or licence granted to it; or (iv) in case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on, shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section. (1-A) Notwithstanding anything contained in sub-section (1), where an undertaking engaged in mining operations is closed down by reason merely of exhaustion of the minerals in the area in which such operations are carried on, no workman referred to that sub-section shall be entitled to any notice or compensation in accordance with the provisions of section 25-F, if.- (a) the employer provides the workman with alternative employment with effect from the date of closure at the same remuneration as he was entitled to receive, and on the same terms and conditions of service as were applicable to him, immediately before the closure; (b) the service of the workman has not been interrupted by such alternative employment; and (c) the employer is, under the terms of such alternative employment or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by such alternative employment. (1-B) For the purposes of sub-section (1) and (1-A), the expressions "minerals" and mining operations" shall have the meanings respectively assigned to them in Clauses (a) and (b) of section 3 of the Mines and Minerals (Regulation and Development) Act, 1957 (67 of 1957). (2) Where any undertaking set up for the construction of buildings, bridges, roads, canals, dams or other construction work is closed down on account of the completion of the work within two years from the date on which the undertaking had been set up, no workman employed therein shall be entitled any compensation under Clause (b) of section 25-F, but if the construction work is not so completed within two years, he shall be entitled to notice and compensation under that section for every (completed year of continuous service) or, any part thereof in excess of six months." 12. It is clear from the provisions of section 25-FFF that under that provision, a workman becomes entitled to a notice and compensation in accordance with the provisions of section 25-F as if the workman had been retrenched. This phrase, "as if the workman had been retrenched" is also to be found in section 25-FF of the Industrial Disputes Act. 13. The Supreme Court, in its judgment, in the case of (Santosh Gupta v. State Bank of Patiala)3, A.I.R. 1980 S.C. 1219, has considered this controversy and in para 5 has observed : "We may rightly say that the termination of the service of a workman on the transfer or closure of an undertaking was treated by Parliament as "deemed retrenchment". The effect was that every case of termination of service by act of employer even if such termination was a consequence of transfer or closure of the undertaking was to be treated as retrenchment for the purposes, etc. Whatever doubts might have existed before Parliament enacted sections 25-FF and 25-FFF about the width of section 25-F there cannot be any doubt that the expression termination of service for any reason whatsoever now covers every kind of termination of service except those not expressly included in section 25-F or not expressly provided for by other provisions of the Act such as sections 25-FF and 25-FFF." 14. It is further to be seen here that whether the workmen of the undertaking, which has applied for closure under section 25-FFF, are to be considered as retrenched workmen for the purpose of section 25-H again fell for consideration before the Supreme Court in its judgment in the case of Punjab Land Development and Reclamation Corporation Ltd., Chandigarh (supra). In para 76 of the judgment, the Supreme Court has observed : "Very briefly stated section 25-FFF which has been already discussed lays down that "where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2) be entitled to notice and compensation in accordance with the provisions of section 25-F, as if the workman had been retrenched." Section 25-H provides for re-employment of retrenched workmen. In brief, it provides that where any workmen are retrenched, and the employer proposes to take into his employment any person, he shall give an opportunity to the retrenched workmen to offer conditions as set out in the section. In our view, the principle of harmonious construction implies that in a case where there is a genuine transfer of an undertaking or genuine closure of an undertaking as contemplated in aforesaid sections, it would be inconsistent to read into the provisions a right given to workman "deemed to be retrenched" a right to claim re-employment as provided in section 25-H. In such cases, as specifically provided in the relevant sections the workmen concerned would only be entitled to notice and compensation in accordance with section 25-F. It is significant in accordance with the aforesaid provisions, the benefit specifically given to the workmen is "as if the workmen had been retrenched and this benefit is restricted to notice and compensation in accordance with the provisions of section 25-F." 15. It is thus clear that the Supreme Court has clearly said that, in case of a genuine closure of an undertaking, the provisions of section 25-H are not attracted. By implication therefore, in case, the closure is not genuine, the provisions of section 25-H would be attracted. Now, it is thus clear that the Supreme Court by its observations quoted above, has excluded operation of section 25-H only in relation to the workmen of an undertaking where a genuine closure had been applied. To my mind, to find out what the Supreme Court means by a genuine 'closure', we have to refer to the provisions of section 25-FFF, which is quoted above. A perusal of these provisions shows that section 25-FFF itself contemplates two types of closures for the purpose of computing the amount of compensation that is required to be paid. In case, a closure is required to be applied on account of the unavoidable circumstances beyond the control of the employer, a different amount is payable as compensation. But, if an undertaking is closed down by reason merely a financial difficulty, etc., then a different amount of compensation is required to be paid. In case, a closure is required to be applied on account of the unavoidable circumstances beyond the control of the employer, a different amount is payable as compensation. But, if an undertaking is closed down by reason merely a financial difficulty, etc., then a different amount of compensation is required to be paid. Though, Shri Samarth, the learned Counsel for the respondent No. 2, submitted that the two types of closures contemplated by section 25-FFF have nothing to do with the genuineness or otherwise of closure and they have nexus with the amount of compensation that is required to be paid, in my opinion, in order to understand the phrase used by the Supreme Court in its judgment in the case of Punjab Land Development and Reclamation Corporation Ltd., Chandigarh, referred to above, viz., "genuine closure", the two types of the closures contemplated by section 25-FFF has to be taken into consideration. To my mind, what the Supreme Court intended to say by the above referred observations in the Punjab Land and Development case, was that, in case the closure applied on account of the unavoidable circumstances beyond the control of the employment, it may be said that the workmen would not be entitled to the application of section 25-H of the Act. If, on the other hand, the closure is applied for financial difficulties, accumulation of undisposed stocks, expiry of the period of lease or license granted to the undertaking, etc., as the closure applied for these reasons can be for a short duration, the benefit of section 25-H should not be denied to the workmen. Otherwise, the provisions of section 25-FFF are capable of being misused for denying the benefit of re-employment to the workmen concerned or to get rid of some whom the employer considers undesirable. In my opinion putting such a construction on the provision, would also advance justice. If an undertaking is required to be closed for a year or two for the reason for financial difficulties faced and that the same undertaking is being reopened within a year or two, in my opinion, there is no justification for denying the workers right given to them under section 25-H. Really speaking, the right given by section 25-H is also not a substantial right. What is provided by section 25-H is that the employer is under obligation merely to offer re-employment. What is provided by section 25-H is that the employer is under obligation merely to offer re-employment. The worker does not get any continuity in service, therefore, in my opinion, obligation of a employer to offer re-employment under section 25-H of the Act in cases of closure which are not brought about due to unavoidable circumstances beyond the control of the employer, would be just. Insofar as the present case is concerned, there is no dispute between the parties that the closure in the present case was applied by the employer due to the financial difficulties and, therefore, the closure, in the present case was of the other kind viz., which was not for reason of unavoidable circumstances beyond the control of the employer. 16. It is further to be seen here that the undertaking was closed in the year 1993 and it was being reopened in June, 1995. As I find that the workmen of the respondent No. 2 were entitled to an offer of re-employment under section 25-H of the Act, it now becomes necessary to find out whether the offer made by the respondent No. 2 can really be termed as a clear and unambiguous offer. It may be pointed out here that what section 25-H contemplates is an offer of re-employment and that offer is to be made to the employees or workmen. Therefore, to my mind, in order that it should be an offer within the meaning of section 25-H, it must be a clear and unambiguous offer. Insofar as the present case is concerned, it is clear that the offer given to the workmen on 23-6-1995 did not contain any condition and what was said was that the workers are being offered a fresh employment for a period of three months on trial basis. However, when the workers approached the Managing Director on 2-7-1995, appointment orders were given to them. All these appointment orders were in two languages. One was in English and the other was in Hindi. Perusal of these orders itself shows that these orders contemplated acceptance of the terms and conditions in those orders by the workmen. As stated above, there is a clear variance in the English and Hindi versions of the appointment orders insofar as the payment to be made to the workers is concerned. Perusal of these orders itself shows that these orders contemplated acceptance of the terms and conditions in those orders by the workmen. As stated above, there is a clear variance in the English and Hindi versions of the appointment orders insofar as the payment to be made to the workers is concerned. It is further to be seen that when the matter was before the Government Labour Officer, again, an offer was made to the workmen. The offer was again in two languages-one in Hindi and other in English. The offer in English language reads that, "We refer to our letter dated 23-6-1995 offering you employment on restarting the factory on the same terms and conditions you were enjoying at the time of closure." Whereas, the Hindi version states that, "in response to our letter dated 23-6-1995, you were called for employment." In the Hindi version, there is no reference to the offer that the employment is being offered on the same terms and conditions as were in exercise at the time of closure. Therefore, the variance between the English and Hindi versions of the communications addressed to the workmen continued even before the Government Labour Officer. 17. It is further to be seen here that, insofar as the complaint filed by the petitioners is concerned, in the complaint, the petitioners have stated : "that, in response to the said letter dated 23-6-1995 offering the workmen re-employment, when the workmen reported for duties, the respondent suddenly came out with a so-called appointment letter and wanted the workmen to sign on them. The respondent also refused to give a copy of the so-called appointment letter to the workmen. That as a matter of fact, the workmen being retrenched workmen, there was no need of an appointment letter." In reply to the complaint, the respondent No. 2 has stated : "It is submitted that in response to letter dated 23-6-1995, only 19 workers came to the establishment on 29-6-1995. They were asked to report on 2-7-1995 for collecting their appointment orders. They were asked to report on 2-7-1995 for collecting their appointment orders. When the said employees were offered appointment orders they refused to sign on them and thus refused to accept the employment offered by the respondent." It is thus clear from the averments made in the complaint and in the reply filed by the respondent No. 2 that there is no dispute between the parties about the events which took place on 2-7-1995. 18. Shri Samarth, the learned Counsel for the respondent No. 2 submitted that, it is not the case of the workmen that they did not sign the letters of appointment because there was variance in English and Hindi versions of the letters of appointment. It is, however, to be seen that the workers have stated in their complaint that the respondent No. 2 wanted them to sign the appointment orders and refused to give them a copy. In this situation, therefore, in my opinion, as the fact about insisting for signatures on the appointment letters is undisputed, to find out whether the offer made by the respondent No. 2 was really an offer, one has to solely refer to the text of the offer. In my opinion, as there is no explanation coming forth from the respondent No. 2 explaining the clear variance in the English and Hindi versions of the appointment letters, in my opinion, it would be reasonable to conclude that the variance that was to be seen in the English and Hindi versions of the appointment letters was deliberate and if somebody concludes from these two versions that it was nothing but an invitation for further litigation between the parties, then it may not be said that conclusion is unreasonable. 19. The learned Counsel for the respondent No. 2 also submitted that as two offers were made, the offer more beneficial to the workmen should have been accepted by the workmen. In my opinion, as the workers were denied copy of the appointment order and they were required to sign the appointment order on 2-7-1995 itself, this submission losses its significance. In these circumstances, therefore, in my opinion, the offer that was made by the respondent No. 2 cannot be termed as a clear and unambiguous offer, and therefore, it has to be said that respondent No. 2 did not comply with the requirements of section 25-H of the Act. In these circumstances, therefore, in my opinion, the offer that was made by the respondent No. 2 cannot be termed as a clear and unambiguous offer, and therefore, it has to be said that respondent No. 2 did not comply with the requirements of section 25-H of the Act. For these reasons, therefore, in my opinion, the Industrial Court was not justified in dismissing the complaint filed by the respondent No. 2. 20. Now, lastly, so far as the submission regarding the complaint ought not to have entertained by the Industrial Court in view of the pendency before the Labour Court questioning the legality of the closure is concerned, in my opinion, the application that was filed claiming benefit under section 25-H of the Act was to be considered on the footing that the closure has been properly applied for the reasons for which the closure has been applied and, therefore, the decision on the complaint need not have waited till the decision in the proceedings where the legality of the closure was challenged. 21. In the result, therefore, the present petition succeeds and is allowed. Rule is made absolute in terms of Prayer Clauses (i) and (ii) with costs. Costs shall be born by the respondent No. 2. 22. At this stage, the learned Counsel for the respondent No. 2 prays that the operation of this order should be stayed for a period of four weeks to enable him to approach the higher Court. The request is opposed by the learned Counsel for the petitioners. He submits that the retrenched employees are out of employment and they are not getting any wages, and therefore, there is no case for staying operation of this judgment. In view of the fact that the workmen are without employment and without wages, in my opinion, it would not be proper to stay the effect of this judgment as prayed for by the learned Counsel for the respondent No. 2. The request is, therefore, rejected. Petition allowed. -----