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2014 DIGILAW 204 (KAR)

S. Jagadeesh v. Management of Doorvani Cables Pvt. Ltd.

2014-02-20

H.BILLAPPA

body2014
ORDER : H. Billappa, J. 1. In this writ petition under Articles 226 and 227 of the Constitution of India, the petitioners have called in question, the award dated 18.5.2006, passed by the II Addl. Labour Court, Bangalore, in Reference No. 34/2005 vide Annexure-'F'. By the impugned order at Annexure-'F', the Labour Court has rejected the reference. 2. Aggrieved by that, the petitioners have filed this writ petition. 3. Briefly stated the facts are: The petitioners claim to be the employees of Doorvani Cables Pvt. Limited, Mahadevapura, Bangalore 560048. The respondent started business of manufacturing different types of cables in the year 1972. The registered office of the respondent is at Cunningham Road. It is stated, there are two units. One is at Mahadevapura and the other is at M.S. Palya, Bannerghatta road, Bangalore. It is stated, the workmen went on strike on 18.7.1994. The Union made a representation dated 25.11.1994 that the workmen are ready and willing to work from 28.11.1994. The factory was locked and the workmen were not allowed to enter the factory. A dispute was raised in reference No. 54/1995 regarding validity of the lock-out. Thereafter, closure notice dated 9.9.1996 was issued. Some of the workmen were forced to accept the compensation. Therefore, the strength of the workmen was reduced to 57 from 127. 4. It is stated, on 7.10.1997, the State Government refused to refer the dispute with regard to closure and rejected the application for reference. The petitioners filed W.P. Nos. 29021-59/2000 challenging the order dated 7.10.1997. The writ petition was allowed and the State Government Was directed to refer the dispute. It was challenged in W.A. No. 5084/2001 and W.A. Nos. 7345-7382/2001. The writ appeals came to be dismissed on 30.11.2004. 5. Thereafter, the State Government referred the dispute to the Labour Court on 12.4.2005 as per Reference No. 34/2005. The Labour Court by its award dated 18.5.2006 has rejected the reference. Therefore, this writ petition. 6. The respondent has filed statement of objections contending that the writ petition is not maintainable. It is stated, the respondent started its factory at Mahadevapura, Bangalore in the year 1970 and it was engaged in the manufacture of telephone wire and cables. The respondent initially employed about 60-70 workmen. During the year 1994, the strength of the workmen was increased to 123. In the year 1983-84, the workmen used to process approximately 245 tons of copper. The respondent initially employed about 60-70 workmen. During the year 1994, the strength of the workmen was increased to 123. In the year 1983-84, the workmen used to process approximately 245 tons of copper. Thereafter, the production decreased and processed only about 70 tons of copper in 1989-90. Finally, the production went down to 46 tons during 1992-93. Consequently, the respondent Unit was badly hit. The decrease in production was more than 80% and the increase in personnel cost was almost 300%. 7. It is stated, the workmen of the respondent - Company had formed the Union in the name and style "Doorvani Cables Employees' Union". The main reason for decline in production was due to non co-operation, high absenteeism and indiscipline amongst the workmen. This resulted in dissatisfaction of the customers. Due to high cost, the cable became more costly and customers started looking for other sources. The decline in the production and increase in the wage cost and other input cost year after year led to deterioration in the performance of the respondent's establishment. The Unit started making losses year after year from 1990 onwards. 8. The efforts made by the respondent - Management to revive the Unit did not succeed because of the non-co-operation of the workmen. During November 1993, the Bankers came forward with a rehabilitation package which included defacement and moratorium on payment of loans and issue of fresh loans for working capital. The customers were won over with the assurance of better deliveries. Inspite of all efforts, the respondent did not succeed due to non-co-operation of the workmen. On 24.6.1994, the workmen threatened the personal safety of the officers and some of the staff members had even engaged in gheraoing them. The workmen also illegally confined the Chief Executive and the Director of the Company for over ten hours. Subsequently, the workmen went on illegal strike from 18.7.1994 resulting in stoppage of production and default on all commitments made to the customers. The strike continued during August, September, October and November, 1994. All efforts made by the Management remained unsuccessful. The Government prohibited the strike on 29.10.1994. Inspite of that, the illegal strike continued till 28.11.1994. The efforts made by the Management to revive the establishment failed. 9. It is stated, by the time the workmen called off the strike, the financial position of the Unit was totally unviable. All efforts made by the Management remained unsuccessful. The Government prohibited the strike on 29.10.1994. Inspite of that, the illegal strike continued till 28.11.1994. The efforts made by the Management to revive the establishment failed. 9. It is stated, by the time the workmen called off the strike, the financial position of the Unit was totally unviable. The Bankers stopped operation of the account due to defaults in repayment. The customers again lost confidence. The suppliers of raw-materials stopped supporting the Unit as their pending bills could not be cleared. The Unit could not return the raw-material as it was held up by the striking workmen. 10. On 5.4.1995, about 25 workmen with their leaders attacked the Cunningham Road Office with a plan to assault the Chief Executive of the respondent. They came with knives and sticks and physically assaulted the Senior Managers and the staff members. They ransacked the office and removed some papers. The staff and supervisors of the Unit resigned from the services. Therefore, there was no hope of reviving the unit. The Management was helpless and had no option but to liquidate the assets and settle the claims of the Bank, Creditors, Statutory Bodies etc. The Unit ceased to function with effect from 18.7.1994. 11. The Management offered Voluntary Retirement Scheme to all the 123 workmen. Out of 123 workmen, 65 workmen opted for the voluntary retirement and left the service by settling their accounts. Only 58 workmen did not opt for voluntary retirement. In the circumstances, the respondent had no option, but to announce the closure of the Unit of Doorvani Cables Pvt. Ltd., situated at No. 11, Dyavasandra Industrial Estate, Mahadevapura, Bangalore 560048. In fact, the unit has been lying closed since 18.7.1994. Accordingly, the Unit stood closed with effect from 9.9.1996. Consequently, the service of the remaining 58 workmen who were on the rolls is deemed to have been terminated with effect from 9.9.1996. 12. It is stated, the eligible workmen as on 8.9.1996 were informed that they shall be paid one month's notice pay and compensation at the rate of 15 days wages for each year of completed service or part thereof in excess of six months in terms of section 25-FFF of the Industrial Disputes Act, 1947. Accordingly, all the 58 workmen were paid closure compensation and service benefits including gratuity. Accordingly, all the 58 workmen were paid closure compensation and service benefits including gratuity. The closure of the Unit and consequent termination of workmen is proper, legal and justified in law. The closure is real and bona fide. 13. It is stated, the respondent had two separate and distinct Units, one located at Mahadevapura and the other at N.S. Palya, Bannerghatta Road, Bangalore. Both the Units were independent and covered under separate factory licenses. The factory license in respect of Unit No. 1 was surrendered to the Chief Inspector of Factories vide letter dated 15.11.1996. The Management had obtained separate-Central Excise License for Unit Nos. 1 and 2 and has surrendered excise license vide letter dated 9.12.2004. The Management has informed the PF Department, ESI Corporation, Pollution Control Board and Sample Survey of India with regard to closure of Unit No. 1. The products manufactured by the Units are different. There is no functional integrality between the two Units. 14. It is stated, the petitioners had raised dispute challenging the termination and also filed another application questioning the closure. The Government issued Endorsement refusing to refer the dispute. It was challenged in W.P. Nos. 29021-59/2000 before this Court. The writ petitions came to be allowed quashing the endorsement and a direction was issued to the Government to refer the dispute to the Labour Court. The Management preferred writ appeals in W.A. Nos. 5084/2001 and 7345-7382/2001. The writ appeals came to be dismissed on 30.11.2004 with a direction to the State Government to refer the dispute to the Labour Court. The State Government referred the dispute for adjudication on 12.4.2005. The dispute was registered as Reference No. 34/2005. After considering the material on record, the Labour Court has rejected the reference. 15. Before the Labour Court, only 25 workmen were covered under the dispute. The Labour Court considering the material on record has held that there is no functional integrality between the two Units. 16. It is stated, the closure of the Unit at Mahadevapura, Bangalore, was effected from 9.9.1996. One Sri. M. Venkataswamy Reddy was examined as WW 1 on behalf of the workmen. He has admitted that Mahadevapura Unit was never re-commissioned and no manufacturing activities started at any time. Therefore, the contention of the petitioners that the Unit No. 1 was re-started in the name of "Foretel Cables Pvt. Ltd.," is not correct. One Sri. M. Venkataswamy Reddy was examined as WW 1 on behalf of the workmen. He has admitted that Mahadevapura Unit was never re-commissioned and no manufacturing activities started at any time. Therefore, the contention of the petitioners that the Unit No. 1 was re-started in the name of "Foretel Cables Pvt. Ltd.," is not correct. The change of name has taken place with effect from 27.11.2008. The change is only in respect of the existing unit. Admittedly, the Unit at Mahadevapura never re-started. The only Unit which existed was a distinct legal entity. The said Unit was subsequently taken over by different Company known as "Foretel Cables (P.) Ltd.", which was shifted to Peenya Industrial Area at Bangalore. The changing of name has nothing to do with the present case. There is no merit in this writ petition and therefore, it is liable to be dismissed. 17. The learned counsel for the petitioners contended that the impugned award passed by the Labour Court cannot be sustained in law. He also submitted that the petitioners were employees of Doorvani Cables Private Limited at Mahadevapura. Thereafter, a new unit was opened. Some of the employees were sent there. Thereafter, the second unit was shifted to Bannerghatta and one unit was closed. There is functional integrality between the two units. The Labour Court has failed to consider this. The petitioners have not opted for voluntary retirement. Both the units are one and the same. The management should have followed the last come first go principle. There is violation of Section 25-F, G and H of Industrial Disputes Act. The KST, CST and PF numbers of both the units are one and the same. There is no closure of business. Mere closure of one unit does not amount to closure of the entire business. There is unity of ownership and management. The product is common. Therefore, the Labour Court was not justified in rejecting the reference. He therefore submitted that the impugned award cannot be sustained in law. 18. As against this, the learned counsel for the respondent submitted that the impugned award does not call for interference. He also submitted that the Labour Court on proper consideration of the material on record has rightly rejected the reference and therefore, the impugned award does not call for interference. Further he submitted that there were only 25 persons before the Labour Court. He also submitted that the Labour Court on proper consideration of the material on record has rightly rejected the reference and therefore, the impugned award does not call for interference. Further he submitted that there were only 25 persons before the Labour Court. Before this court there are 58 persons. Therefore, the writ petition is not maintainable. He also submitted that Annexure-R1 is the closure notice. The unit stood closed with effect from 9.9.1996. Thereafter, one month's notice was given and compensation has been paid. After settlement, the petitioners have raised industrial dispute. The material on record shows that the closure was genuine. The Labour Court considering the material on record has rejected the reference. There is nothing on record to show that the workmen were transferred from one unit to another unit. Both the units are separate and distinct units. There is no functional integrality between the two units. The finding recorded by the Labour Court cannot be interfered with under Articles 226 and 227 of the Constitution of India. 19. Further he submitted that the unit at Mahadevapura was closed in the year 1996. The other unit was functioning. There is no mutual dependency between the two units. They are independent units. The product manufactured in both the units was different. There was continuous loss and labour unrest at Mahadevapura unit. Therefore, it was closed. The closure is real and genuine and closure compensation has been paid. Seniority for each unit was maintained separately. There is a clear finding recorded by the Labour Court that the closure was genuine and real. In fact the witness has admitted the closure. 20. Placing reliance on the decisions reported in 1996 (73) FLR 1283 and ILR 1996 Kar. page 3651 the learned counsel for the respondent submitted that there is no functional integrality between the two units. 21. Further placing reliance on the decision reported in 1970 (1) LLJ 348 the learned counsel for the respondent submitted that when once there is a closure of business, the motive for the closure is immaterial. 22. Further placing reliance on the decisions reported in 1970 (1) LLJ page 343, AIR 1968 S.C. page 1002, 1987 (1) LLJ page 427 : ( AIR 1987 SC 1478 ), the learned counsel for the respondent submitted that if the closure is real and genuine there can be no direction to re-open. 22. Further placing reliance on the decisions reported in 1970 (1) LLJ page 343, AIR 1968 S.C. page 1002, 1987 (1) LLJ page 427 : ( AIR 1987 SC 1478 ), the learned counsel for the respondent submitted that if the closure is real and genuine there can be no direction to re-open. Last come first go principle do not apply to the genuine closure. Closure is justified even if there is unity of ownership. 23. Further placing reliance on the decision reported in 1963 (3) LLJ 87 the learned counsel for the respondents submitted that there is no contravention of section 25-G of the Industrial Disputes Act. 24. Further placing reliance on the decision reported in 2001 (2) LLJ 112 : (2001 AIR Kant HCR 678) the learned counsel for the respondent submitted that the closure was for valid reasons and it is not bona fide. 25. Placing reliance on the decision reported in AIR 2005 SC 851 , the learned counsel for the respondent submitted that as contemplated under sections 25-FF and 25-FFF the workmen are entitled to receive compensation only and they cannot ask for job. 26. Further placing reliance on the decision reported in (CLR 2004 (3) 1 : AIR 2004 SC 124 ), the learned counsel for the respondent submitted that the closure is legal and valid and all dues have been paid. Therefore, the impugned award does not call for interference. 27. In reply, Sri. S. Jagadeesh, the first petitioner inviting my attention to Annexures G, H and J submitted that the unit is not closed and the respondent is running the unit in the name of Foretel Cables Pvt. Ltd. 28. I have carefully considered the submissions made by the learned counsel for the parties. 29. The point that arises for my consideration is, whether the impugned award calls for interference? 30. It is relevant to note, the petitioners claim to be the employees of Dooravani Cable Private Limited, Dyavasandra Industrial Estate, Mahadevapura, White Field Road, Bangalore-48. The unit has been closed since 9.9.1996. The petitioners have raised dispute in Reference No. 34/2005. The Labour Court by its award dated 18.5.2006 has held that the closure is real and bona fide and the termination is proper. Therefore, the reference has been rejected. The Labour Court has considered the evidence of WW 1 and also the Management. The unit has been closed since 9.9.1996. The petitioners have raised dispute in Reference No. 34/2005. The Labour Court by its award dated 18.5.2006 has held that the closure is real and bona fide and the termination is proper. Therefore, the reference has been rejected. The Labour Court has considered the evidence of WW 1 and also the Management. WW 1 has admitted that both the Units were manufacturing different types of cables. There is no evidence on record regarding transfer of workmen from one unit to another unit. The seniority list of both the Units was different. Therefore, the Labour Court has held that there was no functional integrality between the two units. The closure notice has been issued by the Management on 9.9.1996 as per Ex. M35. The witness examined on behalf of the workmen i.e., WW. 1 has admitted that workmen went on strike from 18.7.1994 and no manufacturing activity was carried on from 9.9.1996. Mahadevapura unit was closed on 9.9.96 and thereafter, it was never re-commissioned. The Management has produced letters addressed to various authorities regarding closure of the Unit. Ex. M35 is the copy of the closure notice. Ex. M37 is the copy of the letter through which the Management has surrendered the registration certificate of Central Excise. Ex. M60 is the copy of the letter dated 15.11.1996 through which the factory license has been surrendered and it is requested to cancel the license. Ex. M62 is the copy of the letter dated 15.11.1996 through which the Regional Provident Authority has been informed regarding closure of Unit No. 1 at Mahadevapura. Ex. M63 is the copy of the letter dated 15.11.1996 addressed to the Regional Director, ESI, regarding closure of the Unit at Mahadevapura. Ex. M64 is the copy of the letter dated 15.11.1996 addressed to Deputy Environmental Officer, Pollution Control Board regarding closure of the Unit. Ex. M65 is the letter dated 23.11.1996 addressed to the Assistant Director, Ministry of Planning regarding closure of the Unit at Mahadevapura. The above documents clearly show that Unit No. 1 at Mahadevapura has been closed. The Management has also produced documents to show that closure compensation has been paid to the workmen. WW 1 has admitted receipt of the closure compensation and other benefits. The above documents clearly show that Unit No. 1 at Mahadevapura has been closed. The Management has also produced documents to show that closure compensation has been paid to the workmen. WW 1 has admitted receipt of the closure compensation and other benefits. The Labour Court has also taken into consideration the balance-sheets Exhibits M39 to 42 and M66 to 75 for the years 1989-90 to 2004-05 which indicate gross loss and decrease in the production. The documents produced by the Management and the evidence on record clearly show that there was no co-operation from the workmen. There was continuous agitation and strike till the closure. The evidence also indicates that the officers of the Management were man-handled and illegally confined. At the time of closure there were 58 workmen. The rest have opted for Voluntary Retirement Scheme. For the 58 workmen who were on the rolls, closure compensation and other benefits has been paid. Therefore, the Labour Court has held that the closure was genuine and bona fide and termination of the workmen was proper. 31. The learned counsel for the petitioners contended that the closure is not genuine and bona fide and the termination of the workmen was not proper. There was functional integrality between the two Units and there is violation of the provisions of the Industrial Disputes Act. 32. It is relevant to note, the factory at Mahadevapura has started in the year 1970. It was engaged in the manufacture of telephone wires and cables. From 1989-1990 onwards the production at Mahadevapura unit has started decreasing and has reached its lowest during 1992-1993. The reason for the decline in production was non-co-operation of the workmen and indiscipline. Consequently, the Banks have started doubting the viability of the Unit. The efforts made by the Management to revive the Unit have failed. On 24.6.1994, the workmen have held out threat to the personal safety of the officers. The Chief Executive and Directors have been illegally confined. The workmen have gone on strike from 18.7.1994 and it has continued till 28.11.1994. The efforts made by the Management to revive the Unit have failed. The Unit has ceased to function from 18.7.1994. Thereafter, the Management has offered voluntary retirement scheme to all the 123 workmen. Out of them, 65 have opted for voluntary retirement scheme. Only 58 have not opted for voluntary retirement schemed. The efforts made by the Management to revive the Unit have failed. The Unit has ceased to function from 18.7.1994. Thereafter, the Management has offered voluntary retirement scheme to all the 123 workmen. Out of them, 65 have opted for voluntary retirement scheme. Only 58 have not opted for voluntary retirement schemed. It is clear, the circumstances were beyond the control of the Management. Therefore, the Management has announced closure of the Unit at Mahadevapura from 9.9.1996. Consequently, the Unit has been closed with effect from 9.9.1996 as per Exhibit M35. The workmen on the rolls have been informed that they would be paid one month's notice pay and compensation at the rate of 15 days' wages for every completed year or part thereof in excess of six months as per section 25-FFF of the Industrial Disputes Act. All the 58 terminated workmen have been paid closure compensation and also the entire service benefits including gratuity as per Exhibit M36. 33. The Unit at Mahadevapura and the Unit at N.S. Palya, Bannerghatta Road, Bangalore, are separate and distinct Units. Both the Units had separate factory license. The license of Unit No. 1 has been surrendered vide letter dated 15.11.1996 as per Exhibit M60. The Management has obtained separate Central Excise License for both the units. The Management has surrendered Central Excise License through letter dated 9.12.2004 as per Exhibit M61. The Management has informed the Provident Fund Department, ESI Corporation, Pollution Control Board and Sample Survey of India regarding closure of Unit No. 1 as per Exhibits M62, M63, M64 and M65. The product manufactured in both the Units is different. Both the Units have different excise ranges. Therefore, there is no functional integrality between the two Units. 34. The Labour Court on appreciation of the evidence on record has held that the Management was justified in closing the Unit and closure is genuine and bona fide. The Management has not violated the provisions of the Industrial Disputes Act. The Unit at Mahadevapura has ceased to function from 18.7.1994 and no manufacturing activities have taken place since 18.7.1994 and ultimately the Unit has been closed from 9.9.1996. Infact, WW. 1 has admitted that no manufacturing activities have taken place. Therefore, the closure is genuine. The materials on record clearly establishes that the closure was genuine and bona fide. The Unit at Mahadevapura has ceased to function from 18.7.1994 and no manufacturing activities have taken place since 18.7.1994 and ultimately the Unit has been closed from 9.9.1996. Infact, WW. 1 has admitted that no manufacturing activities have taken place. Therefore, the closure is genuine. The materials on record clearly establishes that the closure was genuine and bona fide. The Labour Court on proper consideration of the material on record has rightly held that the closure was genuine and bona fide. There is no merit in the contention that the Unit No. 1 at Mahadevapura is running in the name of Foretel Cables Pvt. Ltd. It is stated in the statement of objections that the change of name has come into existence from 27.11.2008. The only Unit that was in existence was at Bannerghatta Road. It has been taken over by the Foretel Cables Pvt. Ltd. and the Unit has been shifted to Peenya Industrial Area. Therefore, there is no merit in the contention that the Unit at Mahadevapura is running in the name of Foretel Cables Pvt. Ltd. The material on record clearly establishes that the unit at Mahadevapura has been closed and the closure was bona fide and genuine. Therefore, the impugned award does not call for interference. There is no merit in this writ petition and therefore, it is liable to be dismissed. Accordingly, the writ petition is dismissed.