Civil Appeal No 556 of 1966
283 Appeal by special leave from the order dated August 13 1964 of the Industrial Tribunal Andhra Pradesh in Industrial Dispute No 41 of 1963
MK Ramamurthi Shyamala Pappu and Vineet Kumar for the appellants
K Srinivasamurthy and Naunit Lal for the respondent
The Judgment of the Court was delivered by Bhargava J
This appeal by special leave has arisen out of an award made by the Industrial Tribunal Andhra Pradesh at Hyderabad in an industrial dispute between the respondent the Imperial Tobacco Co as well as exporting the tobacco to various hereinafter referred to as the Company and its workmen
Admittedly the Company is an associate of the Imperial Tobacco Company Ltd and the main business carried on by the Company is that of purchasing tobacco of all varieties and qualities stemming grading and packing of tobacco and supplying it to the Imperial Tobacco Co as well as exporting the tobacco to various foreign countries in the world
The Company has been carrying on this business for about 40 years and handles almost 35 per cent of the tobacco grown in the State of Andhra Pradesh
For the work of stemming grading and packing tobacco the Company has two factories one at Anaparty in East Godavari District and the other at Chirala in Guntur District
In connection with this business the Company in the year 1962 was maintaining 21 depots where according to the workmen the appellants the Company was carrying on the work of collecting tobacco though the Company s case was that the principal work done at these depots was that of handling the tobacco purchased at other places and only included the work of purchasing tobacco on a small scale
On 16th August 1963 the Company gave a notice to the Union of the appellant workmen that 8 out of 21 depots mentioned therein would be closed down with effect from 30th September 1963
Thereafter an industrial dispute was raised by the workmen which related to the closure of these 8 depots as well as to a number of other demands including revision of basic wages and dearness allowance additional discomfort allowance etc
The State Government by its Order dated 14th November 1963 referred the dispute for adjudication under section 101d of the to the Industrial Tribunal Hyderabad
The first issue which was referred for adjudication was as follows  How far the demands of the union viz i that no depot which worked during 1962 season should
be closed and ii that no workman who worked in 1962 season should be retrenched are justified  284 There were ten other issues but we need not reproduce them as we are not concerned with them in this appeal
In the proceedings for adjudication the Company took a preliminary objection that the closure the depots was a managerial function that there could not be an industrial dispute over such closure that the Government therefore had no power to refer this issue for adjudication and that the Tribunal also had no power to adjudicate on it
Thereupon the Tribunal framed a preliminary issue as to whether the employer is justified in alleging that Issue No 1 framed by the Government cannot be deemed to relate to an industrial dispute and as such whether the Government had the power to refer it for adjudication
The Tribunal decided this preliminary issue by giving an interim award on the 13th August 1964
The preliminary objection was allowed and a further direction was made that the effect of this decision on Issue No 1 will be decided later after hearing the parties Thereafter the Tribunal proceeded to hear the reference on this question as well as on all other issues referred to it and  ultimately gave its award on 11th December 1964
In that award both the parts of issue No 1 were decided against the workmen
The workmen have now come up in this appeal against the interim award dated 13th August 1964 as well as against the final award insofar as it relates to issue No 1
The decision given by the Tribunal in the interim award holding that the reference covered by issue No 1 was not competent has been challenged by learned counsel for the appellants on the ground that the closure of a depot does not amount to closure of business in law and since the same business was continued by the Company at at least 13 other depots the closure of the 8th depots in question was unjustified
For the proposition that the closure of the depots did not amount to closure of business learned counsel rolled on the views expressed by this Court in Pipraich Sugar Mills Ltd vs Pipraich Sugar Mills Mazdoor Union1 where the Court explained the reason for the decision given by the Labour Appellate Tribunal in the case of Employees of Messrs India Reconstruction Corporation Limited Calcutta vs Messrs India Reconstruction Corporation Ltd Calcutta2
It however appears to us that this question raised on behalf of the appellants is totally immaterial insofar as
the question of the jurisdiction of the Tribunal to decide the first part of issue No 1 is concerned
The closure of the 8 depots by the Company even if it is held not to amount to closure of business of the Company cannot be interfered with by an Industrial Tribunal if in fact that closure was genuine and real
The closure may be treated as stoppage of part of the activity or business of the Company
Such stoppage of part of a 1 2 63
285 business is an act of management which is entirely in the discretion of the Company carrying on the business
No Industrial Tribunal even in a reference under section 101d of the  can interfere with discretion exercised in such a matter and can have any power to direct a Company to continue a part of the business which the Company has decided to shut down
We cannot possibly accept the submission made on behalf of the appellants that a Tribunal under the has power to issue orders directing a Company to reopen a closed depot or branch if the Company in fact closes it down
An example may be taken of a case where a Bank with its headquarters in one place and a number of branches at different places decides to close down one of the branches at one of those places where it is functioning
We cannot see how in such a case if the employees of that particular branch raise an industrial dispute the Bank can be directed by the Industrial Tribunal to continue to run that branch
It is for the Bank to decide whether the business of the branch should be continued or not and No Bank can be compelled to continue a branch which it considers undesirable to do
In these circumstances it is clear that the demand contained in the first part of Issue No 1 was beyond the powers and jurisdiction of the Industrial Tribunal and was incorrectly referred
for adjudication to it by the State Government
of course if a Company closes down a branch or a depot the question can always arise as to the relief to which the workmen of that branch or depot are entitled and if such a question arises and becomes the subject matter of an industrial dispute an Industrial Tribunal will be fully competent to adjudicate on it
It is unfortunate that in this case when dealing with the preliminary issue the Tribunal expressed its decision in the interim award in general words holding that Issue No 1 as a whole was beyond its jurisdiction
If the reasoning in the interim award is taken into account it is dear that the Tribunal on that reasoning only came to the conclusion that it was not competent to direct reopening of the 8 depots which had been closed so
that the Tribunal should have held that the first part of Issue No 1 only was outside its jurisdiction
So far as the second part of that issue is concerned as we have said above it was competent for the Tribunal to go into it and decide whether the claim of the workmen that they should not be retrenched was justified
On an examination of the interim award and the final award we however find that the Tribunal in fact did 1 286 do so
The case reported in Pipraich Sugar Mills Ltd1 was also concerned only with the question as to the relief that can be granted to workmen when there is closure of a business
No question arose either before the Court or in the cases considered by the Court of an Industrial Tribunal making a direction to the employers to continue to run or to reopen a closed branch of the business
The Labour Appellate Tribunal in the case of Employees of Messrs India Reconstruction Corporation Ltd Calcutta1 was dealing with the question of retrenchment compensation as a result of the closure of one of the units of the company concerned and it held that the workmen were entitled to retrenchment compensation in accordance with law
This Court in the case of Pipraich Sugar Mills Ltd 2 only explained why the Labour Appellate Tribunal was justified in granting retrenchment compensation in that case
The opinion expressed by the Court was that though there is discharge of workmen both when there is retrenchment and closure of business the compensation is to be awarded under the law not for discharge as such but for discharge on retrenchment and if as is conceded retrenchment means in ordinary parlance discharge of the surplus it cannot include discharge on closure of business
It was in this context that the Court went on to add that in the case of Employees of Ms India Reconstruction Corporation Ltd Calcutta 1  what had happened was that one of the units of the Company had been closed which would be a case of retrenchment and not a case of closure of business
It may be noted that at the time when this decision was given section 25FF and section 25FFF had not been introduced in the  and the only right to retrenchment compensation granted to the workmen was conferred by section 25F
It was in the light of the law then prevailing that the Court felt that the decision of the Labour Appellate Tribunal in the case of Employees of Ms India Reconstruction Corporation Lid1 granting retrenchment compensation
could be justified on the ground that the services of the workmen had not been dispensed with as a result of closure cf business but as a result of retrenchment
That question does not arise in the case before us
Since then as we have indicated above section 25FF and section 25FFF have been added in the  and the latter section specifically lays down what rights a workman has when an undertaking is closed down
In a case where a dispute may arise as to whether workmen discharged are entitled to compensation under section 25F of section 25FFF it may become necessary decide Whether the closure as a result of which the services have been dispensed with amounts to a closure in law or not
In the case before us it was admitted by 1earned counsel for both parties that the workmen who have been discharged as a result of the closure of the 8 depots 1 2 287 of the Company have all been paid retrenchment compensation at the higher rate laid down in section 25F so that in this case it is not necessary to decide the point raised on behalf of the workmen
In connection with the second part of issue No 1 it was also urged by learned counsel for the appellants that the business which was being carried on at the 8 depots had not in fact been closed down and had merely been transferred to buying points situated in and around the closed depots including two new buying points established by the Company after the closure of these 8 depots
The argument was that the workmen were old employees who had served the Company for a long time and were entitled to certain benefits as a result of that long service
The Company closed these 8 depots mala fide with the object of depriving the workmen of those benefits
and merely altered the nature of the business by closing the depots and carrying on the stone business at the buying points
This point urged by learned counsel cannot however be accepted in view of the findings of fact recorded by the Tribunal
The Tribunal examined in detail the allegations made on behalf of the workmen in this respect
In fact the interim award mentions that for the purpose of deciding the preliminary issue and the first issue evidence was recorded by the Tribunal for more than a week and arguments of Advocates of the parties were heard for even a longer period
After examining the evidence the Tribunal came to the conclusion that the stoppage of the work at the depots was genuine and that the work which was being carried on at the depots had not been transferred to the buying points established by the Company
The closure of the business at the depots was necessitated by reasons of expediency inasmuch as the Company had to reduce its purchases in its quest for quality and its desire to run the business economically
The principal work which used to be done at the depots was not that of purchasing tobacco but of handling it and that work was not transferred at all to any buying point
The Tribunal thus came to the finding that the closure of these depots was real and genuine and that the suggestion of the appellants that only a device was adopted of carrying on the same business in a different manner had no force at all
if the same business had been continued though under a different guise the claim of the workmen not to be retrenched could possibly be considered by the Tribunal but on the finding that there was a genuine closure of the business that used to be carried on at the depots no question could arise of the retrenchment being set aside by the Tribunal
The Tribunal could not ask the Company to re employ or reinstate the workmen because there was no business for which the workmen could be required
In these circumstances all that the workmen 288 could claim was compensation for loss of their service and in that respect as we have indicated above the workmen have received adequate compensation
Consequently the appeal has no force and is dismissed but we make no order as to
costs
VPS Appeal dismissed
L2 SCI69 2500 6 I 70 GIPF


Summary:
The respondent was carrying on the business of purchasing handling and selling tobacco
In 1962 it was maintaining 21 depots where the principal work was handling tobacco and the work of purchasing was done on a small scale
In 1963 it gave notice that 8 out of the 21 depots would be closed down
An industrial dispute was raised by the workmen and the demands off the workmen namely 1 that no depot worked during 1962 should be closed and 2 no workman who worked in 1962 should be retrenched were referred to the Industrial Tribunal
The Tribunal held that the stoppage of work at the 8 depots and the closure was genuine and real that there was no transfer of the work that was being carried on at those depots to other buying points established by the respondent and repelled the suggestion of the appellants that it was a mala fide device adopted for carrying on the same business in a different manner and decided both the issues against the workmen
In appeal to this Court HELD  1 A genuine closure of depots or branches even though it did not amount to
closure of the business could not be interfered with by an Industrial Tribunal and therefore the issue was incorrectly referred by the Government for adjudication by the Tribunal
The closure is stoppage of part of the activity or business of the respondent
Such stoppage is an act of management which is entirely in the discretion of the respondent and n0
Industrial Tribunal can interfere with the discretion exercised in such a matter or can have the power to direct the respondent to continue a part of the business which it had decided to shut down
or direct it to reopen a closed depot or branch
284 G H 285 A C 2 On that finding no question could arise of the retrenchment being set aside by the Tribunal because there was no business for which the workmen would be required
All that the workmen could claim was compensation for loss of the service and in a case where a dispute may arise as to whether workmen discharged are entitled t0 compensation under section 25F or section 25FFF of the  it may become necessary to decide whether the closure amounts to closure in law or not
But in the present case the workmen have all been paid retrenchment compensation at the higher rate laid down in section 25F and therefore received adequate compensation
287 F H 288 A