: 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2009 OF 2004 WRIT PETITION NO.2009 OF 2004 WRIT PETITION NO.2009 OF 2004 1. WMI Cranes Limited Bhandup (West) Mumbai - 400 078. 2. STROM-KRAFT CONTROLS, Mumbai - 400 086 .. Petitioners. V/s. Kush Sitaram Chavan & 41 Ors. .. Respondents. Shri.P.K.Rele, Sr.Advocate with Shri.R.P.Rele i/b. Shri.Piyush Shah for the petitioners. Shri.N.M.Ganguli for the respondents. CORAM : S.C.DHARMADHIKARI, J CORAM : S.C.DHARMADHIKARI, J CORAM : S.C.DHARMADHIKARI, J. DATE : 22ND JANUARY, 2007. DATE : 22ND JANUARY, 2007. DATE : 22ND JANUARY, 2007. ORAL JUDGEMENT :- ORAL JUDGEMENT :- ORAL JUDGEMENT :- : 2 : 1. By this petition under Article 226 of the Constitution of India, the petitioners are challenging the judgement and order dated 11th March, 2004 delivered by the Industrial Court, Mumbai in Complaint (ULP) No.179 of 1997. 2. The complaint had been filed by the respondents herein is not in dispute. Further, that complaint invokes the jurisdiction of the Industrial Court, Mumbai, alleging commission of Unfair Labour Practice covered by Item 6 of Schedule II, Item 5, 9 and 10 of Schedule IV of Maharashtra Recognition of Trade Unions & Prevention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act for short). 3. It would be necessary to notice the allegations and averments in the complaint for appreciating the rival contentions. 4. The respondents-original complainants alleged that the complaint is instituted on the basis that they are employees of one Strom-Kraft Controls (petitioner No.2 herein). They also claim to be employees of the orig.respondent No.2. (petitioner No.1 before this Court). : 3 : 5. The complaint proceeds on the basis that the original first respondent is a partnership firm which is engaged in the business of manufacturing Control Gears and other Electrical Accessories used in cranes. 6. One Gopal Vazirani is impleaded as respondent No.3 to the complaint along with his wife Smt.Padma Vazirani on the basis that they are partners of the petitioner No.2 before me. They are husband and wife. The husband is also Chairman of the petitioner No.1 original respondent No.2. 7. The complaint proceeds to allege that the respondent No.2 i.e. petitioner No.1 before me is a company registered under the Companies Act, 1956 of which one Gopal Vazirani (respondent No.3 to the complaint) is the Chairman. It is alleged that he looks after the business activities of the firm as well. Original respondent No.5 is the Works Manager of the WMI Cranes i.e. petitioner No.1 before me. 8. For brevity’s sake, the petitioners would be referred to as WMI Cranes and Strom-Kraft Controls. The undisputed position is that Strom-Kraft Controls is a : 4 : partnership firm, whereas WMI Cranes is a company registered under the Companies Act. 9. The complanit proceeds to allege that the firm Strom-Kraft Controls was employing more than 100 employees but prior to two years of the filing of the complaint, the number has been brought down to 42. The factory is at Ghatkopar. WMI Cranes is employing more than 350 employees at its factory at Bhandup. It is also employing more than 100 employees in its office. 10. The number of employees working in Strom-Kraft Controls is 42 workers at the factory, 15 staff members and 5 watchmen at the establishment/office. 11. The complaint alleges that the employees in the firm were capable of being transferred to the company and a list of about 14 employees who have been working initially in the firm but later on transferred to the company is also annexed. Similarly, it is alleged that Gopal Vazirani was looking after the overall production and business activities of both the firm and the company. The employees were inter-transferable. The complaint alleges that staff members and the Works Manager (original respondent No.5), initially working for the firm are now : 5 : working for the limited company. Thus, there is absolute functional integrality, common management and general unity as far as the firm and the limited company is concerned. 12. Even the employees from the factory are transferable. However, it is alleged that by a letter dated 21st April, 1996, the firm informed the employees working in the factory that w.e.f. 21st May, 1996 the activities of the firm would be closed down and the reason assigned for the same was tough competition in the market. It is alleged that these reasons are false, mala fide and untenable in law. 13. It is alleged that the complainants are members of a Trade Union having its office at Kandivali (West), Mumbai and the said union filed a complaint of unfair labour practices under Items 9 and 10 of Schedule IV of MRTU & PULP Act before the Industrial Court, Mumbai being Complaint (ULP) No.689 of 1996. They impugned the illegal and mala fide lock-out in the guise of closure notified by the respondents under their notice dated 21st April, 1996. 14. It is alleged that at the relevant time, the firm was employing more than 50 workmen including clerical : 6 : staff but there is complete non compliance with the requirement of Sec.25-FFA of the Industrial Disputes Act, 1947. The closure is therefore illegal on this ground also. 15. According to the complainants, the company and the firm were jointly employing more than 420 workmen in their factories and therefore, Chapter VB of the Industrial Disputes Act, 1947 was applicable. Therefore, requirement of permission prior to effecting the closure was necessary and even that is not obtained. 16. It is alleged that the first respondent firm has not closed down its activities despite the above notice. The manufacturing activities are still going on at different places. The partnership firm was also not dissolved. For all these reasons, the closure of the business by the firm is mala fide and illegal. In fact, if the business operations are still continuing, then, this amounts to nothing but an illegal lockout. Such a lockout could not have been effected without compliance with the provisions of the Industrial Disputes Act, 1947 and the MRTU & PULP Act. In such circumstances, the complainants be allowed to resume their duties. : 7 : 17. In Para 3 (h) of the complaint this is what is alleged :- "(h): The Complainants state that the said Union, Maharashtra Association of General Workers challenged the illegal and malafide lockout by filing complaint before the Industrial Court and during the pendency of the complaint the union advised the Complainants to accept their terminal dues. Accordingly, the Respondents paid terminal dues of the employees by two installments. The Respondents paid the First installment of the terminal dues on 20th May, 1996 and the Second installment was paid on 27th June, 1996. The Complainants state that the Respondents 3 to 5 gave an assurance in the presence of the Complainants and the President of the said union that all the employees shall accept their terminal dues and after three months from the acceptance of the terminal dues all the employees working in the factory and office of the 1st Respondent firm would be : 8 : absorbed as fresh employees in the employment of the 2nd Respondent company and the 2nd Respondent would give work to all the Complainants commensurate to the designations and skill the employees had in the factory of the 1st Respondent firm and wages would also be protected after absorbing the Complainants in the employement of the 2nd Respondent company. The Complainants state that as per the assurances given by Respondent No.3 to 5 and the President of the Union the Complainants accepted the terminal dues in two installments. The Complainants state that all the clerical, supervisory staffs working in the factory and office of 1st Respondent firm are now working for Respondent No.2 on the same grades and wages. The Respondent No.5 who was the employee of 1st Respondent firm is now also working as Works Manager of Respondent No.2 on the same grade and wage scale. The Complainants state that as the Respondents No.3 to 5 assured them that after three months of accepting their : 9 : legal dues they would be absorbed on the same grade and wage scale in the 2nd Respondent company they accepted their terminal dues and after three months they repeatedly approached the Respondent No.3 and 4 and requested them to implement the settlement/agreement and assurances given by them at the time of paying the terminal dues to the Complainants. The Respondent No.4 time and again told the Complainants that she would consult her husband, Respondent No.3 and accordingly inform the decision to the Complainants and called the Complainants to her residence after every 15 days. The Complainants state that they were forced to run from pillar to post for the last 6 months and the Resondent Nos. 3 and 4 kept on promising but they failed to implement their assurances, settlement and agreement. The Complainants state that they have now lost faith in Respondent Nos.3 and 4 accordingly they approached their union to take up their matter before appropriate Court, but the union expressed its : 10 : inability to do anything in the matter. Therefore, the employees are filing the present complaint in their individual capacity." 18. Although, it is not disputed that the terminal dues were paid to the complainants but it is alleged that while making the said payment, the respondents obtained the signatures of the complainants on a stamped receipt and some typed papers. These were signed by the complainats in token of the receipt of payment and as instructed by their union. It is alleged that the complainants are not aware of the contents of the said letters as also receipts as both are in English language. In Para 3 (j) of the complaint, it is alleged that the complainants were under the bonafide belief that the respondents would absorb them in the employment. It is alleged that some staff members were allowed to join the duties of the company and their services were absorbed accordingly. However, the assurances as far as the workmen and the complainants specifically are not abided by the original respondents. 19. In the light of the aforesaid contentions and allegations, the complainants impugned the notice dated : 11 : 21st April, 1996 and the closure according to them of the activities after 21st May, 1996 is bad on the grounds more specifically set out in the complaint. It is alleged that such a treatment was given to the complainants only because they organised themselves and formed a union and therefore the action of the petitioners amounts to commission of unfair labour practices under the Items more specifically referred to by me in the foregoing paragraphs. 20. It is on these allegations that the complainants prayed that the Industrial Court should declare that the petitioners before me have engaged in unfair labour practices under Items 6 of Schedule II, Items 9 and 10 of Schedule IV of MRTU & PULP Act and directions be issued to withdraw the said unfair labour practices and cease from indulging in the same. The lockout being illegal should be directed to be raised or lifted and the complainants be allowed to resume their duties is also the prayer. These are the complainants allegations. The complaint was filed on 28th February, 1997. 21. It is not necessary for me to refer to the contents of the application for condonation of delay and interim relief. : 12 : 22. At this stage, it would be proper to refer to the Written Statement which is filed on behalf of the firm Strom-Kraft Controls. As far as the employment of the complainants with this Storm-Kraft Controls, which is a partnership firm, is concerned, the relationship of employer-employee at the relevant time was not denied. However, it was specifically contended in the Written Statement and more particularly in Para 2 thereof that the firm was finding it difficult to survive in the light of the cut throat competition. Therefore, the manufacturing activities were decided to be closed down w.e.f. 21st May, 1996. A Notice was displayed on 21st April, 1996 to that effect. The workmen were clearly informed that their services would not be required and they stand terminated w.e.f. 21st May, 1996. Due to closure of the manufacturing activities, they were told to collect their legal dues. The firm sent a copy of the notice to the Commissioner of Labour, Mumbai as well as President of the Maharashtra Association of General Workers, a Union of which the complainants and the workmen are members. 23. The specific case in the Written Statement of the firm is that upon receipt of the notice dated 21st April, 1996, the President of the Union approached the partner of : 13 : the respondent firm on 10th May, 1996 and requested him to withdraw the said notice of closure. However, the President of the Union was informed about the events leading to the notice and the reasons for issuance of the same. There was prolonged discussion after which a Voluntary Retirement Scheme was framed. The minutes of the meeting dated 10th May, 1996 would reflect the discussion and the scheme. Thereafter, a notice was displayed on 14th May, 1996. The said notice gave the details of the scheme of Voluntary Retirement, the monetary benefits which the workmen will be getting if they accepted the same and the time within which the amounts would be disbursed. It is pointed out that after the notice was displayed, all workmen of the firm approached it and gave letters stating that they are opting for Voluntary Retirement under the scheme. They requested the firm to accept their applications in that behalf. The firm, accordingly informed each of these workmen that their applications for retirement under the scheme are accepted. In two instalments, the legal dues were paid. The first instalment was paid on 21st May, 1996 and the second was to be paid on 25th June, 1996. That date was extended till 5th July, 1996 on the request of the President of the Union. : 14 : 24. It is, therefore contended that in view of the workmen having retired under the scheme, the notice dated 21st April, 1996 regarding closure of manufacturing activities was kept in abeyance. All workmen who applied for payment of gratuity were paid the same and all 42 workmen have retired under the scheme. They issued a receipt in favour of the petitioner No.2 firm after availing of the benefits of the scheme. 25. It is in these circumstances that the firm contended that it had not committed any unfair labour practices. It proceeded to deny each and every allegation and averments in the complaint. As far as the allegation in Para 3 (a) are concerned, they were specifically denied in the Written Statement. The allegations in Para 3 (b) of the complaint were also denied. A reference can be made to Para 13 of the Written Statement in that behalf. At this stage itself, it would be advantageous to reproduce the contents in Para 13 of the Written Statement in so far as the assurances of absorption of the employees/workmen in the limited company. The said denial reads thus : - "13: It is denied that the Respondent Nos.3 to 5 gave assurances in the presence of the : 15 : Complainants and the President of the said Union that the employees shall accept their terminal dues and after 3 months thereon all the employees working in the factory and of the Respondent Company would be absorbed as fresh employees in the employment of the Respondent No.2 and the Respondent No.2 would give the work to all the complainants commensurate to the designation and services of the employees in the factory of the Respondents Company and the wages would also be protected after absorbing the Complainants in the employment of the respondent No.2 as alleged." 26. The firm therefore denied that it has to reinstate anybody. According to it, there is no unfair labour practice much less the one alleged under the Items referred to above. The Written Statement which was filed on 15th June, 1996 on behalf of the firm proceeds on the above basis. 27. The Written Statement of the limited company is also on record. The company had categorically raised the issue of maintainability of the complaint on the ground that as far as the company is concerned, there is no employer employee relationship between the complainants : 16 : and the original respondent No.2 company. The company has distinct identiy of its own in law. A partnership firm and a limited company cannot be equated with each other. There is no question of the company being obliged to take into services anybody. None of the Items of the Schedules to the MRTU & PULP Act are attracted. In Para 13 of the Written Statement, the company pointed out the nature of its business, number of workmen employed, the location of its factory and other details. The company does not deny that Gopal Vazirani is its Chairman and said Gopal Vazirani is also a partner of the firm M/s.Strom-Kraft Controls. However, the nature of activities carried out by the company and the firm are entirely different. It is denied by the company that there is a functional and financial integrality. The workmen of the firm and the company are doing distinct work. No workmen of the firm has ever worked with the limited company. Their service conditions are different. The firm has its own management. The company had never employed anybody out of 42 workmen/complainants. There is no question of any master and servant relationship being in force. All allegations in the complaint have been denied. 28. It is also pointed out in the Written Statement (Para 13) by the company that there is no assurance as far : 17 : as the respondent No.2 i.e. the limited company is concerned. Thus, neither the question of any direction being issued by the Court to absorb the employees/complainants with the limited company arises nor they being permitted to resume their duties. 29. It was clarified in the Written Statement that some staff members of the firm may have been absorbed by the company but there is no question of absorption of the workmen at all. For all these reasons, it was prayed that the complaint be dismissed. 30. The allegations in the complaint and the denials so also pleas in the Written Statement raised several issues and therefore the Industrial Court framed the same accordingly. 31. Thereafter, oral evidence was recorded. As far as the complainants are concerned, one Kush Chavan stepped into the box so also one Vinod Acharya. They have been cross examined at length. 32. As far as the respondents before the Industrial Court are concerned, one Gopal Vazirani stepped into the witness box and he was cross examined by the complainants’ : 18 : advocate. 33. During the course of recording all these depositions, number of documents were taken on record and exhibited. These include the minutes of meeting so also the notice. 34. After the evidence was closed, the learned Member of the Industrial Court heard oral arguments and by his judgement and order referred to above he held that the petitioners are guilty of the unfair labour practices enumerated in his order and therefore the complaint is liable to be allowed. After allowing the same, the learned Member directed both the petitioners to take back the complainants in the employment as fresh employees in either of their establishments within the period of two months from the date of his order. 35. Writ Petition No.2009 of 2004 is filed by the firm and the company to assail this order, whereas Writ Petition No.2449 of 2004 is filed by the original complainants to challenge that part of the order of the Industrial Court whereby it directs, both, i.e. the firm and the company to reinstate the complainants. Shri.Ganguli, learned Advocate appearing for the : 19 : respondents states that the original complainants had pressed for reinstatement of their services with the firm and the directions as issued by the Industrial Court be modified accordingly. 36. Shri.Rele, learned Sr.Advocate appearing for the company and the firm in Writ Petition No.2009 of 2004 has firstly contended that the judgement of the Industrial Court is vitiated by serious errors of law apparent on the face of the record. He submits that the learned Member has completely misdirected himself in as much as by his judgement and order, he has created an employer employee relationship when none exists on facts and in law. He submits that the company cannot be told or directed in law to reinstate anybody. There is no question of the compnay being directed to absorb the original complainants. He submits that the complainants have referred to the notice dated 21st April, 1996. That notice clearly sets out the facts and circumstances leading to the closure of the manufacturing activities of the firm w.e.f. 21st May, 1996. Shri.Rele submits that it is not as if the complainants are unaware of the scheme of Voluntary Retirement because they have referred to the minutes of the meeting held on 10th May, 1996. He submits that Shri.Prasanna Pawar is the President of the Maharashtra : 20 : Association of General Workers. This union represented all workmen of Strom-Kraft Controls and at a meeting of its President with the firm, the Voluntary Retirement Scheme was proposed and discussed and later on approved and accepted. Thereafter, Shri.Rele has invited my attention to Cl.(j) of the minutes of meeting which records that the workmen shall have no right of reinstatement or re-employment with the firm. He submits that the minutes, thus cull out a scheme of Voluntary Retirement, the duration of the same and the benefits thereunder. The minutes are not at all challenged. They are in fact signed by both the representative of the firm Smt.Padma Vazirani and Shri.Prasanna Pawar. Thereafter, Shri.Rele has invited my attention to the notice dated 14th May, 1996 and the receipts which are also on record of the proceedings before the court below. He submits that the applications were made by the workmen for Voluntary Retirement which have been accepted by the firm. The employees concerned have been retired from the services with effect from the date of receipt of the communication of the company in that behalf. He also invites my attention to the contents of the receipts which have been executed by the workmen in favour of the company acknowledging and accepting the receipt of the various sums pursuant to this Voluntary Retirement Scheme. He : 21 : submits that this Court must consider the averment in Para 3 (h) of the complaint and the so called assurance which has been given for absorbing the services of the complainants in the backdrop of the receipt. He submits that the Industrial Court has proceeded upon conjectures and surmises when the averments in the complaint are absolutely vague. They are silent with regard to the relevant and pertaining details. Nowhere in the complaint, it is mentioned that who gave the assurance and on what date leave alone the nature of the assurance. On the premise of such vague allegations, there could not have been any direction to reinstate the employees/original complainants. He submits that there is no finding in the entire judgement and order with regard to any functional integrality. In this behalf, he has invited my attention to the finding of the Industrial Court in Para 18 of its judgement. He submits that there is absolutely no assurance and the evidence which is on record has been completely brushed aside. He submits that from the cross examination of the witnesses examined by the complainants, it is clear