1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 5483 OF 1997 M/s.Gupta Steels ...Petitioner vs Maharashtra Labour Union & Anr. ...Respondents Mr.Neel Helekar with Ms.Neha Mehta i/b. M/s.Haresh Mehta & Co. for the Petitioner. Ms.N.D.Buch for Respondent No.1. CORAM : V.M. KANADE, J. DATED ; APRIL 21, 2009 P.C. :- 1 By this petition which is filed under Articles 226 and 227 of the Constitution of India, the petitioner is challenging order passed by the Industrial Court, Pune, dated 11th September, 1997. By the said judgment and order, the Industrial Court was pleased to allow the complaint filed by the respondent herein under Item 9 of Schedule IV of the MRTU and PULP Act and declared that the petitioner 2 company had engaged in unfair labour practice by giving illegal lay-off to the workers who are members of the complainant union and by not paying the wages of lay-off period to the workers. The company was further directed to pay the wages of the lay-off period from 10.2.1993 to the 7 workers who had not settled their claim with the company till their services were legally terminated or till the lay-off was called of. Brief facts are as under :- 2 A complaint was filed by the respondent  Maharashtra Labour Union in the capacity of the Trade Union registered under the Trade Unions Act on behalf of the workers who were members of the union and employees of the petitioner herein. The petitioner herein who is respondent in the said complaint is a partnership firm registered under the Partnership Act and also registered under the Factories Act, 1948. In the complaint, it was alleged that the members of the complainant union had been given lay-off by the company with effect 3 from 10.2.93. It was contended that the company had no right to give lay-off to the members of the union. It was alleged that the employees were not given 100% wages. Accordingly, a notice was sent by the Union on 12.3.93 requesting the company to pay wages to the employees from 10.2.93. The company having failed to pay wages, complaint was filed seeking direction of 100% wages from the company from 10.2.93. 3 In the reply the company resisted the claim of the employees and it was stated that the company had signed the settlement which had become effective from 1.2.93, as a result of which, 8 hours shifts were brought to 5 hours a day as there was no work available with the company. It was alleged that the company was facing critical financial position and was making heavy losses and its total liability in respect of loan and other borrowings from financial institutions was to the tune of Rs.32 lakhs. It was alleged that the company had overdraft 4 to the extent of Rs.14,41,205/- and a term loan of Rs.1,07,000/- was also not repaid by the company. It was further pointed out that the total dues outstanding and payable to the MSEB were to the tune of Rs.48 lakhs and as a result, the MSEB had disconnected electricity supply with effect from 29.1.93. It was submitted that there was closure by the said company and the services of the employees were terminated after disconnection of electricity and therefore, the employees were not entitled to get 100% wages as alleged. It was also contended that 34 workers had received amount towards full and final settlement of their claim and only these 7 workmen had refused to accept the legal dues which the company was willing to pay. The Labour Court, however, came to the conclusion that the company had indulged in unfair labour practice under Items 9 and 10 of the said Act and had given lay-off to its workers. It did not accept the contention of the company that they had declared closure and thereby terminated the services of their employees. 5 4 Shri Helekar, learned Counsel appearing on behalf of the petitioner submitted that the Labour Court had erred in holding that there was no closure by the company and that the workers were laid off with effect from February 1993. He submitted that the complainant s own witness had admitted that the factory had closed since February 1993. He further submitted that majority of the workmen i.e. nearly 34 workmen had accepted the closure of the company as final and had accepted their dues and gave up all their claims against the company. The Union also, it was submitted, had not challenged the closure and it had become final and irreversible. He further submitted that the Industrial Court had patently erred in holding that the notice of closure had not been served on the workmen and closure compensation was not offered before the closure of the company. In support of the said submissions, he relied on various judgments :- 6 1)Management of Express Newspapers (Private) Ltd., Madras, Appellant vs. The Workers and others, Respondents (AIR 1963 SC 569), 2)M/s.Hathising Manufacturing Co.Ltd., Ahmedabad and another v/s. Union of India and another (AIR 1960 SC 923), 3)Management of Hindustan Steel Ltd. vs. The Workmen and others ((1973 3 SCC 564), 4)Pottery Mazdoor Panchayat vs. Perfect Pottery Co.Ltd. And Another ((1979) 3 SCC 762), 5)M/s.Avon Services Production Agencies (P) Ltd. vs. Industrial Tribunal, Haryana and others ((1979) 1 SCC 1), 6)Workmen of the Indian Leaf Tobacco Development Co.Ltd., Guntur, Appellants v. The Management of Indian Leaf Tobacco Development Co. Ltd., Guntur, Respondent (AIR 1970 SC 860), 7)District Red Cross Society vs. Babita Arora and others ((2007) 7 SCC 366), 8)Azad Kamgar Union vs. Metagraphs Pvt.Ltd.,(2001 II CLR 753) and 9)Poonvasi & Ors. vs. Crown Silk Weaving Industries & Ors. (1994 I CLR 1047) 5 The learned Counsel for the respondent, on the other hand, submitted that the Industrial Court had correctly relied on the facts and appreciated the evidence on record and had rightly come to the conclusion that the said action of termination of services of the employees were illegal and it amounted to lay-off. He submitted that the alleged notice of closure was not served on the employees 7 and the said notice also was not brought on record. 6 The short question which falls for consideration before this Court is whether the action taken by the employer is a bonafide and genuine or whether the company had right to close down business in view of the provisions of Section 25-FFA of the Act. In the present case, it an admitted position that in all 41 employees were working in the company and except 7 workmen, all other workmen collected their legal dues which were offered by the management. One other issue also which fall for consideration is whether there is a precondition on the part of the company to pay the legal dues to the workers at the time of termination of their services on the closure of business. In the present case, the Industrial Court has held that it was a precondition on the part of the company to pay the legal dues to their workers when their services were terminated by the company and in the absence of payment of legal dues and in the absence of any 8 legal notice regarding closure, the Industrial Court came to the conclusion that the company had given illegal lay-off to all the workers and the lay-off had continued. Further, there is no dispute that the company had incurred huge losses and was unable to pay their electricity dues and therefore, the electricity connection was disconnected by the MSEB for non-payment of arrears of electricity. It is also an admitted position that the company had signed a settlement which had become effective from 1.2.93 and the eight hours shifts which were in operation upto 1.2.93 were brought down to five hours in a day since there was no work available to the company. Further, it has been brought on record that an amount of almost Rs.50 lakhs was due and payable to various financial institutions. In my view, the Industrial Court had erred in holding that it was necessary to serve closure notice on the workmen and to pay legal dues to their workers as a precondition of closure of business. In the present case, admittedly, less than 50 employees were 9 working in the company. Under Section 25-FFA, a notice of 60 days has to be given to the appropriate Government stating clearly the reasons of intended closure of undertaking. The proviso to the said section clearly states that the section would not apply to an undertaking in which less than 50 workmen are employed. In the present case, admittedly, in the preceding twelve months, less than 50 workmen were employed by the petitioner company. The question, therefore, of giving 60 days notice as contemplated under Section 25-FFA does not arise. 7 Section 25-FFF lays down the compensation which is payable to workmen in case of closure of undertaking. Conjoint reading of Section 25FFA and Section 25-FFA clearly discloses that if less than 50 workmen are working, a undertaking has every right to close down the business in view of the provisions of Sections 25-FFF. Similarly, neither of these provisions lay down that it is necessary 10 to pay the compensation to the workmen before effecting a closure of business. In view of these provisions, in my view, the Industrial Court was clearly erred in holding that in the absence of payment of legal dues and in the absence of legal notice regarding the closure or notice regarding termination of service of the workers, the action of closing down the company amounted to illegal lay-off by the company. In my view, therefore, the Industrial Court has clearly erred in holding that since the copy of the notice issued by the company regarding the closure is not produced on record, there is no proof of closure. This finding recorded by the Industrial Court also is clearly illegal. The finding of the Industrial Court, therefore, that since notice of closure is not produced, a finding had to be given that the company had given illegal lay-off to the workers is patently illegal and incorrect. 8 The petitioner company has brought on 11 record receipts which are at Exhibit -21 in which 34 receipts have been produced before the Industrial Court which clearly showed that the workers had settled their claim with the company as full and final settlement. The Industrial Court has not relied on the said receipts since no date was mentioned on the said receipts. The Industrial Court came to the conclusion that since the dues of the workers might have been settled during the pendency of the case, it does not prove that the action on the part of the company is legal and proper. The Industrial Court, in my view, had clearly erred in not placing reliance on the receipts which were produced by the petitioner company which had clearly showed that the legal dues of the 34 workmen were settled and they were always willing to settle all legal dues of the remaining 7 workmen also, who had, however, not accepted the closure compensation which were offered to them. Looked at from any angle, therefore, the Industrial Court clearly erred in holding that the petitioner company had not proved 12 closure and therefore, it amounted to illegal lay- off by the petitioner company. 9 This Court in the case of Poonvasi and others (supra) has clearly held that notice to the Government of intended closure is not a condition precedent for closure of an undertaking and non- compliance thereof cannot have the effect of rendering the closure illegal and non est. 10 In the result, this petition is allowed. The impugned order is set aside and quashed. Writ Petition is allowed in terms of prayer clause (a). Under the circumstances, there shall be no order as to costs. 11 The writ petition is disposed of. (V.M. KANADE, J.)