WP/2988/1998 １ IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2988 OF 1998 S.B. Patole & Ors. ... Petitioners V/s. Fujitsu ICIM Ltd., Pune & Ors. ... Respondents Ms. N.D. Buch with Mr. H.D. Buch and Mr. S.K. More for the Petitioners. Mr. K.S. Bapat with Mr. T.R. Yadav for Respondent No.1. CORAM :SMT. NISHITA MHATRE, J. RESERVED ON :15 TH SEPTEMBER, 2010. PRONOUNCED ON:29 TH OCTO BER, 2010. JUDGMENT: 1. This Writ Petition has been filed by 24 workmen who are employed with the respondent No.1-Company. However, out of these 24 workmen, most of the workmen have settled their disputes with the respondent No.1-Company. The Writ Petition is now prosecuted only by petitioner Nos.1, 3, 4 and 17 to 24. Aggrieved by the order dated 5th May, 1998 of the Industrial Court, Pune in dismissing the Complaint (ULP) No. 165 of 1997 filed by the petitioners, (hereinafter referred to as the workmen), under Section 28 read with Items 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, (for short WP/2988/1998 ２ “the MRTU & PULP Act”), the workmen filed the present Writ Petition. 2. The respondent No.1, (hereinafter referred to as “the Company”), manufactures computers, printers, fax machines etc. It is also engaged in software development and has several Divisions including the Manufacturing and Supply Division (MSD), National Software Division (NSD), Engineering Support Division (ESD) etc. According to the workmen, there were 1200 employees totally in all the Divisions which are part and parcel of the Company, registered under the Companies Act, 1956. In 1994, the Company floated a Voluntary Retirement Scheme, (for short “VRS”), for the MSD and not for the workers in any other Division. This was because certain activities of the MSD were transferred to Pondicherry. 125 employees accepted the VRS, while 117 employees continued to work with the Company in that Division in Pune. On 15th October, 1996, the Company issued a notice of suspension of operations on the ground that work orders were not available with the Company. In 1997, a second VRS was offered by the Company to the employees working in the MSD. 82 employees accepted this scheme, while 24 employees continued in employment. WP/2988/1998 ３ 3. Complaint (ULP) No.165 of 1997 was filed by five workmen for themselves and 20 other workmen, who had authorized them to file the said complaint under Item 9 of Schedule IV of the MRTU & PULP Act. The workmen contended that they apprehended a closure of the Company and, therefore, filed the said complaint. It was pleaded that the MSD and other Divisions were an integral part of the Company and that they had functional integrality with the Company. The workers pleaded that most of the divisions/companies mentioned in the complaint were being run from the factory premises. It was contended that the closure was likely to be effected without following the provisions of law which would amount to an unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act. They sought an injunction against the Company restraining it from closing the MSD during the pendency of the Complaint (ULP) No.165 of 1997. 4. A written statement was filed by the Company. It was contended that the Company had decided to close down the manufacturing activities in Pune by following the provisions of law. The Company pleaded that there were less than 100 workmen employed and therefore the provisions of Section 25 O WP/2988/1998 ４ of the the Industrial Disputes Act, 1947, (for short “the I.D. Act)”, did not apply to the facts in the present case. However, while dealing with the contention in the complaint that the Divisions of the Company were integrated, the Company pleaded that the companies and Divisions mentioned in the complaint were “independent Companies having separate legal entities”. As regards the Engineering Division, the Company has pleaded that it has nothing to do with the factory in which premises the MSD was situated. 5. An application for amending the complaint was filed by the workmen after the closure of the manufacturing activities in Pune from 24th July, 1997. Although the application was opposed by the Company, the Industrial Court has allowed the application. By this amendment the workers had pleaded that the closure effected from 24th July, 1997 was illegal and that the Company had committed an unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act by declaring such a closure. 6. On 5th December, 1997, the workmen submitted an application before the Industrial Court seeking a direction WP/2988/1998 ５ against the Company for production of certain documents. The documents related to both, the Company as well as, more specifically, the Central Engineering Service Division / Engineering Service Division and the International Software Division. These documents included the muster roll/pay roll, a consolidated statement of the annual contribution to the Provident Fund Authority, Bonus Registers, transfer orders issued during the periods from 1993 to 1997. Certain documents were produced by the Company pursuant to the order passed by the Industrial Court on 1st January, 1998. The Industrial Court had directed the workmen to submit the inspection reports of these documents. Accordingly, inspection was given of those documents which, according to the Company, were traceable. Admittedly, the muster roll for the period from August, 1996 to October, 1996 was not produced at the time when inspection was given, but was produced later. Instead of producing the muster roll for the period from April, 1996 to July, 1996, the Company had produced the pay slips for the non-management staff of the Manufacturing and Supply Division from April, 1996 to July, 1996 for inspection. From the documents furnished for inspection, the workmen prepared a chart indicating the WP/2988/1998 ６ number of workmen employed in the MSD and ESD besides those working in the International Software Division. On the basis of the information furnished, it was found that the number of workers employed was more than 100 from August, 1996 when 248 workers were employed, till March, 1997, when 161 workers were working. The strength dwindled thereafter to less than 100 workers by July, 1997. These figures included persons working in both the MSD and the ESD. The statements filed before the Court included the name of each individual workman and his category. A consolidated statement was also prepared and filed in Court. These statements were filed as an inspection report by the workmen on 21st February, 1998. 7. The workmen led evidence by examining Shri. Sudhakar Patole, i.e. Petitioner No.1 herein, who was working in the Computer Assembly Department, and Shri. Satish Sakpal, who was working as ‘Accounts Assistant’. The Company did not lead any oral evidence, but sought to rely on the admissions elicited from the witnesses of the workmen in their cross- examinations. WP/2988/1998 ７ 8. The Industrial Court dismissed the complaint by concluding that there were less than 100 employees working in the Concern on 31st July, 1997, on which date the Company had closed down. The Industrial Court concluded that the termination of services of the workmen pursuant to the letter dated 24th July, 1997 could not be faulted. The Industrial Court further held that the amendment to the complaint did not in any manner prove the case of the workmen that, the Company had flouted the provisions of Section 25 O of the the Act, 1947, by closing down the Concern on 31st July, 1997. The Industrial Court held that the MSD could function without any other Division as there was no functional integrality between it and any other Division of the Company. Based on the evidence on record, the Court observed that “all the Departments were having separate functional integrality and MSD was independent from other Departments.” The Court came to this conclusion because there were separate agreements covering the service conditions of the workmen in the ESD and the MSD and the witness of the workmen had admitted that he had not been transferred out of the MSD during his tenure of service with the Company. The Court then concluded that it was a general principle and rule that when a majority of the WP/2988/1998 ８ employees accepted “one thing”, the minority should accept the same. The Court was of the view that when admittedly the VRS had been accepted by 325 employees, the 25 employees, who remained in employment at the time of closure, could not contend that their termination from service was illegal. As regards the question as to whether five employees, who represented 20 others, could file the complaint, the Court concluded that the workmen ought to have withdrawn the present complaint which was filed in apprehension of a closure and then filed fresh complaints in respect of the termination of services of the employees due to the closure by filing individual complaints under Item 9 of Schedule IV of the MRTU & PULP Act. The Court did not draw an adverse inference against the Company although it had not produced all the documents, which were directed to be produced by the Court. The Court was of the opinion that the documents which were filed on record were sufficient to decide the issue in the complaint. 9. Ms. Buch, the learned Advocate appearing for the workmen, submitted that the inspection report which was based on the information culled out from the documents on record indicates that there were 117 workmen employed in October, WP/2988/1998 ９ 1996 when there was a suspension of operations. She submitted that admittedly the employer has not produced the muster rolls for the entire period that was sought. According to her, an adverse inference ought to have been drawn by the Industrial Court for non production of these documents despite orders of the Court. She submitted that from the evidence on record, i.e. the muster rolls and the Provident Fund Registers, the workmen were able to prove that the average strength of workmen for the 12 months prior to the date of closure was more than 100. Ms. Buch pointed out that the employer chose not to lead any evidence. She submitted that the MSD could not have been considered as a separate independent entity as there was no evidence to that effect. According to her, there was conclusive evidence on record to indicate that the Company had flouted the provisions of Section 25 O of the the Act and had thereby committed an unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act. She pointed out that when the employer had chosen not to lead any evidence, the Industrial Court could not have held that the MSD was a separate independent unit having an independent existence or identity from the Company. The learned Advocate pointed out that assuming there were WP/2988/1998 １０ separate Divisions like MSD, ESD etc. they were formed only for administrative reasons and Management exigencies. She relied on the judgement of the Supreme Court in the case of S.G. Chemicals and Dyes Trading Employees Union vs. S.G. Chemicals and Dyes Trading Ltd. and Anr., reported in 1986 1 LLJ 490 and of the Division Bench of this Court in the case of R.K. Shinde & Ors. vs. Shekoba Auto Pvt. Ltd. & Anr., reported in 2008 (1) ALL MR 277 , in support of her contention that where as a result of a breach of Section 25 O of the the Act the services of the workmen are terminated, a complaint is maintainable under Item 9 of Schedule IV of the MRTU & PULP Act. 10. The learned Counsel further submitted that in any event the onus of proving that the employer had not employed more than 100 workers at the time of closure was on the employer and not the workmen. In support of this proposition Ms. Buch relied on the judgement of the learned Single Judge of this Court in the case of Varsha Vishwanath Kolambkar v/s. Ravindra Hindustan Platinum Pvt Ltd. and Ors., reported in 1987 1 CLR 3. WP/2988/1998 １１ 11. On the other hand, Mr. Bapat, the learned Advocate appearing for the Company, submitted that the complaint itself was not maintainable in respect of all 24 workmen; at best, it could have been confined to those five workmen, who had filed the same. Therefore, submitted Mr. Bapat, even if the Writ Petition is to be allowed, the relief can only be granted to the five workmen who had actually signed the complaint. He then pointed out that the MSD is a separate entity which was closed down on 24th July, 1997 and the fact that the Company continued to operate even after the closure of MSD showed that there was no functional integrality between the MSD and the other Divisions of the Company or the Company itself. He pointed out that the separate agreements were executed between the workmen employed in each of the Divisions and the Company and the service conditions applicable to the workmen in each division were different. According to him, this fact is one of the indicia for concluding that the MSD is not functionally integrated with other Divisions of the Company. He submitted that the MSD manufactured Hardware, while the ESD, was servicing components. He then submitted that the evidence on record established that the inspection report filed by the workmen WP/2988/1998 １２ included persons who were not workmen, as defined under Section 2(s) of the I.D. Act, to make up the complement of 100 workmen. According to him, while considering whether there was any need for issuing a notice under Section 25 O of the I.D. Act, only those who are “workmen” as defined under Section 2(s) of the I.D. Act, need to be reckoned. The learned advocate drew my attention to the admission of the witness of the workmen, i.e. the Accounts Assistant, who had prepared the inspection report, that the list included those who were not workmen. He then submitted that Section 25 O of the I.D. Act contemplates “closure of an undertaking” although the word “undertaking” has not been defined under the Act. What is defined is an “Industrial Establishment” or “Undertaking” under Section 2(ka) of the I.D. Act. He submitted, therefore, that considering the procedure required for closing an “undertaking” or an “industrial establishment”, what needs to be ascertained is whether the MSD forms an “undertaking” within the meaning of Section 2(ka) of the I.D. Act. He submitted that it is well settled that a part of an “undertaking” or an “industrial establishment” or a “Division” can always be closed without following the procedure under Section 25 O of the I.D. Act, WP/2988/1998 １３ if there are less than 100 workmen employed on an average per working day for the preceding 12 calendar months. He submitted further that the judgment in the case of S.G. Chemicals and Dyes Trading Employees Union (supra) if interpreted in its proper perspective cannot support the case of the workers. He relied on the judgment of the Division Bench of this Court in the case of Yeshwant G. Chikhalkar & Ors. v/s. Killick Nixon Ltd. & Ors., reported in 1999 II LLJ 998, and of the learned Single Judge of this Court in the case of Maharashtra General Kamgar Union vs. Indian Gum Industrial Ltd. & Ors., reported in 2000 II CLR 509 , in support of his contention that where a Company has several activities which are separate from each other, unless it is shown that these activities are functionally integrated, the Divisions cannot be clubbed together for ascertaining whether there are more than 100 workmen employed at the time of closure. He then pointed out that the observations made in the case of Varsha Vishwanath Kolambkar (supra) regarding the burden of proof on the issue of the number of workmen employed have been noted as observations made in passing by the Division Bench of this Court in the case of Arvind Anand Gaikwad vs. Uni Abex Alloy Products Ltd. & Ors., reported in WP/2988/1998 １４ 1988 1 CLR 26. The learned Advocate urged that when there is a closure in fact, which results in automatic termination of the service of the workmen employed in the Unit which is closed, the workmen could only be entitled to compensation, as payable under Section 25FFF of the I.D. Act and there can be no direction to restart the Company. According to him, assuming it is held that there is a violation of provisions of Section 25 O of the I.D. Act, each workman must discharge the burden of examining himself regarding the back-wages payable to him. In any event, submitted Mr. Bapat, an issue regarding the illegal termination of service on account of an illegal closure can only be decided by the Labour Court and not the Industrial Court. 12. The first issue which I will consider is whether a complaint can be filed by five workmen on behalf of several other workmen. As stated earlier, the contention on behalf of the Company is that such a complaint is not maintainable and if at all relief is to be granted, it must be limited only to the five complainants. The complaint has been filed alleging that the Company had committed unfair labour practices under Items 9 and 10 of Schedule IV of the MRTU & PULP Act. The complainants have pleaded in the complaint itself that they WP/2988/1998 １５ are filing the same in their representative capacity for and on behalf of 20 other workmen similarly situated. 13. The Industrial Court Regulations, 1975 framed under Section 33 of the MRTU & PULP Act permit the filing of a complaint in a representative capacity. Therefore, merely because a complaint has been signed by five workmen and the subject matter concerns several other workmen, whose names have been mentioned in the annexure to the complaint, it cannot be said that the reliefs, if any, granted in the complaint have to be restricted only to those five workmen. Furthermore, under Section 29 of the MRTU & PULP Act, an order of the Industrial Court would be binding on all persons who on the date of filing of the complaint are employed in the undertaking to which the complaint relates and all persons who may be subsequently employed in the undertaking. Thus, the submission of the learned Advocate for the Company that the complaint has to be limited only to those workmen who had signed the complaint is without merit. 14. In the case of Ceat Ltd. (Electron ics Division), Mumbai vs. Anand Aba Saheb Hawaldar & Ors. , reported in 2003 (3) L . L.J. 268 , the Division Bench of this Court considered a WP/2988/1998 １６ similar objection raised by the employer. It was contended on behalf of the employer that though the relief sought was for 337 employers, it could not be granted since the complaint under Section 28 of the MRTU & PULP Act had been filed only by 6 employees. The Division Bench accepted the contention advanced on behalf of the workmen that the order or judgement in such a case would be in rem and would apply to the undertaking to which the complaint relates. The judgement of the Division Bench was set aside by the Supreme Court in the case of Ceat Ltd. vs. Anand Abasaheb Hawaldar & Ors. , reported in 2006 (1) L.L.J. 1096, considering the factual position. In view of this, the Supreme Court did not enter into the controversy whether the complaint was maintainable. 15. The second issue is whether the complaint under Item 9 of Schedule IV of the MRTU & PULP Act is maintainable. It has been argued on behalf of the Company that no relief can be given to the workmen since their services were terminated as a consequence of the closure and therefore they ought to have filed complaints under Item 1 of Schedule IV of the MRTU & PULP Act. A similar contention was raised by the employer in the case of S.G. Chemicals and Dyes Trading Employees Union (supra). The Supreme Court observed thus : WP/2988/1998 １７ “Under sub-section (6) of Section 25-O, where no application for permission under sub-section (1) of Section 25-O is made, the closure of the undertaking is to be deemed to be illegal from the date of the closure and the workmen are to be entitled to all the benefits under any law for the time being in force, as if the undertaking had not been closed down. The eighty-four workmen were, therefore, in law entitled to receive from September 18, 1984, onwards their salary and all other benefits payable to them under the settlement dated February 1, 1979. These not having been paid to them, there was a failure on the part of the Company to implement the said settlement and consequently the Company was guilty of the unfair labour practice specified in Item 9 of Schedule IV to the Maharashtra Act, and the Union was justified in filing the complaint under Section 28 of WP/2988/1998 １８ the Maharashtra Act complaining of such unfair labour practice.” 16. Similarly in the case of R.K. Shinde & Ors. (supra), the Division Bench of this Court has held that a complaint under Item 9 of Schedule IV of the MRTU & PULP Act would be maintainable before the Industrial Court after an illegal retrenchment of the workmen as a consequence of the failure to comply with the provisions of Section 25 O of the I.D. Act. Where there is a breach of a provision of law which has resulted in the termination of service, a complaint under Item 9 of Schedule IV of the MRTU & PULP Act would be maintainable in view of the aforesaid judgement. Therefore the contentions that a complaint under Item 9 was not maintainable and that relief could be granted only in a complaint filed under Item 1 of Schedule IV is without merit. 17. With these preliminaries out of the way, I will now consider the third issue i.e. whether it is necessary to club all the Divisions of the Company together for the purposes of ascertaining if there were 100 or more workmen employed in the Company on the date the notice of closure was issued. It has been contended on behalf of the Company that each WP/2988/1998 １９ Division of the Company is an independent Unit and has no functional integrality with the other Divisions. It is further submitted that while deciding whether the closure of the MSD was legal and proper, the number of employees working in the MSD must be considered and not those in the other Divisions. It is axiomatic that when the functional integrality between two Units is to be ascertained, those Units must appear to be separate or distinguishable and have an independent existence. The registration of such Units would therefore have to be distinct. But where two Divisions or Departments or Sections of one Company are working under the umbrella of the Company which is registered under the Companies Act, 1956, the question of considering the functional integrality between such Divisions or Departments or Sections does not arise. They exist together, functioning as one Company, as a whole. The necessity of considering the functional integrality in such a situation does not arise. Therefore, while ascertaining whether there are 100 or more employees working in a Company of which a Division or Department or Section is to be closed, it would be necessary to consider the number of employees working in the entire Company. Section 2(cc) of the I.D. Act defines closure to be WP/2988/1998 ２０ the permanent closing down of a place of employment or a part thereof. Chapter V-B of the the Act contains special provisions relating to closure in certain establishments. Section 25K contained in Chapter V-B of the I.D. Act provides that the rigors of the Chapter apply to those industrial