IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23.07.2008 CORAM THE HON'BLE MR.JUSTICE S.NAGAMUTHU W.P.No.2296 of 2008 & M.P.Nos.1 to 3 of 2008 The Management of M/s.R.S.L.'B' Tannery Vaduvanthangal 632 204, Katpadi Taluk, Vellore District. . . Petitioner Vs 1.The Presiding Officer, Labour Court, Vellore. 2.M.Sekar 3.K.Paranthaman 4.M.Kesavan 5.R.Manogaran 6.S.Marimuthu 7.K.Kumaresan 8.G.Kasinathan 9.G.Ravichandran 10.S.Rajendiran 11.M.Jagadeesan 12.K.Kumaravel 13.K.Rajendiran 14.S.Mahendiran 15.G.Tharani 16.G.Ranganathan 17.V.Ganesan 18.S.Dhandapani 19.M.D.Rajendiran 20.R.Babu 21.C.Subramani 22.C.Murugesan 23.C.Venkatesan 24.R.Srinivasan 25.V.Venkatesan 26.S.Mahendiran 27.K.K.Sampath 28.C.Muniswamy https://hcservices.ecourts.gov.in/hcservices/ 29.G.Vadivel 30.K.M.Murugesan 31.L.Venkatesan 32.P.M.Govindaswamy 33.R.Nedunchelian 34.M.Arumugam 35.P.Mahadevan 36.V.Kotti 37.M.Gunasekaran 38.K.Karthivelu 39.M.Krishnamurthy 40.G.Annadurai 41.G.Ravi 42.G.Rajendran 43.M.Shan Basha .. Respondents Writ Petition filed under Article 226 of the Constitution of India to issue a writ of certiorari calling for the records of the first respondent with respect to the order passed in computation petitions Nos.151/05, 212/05, 213/05, 214/05, 216/05, 217/05, 228/05, 229/05, 346/05, 347/05, 361/05, 362/05 dated 31.10.2007 on the file of the first respondent Labour Court and quash the same. For Petitioner : Mr.S.R.Shanmuga Dass For Respondents : Mr.S.T.Varadharajulu O R D E R By consent of the learned counsel on either side, the writ petition itself is taken up for disposal. 2. Challenging a common award made on the petitions filed by the respondents herein under Section 33 C(2) of the Industrial Disputes Act, the petitioner, who is the respondent before the Labour Court, has come forward with this petition. 3. The petitioner is an industrial establishment and the respondents are workmen in the said establishment. According to the petitioner, due to general recession in leather business and severe financial crunch, the establishment could not be operated and so suspension of production was declared by the establishment by notice dated 12.04.2002 setting out the reasons for declaring such suspension of production. Proper notices were also sent to statutory authorities. 4. It is further stated by the petitioner that when the suspension of production was declared, all the workers were informed that whoever was willing to resign would be paid all the legal dues. https://hcservices.ecourts.gov.in/hcservices/ In pursuance of the same many workers came forward and submitted their resignation and the same were also accepted by the Company, consequently the workmen have also obtained settlement of Provident Fund accumulation. 5. Challenging the notice dated 12.04.2002 suspending production, the workers union has raised an industrial dispute and the same is, as of now, pending before the Industrial Tribunal, Chennai, in I.D.No.46 of 2002. While so, the respondents filed petitions Nos.151, 212 to 217, 228, 229, 346, 347, 361 and 362 of 2005 before the first respondent, Labour Court, Vellore under Section 33C(2) of the I.D. Act. In these petitions, the workers contended that the Management had in fact closed down the Industrial establishment and it was not a mere suspension of production as stated by the Management. Since no permission was obtained under Section 25 (o) of the Industrial Disputes Act from the Government, the said closure of the establishment, according to the workmen, is illegal and so, from such date of deemed closure, the workmen are entitled to all the monetary benefits. In other words, the contention of the workmen is that the right to claim compensation is a pre existing right by operation of Law under Section 25(O) of the Act and so without any prior adjudication in respect of their claim, the Labour Court has got jurisdiction to compute the benefits under Section 33 C (2) of the Act. 6. The contention of the Management before the Labour Court was that there was no closure, as it was contended by the workmen, but, on the contrary, what was done by the Management was in fact only mere suspension of production of work. The petitioner contended that the said disputed question should have been adjudicated upon by an appropriate authority under Section 10 of the Industrial Disputes Act and if only there is such adjudication by the said authority, then the workmen will be entitled in maintaining a petition under Section 33C(2) of the Act. 7. Before the Labour Court, on the side of the workmen two witnesses were examined as P.W.1 and P.W.2 and two documents were exhibited as Ex.P1 and Ex.P2. On the side of the Management a lone witness was examined as R.W.1 and as many as 24 documents were exhibited as Ex.R1 to Ex.R24. 8. On considering all the materials available, the Labour Court has concluded that the pendency of the Industrial Dispute in I.D.No.46 of 2002 before the Industrial Tribunal, Chennai is not a bar for the Labour Court to decide the Petitions filed by the workmen under Section 33 C(2) of the Act. The Labour Court has also found that it was actually closing down the Industrial establishment and not mere suspension of production as it is claimed by the Management. The Labour Court, therefore, calculated the amounts due to the workmen and accordingly ordered for the payment of the same by the https://hcservices.ecourts.gov.in/hcservices/ Management. It is the said common award which is under challenge in this writ petition. 9. I have heard Mr.S.R.Shanmuga Dass, the learned counsel for the petitioner and Mr.S.T.Varadharajulu, the learned counsel for the respondent and also perused the records carefully. 10. From the rival stands taken by the parties, the following question arises for consideration; "1.Whether the Labour Court was right in entertaining Petition under Section 33 C(2) of the Act, when there had been no prior adjudication in respect of entitlement of the workmen for wages." "2.Whether the Labour Court was right in holding that the petitioner/Management has closed down the establishment." 11. Now, let me analyse the law on this subject. Section 25 (O) of the Industrial Disputes Act deals with closure of Industrial establishments. The relevant sub Sections read as follows; "(1)Procedure for closing down an undertaking.-(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner: Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work. (2) Where an application for permission has been made under sub-section(1), the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interest on https://hcservices.ecourts.gov.in/hcservices/ the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen. (3)Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days form the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days. (6) Where no application for permission under sub-section (1) is made, within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workman shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down. 12. A plain reading of 25 (O) would go to establish that before closing down the industrial establishment, the employer is required to obtain prior permission from the Government following the procedure including the procedure relating to prior notice. Section 25(O) (6) makes it very clear that in case where no such application for permission was ever made or where permission for closure was refused, then the closure of the undertaking shall be deemed to be illegal from the date of closure and as a consequence, the workmen shall be entitled to all benefits as if the industrial establishment has not been closed. Thus by means of legal fiction, it should be understood that the industrial establishment was working and there was no closure. Therefore, in cases where the question is whether the workmen are entitled for all the benefits, it should be first decided as to whether the industrial establishment has in fact been closed and that the prior permission was obtained or not. 13. Now, the question is as to Whether the said question can be decided by the Labour Court while deciding the claims of Workmen under Section 33C(2) of the Act. 14. At this juncture, it is necessary to extract 33 C of the Industrial Disputes Act, 1947 which is as follows; https://hcservices.ecourts.gov.in/hcservices/ "Recovery of money due form an employer.-(1) Where any money is due to a workman from an employer under a settlement or an award or under the provisions of (Chapter VA or Chapter VB,) the workman himself or any other person authorised by him in writing in this behalf, or, in the case of the death of the workman, his assignee or heirs may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue: Provided that every such application shall be made within one year from the date on which the money became due to the workman from the employer: Provided further that any such application may be entertained after the expiry of the said period of one year, if the appropriate Government is satisfied that the applicant had sufficient cause for not making the application within the said period. (2) Where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money and if any question arises as to the amount of money due or as to the amount at which such benefit should be computed, then the question may, subject to any rules that may be made under this Act be decided by such Labour Court as may be specified in this behalf by the appropriate Government (within a period not exceeding three months) (Provided that where the presiding officer of a Labour Court considers it necessary or expedient so to do, he may, for reasons to be recorded in writing, extend such period by such further period as he may think fit.) 15. A close reading of Section 33C(1) and (2) of the Act would make it obvious that Sub Section (1) deals only with “any money” due to a workman from an employer under a settlement or an award or under the provisions of Chapter V (A) and V(B) of the Act, whereas Sub Section (2) deals with the entitlement of a workman to receive from https://hcservices.ecourts.gov.in/hcservices/ the employer “any money" or "any benefit” which is capable of being computed in terms of money. 16. The difference between these two Sections is explicit. Sub Section (1) covers only “any money” which is due, whereas Sub Section (2) deals with “any money as well as any benefit” which is capable of being computed in terms of money. So far as Sub Section (1) is concerned, there can be no controversy that such amount of money should be due under any settlement or award or under the provisions of Chapter V(A) or V(B) of the Act. 17. After the introduction of Section 33C of the Industrial Disputes Act, 1947, the scope of the said provision came to be considered by a Constitution Bench of the Honourable Supreme Court in Kays Construction Co. (P) Ltd. v. State of U.P.,((1965) 2 SCR 276). The Honourable Supreme Court had occasion to deal with the difference between “money due” and “benefit capable of being computed". The Honourable Supreme Court has held as follows; “The Divisional Bench has given apt examples of benefits which are computable in terms of money, but till so computed are not “money due”. For instance, loss of the benefit of free quarters is not loss of “money due” though such loss can be reckoned in terms of money by inquiry and equation. The contrast between “money due” on the one hand and a “benefit” which is not “money due” but which can become so after the money equivalent is determined on the other, marks out the areas of the operation of the two sub-sections. If the word “benefit” were taken to cover a case of mere arithmetical calculation of wages, the first sub- section would hardly have any play. Every case of calculation, however, simple, would have to go first before a Tribunal. In our judgment, a case such as the present, where the money due is back wages for the period of unemployment is covered by the first sub-section and not the second. No doubt some calculation enters the determination of the amount for which the certificate will eventually issue but this calculation is not of the type mentioned in the second sub-section and cannot be made to fit in the elaborate phrase “benefit which is capable of being computed in terms of money”. The contrast in the two sub-sections between “money due” under the first sub-section and the necessity of reckoning the benefit in terms of money before the benefit becomes “money due” under the second sub-section shows that mere arithmetical calculations of the amount due are https://hcservices.ecourts.gov.in/hcservices/ not required to be dealt with under the elaborate procedure of the second sub-section. The appellant no doubt conjured up a number of obstructions in the way of this simple calculation. These objections dealt with the “amount due” and they are being investigated because the State Government must first satisfy itself that the amount claimed is in fact due. But the anti-thesis between “money due” and a “benefit which must be computed in terms of money” still remains, for the inquiry being made is not of the kind contemplated by the second sub-section but is one for the satisfaction of the State Government under the first sub-section. It is verification of the claim to money within the first sub-section and not determination in terms of money of the value of a benefit. The judgment” (emphasis supplied) 18. From the above judgment it can be very safely understood that in cases where a workman claims that he is entitled for a “benefit” which is capable of being computed in terms of money, then there has to be an adjudication first by the competent authority as to whether the workman is entitled for such benefit and whether the same is capable of being computed. If only such pre adjudication of the benefit is made, then the question of computing the same in terms of money can be undertaken by the Labour Court under Section 33 C(2) of the Act. 19. As held by the Honourable Supreme Court, the “benefit” becomes “money due” if only there is adjudication by the Court, but in the case on hand the workmen do not claim for any “benefit”, but they claim for “money due”. 20. A comparison of 33 C (1) and (2) of the Act would go to show that under both the sub Sections “money" due to a workman is covered. It has been well settled by catena of decisions of the Honourable Supreme Court that to invoke sub Sections (1) and (2) of 33 C of the Act there has to be either a settlement or an award indicating the “money due” to the workman or under the provisions of Chapter V(A) or V(B) of the Act. In respect of the first category namely any money due under an award, since the very award itself is an adjudication it does not require any more adjudication. Similarly, in respect of money due under a settlement, since such a settlement is the result of the voluntary act of the parties on mutual agreement, nothing is available to be adjudicated upon. Similarly, in respect of amounts due under the provisions of Chapter V(A) and V(B) of the Act also there need not be any pre adjudication in respect of the right of the workman for money, since the amount becomes due by operation of law. Thus in all these categories of cases, since money had already become https://hcservices.ecourts.gov.in/hcservices/ due under any pre-existing rights, there is no requirement or occasion for having any more adjudication so as to enable the workman to approach the Government either under Section 33C (1) or under Section 33C(2) of the Act. 21. In PUNJAB BEVERAGES PVT. LTD. v. SURESH CHAND (1978 2 SCC 144) the Honurable Supreme Court has held that "a proceeding under Section 33C(2) is a proceedings in the nature of execution proceeding in which the Labour Court calculates the amount of money due to a workman from the employer, or, if the workman is entitled to any benefit which is capable of being computed in terms of money, proceeds to compute the benefit in terms of money. Proceedings further, this Court held that the right to the money which is sought to be calculated or to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship between the industrial workman, and his employer". “It is not competent to the Labour Court exercising jurisdiction under Section 33C(2) to arrogate to itself the functions of an industrial tribunal and entertain a claim which is not based on an existing right but which may appropriately be made the subject matter of an industrial dispute in a reference under Section 10 of the Act.” 22. Following the above said judgment and two more judgments of the Honourable Supreme Court in MUNICPAL CORPORATION OF DELIHI v. GANESH RAZEK & ANOTHER ((1995) 1 SCC 235) and STATE BANK OF INDIA v. RAM CHANDRA DUBEY & OTHERS ((2001 1 SCC 73) a Full Bench of the Honourable Supreme Court in STATE OF UTTAR PRADESH v. BRIJPAL SINGH (2006 AIR SCW 66) has summed up the principles as follows; Any money or any benefit which is capable of being computed in terms of money and which he is entitled to receive from his employer and is denied of such benefit can approach Labour Court under Section 33 C(2) of the Act. The benefit sought to be enforced under Section 33C(2) of the Act is necessarily a pre-existing benefit or one flowing from a pre-existing right. The differenced between a pre-existing right or benefit on one hand and the right or benefit, which is considered just and fair on the other hand is vital. The former falls within https://hcservices.ecourts.gov.in/hcservices/ jurisdiction of Labour Court exercising powers under Section 33C(2) of the Act while the latter does not. 23. Applying the above principles, if the facts of the case on hand are analysed, as rightly pointed out by the learned counsel for the respondent, the “money due” to the workmen arise out of the pre- existing right. The said right emanates from Section 25 O of the Act. Section 25(O) of the Act falls in Chapter V(B) of the Act. Though there is a specific mention made of Chapter V(A) and V(B) of the Act in Section 33C(1) of the Act and no such mention has been made in Section 33C(2) of the Act, Section 33C(2) should not be read in isolation so as to interpret that Section 33C(2) does not cover the existing rights of the workman emanating from Chapter V(A) or V(B) of the Act. It is trite law that Section 33C(2) is larger in it's scope than Section 33C(1) of the Act. Section 33C(1) empowers an administrative authority, where there is only a limited scope for any enquiry, whereas, Section 33C(2) of the Act empowers a judicial authority where there is a larger scope for enquriy. If a conjoint reading of Section 33C(1) and Section 33C(2) is made, there may not be any difficulty to conclude that Section 33C(2) of the Act embraces into its ambit the pre-existing rights of workmen emanating from Chapter V(A) or V(B) of the Act. As pointed out earlier, in the instant case, the workmen claim that their right is a pre existing one under Section 25(O) of the Act falling in Chapter V (B) of the Act and same needs to be accepted. 24.Though it is contended by the learned counsel for the petitioners that the industrial establishment was not closed and there was only suspension of production, as the scope of enquiry under Section 33C(2) is larger than the scope under Section 33C(2) of the Act, as an incidental issue, the Labour Court while exercising its jurisdiction under Section 33C(2) of the Act can very well go in to the question whether the industrial establishment had been closed or had there been only suspension of production alone. 25. In INLAND STEAM NAVIGATION WORKERS UNION v. U.O.I (2001 I LLJ 730), the Honourable Supreme Court had an occasion to consider the said question and in paragraph 8 of the judgment it has been held as follows;- “8. Before us it is contended that the Division Bench of the High Court while dealing with the appeal arising out of the company matter held that it was not within the scope of the scheme to find out first whether there was a closure of the company within the meaning of the I.D.Act and that claim of the workmen under the I.D. Act based on agreement dated August 25, 1965 was not https://hcservices.ecourts.gov.in/hcservices/ within the jurisdiction and province of the application for sanction of the scheme and that the agreement will have to be enforced in a properly constituted proceedings.” In paragraph 10 the said judgment, the Honourable Supreme Court has concluded as follows; “10. As rightly held by the High Court, the workmen in question are entitled to compensation in case of closing down of an undertaking. Here there has been no transfer of the undertaking from the company to the Corporation as found by the Tribunal and upheld by the High Court because by order made by the Company Court the scheme of arrangement was to close down the company and what was taken over by the Corporation was separate arrangement. Therefore, in the eye of law what is to be held is that the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer and every workman who has been in service for more than ten years in that undertaking immediately before such closure shall be entitled to notice and compensation in accordance with the provision of Section 25-F as if the workmen has been retrenched. In case where an undertaking is closed down by reason of financial difficulties as was the position in the present case, it cannot be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer. Therefore, if an application is made by the workmen or by the union of their behalf before a Labour Court under Section 33-C(2) of the I.D. Act it will be proper for the Labour Court to examine the claims under Section 25-FFF of the I.D. Act, of each of these workmen and award compensation accordingly. (emphasis supplied) 26. As held by the Honourable Supreme Court in the above case, it will