IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :: 11-01-2008 CORAM THE HONOURABLE MR.JUSTICE ELIPE DHARMA RAO AND THE HONOURABLE MR.JUSTICE S.R.SINGHARAVELU WRIT APPEAL No.1271 OF 2001 Shaw Wallace & Co.Ltd., Glue & Acid Plant Employees Union, rep.by its General Secretary Mr.P.R.Viswambaram, Kaduvetti, Madras-600 077. ... Appellant/Petitioner -vs- 1.The State of Tamil Nadu, rep.by Secretary to Government, Labour & Employment Department, Chennai-600 009. 2.The Management of Shaw Wallace & Co. Ltd., Glue & Acid Plant, 154, Thambu Chetty Street, Chennai-600 001. ... Respondent/Respondents Appeal under Clause 15 of the Letters Patent against the order of this Court dated 5.3.2001 and made in WP.No. 12259 of 1997. W.P.No.12259 of 1997: Petition presented to this Court under Article 226 of the Constitution of India, to issue a Writ of Mandamus directing the Ist respondent Government to refer the deispute declined to be referred under G.O.(D) No. 1126 dated 9.12.1996. For appellant : Mr.V.Prakash, Senior Counsel, for Mrs.G.Ramapriya. https://hcservices.ecourts.gov.in/hcservices/ For respondent 1 : Mr.P.Subramanian, Govt.Advocate. For respondent 2 : Mr.Manohar Gupta, for M/s.Gupta & Ravi. J U D G M E N T (Judgment of the Court was delivered by ELIPE DHARMA RAO,J.) This Writ Appeal is filed against the order, dated 05.03.2001, made in W.P.No.12259 of 1997, whereby a learned single Judge dismissed the Writ Petition, which was filed against the order of the Government, refusing to refer the dispute for adjudication, under G.O.(D).No.1126, dated 09.12.1996. 2. According to the appellant, they raised an industrial dispute relating to the closure of the factory at Kaduvetti and the said dispute was declined to be referred for adjudication, on the ground that the second respondent management wanted to introduce contract labour system, wherein direct labour was employed pursuant to the settlement arrived at under Section 18 (1) of the Industrial Disputes Act with another Union; the said introduction of contract labour system was objected to by the appellant Union; thereafter, a Writ Petition was filed and eventually in Writ Appeal, it was held that the settlement being under Section 18 (1) of the Act, it would bind only the parties to the settlement and not the appellant, who were not the parties; thereafter, the Management suspended its operation and the dispute relating to the suspension of operation was pending on the file of Industrial Tribunal, Madras, in I.D.No.114 of 1993; during the pendency of the dispute, the Management secured signatures from individual workers bypassing the Union and entered into settlement; after the settlement, the Management closed down the factory and as against the said closure, the appellant Union raised an industrial dispute and the Government refused to refer the said dispute for adjudication. 3. Per contra, the case of the second respondent Management was that due to adverse trading condition and increase in the establishment cost, the company was incurring loss and the steps taken by the Management to improve the https://hcservices.ecourts.gov.in/hcservices/ situation went in vain; hence, the Management suspended the production activities at the Acid Plant from 14.01.1992 and at the Glue Factory from 12.01.1992 to arrest the mounting losses; the employees were informed vide notice dated 22.05.1992 that with effect from 01.06.1992, the principle of "No Work, No Pay" would apply; the appellant Union raised a dispute challenging the suspension of the operations by the Management and the same was referred to Industrial Tribunal; in the meanwhile, the management, vide its notice, dated 07.09.1992, introduced a Voluntary Retirement Scheme and 150 out of 160 workmen applied for the said Scheme and accepted the benefits payable to them in full and final settlement of their claims and that the employees, who opted for Voluntary Retirement Scheme, also agreed that they would withdraw all the claim petitions filed by them and they would not prosecute the Management. 4. It was also the case of the Management that after giving 60 days notice to the workmen, the factory was closed; challenging the said closure, the dispute was raised by the appellant Union, in which there were only two employees and, in such circumstances, the Government rightly declined to refer the dispute for adjudication. 5. The rejection of the Writ Petition by the learned single Judge was for the reasons that a Division Bench of this Court had held that 151 workmen of the appellant Union had retired under Voluntary Retirement Scheme, agreeing to withdraw all their claims and that as per the management, at present, only two employees were in the appellant Union, which had not been refuted by filing any rejoinder. 6. As against the said rejection, this Writ Appeal is filed by the appellant Union, contending that they have raised a dispute with regard to the closure of the respondent company, as it was closed contrary to Section 25 (o) of the Industrial Disputes Act, which contemplates obtaining permission from the competent authority before closure. 7. The issue remains for consideration is, whether the closure is valid ? 8. In the Writ Petition, the said issue was not considered by the learned single Judge. Therefore, the order of the learned single Judge, dismissing the Writ Petition, which was filed against the order of the Government, refusing to refer https://hcservices.ecourts.gov.in/hcservices/ the matter for adjudication, on the ground that on the date of closure of the factory, there were only eight workers and the said fact had not been disputed by the appellant Union, suffers from mala fides. In fact, it was not the issue to be considered by the Government at the time of referring the dispute. 9. Learned Senior Counsel for the appellant relied upon a decision of the Hon'ble Supreme Court in Oswal Agro Furane Ltd. and Another v. Oswal Agro Furane Workers Union and Others, 2005 (3) Supreme Court Cases 224, wherein it has been held as under : "Having regard to the maxim "ex turpi causa non oritur actio", an agreement which opposes public policy as laid down in terms of Sections 25-N and 25-O of the Act would be void and of no effect. The Parliament has acknowledged the governing factors of such public policy. Furthermore, the imperative character of the statutory requirements would also be borne out from the fact that in terms of sub-section (7) of Section 25-N and sub-section (6) of Section 25-O, a legal fiction has been created. The effect of such a legal fiction is now well known. The consequences flowing from such mandatory requirements as contained in Sections 25-N and 25-O must, therefore, be given full effect". 10. Learned Senior Counsel for the appellant also relied upon a Division Bench decision of this Court in Management of EID Parry (India) Ltd., Pugalur, v. Government of Tamil Nadu, 2007 (4) L.L.N.847, to which one of us (Elipe Dharma Rao,J.) was a party, wherein a decision of the Supreme Court in Shaw Wallace and Company Ltd. v. State of Tamil Nadu, 1988 (1) L.L.N.172, was brought to the notice for reference, in which it was held that (1) the Government would normally refer the dispute for adjudication and (2) the Government may refuse to make reference, if – (a) the claim is very stale; (b) the claim is opposed to the provisions of the Act; (c) the claim is inconsistent with any agreement between the parties; (d) the claim is patently frivolous; (e) the impact of the claim on the general relations between the employer and the employees in the https://hcservices.ecourts.gov.in/hcservices/ region is likely to be adverse and (f) the person concerned is not a workman as defined by the Act. 11. As per guideline 2 (b), the Government may refuse to make reference if the claim is opposed to the provisions of the Act. But, in this case, the Government cannot say that the claim is opposed to the provisions of the Act, on the ground that only two workmen raised an industrial dispute, when the dispute raised by the workmen is with regard to Section 25 (O), which provides for obtaining prior permission before closure of the institution, which has to be considered by the Industrial Tribunal, for reference. Therefore, both the Government and the learned single Judge have not properly appreciated the issue raised by the appellant. 12. However, learned counsel for the respondent cited a decision of the Supreme Court reported in Nedungadi Bank Ltd. v. K.P.Madhavankutty and others, 2000 (2) L.L.N.21, wherein it has been held in para 6 as follows : "6. Law does not prescribe any time- limit for the appropriate Government to exercise its powers under Section 10 of the Industrial Disputes Act,1947. It is not that this power can be exercised at any point of time and to revive matters which had since been settled. Power is to be exercised reasonably and in a rational manner. There appears to be no rational basis on which the Central Government has exercised powers in this case after lapse of about seven years of order dismissing the respondent from service. At the time reference was made, no industrial dispute existed or could be even said to have been apprehended. A dispute which is stale could not be the subject-matter of reference under Section 10 of the Act. As to when a dispute can be said to be stale would depend on the facts and circumstances of each case. In fact, it could be said that there was no dispute pending at the time when the reference in question was made. Demand raised by the respondent for raising https://hcservices.ecourts.gov.in/hcservices/ industrial dispute was ex facie bad and incompetent." But, in this case, as has already been stated supra, it cannot be said that there is no dispute so as to be referred for adjudication. Merely on the ground that, at present, only two employees are raising the dispute, it cannot be said that there is no dispute at all. Therefore, when such a dispute was pending adjudication, the above judgment cannot be made applicable to the facts and circumstances of this case. 13. No doubt, in view of Shaw Wallace case (cited supra), the Government has got discretion to refer or not to refer the dispute. However, if we apply the principles laid down in Workmen of Sundaram Industries Ltd. v. Sundaram Industries Ltd., 1997 (3) L.L.N.346, the Government has totally misconstrued the dispute while refusing to refer the same, raised by the appellant under Section 25 (O). Section 25 (O) does not contemplate number of workers in a factory, as has been wrongly interpreted by the Government. On the other hand, it contemplates obtaining prior permission before closure of the company. Moreover, even as per Section 2-A (2), the appellant has got a right to straightaway approach the Tribunal, raising the industrial dispute, without approaching the Government. On the said ground also, we hold that the order of the learned single Judge is liable to be set aside. Hence, the Government/first respondent is directed to refer the matter to the Industrial Tribunal within a period of twelve weeks from the date of receipt of a copy of this order. 14. Writ Appeal is allowed. No costs. dixit Sd/ Asst. Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1.The Secretary to Government, The State of Tamil Nadu, Labour & Employment Department, Chennai-600 009. • One cc to Mr. Gupta and Ravi, Advocte SR 1595 • One cc to P. Chandrasekaran Advocate sR 20323 • Oe cc to Govt Pleader SR 1993 • BV (co) sg 01/02/08 W.A.No.1271 OF 2001 11-01-2008 https://hcservices.ecourts.gov.in/hcservices/