CWP No. 2834 of 2003 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 2834 of 2003 (O&M) Date of decision: 17.08.2009 Khem Chand s/o Sh. Kadam Singh and others .....PETITIONERS VERSUS The State of Haryana through the Financial Commissioner and Secretary, Labour and Employment, New Secretariat Building, Sector-17, Chandigarh and another ..... RESPONDENTS CORAM: HON'BLE MR. JUSTICE AUGUSTINE GEORGE MASIH Present: Ms. Abha Rathore, Advocate, and Mr. Puneet Gupta, Advocate, for the petitioners. Mr. D.S.Nalwa, Addl. A.G. Haryana. Mr. M.L.Sarin, Sr. Advocate, with Mr. A.S.Chadha, Advocate, and Mr. Vivek Sood, Advocate, for respondent No. 2. *** AUGUSTINE GEORGE MASIH, J. This writ petition has been preferred by 62 workmen, who are aggrieved by the order dated 09.08.2002 (Annexure P-12) passed by the State of Haryana granting permission to respondent No. 2-M/s Whirlpool of India Limted, Faridabad, under Section 25-O of the Industrial Disputes Act, 1947 to close down its 'Evaporator Section', and order dated 17.01.2003 CWP No. 2834 of 2003 2 (Annexure P-16), vide which the Review Petition preferred by The Whirlpool of India Employees Union (Regd.) against the order dated 09.08.2002 stands rejected. Apart from praying for quashing of the above two orders, the petitioners have also sought quashing of the order in the form of notice dated 13.08.2002 (Annexure P-9) informing the workmen of the evaporator section about the order dated 09.08.2002 (Annexure P-12) leading to the termination of the services of the petitioners-workmen. Respondent No. 2-M/s Whirlpool of India Limited, Faridabad, took over Kelvinator of India Ltd. in the year 1996 and continued to manufacture the same products. According to the Company, it was running into losses and, therefore, had to introduce new technology to compete with other companies who were producing these products and to bring down the cost of production, had to reduce the manpower by introducing the Voluntary Retirement Scheme. Despite cutting down the manpower, the Company could not break even its expenses and accordingly, the Compressor Division was transferred to M/s Tecumesh on 'as is where is' basis without affecting the terms and conditions of the employment of the employees. The Plastic Division was transferred to M/s Brite Brothers in the year 2001 because of the fact that the technology with regard to manufacture of plastic components used in the refrigerators had undergone a sea change and the Company was not in a position to meet with the requirements of fixing quality components of plastic, which were used by the other competitors in the market. The Company while manufacturing the refrigerators was using clinch tube type evaporators. With the change in technology world-wide in respect of the conventional evaporators, roll bond evaporators were introduced, which were much more economical, efficient and consumed CWP No. 2834 of 2003 3 less energy. The competitors of the Company switched over to the said technology and were, therefore, having an edge over the Company- respondent No. 2. Apart from this, another compelling circumstance for use of roll bond evaporators was that as per The Montreal Convention, 1987, on Environment, to which India was one of the participants, had emphasized that gases which tend to deplete ozone layers in the atmosphere should not be used. The Government of India, accordingly, framed the Ozone Depleting Substance (Regulation and Control) Rules, 2000 (hereinafter referred to as 'Rules, 2000') under the Environment Protection Act, 1986, in which the use of gases, which tend to deplete the ozone layers, was prohibited. The conventional clinch tube type evaporators, which were being manufactured by respondent No. 2- Company, used gases which tend to deplete ozone layers and were now prohibited under the Rules, 2000. As per these Rules, this prohibition was to come into effect from the end of 2002 and before that the use of these gases was required to be stopped by the manufacturers of refrigerators. Taking into consideration all these factors, respondent No. 2-Company decided to switch over to the use of roll bond evaporators in the refrigerators. As it did not have the necessary expertise to manufacture the roll bond evaporators in its factory, it decided to purchase the same from outside sources. Another aspect, which forced the Company to take this step, was that the roll bond evaporators had been designed and manufactured by M/s EAR Canal SA Pvt. Ltd., Spain, which had got the design patented under the law. All other competitors of respondent No. 2- Company in India in the refrigerator industry were purchasing the said evaporators from this very Company. The effect of this decision was that the entire machinery already lying in the Evaporator Section was rendered CWP No. 2834 of 2003 4 redundant except that it had to be sold as scrap. Over and above, it required an expenditure of Rs. 8 to 9 crores in the infrastructure for fixing the roll bond evaporators purchased from outside to be fitted in the refrigerators manufactured in the factory of respondent No. 2. Under these compelling circumstances, a decision was taken to close down the Evaporator Section to keep itself afloat in the cut throat competitive market adhering to and complying with the requirement of the statutory provisions. Therefore, an application for seeking permission to close down the Evaporator Section was moved to the appropriate Government i.e. Government of Haryana under Section 25-O of the Industrial Disputes Act, 1947. The application under Section 25-O of the Industrial Disputes Act dated 31.05.2002 was received by the Labour Department on 12.06.2002, copy whereof has been appended as Annexure P-3. According to the said application, the date of proposed closure was mentioned as 31.07.2002. The Whirlpool of India Employees Union (Regd.) (hereinafter referred to as 'the Union') received a copy of the application dated 31.05.2002 on 25.06.2002, which was delivered by the office of Deputy Labour Commissioner, Faridabad, along with a letter of the Labour Department stating that a meeting is fixed for 28.06.2002 at 11.30 A.M. in the office of the Joint Labour Commissioner, Haryana at Chandigarh for hearing the matter regarding application dated 31.05.2002 for permission for closure of Evaporator Section by the Management of M/s Whirlpool of India Ltd. The Union and the Management appeared before the Joint Labour Commissioner, who agreed to grant time to submit reply but the Union was not allowed to be represented through their Legal Secretary, who was a practicing Advocate. The matter was adjourned to CWP No. 2834 of 2003 5 08.07.2002. The office bearers of the Union appeared on 08.07.2002 and submitted their reply dated 06.07.2002 to the application. Thereafter, the matter was adjourned to 13.07.2002 to be heard by the Labour Commissioner himself. On 13.07.2002, respondent No. 2-Company submitted rejoinder dated 11.07.2002 to the reply of the Union. The matter was then adjourned to 23.07.2002 as the Labour Commissioner reached late in the office and no time was left to take up the matter. On 23.07.2002, the Labour Commissioner was not available and the Union submitted their written arguments dated 22.07.2002. It would not be out of way to mention here that respondent No. 2-Company vide notice dated 01.8.2002 informed the employees of the Evaporator Department that the production activities in the Evaporator Department were being suspended temporarily w.e.f. 03.08.2002 to 11.08.2002 and, therefore, the employees of this Department need not report for duty. Thereafter, the Union received a letter informing that the meeting was fixed on 05.08.2002 at 11.30 A.M. in the office of the Financial Commissioner and Principal Secretary to Government of Haryana, Labour and Employment and on that date both the parties were heard. The Financial Commissioner and Principal Secretary, Government of Haryana passed order dated 09.08.2002 granting permission to the Management to close down the Evaporator Section and the letter was sent to respondent No. 2-Management and the Union on the same day, but no copy was received by the Union or the workmen individually. On receipt of the order dated 09.08.2002 passed by respondent No. 1 granting permission to the Management to close down the Evaporator Section, notice was displayed that keeping in view the permission granted by the Government to close down the Evaporator Section, the operation in Evaporator Section is suspended till further orders CWP No. 2834 of 2003 6 and the workers of the Evaporator Section need not report for duty till then. The workmen were shocked to read the notice as they had no knowledge about the order passed by respondent No. 1 granting permission as the same was not conveyed to them and accordingly, the Union requested for supply of copy of the order of Government dated 09.08.2002, which was subsequently received by the Union on 26.08.2002 sent by the Labour-cum-Conciliation Officer, Faridabad through proper channel. However after notice dated 13.08.2002 displayed on the notice board of the Company, the Union procured a copy of the order and immediately prepared a Review Petition dated 19.08.2002 and submitted before respondent No.1 under Section 25-O(5) of the Industrial Disputes Act, 1947. A request for stay of the order under Review was sought but respondent No. 1 did not fix the date of hearing of the petition and taking advantage thereof, respondent No. 2 terminated the services of the 186 workers of the Evaporator Section. Reply to the Review Petition was filed by the Company-respondent No. 2 on 12.10.2002. Since no decision was being taken on the Review Petition, the Union approached this High Court by way of filing CWP No. 17655 of 2002 titled as Whirlpool of India Employees Union (Regd.) vs. State of Haryana and another, which was disposed of by this Court vide order dated 31.10.2002 with a direction to respondent No. 1 to decide the Review Petition preferred by the Union within two months from the date of certified copy of the order of the Court is brought to the notice of the competent authority. In compliance with the order passed by the High Court, the Review Petition preferred by the Union was decided vide order dated 17.01.2003. The stand of the Union was rejected by respondent No. 1 leading to the filing of the present petition challenging the order dated 09.08.2002 (Annexure P-12), vide which CWP No. 2834 of 2003 7 permission has been granted to the Company under Section 25-O of the Industrial Disputes Act, 1947 to close down the Evaporator Section as also the order dated 17.01.2003 (Annexure P-16) passed by respondent No. 1 rejecting the Review Petition preferred by the Union and the notice dated 13.08.2002 (Annexure P-9), vide which the operation in the Evaporator Section was suspended till further orders and the workers in the Evaporator Section were directed not to report for duty. The present petition was initially preferred by the Whirlpool of India Employees Union (Regd.), Haryana (affected persons of the Union only) through Sri Parkash s/o Sh. Harpal Singh resident of MCF No. 388, 60 feet Road, Parwatia Colony, Faridabad, Haryana. The Company raised a number of preliminary objections, out of which one was that Mr. Sri Parkash and Mr. Dhan Singh have no locus standi to initiate any legal action on behalf of the petitioner-Union as they are not the office bearers of the Union. On this objection having been taken, two separate Miscellaneous Applications i.e. Civil Misc. No. 21925 of 2004 and Civil Misc. No. 22045 of 2004 were filed. In C.M. No. 21925 of 2004, the applicants claimed that they were working in the Evaporator Section of the Company and since they were affected by the impugned orders, which have been challenged in the writ petition, they have authorized Mr. Sri Parkash to represent the applicants in all legal proceedings. They have, therefore, prayed that the applicants be added as writ petitioners and the name of Whirlpool of India Employees Union (Regd.) Haryana (Affected members of Union only) may be deleted from the array of parties. The application was filed by 62 affected members. In C.M. No. 22045 of 2004, the petitioners had prayed for the amendment of the writ petition in view of the objections raised by the Company. The amendment sought was CWP No. 2834 of 2003 8 mentioned in paragraphs 8 and 9 of the application. The applicants had detailed the amendment sought. Reply to the said applications were filed by the Company. On consideration of the applications and the reply filed by the Company and after hearing the counsel for the parties, a Division Bench of this Court vide its order dated 11.04.2005 allowed both the applications as per their prayers. However, all objections legal as well as factual were left open to the Company including the objections with regard to delay and latches. Counsel for the petitioners contends that the order dated 09.08.2002 passed by the Government granting permission to the Company cannot be sustained as the same is in violation of the provisions of Section 25-O of the Industrial Disputes Act. There is a patent legal error, which has crept in and the same has not been taken into consideration by the Government while passing the order dated 09.08.2002 (Annexure p-12) and thereafter, order dated 17.01.2003 (Annexure P-16) while deciding the Review Application preferred by the Union. She submits that Section 25-O provides for the procedure for closing down an undertaking. As per sub-section (1), an employer who intends to close down an undertaking of an industrial establishment to which this chapter applies, shall apply in the prescribed manner for the prior permission at least 90 days before the date on which the intended closure is to become effective, to the appropriate Government. She submits that the application for permission to seek closure of the Evaporator Unit is dated 31.05.2002 (Annexure P-11). The said application gives the date, on which the intended closure is to become effective, as 31.07.2002. This only comes to 60 days, which is against the mandate of Section 25-O. The application, in any case, was received by the appropriate Government on 12.06.2002 CWP No. 2834 of 2003 9 and, therefore, the actual period, for which the notice was given by the Company, comes to 48 days. She further submits that Section 25-O (1), apart from mandating 90 days notice, also provides that a copy of the said application of intended closing down of an industrial establishment shall also be served simultaneously on the representatives of the workmen in the prescribed manner. As has come on record, the said application dated 31.05.2002 was not served upon the Union simultaneously. The same was received by the Union on 25.06.2002 and that too, not from the Company but from the Labour Commissioner, Haryana, vide letter dated 21.06.2002, which was received by the Union on 25.06.2002 (Annexure P- 2). Accordingly, she submits that even if the provisions of Section 25-O are stretched to the extent that all requirements under the provisions were fulfilled that would come to 25.06.2002, when the application was received by the Union and when the period is calculated from this date, it comes to only 35 days. She, on this basis, submits that the application itself being in violation of Section 25-O of the Industrial Disputes Act, the same could not have been considered and decided by the Government as it was an incurable defect. She further submits that apart from this patent error, which has been overlooked by the Government to the prejudice of the petitioners, the Government as per Section 25-O (2) of the Industrial Disputes Act was required to make an enquiry into the reasons mentioned in the application for seeking permission to close down an undertaking and such enquiry without taking into confidence the employees, who are directly affected by such a decision of the Government, would be in violation of the basic principles of natural justice. The Union was not given effective hearing by the Government and its officials. They were not allowed to be represented by the Legal Secretary as the workmen were not CWP No. 2834 of 2003 10 well conversant with the language, which was being used during the submissions being made and further the application and the contents thereof were technical in nature, which a layman could not understand and respond to. On the other hand, the Management was represented by high officials, who were well educated and were aware of the details and the implication of the technical and legal aspects pitted against workmen who neither understood the intricacies of law and the technical details. The enquiry thus was without virtually associating the Union and, therefore, cannot be said to be in accordance with the provisions of law. She submits that the intention of the Legislature was to give effective opportunities of being heard to the employer and the workmen, who may be interested in such closure. All factors relevant have not been taken into consideration by the Government while coming to its decision granting permission to the Company for closure. It is her further submission that the requirement of section 25-O (2) is that on the decision having been taken by the Government, the order so passed, a copy of such order shall be communicated to the employer and the workmen simultaneously. In the present case, the employer has been communicated the order dated 09.08.2002 and copy thereof supplied but the same has not been done as far as the workmen are concerned. The workmen only came to know of the said order when notice dated 13.08.2002 was displayed on the notice board by the Company and the order dated 09.08.2002 was officially communicated to the Union only on 26.08.2002 when the same was received from the Labour-cum-Conciliation Officer, Faridabad (Annexure P- 10). She submits that the whole proceedings are biased in favour of the Company to the prejudice of the workmen. The permission has been granted under Section 25-O of the Industrial Disputes Act by the CWP No. 2834 of 2003 11 Government overlooking the provisions of the Act with an intention to please the Multinational Company. An effort was made by the Government by not communicating the order dated 09.08.2002 to the Union to scuttle the right of the workmen to prefer an application under Section 25-O (5) for review of the order granting permission under sub-section (2). Another point, which has been pressed into service by the counsel for the petitioners, is that the Evaporator Section is not an undertaking of an industrial establishment. She submits that it is only an up-gradation of the technology or at the most, change of technology, which would only amount to closing down a Department. It is not an independent portion of the business of the Company, which is being sought to be closed down nor an independent venture, which would fall within the definition of an undertaking, as provided under Section 2 (ka) of the Industrial Disputes Act. She relies upon the judgments of the Hon'ble Supreme Court in the case of Avon Services (Production Agencies) Pvt. Limited vs. Industrial Tribunal, Haryana, Faridabad and others, 1979 LLJ (1) 1, Management of Hindustan Steel Ltd. vs. The Workmen and others, 1973 LAB I.C. 461, District Red Cross Society vs. Babita Arora and others, (2007) 7 Supreme Court Cases 366 and a judgment of the Delhi High Court in the case of Raj Hans Press vs. K.S.Sidhu and others, 1977 LAB I.C. 1633. She has, on the basis of the above judgments, contended that if a unit or a part of undertaking, which has no functional integrity with the other unit, then and only then can it be termed as a separate undertaking or unit, which could be granted permission to close down. She further submits that the staff of the industry was inter-transferable and, therefore, the principle of 'last come first go' should have been given effect assuming the closure is said to be in accordance with law. Even if, for CWP No. 2834 of 2003 12 arguments sake, it is accepted that the closure was in accordance with law, the principle of 'last come first go' should have been followed. She relies upon the judgment of the Ho'ble Supreme Court in the case of J.K.Synthetic vs. Rajasthan Trade Union Kendra (2001) 2 SCC 87 in support of this contention. She contends that since this Evaporator Section is not an independent unit and the closure of which would, therefore, not fall within the ambit of Section 25 FFF of the Industrial Disputes Act with regard to the grant of compensation to the workmen rather it would fall under Section 25-N of the Industrial Disputes Act. Since the provisions of Section 25-N of the Industrial Disputes Act having not been complied with, the termination of the services of the workmen cannot be said to be in accordance with law and is in violation of the provisions of the Industrial Disputes Act entitling them to reinstatement in service with all consequential benefits. It is her contention that the closure could not have come into force and if the closure had to be effected, the Company could not have violated the settlement, which it had reached with its workmen by way of the agreement dated 29.01.2002 entered under Section 12 (3) of the Industrial Disputes Act, 1947. She submits that as per the said agreement, the decision regarding installation of machines, increase in capacity, change in production facilities, new/improved production system implementation of new technology, raw engineering of shop floor/relaying of machines was solely to be the prerogative of the Management and union and the workmen would neither interfere nor obstruct the implementation of these management decisions rather Union and the workmen were to provide their full cooperation in implementing these decisions but all this was dependent upon and subject to the further clause, which states that it will not have adverse effect on the employment of the CWP No. 2834 of 2003 13 workmen. It is an admitted position by the Company that the conciliation settlement/agreement dated 29.01.2002, which has been referred to in para-3 of the writ petition, was in force, when the application for closure of the Evaporator Unit was made and thereafter, the closure was effected from 13.08.2002. She submits that the said decision under the said agreement under the Industrial Disputes Act was binding between the parties under Section 18 of the Industrial Disputes Act and, therefore, the decision of closure is not sustainable in view of the settlement entered into between the parties. In view of the above submissions, she submits that the present writ petition deserves to be allowed and the impugned orders cannot be sustained entitling the petitioners to reinstatement in service with all consequential benefits. On the other hand, learned senior counsel for respondent No. 2-Company has pressed into service certain preliminary objections with regard to the maintainability of the present writ petition. He submits that the principle of collective bargaining is applicable to the Industrial Disputes Act and the orders under challenge cannot be questioned by an individual workman. He submits that when the initial application for permission of closure under Section 25-O of the Industrial Disputes Act was preferred by the Company, the objections were raised by the M/s Whirlpool of India Employees Union (Regd.). After considering the contentions of the Union and the Company and after due enquiry, as per the provisions of the Industrial Disputes Act, the order dated 09.08.2002 (Annexure P-12) was passed by the appropriate Government granting permission to the Company for closure of the unit. He further submits that thereafter, an application for Review under Section 25-O (5) was preferred by the Union. CWP No. 2834 of 2003 14 None of the petitioners, although provided for under Section 25-O (5) of the Industrial Disputes Act that a workman can also file a Review, preferred a Review of the order granting permission under Sub-Section (2) of Section 25-O of the Industrial Disputes Act. The Review Application preferred by the Union was duly considered by the Appropriate Government and on consideration of the objections, dismissed the same vide order dated 17.01.2003 (Annexure P-16). The Union has chosen not to challenge the orders of permission granted for closure dated 09.08.2002 (Annexure