C.W.P No.14613 of 2007 -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P No.14613 of 2007 Date of Decision: 27.07.2009 Sh. Chander Shekhar .....Petitioner Versus The State of Haryana and others ...Respondents 2. C.W.P. No.2453 of 2008 Sh. Om Dutt .....Petitioner Versus The Presiding Officer, Industrial Tribunal-cum-Labour Court, Gurgaon and others .....Respondents 3. C.W.P. No.2297 of 2008 Sh. Mahender Singh .....Petitioner Versus The Presiding Officer, Industrial Tribunal-cum-Labour Court, Gurgaon and others .....Respondents Present: Mr. A.K. Tyagi, Advocate for the petitioner. Mr. D.S. Nalwa, Addl. A.G., Haryana. Mr. R.N. Raina, Advocate with Mr. Dhurav Dayal, Advocate for respondents No.2 and 3. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers may be allowed to see the judgment ? Yes. 2. To be referred to the Reporters or not ? Yes. 3. Whether the judgment should be reported in the Digest?Yes. -.- K. KANNAN J. 1. The three cases relate to challenge to orders of the Labour C.W.P No.14613 of 2007 -2- Court in three distinct references against the same management. The workmen had been proceeded against in a domestic enquiry for alleged misconduct that led to removal from service by dismissal. The challenge to the orders before the Labour Court had been on the basis that the copies of the enquiry report had not been given, before the Disciplinary Authority chose to inflict the punishment. The Labour Court rejected the contention on the ground that the actual prejudice caused to the workmen had not been established by specific pleadings in the claim statement. 2. There was an additional ground which the Labour Court took that the establishment had been transferred to M/s Tupperware India Pvt. Ltd., which had been subsequently added as a party- respondent at the instance of the workmen. The Labour Court found that the transfer was true but it found that the management failed to prove that it had closed down the factory and retrenched all its workers. 3. The challenge before this Court by the workmen was on the ground that the enquiry before the Enquiry Officer had been vitiated and the Disciplinary Authority had not forwarded the finding of the Enquiry Officer to join a contest on the findings of the Enquiry officer. The Labour Court had taken a strict view of the pleadings by observing that since the prejudice had not been specifically pleaded in the claim statement, the workmen were not entitled to take up such a contention before the Labour Court. As a general proposition of law, which has been laid down by a Constitution Bench of the Hon'ble Supreme Court in M.D., ECIL Vs. B.Karunakar-AIR 1994 SC 1074, C.W.P No.14613 of 2007 -3- that mere absence of furnishing the copy of the enquiry report would not vitiate the enquiry unless a clear prejudice was shown by an employee. It is again not merely a case where the copy of the report had not been furnished but even a show cause notice before inflicting the punishment had not been given to the workmen. In a similar situation in Swapan Ganguly Vs. State of U.P.-1995 LIC 235, the Hon'ble Supreme Court applied the principle in M.D., ECIL Vs. B. Karunakar's case (supra) and remitted the matter to the Labour Court again only for the purpose of considering whether any lesser punishment could have been awarded. In this case also the punishment of removal from service that was ordered even without furnishing copy of the report or affording an opportunity to the workmen constitutes a serious prejudice to the reasoning of the Labour Court that the prejudice had not been pleaded in the claim statement or in the demand notice by taking a technical view of imparting strict rule of pleading in labour jurisprudence which was uncalled for, especially when the parties had known the respective stand. The reference itself was on the ground that the enquiry was not proper and the dismissal from service was unjustified. The Labour Court ought to have, therefore, considered the issue relating to prejudice that the workmen complained of, for non-furnishing of the copy of the report and the punishment inflicted. 4. Before the final disposition, there is another point that would require consideration of whether the subsequent transferee namely M/s Tupperware India Pvt. Ltd. was liable in any way for the action before the Labour Court and whether it had to take any C.W.P No.14613 of 2007 -4- responsibility. The Hon'ble Supreme Court had in one of the earliest decisions in Hariprasad Shivshankar Shukla and another Vs. A.D. Divelkar and others AIR 1957 SC 121 had held that there can be no retrenchment compensation under Section 25-F, when services were terminated by an employer at closure and transfer of the undertaking. This led to an amendment in the provisions of the Industrial Disputes Act by making provisions through Section 25-FFF that provided for reliefs to workman in case of transfer of undertaking. It is apposite to reproduce Section 25-FFF here: “Section 25-FFF. Compensation to workmen in case of closing down of undertakings- (1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of Section 25F, as if the workman had been retrenched: Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under clause (b) of Section 25F, shall not exceed his average pay for three months. [Explanation.- An undertaking which is closed down by reason merely of- (i) financial difficulties (including financial losses); or (ii) accumulation of undisposed stocks; or (iii) the expiry of the period of the lease or licence granted to it; or (iv) in case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on, shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub- section] [(1A) Nothwithstanding anything contained in sub-section (1), where an undertaking engaged in mining operations is closed down by reason merely of exhaustion of the minerals in the area in which such operations are carried on, no workman referred to in that sub-section shall be entitled to any notice or compensation in accordance with the provisions of Section 25-F, if- (a) the employer provides the workman with alternative employment with effect from the date of closure at the same remuneration as he was entitled to receive, and C.W.P No.14613 of 2007 -5- on the same terms and conditions of service as were applicable to him, immediately before the closure; (b) the service of the workman has not been interrupted by such alternative employment; and (c) the employer is, under the terms of such alternative employment or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by such alternative employment. (1B) For the purposes of sub-sections (1) and (1A), the expressions "minerals" and "mining operations" shall have the meanings respectively assigned to them in clauses (a) and (b) of section 3 of the Mines and Minerals (Regulation and Development) Act, 1957 (67 of 1957).] (2) Where an undertaking set-up for the construction of buildings, bridges, roads, canals, dams or other construction work is closed down on account of the completion of the work within two years from the date on which the undertaking had been set-up, no workman employed therein shall be entitled to any compensation under clause (b) of Section 25F, but if the construction work is not so completed within two years, he shall be entitled to notice and compensation under that section for every [completed year of continuous service] or any part thereof in excess of six months.]" 5. This Section contemplates continuity of service for a workman in the three circumstances detailed in Clauses (i) to (iv). A workman would be denied his retrenchment compensation, if only he continues with the subsequent transferee and in all other cases, the right to the relief under Section 25-F could be pressed against his employer and the liability of the transferee would then depend on whether he is a transferee of the undertaking itself and there is a continuity in the operations to the successor. The question as to whether a workman will have a remedy against an employer will, therefore, depend on the definition of employer. Section 2(g) of the Industrial Disputes Act defines thus: 2 (g) "employer" means- (i) in relation to any industry carried on by or under the authority of any department of [the Central Government or a State Government] the authority C.W.P No.14613 of 2007 -6- prescribed in this behalf, or where no authority is prescribed, the head of the department; (ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority; 6. It has been held that this definition is neither exhaustive nor exclusive. In Workmen of Swatantra Bharat Mills Canteen, New Delhi Vs. Management of Swatantra Bharat Mills, New Delhi 1984 Lab I.C. 1235 , it was held that the term 'employer' must be given its ordinary grammatical meaning. Therefore, when the purchaser purchased only the plant and machinery and did not purchase either the concern or its mill or good will, such purchaser could not be considered as a successor-in-interest and no liability would be caused on him. (Antony D'souza and others Vs. Sri Motichand Sils Mills 1954 I LLJ 793 and also Bombay Garage Limited Vs. I.T. 1953 I LLJ 14). Learned counsel appearing on behalf of the 2nd respondent referred to sale deed to point out that merely the land where the factory was being run had been purchased and there was evidence that the 2nd respondent was actually carrying on a different business that had no relation of what was being carried by themselves. Transfer and the sale deed also specified that it was a different business in which the transferor would have no interest. There is nothing to suspect that the transfer itself was not bona fide or that the transferee was merely a benamidar for the transferor, in which instances alone, it shall become possible for the workmen to have the remedy against the subsequent purchaser also. The subsequent purchaser-2nd respondent is, therefore, exonerated and shall be struck off from the array of parties. C.W.P No.14613 of 2007 -7- 7. The order of the Labour Court is set aside and the matter is remitted to the Labour Court for fresh consideration regarding the contention of the workmen relating to the prejudice caused to him by non-furnishing of the enquiry report and the fact that show cause notice had not been issued to him before inflicting on the workmen punishment of removal from service. The Labour Court shall give opportunities to the respective parties -workman and the management (M/s Bandhu Machinery Pvt. Ld.) to adduce evidence and take a decision as expeditiously as possible preferably within a period of six months from the date of receipt of records. 8. The writ petitions are disposed of in the above terms. No costs. (K. KANNAN) JUDGE July 27, 2009 Pankaj*