:1: IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1977 OF 2006 WRIT PETITION NO. 1977 OF 2006 WRIT PETITION NO. 1977 OF 2006 1. M/s. Agarwal Traders ] Proprietor of Navyug ] Processes, 12, D.D. Sathe ] Marg, Girgaon, Mumbai ] 2. Banwarilal Jalan ] Partner, residing at ] 12, D.D. Sathe Marg, Girgaon] Mumbai 400 004 ]..Petitioners versus 1. Ankush M. Bhabal ] Shivshankar Nagar, Salt Pan ] Road, Wadala (E), Mumbai 37 ] 2. Smt. Laxmi Maruti Bhabal ] widow of late Shri Maruti ] Vishram Bhabal, Residing at ] Room No. 105, First floor, ] "A’ Wing, Swarganga ] Apartments, Sector - 18 ] Kamothe, Khandeshwar, ] Navi Mumbai 410 209 ] 3. Vijay Dattatraya Yeram ] A/90, Shastri Nagar, Sion ] Koliwada, Mumbai - 22 ] 4. Sadanlal Mahabir Mali ] Silver Dukes B No. Room 203 ] Prabhadevi, Hathiskar Marg ] Mumbai - 25 ] 5. Suryakant Laxman Bhabal ] Shivshankar Nagar, Salt Pan ] Road, Wadala (E), Mumbai 37 ] 6. Madhukar Atmaram Lakeshri ] Baramden Rami Chawl, ] Jawahar Nagar, Sai Baba Road] Khar (E), Mumbai - 51 ] 7. Naseer Abbas Mullah ] Municipal Pathra Chawl, ] Chawl No. 43, Room No. 4 ] Byculla, Mumbai - 11 ] 8. Manoj Banwarilal Jalan ] 12/2, D.D. Sathe Marg, ] Girgaum, Mumbai - 4 ] 9. Smt. Pratikha Prakash ] Ghavale, widow of late Shri ] :2: Prakash Gunaji Ghavale ] Lokmanya Co-operative ] Housing Society, Plot No.526] Room No. 22, Charkop, ] Kandivali (West), ] Mumbai 400 067 ] 10. Smt. Shaila Dattatray ] Kharkar, widow of late Shri ] Dattatray Janardan Kharkar ] G-8(96), Hiraji Baug Wadi ] Chawl No. 8, Jakeria Bunder ] Road, Sewri, Mumbai 400015 ]..Respondents Mr. Sudhir Talsania, Senior Counsel with Mr. Kiran Bapat with Mr. J. K. Desai for the Petitioners. Mr. Vinod Shetty with Ms. Ketki Rege for the Respondent No. 1. Mr. Neel Helekar for the Respondent No. 8. CORAM : S. A. BOBDE, J. CORAM : S. A. BOBDE, J. CORAM : S. A. BOBDE, J. DATE : 22ND JULY, 2008. DATE : 22ND JULY, 2008. DATE : 22ND JULY, 2008. ORAL JUDGMENT : ORAL JUDGMENT : ORAL JUDGMENT : . This petition by the employer is directed against the Order of the Industrial Court, Mumbai, dated 6.6.2006 holding the petitioners guilty of Unfair Labour Practices under Item 6 of Schedule II and Item 9 of Schedule IV of the MRTU & PULP Act, 1971. The Industrial Court has further directed the petitioners to pay the wages of the complainants till subsistence of contract of employment after deducting the payment already made / deposited. :3: 2. The Petitioner No.1 is a partnership firm engaged in the business of job work of calendaring and packaging of cloth. In 1986, the land upon which the factory of the petitioners was situate was acquired by the BEST Undertaking for construction of Depot. This acquisition was challenged by the Union Sarva Shramik Sangh by Writ Petition No. 1106 of 1993. This petition was dismissed on 15.6.1993. 3. On 12.7.1993 a Notice of intended lock-out with effect from 26.7.1993 was put up on the notice board. Before the lock-out took effect, on 13.7.1993 the BEST Authorities demolished the factory premises of the petitioners. 4. According to the petitioners they offered the dues to the workmen on account of closure. Apparently some accepted the dues while others did not. 5. On 30.8.2000 the Respondent Nos. 1 to 7 filed a Complaint on their own behalf and on behalf of other workmen totalling 76, after a period of about 7 years claiming that the closure effected by the petitioners is in the guise of the lock-out and being in contravention of Section 25(O) of the Industrial :4: Disputes Act, is illegal since the contract of employment continues, the petitioners are bound to pay the wages to the respondents employees. 6. The Industrial Court condoned the delay of about 7 years and thereupon adjudicated the complaint. It came to the conclusion that the lock- out announced vide a Notice dated 12.7.1993 intended to be effective from 26.7.1993 was illegal and unjustified and further that the petitioners have not taken any steps to terminate the contract of employment and therefore they are liable to pay wages. The learned Industrial Court therefore directed the petitioners to pay wages and legal dues to the respondents workmen till the subsistence of contract of employment. 7. Mr. Talsania, learned counsel for the petitioners submitted that the Order of the Industrial Court is unsustainable in law, primarily since the Industrial Court has ignored the existence of the closure of the petitioners establishment on 13.7.1993. According to the learned counsel it was necessary to give legal effect to the closure which necessarily terminated the contract of employment and therefore even though the petitioners might be held :5: liable to payment of closure compensation they should not be held liable for payment of wages as if the contract of employment continued. 8. Mr. Shetty the learned counsel for the respondents submitted that the Industrial Court has come to the conclusion that the lock-out is illegal and since the petitioners had really effected closure in the guise of lock-out, there was a clear unfair labour practices committed by them and therefore the contract of employment must be held to be in existence. Accordingly, the petitioners must be held liable for payment of wages. The procedure of a valid closure is provided by Section 25 FFA of the Industrial Disputes Act, which reads as follows:- "25FFA. Sixty days’ notice to be given of "25FFA. Sixty days’ notice to be given of "25FFA. Sixty days’ notice to be given of intention to close down any undertaking.- (1) An intention to close down any undertaking.- (1) An intention to close down any undertaking.- (1) An employer who intends to close down an employer who intends to close down an employer who intends to close down an undertaking shall serve, at least sixty days undertaking shall serve, at least sixty days undertaking shall serve, at least sixty days before the date on which the intended closure is before the date on which the intended closure is before the date on which the intended closure is to become effective, a notice in the prescribed to become effective, a notice in the prescribed to become effective, a notice in the prescribed manner, on the appropriate Government stating manner, on the appropriate Government stating manner, on the appropriate Government stating clearly the reasons for the intended closure of clearly the reasons for the intended closure of clearly the reasons for the intended closure of the undertaking: the undertaking: the undertaking: Provided that nothing in this section shall Provided that nothing in this section shall Provided that nothing in this section shall apply to - apply to - apply to - (a) an undertaking in which- (a) an undertaking in which- (a) an undertaking in which- (i) less than fifty workmen are employed, (i) less than fifty workmen are employed, (i) less than fifty workmen are employed, or or or (ii) less than fifty workmen were employed (ii) less than fifty workmen were employed (ii) less than fifty workmen were employed on an average per working day in on an average per working day in on an average per working day in :6: the preceding twelve months, the preceding twelve months, the preceding twelve months, (b) an undertaking set up for the construction (b) an undertaking set up for the construction (b) an undertaking set up for the construction of buildings, bridges, roads, , roads, canals, of buildings, bridges, roads, , roads, canals, of buildings, bridges, roads, , roads, canals, dams or for other construction work or project. dams or for other construction work or project. dams or for other construction work or project. (2) Notwithstanding anything contained in (2) Notwithstanding anything contained in (2) Notwithstanding anything contained in sub-section (1), the appropriate Government, sub-section (1), the appropriate Government, sub-section (1), the appropriate Government, may, if it is satisfied that owing to such may, if it is satisfied that owing to such may, if it is satisfied that owing to such exceptional circumstances as accident in the exceptional circumstances as accident in the exceptional circumstances as accident in the undertaking or death of the employer or the like undertaking or death of the employer or the like undertaking or death of the employer or the like it is necessary so to do, by order, direct that it is necessary so to do, by order, direct that it is necessary so to do, by order, direct that provisions of sub-section (1) shall not apply in provisions of sub-section (1) shall not apply in provisions of sub-section (1) shall not apply in relation to such undertaking for such period as relation to such undertaking for such period as relation to such undertaking for such period as may be specified in the order]. may be specified in the order]. may be specified in the order]. It may be noted that the respondents have been unable to establish the existence of more than 76 workmen and therefore it is clear that the provisions under Chapter VB which include Section 25-O of the I. D. Act are not applicable. 9. There is no doubt that the closure took place. There was in fact a physical demolition of the petitioners factory by the BEST on 13.7.1993 in pursuance of notice of land acquisition. That thereafter the lock-out notice given on the earlier day 12.7.1993 was not given effect to. It is clear from the complaint that the respondents are aware of this demolition. Earlier the respondents had also challenged the acquisition by way of a writ petition. The question is, in such circumstances what is the responsibility and liability of an employer such as :7: the petitioners. It is clear that Section 25FFA would not apply to the closure in question because the closure did not take place in pursuance of an intention of employer to close down the undertaking. The closure took place as a result of acquisition of the premises and the demolition of the factory. In the circumstances, the petitioners’ liability will have to be worked out in accordance with Section 25FFF. That liability must therefore be a liability to issue notice and pay compensation in accordance with the provisions of Section 25F as if the workmen had been retrenched. 10. Mr. Talsania the learned counsel for the petitioners stated that the petitioners does not claim any protection of liability under Proviso to Section 25FFF. However, the Industrial Court has ignored the settled position in law that the closure brings an end to the contract of employment and has held that the contract of employment which existed on 12.7.1993 i.e. on the date of the notice of lock-out continued thereafter because the petitioners did not take any steps for terminating the contract of employment. This is a clear error of law on the face of the record. The Industrial Court ought to have noticed the closure and given effect to the said :8: closure by imposing liability of compensation for closure rather than for payment of wages as if the contract of employment subsist. There is in fact very little discussion by the Industrial Court on the existence of closure. On the other hand, the Industrial Court has come to the conclusion that the lock-out proposed by the petitioners was not justified. In doing so the learned Industrial Court overlooked the fact that the lock-out never became effective since it was intended to take effect from 26.7.1993, Whereas the petitioners factory and establishment suffered a forcible closure because of the land acquisition on 13.7.1993. The order of the Industrial Court is therefore not sustainable. It therefore appears clear that the petitioners establishment was closed with effect from 13.7.1993 and indeed there is no evidence on record to come to a contrary conclusion. 11. It must be made clear that the Petitioners cannot be held liable for any non-compliance because they did not issue notices and offer compensation before the closure. 12. It is a settled law, vide Judgment of the Supreme Court in M/s. Avon Services Production M/s. Avon Services Production M/s. Avon Services Production :9: Agencies (P) Ltd., vs. Industrial Tribunal, Haryana Agencies (P) Ltd., vs. Industrial Tribunal, Haryana Agencies (P) Ltd., vs. Industrial Tribunal, Haryana and others [AIR 1970 Supreme Court 170] and others [AIR 1970 Supreme Court 170] and others [AIR 1970 Supreme Court 170] and Maruti Maruti Maruti Udyog Ltd. vs. Ram Lal & Ors. [(2005)2 Supreme Udyog Ltd. vs. Ram Lal & Ors. [(2005)2 Supreme Udyog Ltd. vs. Ram Lal & Ors. [(2005)2 Supreme Court Cases 638 Court Cases 638 Court Cases 638] that issuance of a notice and payment of compensation is not a condition precedent for giving effect to a closure as in the case of Section 25FFF of the Industrial Disputes Act. 13. In M/s. Avon Services case the Supreme Court, vide a paragraph 16 observed as follows: "..... By S. 25F a prohibition against "..... By S. 25F a prohibition against "..... By S. 25F a prohibition against retrenchment until the conditions prescribed retrenchment until the conditions prescribed retrenchment until the conditions prescribed by that section are fulfilled, is imposed; by that section are fulfilled, is imposed; by that section are fulfilled, is imposed; by S. 25FFF(1) termination of employment on by S. 25FFF(1) termination of employment on by S. 25FFF(1) termination of employment on closure of the undertaking without payment closure of the undertaking without payment closure of the undertaking without payment of compensation and without either serving of compensation and without either serving of compensation and without either serving notice or paying wages in lieu of notice is notice or paying wages in lieu of notice is notice or paying wages in lieu of notice is not prohibited. Payment of compensation and not prohibited. Payment of compensation and not prohibited. Payment of compensation and payment of wages for the period of notice payment of wages for the period of notice payment of wages for the period of notice are not, therefore, conditions precedent to are not, therefore, conditions precedent to are not, therefore, conditions precedent to closure." closure." closure." In Maruti Udyog case, the Supreme Court, vide a paragraph 21 observed as follows:- "21. How far and to what extent the provisions 21. How far and to what extent the provisions 21. How far and to what extent the provisions of Section 25-F of the 1947 Act would apply in of Section 25-F of the 1947 Act would apply in of Section 25-F of the 1947 Act would apply in case of transfer of undertaking or closure case of transfer of undertaking or closure case of transfer of undertaking or closure thereof is the question involved in this appeal. thereof is the question involved in this appeal. thereof is the question involved in this appeal. A plain reading of the provisions contained in A plain reading of the provisions contained in A plain reading of the provisions contained in Section 25-FF and Section 25-FFF of the 1947 Act Section 25-FF and Section 25-FFF of the 1947 Act Section 25-FF and Section 25-FFF of the 1947 Act leaves no manner of doubt that Section 25-F leaves no manner of doubt that Section 25-F leaves no manner of doubt that Section 25-F thereof is to apply only for the purpose of thereof is to apply only for the purpose of thereof is to apply only for the purpose of computation of compensation and for no other. computation of compensation and for no other. computation of compensation and for no other. The expression "as if" used in Section 25-FF and The expression "as if" used in Section 25-FF and The expression "as if" used in Section 25-FF and Section 25-FFF of the 1947 Act is of great Section 25-FFF of the 1947 Act is of great Section 25-FFF of the 1947 Act is of great significance. The said term merely envisages significance. The said term merely envisages significance. The said term merely envisages computation of compensation in terms of Section computation of compensation in terms of Section computation of compensation in terms of Section 25-F of the 1947 Act and not the other 25-F of the 1947 Act and not the other 25-F of the 1947 Act and not the other :10: consequences flowing therefrom. Both Section consequences flowing therefrom. Both Section consequences flowing therefrom. Both Section 25-FF and Section 25-FFF provide for payment of 25-FF and Section 25-FFF provide for payment of 25-FF and Section 25-FFF provide for payment of compensation only, in case of transfer or compensation only, in case of transfer or compensation only, in case of transfer or closure of the undertaking. Once a valid closure of the undertaking. Once a valid closure of the undertaking. Once a valid transfer or a valid closure comes into effect, transfer or a valid closure comes into effect, transfer or a valid closure comes into effect, the relationship of employer and employee does the relationship of employer and employee does the relationship of employer and employee does not survive and ceases to exist. Compensation not survive and ceases to exist. Compensation not survive and ceases to exist. Compensation is required to be paid to the workman as a is required to be paid to the workman as a is required to be paid to the workman as a consequence thereof and for no other purpose." consequence thereof and for no other purpose." consequence thereof and for no other purpose." 14. Thus, the closure of the petitioners establishment cannot be held to be vitiated on the ground that it was not preceded by notice and payment of compensation. The closure was validly effected. This however does not relieve the petitioners of their liability to pay compensation. Admittedly, the petitioners have not paid closure compensation. According to them they were ready to, but the respondents did not approach them. It is clear that the law casts a duty on the employer to pay the compensation and the employer is not entitled to contend that he wanted to but the workmen did not claim it. It appears that the petitioners have deposited compensation before the Industrial Court as per the order of this court and the amount has been withdrawn by the respondents. 15. The learned counsel for the respondents submitted that the petitioners had deliberately avoided payment of compensation from the date of :11: closure i.e. 13.7.1993 and must be held liable to pay interest on the said sum. There is merit in this contention on behalf of the respondents and accordingly I consider it appropriate to direct the petitioners to pay interest at the rate of 12% per annum from 13.7.1993 till the date the amount was deposited by them before the Industrial Court. The petitioners are accordingly directed to deposit the amount of interest, as stated above, before the industrial Court within a period of 12 weeks from today. 16. The respondents shall be at liberty to claim interest of unpaid gratuity in accordance with law, as may be advised. The petitioners shall be at full liberty to defend such an application, if made. 17. At this juncture, it may be noted that the learned counsel for the petitioners submitted that the learned Industrial Court committed error in entertaining the Dispute after a period of seven years. It is true that there is AN inordinate delay. However, having regard to the circumstances of the case, viz. the fact that the respondents mainly are illiterate and appear to have been laid down by their Union, the learned Industrial Court has condoned the :12: delay in the interest of justice. I see no reason to interfere with the order condoning the delay. 18. In the result, the impugned order is hereby set aside. The Petitioners shall be liable, as above. 19. Rule made absolute as indicated above. (S. A. BOBDE, J.) (S. A. BOBDE, J.) (S. A. BOBDE, J.)