IN THE HIGH COURT OF UTTARANCHAL AT NAINITAL Court’s order whether the case is or not approved for reporting Chapter VIII, Rule 32(2) (b) Description of case W.P. 1376 OF 2001, Decided on 21.8.2003 Jabar Singh Vs.P.O. Labour Court 4 ors A.F.R. (Approved for Reporting) ______________________________ Not approved for reporting Date 21.8.03 Initials of Judge Note- Bench reader will attach this at the top of the first page of the judgment when it is put up before the Judge for signature. Reserved (1) Writ Petition No. 1376 (M/S) of 2001 Jabar Singh and eleven others …Petitioners Versus Presiding Office, Labour Court and three others ….Respondents (2) Writ Petition No. 1015 (M/S) of 2001 Harpal Singh and six others …Petitioners Versus Presiding Office, Labour Court and three others ….Respondents (3) Writ Petition No. 3008 (M/S) of 2001 Rakesh Singh …Petitioners Versus Presiding Office, Labour Court and three others ….Respondents ------------------- Hon’ble P.C.Verma, J. The petitioners in the above writ petitions were appointed as Scalers between 982-83. Some of them were appointed directly and some of them by promotion. The services of the petitioners were retrenched by order dated 30.5.1995 and 31.5.1995. The petitioners raised an industrial dispute before the Labour Court, Dehradun. The learned Labour Court held that retrenchment order was legal and valid as the provisions of section 6-N of the U.P. Industrial Disputes Act were fully compiled with, the provisions of Section 25N of the Industrial Disputes Act are not attracted as the Forest corporation is not an industrial establishment as defined in Section 25L of Chapter V-B of Industrial Disputes Act. Feeling aggrieved by the award dated 24.12.1997 contained in annexure No. 3 to the writ petition no. 1376 (M/S) of 2001, the award dated 24.12.97 contained in writ petition no. 1015 (M/S) of 2001, vide annexure no.3, the award dated 24.12.97 contained in annexure no.4 to the writ petition no.3008 (M/S) of 2001 and the retrenchment orders impugned in these writ petitions, the petitioners have filed these petitions for seeking writ of certiorari to quash the same. The question that falls of determination before this Court is whether the provisions of Section 25N of the Industrial Disputes Act are attracted or not and whether for non-compliance of the conditions contained in Section 25N retrenchment order as well as award are illegal and non-est and are liable to be set aside. The petitioners contended before the Labour Court that the Forest Corporation is a ‘factory’ as defined under clause (m) of Section 2 of the Factories Act where the manufacturing process is carried n by engaging the workmen for cutting the trees by axe and changing the shape of the timber into logs by using hand driven saw. In process a large number of workmen (more than 100 workmen) work. The area of the land over which the aforesaid activity is carried on is a premises. Therefore, the Corporation is an establishment within the definition of industrial establishment under Section 25L contained in Chapter V-B. Therefore, the provisions of Section 25N were applicable and without complying the procedure prescribed for retrenchment under Section 25N contained n Chapter V-B, retrenchment order was null and void. Reliance was placed by the learned counsel for the petitions before the Labour Court on the judgment of the Apex Court in A.M. Bhiwendiwala v. State of Bombay reported in AIR 1962 SC page 29 in which the Apex Court has held that the meaning of premises is wide and is used to denote the ‘land without any boundary’. The learned counsel for the employer-corporation contended before the Labour Court that the Corporation is not ‘a factory’ within the definition of Factories act, as Forest Corporation dies not work in any premises of place surrounded by a boundary, corporation undertakes the work of cutting of trees earmarked at different places in the forest, which cannot be said to be factory. Power driven saw machine can be a factory but no saw machine was working in Garhwal region at the time of retrenchment of the petitioners. The Labour Court, after considering the rival contentions of the parties before it, held that the Forest Corporation cannot be said to be factory under the Factories Act. The Labour Court while recording the foresaid finds, gave the following reasons in the judgment:- “in these references which are under consideration before me, the forests cannot be said to be open land or premises and also cutting of trees is not a manufacturing process because the log made by cutting of trees is also a raw material which are carried in the plains and hills. This cannot be called manufacturing process because he manufacturing process begins later on by converting the logs into furniture and building material.” Case of A.M. Bhiwendiwala v. State of Bombay (supra) were different than those of the instant case. The Labour Court relied upon the Apex Court judgment in Civil Appeal No. 785 of 1986, decided on 26.10.1994, reported in 1995 L.L.J. Vol. II, page 648 regarding the definition of factory as under; “The ordinary meaning of ht word precinct is a piece of land including its buildings or a building together with its grounds or apartments and ‘precincts’ means the area surrounding a place. The words any premises including precincts thereof including all buildings with the surrounding which form part of one unit.” The Labour Court after holding the Corporation is not a factory as defined under clause (m) of Section 2 of the Factories Act or Mine as defined under clause (j) of sub-section (1) of Section 2 of the Mines Act or Plantation as defined under clause (f) of Section 2 of the Plantations Labour Act, held that the Corporation is not an industrial establishment within the definition of Section 25L under Chapter V-B, therefore, the provisions of Section 25N were not attracted. The Labour Court further held that the references were made under Section 4K of the U.P. Industrial Disputes Act and not under the Industrial Disputes Act, therefore, only the provisions of U.P. Industrial Disputes Act would apply. The Labour Court placed reliance on U.P. State Electric Supply Company Ltd. V. R.K. Shukla and others decided on 30.4.1969, reported in L.I.C. 1970 page 276-285 para 9. The learned counsel for the petitioners Ms. Suman Sirohi assailed the finding recorded by the Labour Court that (i) it wrongly held that the meaning of premises and precincts thereof means the building and appurtenant land thereto surrounded by the boundary in which manufacturing process is carried on, while such restricted meaning to the words premises and precincts thereof have been rejected by the Constitution Bench of the Apex Court in A.M. Bhiwendiwala v. State of Bombay (supra). (ii) the Labour Court misread the judgment in A.M. Bhiwendiwala v. state of Bombay (supra) and held that the facts of that case were distinct and different than the instant case. (iii) the Labour Court failed to appreciate the meaning assigned by the Apex Court by its Constitution Bench judgment in A.M. Bhiwendiwala v. State of Bombay (supra) to the words premises and precincts thereof used in the definition of factory as defined under Section 2(m) of Factories Act. (iv) the Labour Court did not consider the definition of manufacturing process defined under the Factories Act, which is an integral part of definition of the factory defined under Section 2(m) of the Factories Act, though the Labour Court has recorded a finding that the trees are cut by the Scalers/Workmen and they change it into logs by hand driven saw, which is a raw material used for manufacturing of furniture etc., the Labour Court failed to appreciate that cutting of the trees and shaping it into logs is the making of article (within the definition of manufacturing process defined under Section 2(m) of the Factories Act). Ms. Suman Sirohi further submitted that the cutting of trees by the workmen with the help of axe and shaping it into logs in manufacturing process carried on in each region by more than 100 workers in each calendar year. As such, every region of the Forest Corporation, where the aforesaid activities are carried on, is a factory within meaning of Section 2(m) of the Factories Act and an industrial establishment within the definition of Section 25L of the Industrial Disputes Act, as the requirements of Section 25K of Chapter V-B of the Industrial Disputes act are fulfilled. Thus, the retrenchment could only be made by the employer- corporation in accordance with the provisions of Section 25N of the industrial Disputes Act. On the other hand, learned Counsel for the employer Sri V.K. Bisht tried to support the judgment passed by the Labour Court and submitted that the retrenchment orders are valid and legal and have been passed in accordance with the provisions of Section 6N of the U.P. Industrial Disputes Act. The Labour Court found that there was no illegality in the impugned retrenchment order, therefore, the retrenchment orders are valid and award may be upheld. The Industrial Disputes Act as enacted in 1947, was a piece of legislation mainly concerned with providing machinery for investigation and settlement of industrial disputes. There was no provision for the payment of ‘lay- off’ or ‘retrenchment’ compensation to the workmen who were ‘laid off’ or ‘retrenched’ in certain contingencies. In 1953, as a result of accumulated stocks in textile industry, textile mills were threatened with the consequences of closure of one or more shifts entailing lay-off or retrenchment of a large number of workers employed in the industry. Therefore, in order to avoid industrial unrest in the country, the President of India promulgated the Industrial Disputes (Amendment) Ordinance, 1953 (Ordinance 5 of 1953), which was repealed and replaced by the Industrial Disputes (Amendment) Act, 1953. By Section 3 (Act 43 of 1953) of the amending Act, chapter VA containing the Sections 25A to 25J were inserted. The Act 43 of 1953 was further amended by the Act No. 4 of 1957. Y Act No. 18 of 1957, which was enacted by the Parliament, the new Sections 25FF and 25FFF were substituted for the old Section 25FF. after the amendment in the industrial Disputes Act, the U.P. Industrial Disputes Act, which was earlier at par with the Central Act, was amended by Industrial Disputes (amendment) Act 1957 (U.P. Act I of 1957) and the similar provisions as contained in the Central Act were inserted. The Section 6N of the U.P. Industrial Disputes Act is similar to Section 25F of the Industrial Disputes Act, which is contained in Chapter V- A of the Central Act. The industrial establishment or industrial undertaking was used in the various sections but neither it was defined under the Central Act nor in the State Act. There was no provision of restricting or preventing lay-off or retrenchment neither in the Central Act nor in the State Act. Therefore, an employer had unfettered right to close down his establishment subject to the provision of sixty days’ notice. In view of large scale lay-offs, retrenchments and closures resorted to by big establishments, the Central Government in order to prevent avoidable hardships to the employees and to maintain higher tempo of production and productivity, felt it necessary to put some restrictions on the employer’s right to lay-off, retrenchment and closure. With this object in view, the Central Act was amended by the Industrial Disputes (Amendment) act, 1976 (Act No. 32 of 1976) because it was felt that the existing law enabled large scale lay-offs, retrenchments and closures by large companies and undertakings and this has resulted in all around demoralizing effect on workmen. By this amending Act a new Chapter V-B was added. Effect of this amendment is that Industrial Establishments have been classified into two categories. In one category Chapter V-A will apply and in another category Chapter V-B will apply. By the same amending Act No.32 of 1976, of the first time, ‘industrial establishment’ was defined under Section 2-Ka in general, other than definition of industrial establishment under Chapter V-B, which reads as under:- “(ka) “Industrial establishment or undertaking” means an establishment or undertaking in which in industry is carried on. Provided that where several activities are carried on in an establishment or undertaking and only one or some of such activities is or are an industry or industries, then- (a)If any unit of such establishment or undertaking carrying on any activity, being an industry, is severable from the other unit or units of such establishment or undertaking, such unit shall be deemed to be a separate industrial establishment or undertaking.” Chapter V-B of industrial Disputes act contains Sections 25-K to 25-S. Section 25K provides that the provisions of Chapter V-B shall apply to an industrial establishment (not being an establishment of a seasonal character or in which work is performed only intermittently) in which not less than one hundred workmen were employed on an average per working day for the preceding twelve months. Section 25L (a) defines the industrial establishment which reads as under:- “(a) “Industrial establishment” means- (i) a factory as defined in clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948); (ii) a mine as defined in clause (j) of sub- section (1) of Section 2 of the Mines Act, 1952 (35 of 1952); and (iii) a plantation as defined in clause (f) of section 2 of the Plantations Labour Act,1951 (69 of 1951); (b) notwithstanding anything contained in sub- clause (ii) of clause (a) of Section,-- (i) in relation to any company in which not less than fifty-one percent of the paid-up share capital is held by the Central Government, or (ii) In relation to any corporation (not being a corporation referred to sub- clause (i) of clause (a) of Section 2) established by or under any law made by Parliament, The Central Government shall be appropriate Government. Section 25-N Conditions precedent to retrenchment of workmen – (1) No workman employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one yea under an employer shall be retrenched by that employer until, -- (a) The workman has been given three months’ notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice, and (b) The prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the official Gazette (hereinafter in this section referred to as the specified authority) has been obtained on an application made in this behalf. (2) An application for permission under sub- section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment ad a copy of such application shall be served simultaneously on the workmen concerned in the prescribed manner. (3) Where an application for permission under sub-section (1) has been made, the appropriate Government or the specified authority, after making such enquiry as it thinks fit ad after giving a reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such retrenchment, may, having regarding to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen 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. (4) Where an application for permission has been made under sub-section (1) and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from 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. (5) An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of sub-section (6), be final and binding on all the parties concerned and shall remain in force for one year from the date of such order. (6) the appropriate Government or the specified authority may, either on its own motion or on the application made by the employer or any workman, review it order granting or refusing to grant permission under sub-section (3) or refer the matter, or, as the case may be, cause it to be referred, to Labour Court for adjudication: Provided that where a reference has been made to a Labour Court under this sub-section, it shall pass an award within a period of thirty days from the date of such reference. (7) Where no application for permission under sub-section (1) is made, or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workman and the workman shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him. (8) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the establishment or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such establishment for such period as may be specified in the order. (9) Where permission for retrenchment has been granted under sub-section (3) or where permission of retrenchment is deemed to be granted under sub-section (4), every workman who is employed in that establishment immediately before the date of application for permission under this section hall be entitled to receive, at the time of retrenchment, compensation which shall be equivalent to fifteen days’ average pay for every completed year of continuous service or any part thereof in excess of six months. Section 38 of the industrial Disputes Act provides that the appropriate Government may, subject to the condition of previous publication, make rules for the purpose of giving effect to the provisions of the Act. The appropriate Government is defined under Section 2(a) of the industrial Disputes Act. State Government cannot be an appropriate Government in respect of the Industrial disputes referred in clause (i) of Section 2 (a) of the Industrial Disputes Act. Only Central Government shall be appropriate Government. Likewise the Central Government shall be the appropriate Government in relation to any Company in which not less than fifty-one per cent of the paid up share capital is held by the Central Government or in relation to any corporation (not being a corporation referred to sub-clause (i) of clause (a) of Section (2), established by or under any law made by Parliament as provided under clause (b) of Section 25L. By virtue of clause (ii) of Section 2, the State Government shall be appropriate Government in respect of industrial disputes other than referred in clause (i) of Section 2(a) or clause (i) and (ii) of sub-section (b) of Section 25L. There is no provision under the U.P. Industrial Disputes Act like provisions contained in Chapter V-B of the Industrial Disputes Act. Therefore, the provision of Chapter V-B shall ipso facto apply in State of Uttar Pradesh as it is the law made by the Parliament under Article 246(3) read with entry 22 of list III. It is in this legal back ground that the State of U.P. has made the Industrial Disputes (Uttar Pradesh) Rules, 1976 in exercise of the powers conferred by sub-section (1) of Section 38 of the Industrial Disputes Act, 1947 (Act No. XIV of 1947), after the same having previously been published for objection and suggestions vide Notification No. 1819 (ST)/ XXXVI-I 127 (ST)-76, dated March 18, 1976 to give effect to the provisions of Chapter V-B of the Industrial Disputes Act in State of Uttar Pradesh. Rule 2 provides the definition, which is reproduced as under:- “2. Definition- In these rules, unless the context otherwise requires- (a) ‘Act’ means the industrial Disputes Act, 1947; (b) ‘Form’ means a form appended to these rues; (c) ‘Section’ means a section of the Act; (d) Words and expressions used in these rues and not defined therein, but defined in the Act shall have meanings assigned to them in the Act.” Relevant Rule 4 for application of Section 25N in the State of U.P. reads as under:- “4. Notice of, and application for permission for, retrenchment- (1) Notice under clause (c) of sub-section (1) of Section 25N for retrenchment shall be served in Form ‘D’ on such authority as may be specified by the State Government either personally or by registered post acknowledgment due and where the notice is served by registered post, the date on which the same was delivered to such authority shall be made deemed to be the date of service f the notice for the purposes of sub-section (3) of the said section. (2) Application of permission for retrenchment under sub-section (4) of Section 25N shall be made in Form ‘E’ (with attested copy of the notice given by the employer under clause (a) of Section 25-F and delivered to such authority as may be specified by the State Government either personally or by registered post acknowledgement due and where applications sent by registered post the date on which the same was delivered to the State Government or the authority shall be deemed to be the date on which the application was made for the purposes of sub-section (5) of the said section. (3) The notice or, as the case may be, the application shall be served in triplicate and sufficient number of copies of the application for service on the workmen concerned shall be submitted along with the notice or, as the case may be, the application. (4) the employer concerned shall furnish to the State Government or the authority to whom the notice for retrenchment has been given under clause (c) of sub-section (1), or, as the case may be, sub-section (4) of the said Section 25-N, such further information as the State Government or, as the case may be, the authority considers necessary for arriving at a decision on the notice or, as the case may be, application, as and when called for by such authority, so as to enable the State Government or the authority to communicate its permission or refusal to grant permission within the period specified in sub-section (3), or, a the case may be, sub-section (5) of the said Section 25-N.” The appropriate Government by framing the Rules known as The Industrial Disputes (Uttar Pradesh) Rules, 1976 have made the Section 25N applicable in relation to industrial establishment in/of State of U.P., which is an industrial establishment as defined under Section 25L of Chapter V-B. Therefore, I hold that the industrial establishment in/of State of U.P. which falls within the definition of Section 25L of Industrial Disputes Act, retrenchment therein shall be made strictly in accordance with the provisions of Section 25N of the Central Act read with Section 4 of The Industrial Disputes (Uttar Pradesh) Rules, 1976. Any retrenchment made in violation of this Section shall be void. Now, the question remains as to whether the Forest Corporation is an industrial establishment within the definition of Section 25L or not. The U.P. Forest Corporation is created under the U.P. Forest Corporation Act, 1974 with an object for better preservation, supervision and development of forests and better exploitation of forest produce within the State and for matters connected therewith. Section 2 of the Act is a definition clause, Section 3 provides for establishment of the Corporation and Section 4 provides for Constitution of the Corporation. The functions and powers of the Corporation are provided under Sections 14 and 15 respectively, which