IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION LETTERS PATENT APPEAL NO. 66 OF 2006 IN WRIT PETITION NO. 5845 OF 1999 R.K. Shinde of Pune, Indian inhabitant having address at, C/o. S.131, Shinde Vasti, Hadapsar, Pune 411 013. 2. M.S. Desai, of Pune, Indian inhabitant having address at, C/o. S.131, Shinde Vasti, Hadapsar, Pune 411 013. 3. Shri B. D. Hazare 4. Shri Dhume B.S. 5. Shri A.S. Karpe 1 6. Shri S.T. Holkar 7. Shri S.N. Kakde 8. Shri S.S. Moze (deceased) 8a. Chhaya Suresh Moze (Legal heir of Appellant No. 8) 9. Shri S.A. Memane 10. Shri P.V. Vanarse 11. Shri V.M. Ghodke 12. Shri N.L. Raskar 13. Shri S.N. Pawar 14. Shri S.R. Alhat 15. Shri R.D. Waghmare 16. Shri M.L. Kamble 17. Srhi P.V. Rane 18. Shri A.V. Wambure 19. Shri S.L. Warude 20. Shri R.B. Jadhav 21. Shri D.E. Jawalkar 22. Shri D.G. Pokharkar 2 23. Shri S.D. Nawagire 24. Shri S.M. Inamdar 25. Shri G.M. Sutan 26. Shri C.N. Khopkar 27. Shri R.V. Pataskar 28. Shri D.M. Shinde 29. Srhi P.F. Lazar 30. Shri M.H. Zambare 31. Shri B.H. Vairagar 32. Shri S. Dhokale 33. Shri N.M. Sayyed 34. Shri J.N. Mahadik 35. Mrs. S.C. Choundhe 36. Mrs. M.N. Fullelu 37. Shri P.H. Yadav 38. Mrs. L.L. Khenat Being all of Pune, Indian inhabitants having their address at, S. No. 131, 3 Shinde Vasti, Hadapsar, Pune 411 013. .. Appellants. (Orig. Respondents No. 1 to 15 & 18 to 36 38, 40) vs. 1. Shekoba Auto Pvt. Ltd., A Company incorporated under Companies Act, 1956, having its address at 68, Hadapsar Industrial Estate, Pune 411 013. 2. Neotronics (P.) Limited Hadapsar Industrial Estate, Pune 411 013. .. Respondents. (Orig. Respondent No.41. Mr. S.J. Deshmukh with Ms. N.D. Buch, Mr. H.D. Buch, Mr. S.K.More and Mr. B.B. Dholkia for Appellants. Mr. C.U. Singh, Sr. Advocate with Mr. T.R. Yadav i/by K.S. Bapat for Respondent No.1. Mr. N.G. Helekar for Respondent No. 2. 4 CORAM : J.N. PATEL & A.A. SAYED, JJ. JUDGEMENT RESERVED ON 20/07/2007 JUDGEMENT DELIVERED ON 26/11/2007. ORAL JUDGMENT (Per J.N. Patel, J.) By this Letters Patent Appeal the Petitioners, employees of the respondent, have impugned the judgment and order dated 3rd March, 2006 passed by the learned Single Judge of this Court in Writ Petition No. 5845 of 1999 which came to be filed by the respondent employer challenging the decision of the Industrial Court, Pune in Complaint (ULP) No. 70 of 1999 holding that the employer had committed unfair labour practices under Item 9 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafer referred to as the MRTU & PULP Act, 1971) 5 thereby directing the employer to continue the respondents employees 1 to 40 in their services and to pay each of the respondents Rs. 1000/- towards compensation and a further sum of Rs. 1000/- each towards cost. The Industrial Court, inter alia, held that Petitioner and the Respondent No. 2 were functionally integrated and together employed more than 100 employees and, therefore, the provisions of Chapter VB of the Industrial Disputes Act, 1947 were applicable and as the Petitioner has failed to obtain permission of the appropriate government, it has committed unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act, 1971. 2. The complainant employees had filed a complaint against the respondent employer, namely, Shekoba Auto Private Limited and Neotronics (P) Ltd., It was their case that the respondent employers have two units registered under the Factories Act, 1948 6 located in the same building. Originally, the employer of the complainant employees had a manufacturing unit known as Electro Components Company in the same premises. It is somewhere on or about 24th September, 1978 the said M/s. Electro Components Company got bifurcated in two units and informed the employees that their services stood transferred to another unit with effect from 1st November, 1978 on the same terms and conditions without break. It is their case that Auto Components Company was changed to Shekoba Auto (P) Ltd., and the name of Electro Components Company was changed to Neotronics (P) Ltd., i.e., the original respondent no. 2 and the employees of Electro Components Company were absorbed in these two companies. According to the complainant employees both respondent nos. 1 and 2 are very closely knit units and their production is interchangeable and the employees of respondent nos. 1 and 2 are frequently asked to work in each other's 7 factory and the wages are adjusted in their books. It is also their case that the sales and purchases are common. The directors are also common and there is one recognised union in both the respondents i.e. Sarva Shramik Sanghatana and that the negotiations and settlements for employees of both the units are held in common meeting though separate settlements are signed and, therefore, according to the complainant employees there is functional integrality between the respondent no. 1 and 2. It is their case that respondent no. 1 employs 40 employees and 4 staff whereas the respondent no. 2 employs 69 employees. Both of them taken together are more than 100 employees and, therefore, the provisions of Chapter VB of the Industrial Disputes Act, 1947 (hereinafter referred to as the I.D. Act) are applicable. The respondent no. 1 i.e. Shekoba Auto (P) Ltd., issued a letter dated 17th March, 1999 to all the complainant employees retrenching the complainants from 21st march, 1999 and this led to the 8 challenge of their retrenchment by filing a complaint of unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act, 1971. 3. It was the case of the complainant employees that the reasons for retrenchment are patently false, the calculation of compensation, service are also incorrect. No seniority list was displayed seven days prior to retrenchment so also no permission to retrench the employees under Section 25-N of the Industrial Disputes Act, 1947 was obtained. Hence there is non- compliance of the provisions of Sections 25-F, 25-G and 25-N of the Industrial Disputes Act, 1947 and consequently there is unfair labour practice under Item 9 of Schedule IV of the MRTU & PULP Act, 1971. According to the complainant employees, respondent no. 1 has sent a letter to the complainants on 19th March 1999 stating that they are stopping production and, therefore, their action is not bonafide and it is 9 apprehended that respondent no. 1 wants to get rid of the senior employees and re-start production with the help of new recruits. Therefore, the proposed retrenchment is malafide. It was also their case that the respondent no. 1 has opened another unit at Hubli manufacturing the same product and they want to shift their assets to Hubli which also shows malafides on their part. Therefore, they sought a relief in the nature of declaration that the respondent nos. 1 and 2 have engaged in unfair labour practices and that they may be directed not to give effect to the notice of retrenchment issued to the complainant employees and continue to employ them. 4. In reply, the Respondent No. 1 took the stand that the complaint is neither true nor bonafide nor it is legal. It was their case that in April, 1972, a partnership concern Electro Components Company was established. Auto Components Company, a new 10 partnership firm came into being in November, 1978. Electro Components Company had decided to discontinue manufacture of auto condensers from their product line and this product was taken up by the new firm Auto Components Company and later on developed other products of its own. Majority of products of Auto Components Company were related to the automobile industry, whereas the product manufactured by Electro Components Company related to electronic industry. Though they accepted that Auto Components Company also took over the workmen working in Auto Condenser Section of Electro Components Company, who were willing to change over, but this was pursuant to letter dated 24th September, 1978 filed by the complainants themselves which clearly indicates the change over to the new employer on their own free will and this is how the Auto Components Company took over the employees of Electro Components Company. Electro Components 11 Company thereafter totally discontinued manufacture of this product. According to the respondent employer the partnership firm Auto Components was converted into a private limited company under the name and style of Shekoba Auto Private Limited on 6th June, 1985. They have taken up new employees in addition to those who were taken over from Electro Components Company and in March, 1999 the Respondent No. 1 Shekoba Auto Pvt. Ltd., has discontinued its manufacturing activities. 5. As regards the claim of the complainants that the respondent Nos. 1 and 2 are very close knit and the product is interchangeable, it is the case of the respondents that the product of Respondent nos. 1 and 2 are different and were not interchangeable as alleged. Their clients are separate, their raw-materials are separate and by no stretch of imagination can the product be construed to be interchangeable. According 12 to them, even the directors are different and workers of Respondent Nos. 1 and 2 were not interchangeable though admittedly they are members of a common union, namely, Neotronic Pvt. Ltd., and Shekoba Auto Pvt. Ltd., Kamgar Sanghatana and that is how a common group of union activists interact with the management of both the companies. However, the demands, etc., are submitted separately and they are discussed by the common group with the management of Respondent Nos. 1 and 2 and the settlements were arrived at separately, which goes to show that the union and the concerned Government Agencies have accepted the fact that two companies are separate legal entities and it is specifically stated that the complaint is false, frivolous and made with the sole aim of misleading the Court and there is absolutely no functional integrality as alleged as the factory licences, Central Excise registration, Sales Tax registrations, Certificate of Incorporation under the Companies Act, 13 E.S.I., registration numbers, Provident Fund numbers, M.S.E.B., power sanction/supply etc., are distinctly separate. The Respondents also denied the fact that they are together employing 130 employees. On the other hand, it is their case that the Respondent No. 1 had 44 employees and Respondent No. 2 had 69 employees. Therefore, this by itself establishes the position that Chapter VB of the Industrial Court, 1947 is not applicable and hence allegation of non-compliance of Section 25-N becomes baseless and without substance. 6. In so far as Respondent No. 1 (i.e. Shekoba Auto (P) Ltd.,) is concerned, the manufacturing process in the factory of Respondent No. 1 has been totally discontinued and that the Respondent has used the word 'retrenchment' instead of the word 'closure' only because of the fact that the Respondent being a private limited company duly registered under the 14 Companies Act, the Respondent cannot just close the doors like a private owner and the Respondent has to complete many formalities under the Companies Act and has also to complete business deals like recovery of bills and clearance of dues of suppliers, etc. and so far as the manufacturing activities and the workmen employed thereon are concerned, it is a complete closure. In their reply to the complaint, the Respondent also placed reliance on the judgment of the Supreme Court in the case of Haryana Seeds Development Corporation Ltd., vs. Presiding Officer and another (1997 II C.L.R. 395). The Supreme Court in the aforesaid case has observed that in case of closure, the rigor imposed under Section 25 (F) of the Industrial Disputes Act, stands excluded. In the alternative, it is their contention that all the requirements under Section 25(F) of the Industrial Disputes Act have been scrupulously complied with by the Respondent prior to the action of discontinuation 15 of manufacturing process and 'Retrenchment' of workmen engaged thereon. Paragraph 5 of the complaint in this respect is blatantly false, frivolous and mischievous and it is their case that the complainants have not been able to show how the compensation awarded to them is not correctly calculated and the documents filed by the complainants themselves would go to show that the Respondent did take into consideration the previous service of the workmen prior to their initiation in Shekoba Auto Pvt. Ltd. i.e., the present Respondent No. 1 and that while calculating the compensation service of 23 years has been taken into consideration in respect of all the employees who came over to Auto Components Company in 1978. This goes to show the bonafides of the Respondent and malafides of the complainant employees. It was the case of the Respondents that they have duly communicated to the Union of the complainant workmen about the 16 stoppage of the manufacturing activities and, therefore, the claim of the employees of re- employment of retrenched workmen does not arise. In so far as the unit of Hubli is concerned, it is submitted that they do not own any unit at Hubli. There is a partnership firm in the name and style of Hi-Tech Products Co. which does manufacture similar items like the items produced by the Respondent No. 1 and, therefore, on this count also the complaint is unsustainable and as the complainants have failed to show how the provisions of Section 25(N) of the Industrial Disputes Act, 1947 are applicable and the Respondent has also stated that it has paid all the legal dues to the complainants including the amount payable under Section 25(F) of the Industrial Disputes Act, without deducting any dues and on the other hand, they have suffered loss of Rs. 10,000/- per day on account of wages of the workmen and, therefore, the complaint deserves to be dismissed. 17 18 7. The learned Member of the Industrial Court by his order dated 29th September, 1999 allowed the complaint in favour of the complainant employees. The learned Member of the Industrial Court on the basis of the evidence on record arrived at a finding that the complainants have proved that the respondents have engaged in unfair labour practices under Item 9 of Schedule IV of MRTU & PULP Act, 1971 and that they are entitled for the relief sought which were the two demands considered by him for adjudication. The order came to be challenged by preferring a writ petition in this Court. The Petitioner employer raised a preliminary issue before the learned Single Judge that the compliant has been filed by the complainants under Item 9 of Schedule IV of the MRTU & PULP Act, 1971 which was not maintainable and cases of termination are to be tried by the Labour Court as contemplated under Section 7 of the Act by placing reliance on the decision of the Supreme Court in the case of M/s. 19 Lokmat Newspapers Pvt. Ltd., vs. Shankarprasad (1999 II CLR 433) wherein it is laid down the proposition of law that the scope and ambit of Item 1 is extremely vide and also includes the cases of retrenchment. It was also the case of the Petitioner employer that the issue was considered by this Court in the case of Pepsi Co. India Holdings Pvt. Ltd., vs. Noshir Elavia, 2002 (1) CLR 953 wherein it was held that the cases of termination of service will have to be filed under Item 1 of Schedule IV and Item 9 cannot be invoked for the said purpose. It is submitted that the same view was followed by this Court in the case of Supertex (India) Corporation vs. Radhashyam Pandey, 2001 III CLR 299 and in Dilip Wawande vs. Industrial Court, Nagpur, 1995 II CLR 897, wherein it was held that the Industrial Court cannot deal with the complaint in respect of termination of services falling under Item 1 of Schedule IV of the MRTU & PULP Act. This preliminary issue was contested by the employees on the ground 20 that this being the issue which goes to the root of the matter, which was not taken up before the Industrial Court and, therefore, the said question cannot be decided but the learned Single Judge negatived the contention on behalf of the employees in view of the decision rendered by the Supreme Court in the case of Chittoori Subbanna vs. Kodappa Subbanna, AIR 1965 SC 1325 wherein it was held that a pure question of law not depended upon the determination of any question of fact should be allowed to be raised even at the last stage and that it is also needless to mention that the jurisdiction of the Court cannot be conferred by the conduct of the parties. Therefore, the learned Single Judge dealt with the matter on two issues. Firstly, as to whether the Industrial Court had jurisdiction to entertain the complaint and as regards the finding given by the Industrial Court in respect of functional integrality between the Petitioner and Respondent No.41 and on both the counts arrived at the finding that the Industrial 21 Court not only lacked jurisdiction but even on merits no case has been made by the complainants and the Industrial Court has lost sight of the factual aspect while considering the provisions of the Industrial Disputes Act which do not contemplate two independent companies to be one industrial establishment or undertaking and the impugned order of the Industrial Court was found to be erroneous and was quashed and set aside. 8. Mr. S.J. Deshmukh, the learned counsel appearing for the appellant employees submitted that the learned Single Judge failed to appreciate that by allowing the writ petition the learned Single Judge committed an error of law whereby the Respondent No. 1 without taking recourse to the provisions of Section 25-O of the Industrial Disputes Act, 1947 was allowed to close down its undertaking which was an illegal closure. It is further contended that it has clearly amounted to granting of permission to Respondent No. 1 to close 22 down its undertaking though Section 25-O of the Industrial Disputes Act, 1947 was attracted. 9. Another contention raised by Mr. Deshmukh, the learned counsel for the Appellants, is that the learned Single Judge has failed to appreciate that on the basis of evidence on record of the case it was conclusively proved that there was complete financial and functional integrality between the Petitioner and Respondent No. 41 and since the total number of employees exceeded 100, Chapter VB therefore was attracted and the Respondent No. 1 ought to have taken prior permission for closure under Section 25-O of the Industrial Disputes Act. Mr. Deshmukh submitted that the preliminary issue raised before the learned Single Judge by the respondent employer as regards the jurisdiction of the Industrial Court to entertain the complaint treating as the case of termination and the same being accepted, is an apparent error on the face 23 of record. 10. On the other hand, Mr. C.U. Singh, the learned Senior Counsel for Respondent No. 1, has submitted that the Industrial Court does not have the jurisdiction and a specific jurisdiction in this behalf is vested in the Labour Court. It is further contended that there is no clubbing together two different employers for the purpose of applying Section 25K and 25L of the Industrial Disputes Act, 1947. The number of workmen is to be seen, and 'workmen' can only be those employed by the employer who is closing down or retrenching workmen. Employees of an altogether different company can never be clubbed together as they are not the 'workmen' of the Respondent No. 1 Company. It is further contended that the findings recorded by the Industrial Court in respect of functional integrality between the Respondent No. 1 and the Respondent no. 2 are not only erroneous but are also 24 perverse as they are contrary to the record and, therefore, the judgment is rightly set aside by the learned Single Judge. It is the contention of the learned counsel for the Respondent No. 1 that the Industrial Court having appraised of the law on the said issue had completely misdirected itself while coming to the conclusion. 11. The points which arise for our determination are whether the complaint as preferred and filed before the Industrial Court under Item 9 of Schedule IV of the MRTU & PULP Act, 1971 was maintainable or not and whether the complainants had been able to establish that the provisions of Section 25-O of the Industrial Disputes Act, 1947 are attracted in their case and, therefore, the retrenchment is in contravention of Section 25-N of the Industrial Disputes Act. In short, whether Chapter VB of the Industrial Disputes Act, 1947 is attracted to the case of 25 the complainants? Point No. 1. 12. The learned counsel appearing for the appellants submitted that the whole approach of the learned Single Judge was misdirected as it held that complaint under Item 9 of Schedule IV of the MRTU & PULP Act was not applicable in the facts of the case and that as it was the case of termination it will fall under Item 1 of Schedule IV of the MRTU & PULP Act. It was, therefore, submitted that the decision rendered by the Supreme Court in the case of S.G. Chemicals and Dyes Trading Employees Union and S.G. Chemicals and Dyes Trading Limited and Another, (1986 I L.L.J. 490) clearly lays down the para-meters in the matter of initiating complaint under Section 28. Item 9 of Schedule IV is attracted if there is a contravention of subsisting settlement with regard to salary and other benefits between the workmen and 26 Management and there is a closure contravening the provisions of Section 25-O of the Industrial Disputes Act, 1947 and consequent failure to implement the settlement amounts to unfair labour practice and it is submitted that the said decisions will hold the field. Per contra, it is the contention of Mr. C.U. Singh, the learned Senior Counsel appearing for the respondent employer, that the Supreme Court in M/s. Lokmat Newspapers Pvt. Ltd., vs. Shankarprasad (supra) after examining various clauses of item 1 has held that it leaves no room for doubt that when the Legislature used the words 'discharge' or 'dismissal' of the employees under circumstances enumerated in clauses (a) to (g) in item no.1 of Schedule IV, it not only contemplated dismissal orders which obviously are penal in nature but it also contemplated discharge orders which may either be penal or non-penal in nature and still if any of the relevant clauses of item no. 1 got attracted in connection with such discharge 27 orders they would make the employer, author of such discharge orders, answerable for the alleged 'unfair labour practice' permeating the passing of such simplicitor discharge orders. To recapitulate, in the present case, respondent's complaint is not that his discharge was by way of penalty but his complaint is that the discharge order in his case was a result of victimisation and was not passed in good faith but was passed on patently false reasons and was a result of undue haste on the part of the appellant-employer. Whether the said complaint was justified on merits or not is a different matter but it cannot be said that such a complaint regarding non-penal discharge order was dehors the scope and ambit of item no. 1 of Schedule IV of the MRTU & PULP Act. Mr. C.U. Singh has also placed reliance on the decision of the Pepsi Co. India vs. Noshir Elavia, (supra) wherein this Court held that although there may have been a breach of the standing orders applicable to the establishment, the result is that 28 there has been a termination of service of the employee. Consequently, the reliefs, which can be claimed is of reinstatement with continuity of service with full back wages. This is a relief which can be granted by the Labour Court under Item 1 of Schedule