CWP No.1268 of 2001 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.1268 of 2001 DATE OF DECISION: April 21, 2011 NASIB CHAND ETC. ...PETITIONERS VERSUS PRESIDING OFFICER LABOUR COURT, PATIALA ...RESPONDENTS ETC. 2. CWP No.13003 of 1999 SUKHDEV RAJ ...PETITIONER VERSUS P.O.L.C. RAJPURA ETC. ...RESPONDENTS PRESENT: MR. P.S. BHANGU, ADVOCATE FOR THE PETITIONERS. MR. K.V.S. KANG, ADVOCATE AND MR. JAI BHAGWAN, ADVOCATE FOR MR. ARUN PALLI, SERNIOR ADVOCATE FOR THE RESPONDENTS. 3. CWP No.8715 of 1999 BHAJAN SINGH ETC. ...PETITIONERS VERSUS PRESIDING OFFICER LABOUR COURT, PATIALA ...RESPONDENTS ETC. 4. CWP No.7692 of 1999 DES RAJ AND OTHES ...PETITIONERS VERSUS M/S DALMIAN BISCUITS PVT. LTD., RAJPURA ...RESPONDENTS AND ANOTHER CORAM: HON'BLE MR. JUSTICE K.KANNAN. 1. Whether reporters of local papers may be allowed to see the judgement? Yes/No 2. To be referred to the reporters or not? Yes/No 3. Whether the judgement should be reported in the digest? Yes/No CWP No.1268 of 2001 -2- PRESENT: MR. SATYA PAL JAIN, SENIOR ADVOCATE WITH MR. DHEERAJ JAIN, ADVOCATE FOR THE PETITIONERS. MR. K.V.S. KANG, ADVOCATE AND MR. JAI BHAGWAN, ADVOCATE FOR MR. ARUN PALLI, SERNIOR ADVOCATE FOR THE RESPONDENTS. K.KANNAN, J. I. The lis 1. The above cases address the common question relating to the validity of the awards passed by the Labour Court rejecting the reference obtained at the instance of the workmen who complained that they had been illegally terminated from service. All the petitioners were admittedly workmen under the 2nd respondent-Management in a biscuit factory. To a contention by the workmen that they had been illegally terminated from service on 25.10.1989, without complying with the statutory mandate of Section 25N or 25F of the Industrial Disputes Act, the defence was that the factory had become sick and it had been closed on 25.10.1989, and since it was a case of closure, the petitioners could not complain that there had been any illegal termination of service. It was also the contention that the demand notices themselves had been issued only in October, 1994 and a reference sought after a long delay was barred by laches and limitation. It was also their contention that the petitioners through their union representatives had been parties to a settlement that had been brought about by the Management and the petitioners had also received the first installment of `500/- and it was brought at a time when proceedings had been taken before the BIFR. The BIFR had declared the company as “sick” and provided for a settlement and the persons who were being parties could CWP No.1268 of 2001 -3- not resile from the same and complain of illegal termination of service. II. Dismissal of the reference on the ground of limitation, whether justified 2. The Labour Court set out all the facts, but it did not choose to go into the merits and rejected the reference on a singular point that the petition was barred by limitation and the petitioners being guilty of unexplained delay in seeking reference were not entitled to secure any relief. The issue becomes immediately relevant for being considered, for, that will determine the expediency of whether broach the issue on merits or not. 3. Learned Senior Counsel appearing on behalf of the petitioners in some of the cases Sh.Satya Pal Jain points out that there is no bar of limitation for seeking a reference for illegal termination and the provisions of Article 137 of the Limitation Act are not applicable. If ever there was delay, it could always be sufficiently dealt with by denial of back wages in full or in portion and that there would be no justification for rejecting the reference at all. The petitioners would also contend that in any event if there was a delay, it was duly explained by the fact that the workmen had been engaging themselves in various litigations in various forums. During the year 1989-90, the petitioners participated before the BIFR and later at AIFR and when their claims had been dismissed they had also sought intervention through a writ petition before this Court. The writ petition came to be dismissed observing that proper remedy for the petitioners would be to apply to the Labour Court under the Industrial Disputes Act. It was at that time that they sought a reference and therefore, if there had been a delay, it was on account of relevant factors culminating ultimately in the CWP No.1268 of 2001 -4- proceedings before the Labour Court. There was therefore no ground rejecting the petition on the issue of delay. 4. The learned counsel refers to a ruling of the Supreme Court in Shahji vs. Executive Engineer, PWD, reported in (2005) 12 SCC 141 that that even if there was a delay and the Court comes to conclusion that termination was illegal, it can still mould the relief to be granted to workmen. In such cases, the award of back wages can either be permitted or curtailed. In this case, there has been an observation in the passing that the act of closure of the factory by the Management was made resulting in termination of workmen from service was not in accordance with law. Evidently, it was a case where the statutory mandate for either closure or termination had not been followed and the Court could not have rejected the petition merely on the ground of laches. To the same point is also the decision of the Hon’ble Supreme Court in Ajaib Singh vs. Sirhind Cooperative Marketing-Cum-Processing Service Society Limited and Another reported in (1999) 6 SCC 82 that held that a reference of industrial dispute to Labour Court was not subject to limitation under Article 137 of the Limitation Act. The Hon’ble Supreme Court was intervening in a case where this Court had found the said Article as applicable to deny relief to workmen who were seeking for relief after 5 years after termination. Learned counsel also refers to some decisions of this Court, but I do not believe they are necessary since the law is too well settled and comprehensive that a reference cannot be defeated merely on the ground of delay or laches. I have already observed that even the Labour Court has found the closure and termination to be not in accordance with law and therefore, the Labour Court was bound to have entered into the merits of the CWP No.1268 of 2001 -5- contention by the workmen. The rejection of reference was clearly bad. III. The issues on merits: (i) Effect of closure & (ii) Binding nature of settlement 5. The contention of the Management on the maintainability of the petition is also grounded on two points captioned above. It is stated that there had been no termination of service, but on the other hand, the factory had become sick and therefore, it was closed. It is admitted that the factory was employing nearly about 500 workers and the provisions in Chapter VB of the Industrial Disputes Act were attracted. Even if the factory had remained sick, the factory could not have been closed without a reference to Section 25-O and the termination could not have been made without providing for the compensation as laid down under Section 25-N of the Industrial Disputes Act. The resultant termination from service was also consequently bad and the Management did not have a right to contend that since it was not a case of termination and the violation of Section 25-F was not attracted. Learned counsel appearing for the Management Sh.K.B.S.Kang argues that the Labour Court is not competent to go beyond the terms of reference. The reference was whether the termination of the workmen complained of by them in violation of Section 25-F was justified or not. The Labour Court was not entitled to traverse beyond that limit to hold that it was not merely a case of termination of service, but it was a case of closure which had not followed the mandate of Section 25-O. I find this contention also to be meritless in a case where the workmen have been prevented from working for whatever reasons. They are entitled to complain that there had been violation of Section 25-F, if the termination had resulted by a closure not in accordance with law. If, on the other hand, it CWP No.1268 of 2001 -6- transpires that there had been no closure in the manner contemplated in Section 25-O but there arose termination of services to workmen, the workmen were entitled to plead that they had been illegally terminated and seek for a reference on that basis. They are entitled to ignore the closure with reference to Section 25-O as non est and seek for a reference that the termination was bad in law. It is irrelevant that termination resulted from closure which is not a closure in the eye of law so long as Section 25-O mandate was not followed. A reference sought by the workmen complaining of illegal termination of service was, therefore, perfectly justified. 6. Yet another line of defence taken by the Management was that there had been a settlement between the parties and the petitioners had been paid `500/- in terms thereof and while all the other remaining workers had received subsequent installments as per the terms of settlement, the petitioners alone turned out to be the disgruntled elements who were out to draw blood and rejected even the offer of the amounts paid by the Management for the benefit of the workers. There had been ultimately sale of premises and even the staff quarters and the entire factory premises had been demolished and there existed presently no factory. The petitioners had known about the same, but had still refused the compensation package and they had been insisting for a right of reinstatement. IV. Settlement in contravention of law shall not estop workmen 7. This issues could be seen in two ways: (i) If the closure had been bad, would any settlement undertaking to receive any amount justify the closure and estop the workmen from complaining that termination was illegal? (ii) If the factory had indeed been closed, are the workmen justified CWP No.1268 of 2001 -7- in seeking for reinstatement and back wages? As far as first point is concerned, it is not denied by the senior counsel appearing on behalf of the petitioners that they have not received `500/- purported to be the first installment of the amount guaranteed under the settlement. The contention, however, is that the closure that had been slapped on the workmen was against law and therefore, even the settlement alleged to have been entered into cannot bind them to enable the Management to contend that they had no right to complain of illegal termination. This point has been answered by the Hon’ble Supreme Court in M/s Oswal Agro Furane Ltd. and another vs. Oswal Agro Furane Workers Union and others, reported in AIR 2005 SC 1555. The Hon’ble Supreme Court held that obtaining of prior permission from appropriate Government in case of closure under Section 25-O is mandatory and ruled in paras 14 and 15 of the said judgement as under:- “14. A bare perusal of the provisions contained in Sections 25-N and 25-O of the Act leaves no manner of doubt that the employer who intends to close down the undertaking and/or effect retrenchment of workmen working in such industrial establishment, is bound to apply for prior permission at least ninety days before the date on which the intended closure is to take place. They constitute conditions precedent for effecting a valid closure, whereas the provisions of Section 25-N of the Act provides for conditions precedent to retrenchment; Section 25-O speaks of procedure for closing down an undertaking. Obtaining a prior permission from the appropriate Government, thus, must be held to be imperative in character. 15. A settlement within the meaning of Section 2(p) read CWP No.1268 of 2001 -8- with sub-section (3) of Section 18 of the Act undoubtedly binds the workmen but the question which would arise is, would it mean that thereby the provisions contained in Sections 25-N and 25-O are not required to be complied with? The answer to the said question must be rendered in the negative. A settlement can be arrived at between the employer and workmen in case of an industrial dispute. An industrial dispute may arise as regard the validity of a retrenchment or a closure or otherwise. Such a settlement, however, as regard retrenchment or closure can be arrived at provided such retrenchment or closure has been effected in accordance with law. Requirements of issuance of a notice in terms of Sections 25-N and 25-O, as the case may, and/or a decision thereupon by the appropriate Government are clearly suggestive of the fact that thereby a public policy has been laid down.” 8. I have, therefore, no doubt in my mind that the fact that workmen had received `500/- itself was not to be understood as meaning thereby that they are barred from complaining that termination effected against them was bad. If at all, the amounts received shall be given an appropriate adjustment but they ought not to be taken as disentitling the workmen from securing the reliefs which are otherwise tenable in law. V. Relief on lines of expediency in changed circumstances 9. The point that would flow out of the discussion is to consider the expediency of allowing the reference in the manner sought for through claims for reinstatement and back wages. The admitted fact is that the trouble arose when the management had sold the factory and the concrete CWP No.1268 of 2001 -9- assets were liquidated. The factory premises are reported to have given place to development of a housing colony. It will be futile under such circumstances to give a direction of reinstatement of the workmen. I hold that the termination was bad and it was indeed the illegal closure that resulted in such termination. A right of reinstatement could be the obvious corollary in a case where there is a violation of Section 25-O or Section 25-N or Section 25-F. Having regard to the subsequent turn of events, I would think that the appropriate relief would be the grant of compensation for illegal termination. The petitioners have given the details of entering into service and their salary that had been last drawn at the time when the termination took effect on 25.10.1989. I direct that all the petitioners shall be paid compensation @ `10,000/- for every completed year of service from the date of entry till the date of termination. For any period that falls short of a year of completed service, it shall be proportionate to the compensation payable for 1 year of service. In directing that the compensation shall be at least `10,000/- per year, I have gone by the fact that the workmen had been drawing wages in the range of `860/-`1050/- p.m. and the average yearly salary would be at least `10,000/-. This, in my view, would meet the ends of justice. All the petitioners would be entitled to determination of the amounts on that basis and the 2nd respondent shall be liable to pay the same. It was stated by the learned counsel for the 2nd respondent that the amount set apart under the settlement is still available in bank deposit. The said amount shall be recovered in part satisfaction of the workman's claims. For the balance of amount, the workman shall be entitled to recover in the manner provided under Section 29 of Industrial Disputes Act and the assets CWP No.1268 of 2001 -10- of the erstwhile company in whatever form they exist shall be answerable without being in anyway affected by change in character by virtue of transfer and the intervention of 3rd party interests. The Directors of the company at the relevant time when the company was closed on 25.10.89 shall be liable for being proceeded against for enforcement of the workman's claims, in accordance with law. 10. All the writ petitions are disposed of in the above terms. April 21, 2011 (K.KANNAN) Gulati JUDGE