Case: Tatanagar Foundry Co. Ltd Vs. Their Workmen

Ramaswami, J.1. This appeal is brought by special leave from the award of the Industrial Tribunal, Bihar dated September 15, 1967.2. The appellant, Tatanagar Foundry Co., Ltd., is incorporated in the State of West Bengal and owns two manufacturing establishments one located at Belur in the State of West Bengal and the other in Jamshedpur in Bihar. The appellant carries on its business at Belur but has now closed its business at Jamshedpur with effect from November 20, 1956. At the time of the closure the appellant employed 1360 workmen in its Jamshedpur establishment where it was producing cast iron pipes, specials and heavy grey iron castings including ingots, moulds etc. On September 20, 1966 the appellant issued a notice in respect of its business at Jamshedpur that due to shortage of orders and other economic reasons, about 120 workmen are being retrenched and the Commissioner of Labour, Government of Bihar, Patna was duly notified of the said retrenchment. On September 22, 1966 the Labour Superintendent, Government of Bihar, Jamshedpur, held conciliation proceedings at which the appellant agreed to retain the services of 14 of the retrenched workmen and the union agreed to the retrenchment of the remaining workmen. On or about October 12, 1966 by a notice of the same date, the appellant desired to retrench about 400 workmen, but at the intervention of the Superintendent of Labour the notice was temporarily withdrawn with a view to discuss the matter with the union. Accordingly a meeting was fixed on October 21, 1966 between the appellant and the union at Jamshedpur but the said meeting could not take place. On October 29, 1966 the appellant by a notice laid off nearly 600 quality raw material. In a letter dated November 8, 1966 the Superintendent of Labour, Jamshedpur wrote that the General Secretary of the union had put up a proposal for running the Jamshedpur establishment of the appellant on a co-operative basis and requested Mr. G. D. Agarwalla, Director of the appellant to place the matter before the Board of Directors of the appellant. At their meeting on November 17, 1966 the Board of Directors considered the letter dated November 8, 1966 of the Labour Superintendent and resolved that the State Government should be desirous of running the Jamshedpur plant on a co-operative basis and Sri G. D. Agarwalla was authorised to conduct negotiations with the State Government of Bihar. But no further communication was received from the Government of Bihar indicating its willingness or intention to run the Jamshedpur branch of the appellant. At its meeting on November 17, 1966, the Board of Directors of the appellant considered the situation in the Jamshedpur plant and decided that it should be closed as early as possible and Mr. Agarwalla was authorised to take necessary steps to effect the closure. Pursuant to the decision of the Board of Directors Mr. Agarwalla issued a notice dated November 19, 1966. By the said notice the workmen of the appellant were informed of its decision to close the business at Jamshedpur for good with effect from November 21, 1966 for the reasons explained in the notice. All the workmen were also informed that their services were no longer required after November 21, 1966 and the workers should consider themselves as discharged with effect from the said date. On February 3, 1967 the Government of Bihar referred the following dispute to the Industrial Tribunal, Bihar, for adjudication under S. 10 (1) (d) of the industrial Disputes Act, 1947 (14 of 1947):"Whether the closure of the Tatanagar Foundry Co. Ltd., Jamshedpur is justified? If not, to what relief and compensation the workmen are entitled?"By its award dated September 15, 1967 the Industrial Tribunal held that it was satisfied that the closure of the Jamshedpur business of the appellant was not a closure but a lockout in the disguise of a closure and directed the reinstatement of the workmen with full wages for the period they have been out of employment.3. In support of this appeal it was argued in the first place that the Industrial Tribunal had no jurisdiction to go into the question whether the closure of the Jamshedpur business was justified or not for financial or other reasons. The contention was that the Tribunal having found that the factory had in fact closed down it had no jurisdiction to go into the question whether the closure could have been avoided. In our opinion the argument is well founded and must be accepted as correct. The distinction between a lockout and a closure has been explained by the decision of this court in the Management of Express Newspapers Ltd. v. Workers and Staff employed under it (1963) 3 SCR 540 = (AIR 1963 SC 569 ).It was pointed out in that case that in the case of a closure the employer does not merely close down the place of business but he closes the business itself finally and irrevocably. A lockout on the other hand indicates the closure of the place of business and not closure of the business itself.In the present case the totality of facts and circumstances would lead to the conclusion that the undertaking at Jamshedpur was closed down completely and was a final and irrevocable termination of the business itself. But the Tribunal has come to a finding that the closure of the business was not bona fide but the closure was done in order to victimise the workmen. As regards the financial position the Tribunal took the view that on the whole the financial condition of the company in 1966 has not worsened to such an extent as to reasonably constitute a good ground for closing the business altogether. It might have been a ground for reorganising the company or rationalising it by retrenchment or otherwise but it could not be a ground for winding up the business altogether. In our opinion the finding of the Tribunal on this point is defective in law. It is now well established that in the case of a closure the employer does not merely close down the place of business but he closes the business finally and irrevocably.The closure has to be genuine and bona fide in the sense that it should be a closure in fact and not a mere pretence of closure.(see the decision of this Court in Tea District Labour Association v. Ex-Employees of Tea Districts Labour Association, (1960) 3 SCR 207 at p. 213 = (AIR 1960 SC 815 at p. 817).The motive behind the closure is immaterial and what is to be seen is whether it an effective one.(see the decision of this Court in Andhra Prabha Ltd. v. Secy. Madras Union of Journalists, (1967) 3 SCR 901 = (AIR 1967 SC 1869 ), and Kalinga Tubes Ltd. v. Workmen, AIR 1969 SC 90.

Decision reasoning: 1[ds]In our opinion the argument is well founded and must be accepted as correct. The distinction between a lockout and a closure has been explained by the decision of this court in the Management of Express Newspapers Ltd. v. Workers and Staff employed under it (1963) 3 SCR 540  = (AIR 1963 SC 569 ).It was pointed out in that case that in the case of a closure the employer does not merely close down the place of business but he closes the business itself finally and irrevocably. A lockout on the other hand indicates the closure of the place of business and not closure of the business itself.In the present case the totality of facts and circumstances would lead to the conclusion that the undertaking at Jamshedpur was closed down completely and was a final and irrevocable termination of the business itself. But the Tribunal has come to a finding that the closure of the business was not bona fide but the closure was done in order to victimise the workmen. As regards the financial position the Tribunal took the view that on the whole the financial condition of the company in 1966 has not worsened to such an extent as to reasonably constitute a good ground for closing the business altogether. It might have been a ground for reorganising the company or rationalising it by retrenchment or otherwise but it could not be a ground for winding up the business altogether. In our opinion the finding of the Tribunal on this point is defective in law. It is now well established that in the case of a closure the employer does not merely close down the place of business but he closes the business finally and irrevocably.The closure has to be genuine and bona fide in the sense that it should be a closure in fact and not a mere pretence of closure.(see the decision of this Court in Tea District Labour Association v. Ex-Employees of Tea Districts Labour Association, (1960) 3 SCR 207   at p. 213 = (AIR 1960 SC 815  at p. 817).The motive behind the closure is immaterial and what is to be seen is whether it an effective one.(see the decision of this Court in Andhra Prabha Ltd. v. Secy. Madras Union of Journalists, (1967) 3 SCR 901  = (AIR 1967 SC 1869 ), and Kalinga Tubes Ltd. v. Workmen, AIR 1969 SCTribunal has gone into the oral and documentary evidence adduced by the parties and reached the conclusion that the closure of the business was not due to unavoidable circumstances beyond the control of the appellant. We see no reason for interfering with the finding of the Tribunal on this aspect of the case.