Case: Avon Services (Production Agencies) Pvt. Ltd Vs. Industrial Tribunal, Haryana Farldabad Ors

Socio-economic justice, the corner stone of industrial jurisprudence to be achieved by the process of give and take, concessions and adjustments of conflicting claims would hardly advance if the industrial dispute involved in this appeal by special leave brought by the appellant M/s. Avon Services (Production Agencies) Pvt . Ltd. convassing some technical legal nicety rendering the two employees jobless for more than seven years is encouraged. A brief recital of few facts touching upon the controversy would reveal the arena of dispute. The appellant is a Priva te Limited Company incorporated underthe Companies Act, 1956, and is engaged in the business of manufacturing Fire Fighters Foam Compound. It has set up two factories, one at Bombay and the other at Ballabhgarh. The industrial dispute which is the subject-matter of appeal relates to Ballabhgarh factory. According to the appellant this factory, when commissioned in 1962, was divided into two sections, now styled as two separate undertakings: (i) manufacturing section; and (ii) packing material making section. The manufacturing section comprised two sub- sections, viz., the chemical section, i.e. Foam Compound manufacturing section, and the boiler section. The packing material section was again composed of tw o sub-sections, one manufacturing containers, and the other painting of the containers. Respondents 3 and 4 according to the appellant were employed in the painting section. Around 1964 the appellant decided to buy containers from the mark et and consequently closed down its packing material making section but continued the painting sub-section. On 13th July 1971 the appellant purported to serve a notice on respondents 3 and 4 and one Mr. Ramni intimating to them that the management has decided to close the painting section effective 13th July 1971 due to unavoidable circumstances and hence the services of the three workmen would no longer be required and, therefore, they are retrenched. Even though it is alleged that the notice was served upon the three workmen, the Tribunal found that the notice never reached respondents 3 and 4. By the notice the workmen concerned were also informed that they should collect their dues under section 25FFF ofthe Industrial Disputes Act, 1947, from the office of the Company. Since 13th July 1971 respondents 3 and 4 have been denied employment by the appellant. A Trade Union of the employees of the appellant affiliated to Bharatiya Mazdoo r Sangh served a notice of demand, Annexure P-l dated 16th July 1971 inter alia calling upon the appellant to reinstate respondents 3 and 4 and the third workman and also to pay the full back wages. On 19th February 1972 as per Annexure P-2 , the Secretary to the Government of Haryana, Labour and Employment Department, intimated to the President of the Union that from amongst the demands contained in Annexure P- l, Demands 2 to 9 have been referred to Industrial Tribunal for adjudication. In respect of demand No. l relating to the reinstatement of the three workmen in the painting section, the reference was refused on the ground that there was no work for painting in the factory where these two workmen were working. This refusal to refer the demand concerning respondents 3 and 4 has been the subject-matter of a very serious submission on behalf of the Company that the reference subsequently made by the Government was invalid. To proceed further with the narrative. subsequently the Government of Haryana by its order dated 23rd November, 1972 referred the following dispute to the Industrial Tribunal for adjudication:"Whether the retrenchment of Sarvashri Mohammed Yamin and Mohammad Yasin w as justified and in order ? If not, to what relief they are entitledTribunal registered the reference at No. 81/72 and proceeded to adjudicate upon the dispute. Three issues were raised before the Tribunal and it is necessary to set d own the three issues here in order to point out that one of the contentions raised at the hearing of this appeal was never put forth before the Tribunal. The issues framed by the TribunalWhether the present reference is bad i n law for the reasons given in para No. 1 of the preliminary objection in the written statement ? (On management).2. Whether the statement of claim filed on behalf of the workmen is not in order ? (On management).3 . Whether the retrenchment of Sarvashri Mohammed Yamin and Mohammad Yasin was justified and in order ?If not, to what relief they aremanagement, in support of its contention covered by issue No. 1, urged before the Tribunal that once the Government declined to make a reference in respect of termination of service of respondents 3 and 4, the Government was not competent to refer the dispute for adjudication at a later date. The Tribunal negatived the contention observing that there is abundant authority in support of the proposition that the Government having once declined to make a reference, is not rendered incompetent from making a reference of the same dispute at a later date. Issue No. 2 was also answered against the appellant but as that contention was not raised before us, we need not go into the details of it. On issue No. 3, the Tribunal held that respondents 3 and 4 were retrenched and the case would squarely fall under s. 25F ofthe Industrial Disputes Act, 1947 (for short the Act) and as the appellant employer has not complied with the pre-condition laid down in s. 25F (a) and (b) of the Act to wit, serving of one months notice or wages in lieu of such notice and payment of retrenchment compensation, the retrenchment was invalid. The Tribunal was further of the opinion that as both the workmen have been in service for 15 years or so, they could have been conveniently absorbed in some other department and, therefore, the retrenchment was unjustified. the Tribunal accordingly directed reinstatement of respondents 3 and 4 with full back wages.The appellant moved the High Court of Punjab &Haryana for a writ of certiorari but the writ petition was dismissed in

Reasoning: . The opinion which the appropriate Government is required to form before referring the dispute to the appropriate authority is about the existence of a dispute or even if the dispute has not arisen, it is apprehended as imminent and requires resolution in the interest of industrial peace and harmony. Section 10(1 ) confers a discretionary power and this discretionary power can be exercised on being satisfied that an industrial dispute exists or is apprehended. There must be some material before the Government on the basis of which it forms an opinion that an industrial dispute exists or is apprehended. The power conferred on the appropriate Government is an administrative power and the action of the Government in making the reference is an administrative act. The formation of an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. Thus the jurisdictional facts on which the appropriate Government may act are the formation of an opinion that an industrial dispute exists or is apprehended which undoubtedly is a subjective one, the next step of making reference is an administrative act. The adequacy or sufficiency of the material on which the opinion was formed is beyond the pale of judicial scrutiny. If the action of the Government in making the reference is impugned by a party it would be open to such a party to show that what was referred was not an industrial dispute and that the Tribunal had no jurisdiction to make the Award but if the dispute was an industrial dispute, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before Government on which it could have come to an affirmative conclusion on those matters (see State of Madras v. C. P. Sarathy) ([1953] S.C.R. 334, ).The contention, however, is that once the appropriate Government applies its mind to the question of referring an industrial dispute to the appropriate authority and declines to make a reference, it cannot subsequently change its mind and make the reference of the dispute unless there is some fresh or additional material before it. It was said that once an industrial dispute is raised and the Government declines to make a reference, the opposite party is entitled to act on the supposition that the dispute in question was not worth referring and such a dispute would no more be in existence between the employee 1) and the concerned employer and that the Government cannot spring a surprise by subsequently unilaterally making the reference without any fresh or additional material being brought to its notice. Section 10(l) enables the appropriate Government to make reference of all industrial dispute which exists or is apprehended at any time to one of the authorities mentioned in the section. How and in what manner or through what machinery the Government is apprised of the dispute is hardly relevant. Section 12 casts a duty upon the Conciliation officer to hold conciliation proceedings in respect of the industrial dispute that exists or is apprehended. It is mandatory for the Conciliation officer to so hold the conciliation proceedings where dispute relates to a public utility service and a strike notice has been served under 6. 22. The conciliation officer must try to promote a settlement between the parties and either he succeeds in bringing the parties to a settlement or fails in his attempt, he must submit a report to the appropriate Government, but this procedure for promoting settlement cannot come in the way of the appropriate Government making a reference even before such a report isonly requirement for taking action under s. 10(1) is that there must be some material before the Government which will enable the appropriate Government to form an opinion that an industrial dispute exists or is apprehended. This is an administrative function of the Government as the expression is understood in contradistinction to judicial or quasi- judicial function. Merely because the Government rejects a request for a reference or declines to make a reference. it cannot be said that the industrial dispute has ceased to exist, nor could it be said to be a renew of any A judicial or quasi-judicial order or determination. The industrial dispute may nonetheless continue to remain in existence and if at a subsequent stage the appropriate Government is satisfied that in the interest of industrial peace and for promoting industrial harmony it is desirable to make a reference, t he appropriate Government does not lack power to do so under s. 10(1), nor is it precluded from making the reference o l the only ground that on an earlier occasion it had declined to make the reference. The expression "at any time" is s. 10( l) will clearly negative the contention that once the Government declines to make a reference the power to make a reference under s. 10(1) in respect of the same dispute gets exhausted. Such a construction would denude a very vital power conferred on the Government in the interest of industrial peace and harmony and it need not be whittled down by interpretative process. In Western India Match Co. Ltd., v. Western India Match Co. Workers Union &Ors., ([1970] 3 S.C.R 370.) an identical contention was raised in respect of a reference made under s. 4(k) of the U.P. Industrial Disputes Act which is in pari materia with s. 10(1) of the Act. Negativing this contention this Court observed asthe light of the nature of the function of the Government and the object for which the power is conferred on it, it would be difficult to hold that once the Government has refused to refer, it cannot change its mind on a reconsideration of the matter either because new facts have come to light or because it had misunderstood the existing facts or for any other relevant consideration and decide to make the reference. But where it reconsiders its earlier decision it can make the reference only if the dispute is an industrial one and either exists at that stage or is apprehended and the reference it makes must be with regard to that and no other industrialfollows that the Government does not lack the power to make the reference in respect of the same industrial dispute which it once declined to refer. But it was urged that the ratio of the decision would show that the Government must have some fresh material made available to it, subsequent to its refusal to make a reference, for the formation of a fresh opinion, for making the reference. It is not absolutely necessary that there ought to be some fresh material before the Government for reconsideration of its earlier decision. The Government may reconsider its decision on account of some new facts brought to its notice or for any other relevant consideration and such other relevant consideration may include the threat to industrial peace by the continued existence of the industrial dispute without any attempt at resolving it and that a reference would at least bring the parties to the talking table. A refusal of the appropriate Government to make a reference is not indicative of an exercise of power under s. 10(1), the exercise of the power would be a positive act of making a reference. Therefore, when the Government declines to make a reference the source of power is neither dried up nor exhausted. It only indicates that the Government for the time being refused to exercise the power but that does not denude the power. The power to make the reference remains intact and can be exercised if the material and relevant considerations for exercise of power are available; they being the continued existence of the dispute and the wisdom of referring it, in the larger interest of industrial peace and harmony. Refusal to make the reference does not tantamount to saying that the dispute, if it at all existed, stands resolved. On the contrary the refusal to make a reference not compelling the parties to come to a talking table or before a quasi- judicial Tribunal would further accentuate the feelings and a threat to direct action may become imminent and the Government may as well reconsider the decision and make the reference. It is, therefore, not possible to accept the submission that if the Government had on an earlier occasion decline d to make a reference unless it be shown that there was some fresh or additional material before the Government the second reference would be incompetent. It has not been shown that the dispute had ceased to exist and the very existence of the dispute enables the Government to exercise the power under s. 10(l) and it has been rightly exercised. The view which we are taking is in accord with the decision of this Court in Binny Ltd. v. Their Workmen &Anr. ([1972] 3 S.C.R. 518.) wherein it was found that the Government had declined to make a reference of the dispute on two previous occasions on the basis of which it was contended that the reference was invalid. The contention was negatived observing that the mere fact that on two previous occasions t he Government had taken the view that no reference was called for does not entitle the Court to conclude that there could be no cause for a reference at a later date.Alternatively it was contended that even if the appropriate Government has power to make a reference after having once declined to make the reference, it can only refer that industrial dispute which it had once declined to refer and no other dispute and that in this case the Government has referred an entirely different dispute than the one raised by the Union and that in respect of the referred dispute A the demand having not been made from the employer there was no such dispute in existence and, therefore, the reference was invalid. The contention in the form in which it is now canvassed was not raised before the Industrial Tribunal and even before the High Court. However, as we find substance in the contention we would not reject it on the technical ground that it was not raised before the Industrial Tribunal or the Highagainst this, reference was made to Management of Hindustan Steel Ltd. v. The Workmen &Ors., ([1973] 3 S.C.R. 303.) wherein the management contended that it is a case o f closure and the workmen contended that the termination was on account of retrenchment. The entire decision turns on the facts of the case. Hindustan Steel Ltd. had set up what was described as Ranchi Housing Project and this Project was complete d in 1966. After completion of the residuary work, the services of certain employees were terminated. This termination was questioned alleging that it was a case of retrenchment and as the condition precedent was not complied with, the retrenchment was invalid. The employer contended that it is a case of closure and payment of compensation was not a condition precedent and did not invalidate the termination of service. This Court held that the word undertaking as used in s. 25FFF appears to have been used in its ordinary sense connoting thereby any work, enterprise, project or business undertaking. It is not intended to cover the entire industry or business of the employer. Even closure or stoppage of a part of the business or activities of the employer would seem in law to be covered by this sub-section. This question has to be decided on the facts of each case. Examining the facts of the case, this Court came to the conclusion that it was a case of closure.In the present case the appellant attempted to serve notice dated 13th July 1971 on respondents 3 and 4 and one Mr. Ramni. In this notice it was stated that the management has decided to close the painting section with effect from Tuesday, 13th July 1971 due to unavoidable circumstances and the services of the workmen mentioned in the notice would no longer be required and hence they are retrenched. The workmen we re informed that they should collect their dues under s. 25FFF from the office of thetenor of the notice clearly indicates that workmen were rendered surplus and they were retrenched. It is thus on the admission of appellant a case ofwas, however, urged that notice refers to s. 25FFF and there fore employer intended it to be a notice of termination of service consequent upon closure of painting undertaking. Now, even if a closure of an undertaking as contemplated by s. 25FFF need not necessarily comprehend a closure of the entire undertaking and a closure of a distinct and separate unit of the Undertaking would also be covered by s. 25FFF, the question is-whether painting subsection was itself an undertakingexpression undertaking is not defined in the Act. It also finds its place in the definition of the expression industry in s. 2(j). While ascertaining the amplitude of the expression undertaking in the definition of the expression industry, noscitur a sociis cannon of construction was invoked and a restricted meaning was assigned to it in Bangalore Sewerage Board v. Rajappa. ([1978] 3 S.C.R. 207 at 227.) While, thus reading down the expression, in the context of s. 25FFF it must mean a separate and distinct business or commercial or trading or industrial activity. It cannot comprehend an infinitismally small part of a manufacturing process.The Tribunal found that the alleged retrenchment notice was not served upon workmen and that finding was not controverted by pointing out some evidence which may point to the contrary. The notice expressly states that the workmen are retrenched though it simultaneously states that the action is taken under s. 25FFF. But if the Company had a container making section which was closed way back in 1964 and yet these three workmen who used to paint the containers were retained, it cannot be said that painting section was a recognised sub-section eligible for being styled as a part of the undertaking. If such mini-classification is permitted it would enable the employed to flout s. 25 with impunity. These workmen appear not to have been employed initially as painters. They were doing some other work from which they were brought to painting section. They could have as well been absorbed in some other work from which they were capable of doing as observed by the Tribunal. If painting was no more undertaken as one of the separate jobs, the workmen would become surplus and they could be retrenched after paying compensation as required by s. 25. To style a job of a particular worker doing a specific work in the process of manufacture as in itself an undertaking is to give meaning to the expression undertaking which it hardly connotes. An employer may stop a certain work which was part of an undertaking but which could not be classified as an independent undertaking, the stoppage of work in this context would not amount to closure of the undertaking. The three workmen were doing work of painting the containers. No records were shown that there was a separate establishment, that it was a separate sub-section of that it had some separate supervisory arrangement. In fact, once the container making section was closed down, the three painters became part and parcel of the manufacturing process and if the painting work was not available for them they could have been assigned some other work and even if they had to be retrenched as surplus, the case would squarely fall in s. 25F and not be covered by s. 25FFF, on a specious plea of closure of anTribunal in our opinion was right in holding that this was a case of retrenchment and as conditions precedent were not complied with, the retrenchment was invalid and the relief of reinstatement with full back wages was amply deserved.