Case: Yeshwant G. Chikhalkar Vs. Killick Nixon Limited

The nub of their complaints was that thegiven to them was not in accordance with the provisions of law as thehad violated the mandatory provisions of Chapterof the Industrial Disputes Act, 1947 (for short "the I. D. Act") as it had failed to obtain required permission from the Government and that it had also violated the law in respect of seniority prescribed under Sectionand Rule 81 of the I. D. Act. The employees had also complained that the action ofwas contrary to the settlement which was in subsistence. On all these counts the employees sought the relief of declaration of an unfair labour practice and restraining orders as against theThe company resisted the complaints filed by the employees and denied that it had engaged in any unfair labour practice. It repliedall the contentions raised by the employees. The company had specifically averred that thewas confined only to its Shipping Division and that it had strictly complied with the rules of seniority of the said Shipping Division and that it had also not violated any provisions of the subsisting Settlement and that there was no unfair labour practice of any nature engaged by the company as alleged by the employees. It was further pleaded by the Company that the provisions of Chapterof the I. D. Act was not applicable to the Shipping Division of the Company and, therefore, there was no question of seeking permission from the Government before thewas effected. In the Shipping Division the number of employees employed was less than 100. It also pleaded that the law in respect of the seniority and in respect of payment ofcompensation was strictly adhered to. The main plank of the company was that the Shipping Division is a separate undertaking of the Company and it has distinct and separate business employing 36 employees and it has no connection with the other undertakings or divisions owned by the company viz.(i) Snowcem Sales Division, (ii) Construction Equipment Division (iii) Clearing and Forwarding Division (iv) Agencies and Marketing Division and (v) Stationery Division. It refuted the claim of the employees that there is functional integrality of the Shipping Division with the aforesaid divisions owned by the company. Therefore, according to the Company, a seniority list was not prepared of all the employees employed by the company in all these Divisions. It also strongly refuted the plea of the employees that under the provisions of Chapterof the I. D. Act, the total number of employees employed by the company as a whole should be considered and not only those employees who are in the Shipping Division. The Company therefore prayed for dismissal of the complaint on all these2 ) THE Industrial Court by its Order dated December 24, 1998 dismissed the Complaint. It must be noted here that the Industrial Court has squarely dealt with all the points raised by the parties and has recorded its reasons on every point. In his thorough order the learned Member of the Industrial Court has rightly held that there is no functional integrality of the different divisions of the company with the Shipping Division wherein the concerned employees were employed. The main contention of the employees was that as the employees were transferable from one division to another and that there was unity of ownership and management, the entire company should be taken as one unit ignoring the separate divisions/undertakings/ establishments. The learned member has not accepted this contention and according to us rightly. The true test of two units being functionally integrated is laid down by the Supreme Court in various Judgments. It is a well established position and therefore we need not cite those judgments. This point has often arisen in the cases under the Employees Provident Funds Act, whereunder clubbing of two divisions or undertakings was questioned by the employers. It is now very well established that if one unit which is totally independent and which will not be closed or affected by the closure or stoppage of another unit owned by the same employer in that case these two units would be independent and not interdependent and, therefore, there cannot be any functional integrality between these units. If, however, one unit is adversely affected or is closed down because of the closure of the other unit and it cannot survive unless the other unit also functions in such a situation two units would be interdependent mutually. One would not survive unless the other continues to function. This concept of integrality between the two units is totally absent in the present case. The Shipping Division of the Company is altogether different and has no connection or relation with the activities of the other units. Merely because some employees are transferable or were transferred there being a unity of ownership and management it cannot be said that there is a functional integrality between the Shipping Division and the other divisions. According to us, the Industrial Court has rightly come to the conclusion that there is no functional integrality in existence between the Shipping Division and the other Divisions of the employer company and the natural consequences would be that the Chapterof the I. D. Act will not be attracted and therefore there was no necessity of seeking permission from the Government under Sectionof the Act and even the seniority of the shipping division alone was to be3 ) THE learned single Judge has dismissed the writ petition filed by the employees against the Order of the Industrial Court.

Court's reasoning:
We heard him at length. We are not able to take any different view taken by the Industrial Court and the learned single Judge. We have ourselves applied our mind to the submissions of the learned Counsel. We find no substance as the legal position is absolutely clear and well established. When the attention of the learned Counsel was drawn by us to the definition of the "industrial Establishment" there was no reply from the learned Counsel. The definition of the Industrial Establishment is a complete answer to all the submissions of the learned Counsel of the employees. We reproduce the said definition for ready reference:"industrial establishment or undertaking" means an establishment or undertaking in which any 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, (i) 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; (ii) if the predominant activity or each of the predominant activities carried on in such establishment or undertaking or any unit thereof is an industry and the other activity or each of the other activities carried on in such establishment or undertaking or unit thereof is not severable from and is, for the purpose of carrying on, or aiding the carrying on of, such predominant activity or activities, the entire establishment or undertaking or, as the case may be, unit thereof shall be deemed to be an industrial establishment or undertaking. "Applying the said definition in our case it becomes clear that the employer company is having several activities which are severable from each other and the Shipping Divisions activities are definitely severable from its other divisions viz. , (i) Snowcem Sales Division, (ii) Construction Equipment Division (iii) Clearing and Forwarding Division, (iv) Agencies and Marketing Division, (v) Stationery Division and a Shipping Division. It is not the case of the employees that thegiven to the Shipping Division employees was caused by any other Divisions or thiswill have any chain effect on any of the other5 ) FROM the definition it is clear that each division having severable activities of the employer is to be treated as distinct and separate unless there is mutualthat is to say, one unit cannot survive in the absence of the other one. The learned Counsel has made a reference to the decision of the Supreme Court in the case of S. G. Chemicals and Dyes Trading Employees Union v. S. G. Chemicals and Dyes Trading Ltd. and Ors. reported in(SC ). We are afraid the ratio of the said judgment is not applicable in the present5 ) FROM the definition it is clear that each division having severable activities of the employer is to be treated as distinct and separate unless there is mutualt is to say, one unit cannot survive in the absence of the other one. The learned Counsel has made a reference to the decision of the Supreme Court in the case of S. G. Chemicals and Dyes Trading Employees Union v. S. G. Chemicals and Dyes Trading Ltd. and Ors. reported inC ). We are afraid the ratio of the said judgment is not applicable in the presentcase.