Case: H. P. Mineral and Industrial Development Corporation Employees and apos; Union Vs. State of Himachal Pradesh and Others

2. The H.P. Wool Processors Ltd. was incorporated as a public limited company under the Companies Act, 1956 in 1974 and it started production sometime in January 1976. It was a subsidiary of the H.P. Mineral and Industrial Development Corporation and was wholly managed and controlled by the Government of Himachal Pradesh. It did not turn out to be a viable undertaking and it continued to suffer losses from year to year. The Board of Directors of the, therefore, in the meeting held on, decided to close the undertaking. On the same date it was also decided that the State Government may be moved for waiving the notice of 60 days required to be given under SectionA of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act). By order dated3 the State Government granted exemption from complying with the provisions of SectionA of the Act. Thereafter, ony issued an order for the closure of the undertaking with effect from3 and terminated the services of all the employees barring those necessary to maintain a minimum of administrative functions. The workmen were paid one months pay in lieu of notice, closure compensation, gratuity, amount in lieu of leave due and earned wages due to them. The, representing the workmen of they whose services were terminated, raised an industrial dispute which was referred for adjudication to the Tribunal by the Government of Himachal Pradesh. The Tribunal by its Award datedN of the Act was attracted which required three months notice to be given before retrenchment and since only one months wages in lieu of notice were paid, the Tribunal directed that the workmen be paid wages for two months3. Feeling aggrieved by the said Award writ petitions were filed in the High Court by then as well as by the. The High Court has observed that SectionO of the Act which provided for the procedure for closure of an undertaking had been struck down by this Court in its decision Excel Wear v. Union of India and the amended provisions of Section, which were introduced by Act 46 of 1982, came into force on4 and were not in operation on the day of the closure of the industry and that the provisions of SectionN of the Act had been held to be unconstitutional by the High Courts of Madras and Rajasthan in K.V. Rajendran v. Dy. Commr. of Labour and J.K. Synthetics v. Union of India [ 1984 (48) FLR 125 (Raj)]. The High Court has held that the workmen could not invoke the protection of either of these two provisions and that the only protection that was available to them was that contained in SectionsF of the Act and that the said provisions had been complied with by the. On that view of the matter, the High Court felt that no relief could be granted to the workmen. The High Court, therefore, set aside the Award of the Tribunal insofar as it awarded two months wages to the workmen and held that the workmen were not entitled to any relief.

Court's reasoning:
The submission of Shri Sharma is that since termination of services of the workmen constitutes retrenchment under Section 2(oo) of the Act the provisions of SectionN were applicable to the present case and the workmen could be retrenched only by giving three months notice which was not given in this case5. We are unable to accept this contention. It is no doubt true that in Section 2(oo) the expression retrenchment is defined to mean the termination by the employer of the service of a workman for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action and categories referred to in clauses (a) to (c) have been expressly excluded from the ambit of the said definition. But as far back as in 1957 a Constitution Bench of this Court in Hariprasad Shivshankar Shukla v. A.D. Divikar had laid down that retrenchment under Section 2(oo) of the Act would not cover termination of services of all workmen as a result of the closure of the business6. From the aforementioned observations it is evident that the definition of retrenchment as defined in Section 2(oo) of the Act has to be read in the context of SectionsF of the Act and if thus read retrenchment under Section 2(oo) does not cover termination of service as a result of closure or transfer of an undertaking though such termination has been assimilated to retrenchment for certain purposes, namely, the compensation payable to the workmen whose services are terminated as a result of such closure. In that view of the matter SectionN which deals with retrenchment cannot apply to the present case where termination of the services of the workmen was brought about as a result of the closure of the undertakingThe striking down of SectionO would not, ipso facto, result in enlargement of the ambit of SectionN so as to cover termination of services of workmen as a result of closure which was otherwise outside the ambit of Section. We are, therefore, unable to uphold the contention of Shri Sharma that SectionN was applicable in the present case and it was obligatory for the Management of they to give three months notice as required by SectionO was not available on account of the said provision having been struck down by this Court the only protection that was available to the workmen whose services were terminated as a result of closure was that contained in SectionsF of the Act. It is not disputed that both these provisions have been complied with in the present caseThe submission is that in view of the fact that the workmen were required to exercise their option in this regard and the workmen having exercised their option for absorption it was obligatory on the part of the State Government to have absorbed the workmen in government service or in the service of some other public sector corporation. In this connection, it may be mentioned that then had earlier filed a writ petition (CWP No. 518 of 1984) in the High Court wherein question of absorption was raised but the said writ petition was dismissed in view of the dispute having been referred to the Tribunal for adjudication. The said order of the High Court in the writ petition has become final insofar as the absorption of the workmen is concerned. Moreover, no direction can be given to the State Government to absorb the workmen in government service or in other public sector corporation because in the order dated3 no specific assurance was given regarding absorption to the workmen9. Shri Sharma has also invite our attention to the order passed by this Court on1 in (Himachal Worsted Mills Staff Assn. v. State of H.P. [CA No. 2957 of 1991]) wherein it was directed that compensation at the rate of Rs 40, 000 per person in full and final settlement of the claim for compensation should paid to the workmen whose services were terminated on account of closure of the Himachal Worsted Mills Ltd. The said order made in the facts and circumstances of that case cannot be applied to the present case because here we find that the workmen have been paid compensation and the benefits in accordance with the provisions of the Act.