Case: R.K. Shinde &amp; Others Vs. Shekoba Auto Private Limited, &amp; Another

2. The complainant employees had filed a complaint against the respondent employer, namely, Shekoba Auto Private Limited and Neotronics (P) Ltd., It was their case that the respondent employers have two units registered under the Factories Act, 1948 located in the same building. Originally, the employer of the complainant employees had a manufacturing unit known as Electro Components Company in the same premises. It is somewhere on or about 24th September, 1978 the said M/s. Electro Components Company got bifurcated in two units and informed the employees that their services stood transferred to another unit with effect from 1st November, 1978 on the same terms and conditions without break. It is their case that Auto Components Company was changed to Shekoba Auto (P) Ltd., and the name of Electro Components Company was changed to Neotronics (P) Ltd., i.e., the original respondent no. 2 and the employees of Electro Components Company were absorbed in these two companies. According to the complainant employees both respondent nos. 1 and 2 are very closely knit units and their production is interchangeable and the employees of respondent nos. 1 and 2 are frequently asked to work in each others factory and the wages are adjusted in their books. It is also their case that the sales and purchases are common. The directors are also common and there is one recognised union in both the respondents i.e. Sarva Shramik Sanghatana and that the negotiations and settlements for employees of both the units are held in common meeting though separate settlements are signed and, therefore, according to the complainant employees there is functional integrality between the respondent no. 1 and 2. It is their case that respondent no. 1 employs 40 employees and 4 staff whereas the respondent no. 2 employs 69 employees. Both of them taken together are more than 100 employees and, therefore, the provisions of Chapter VB of the Industrial Disputes Act, 1947 (hereinafter referred to as the I.D. Act) are applicable. The respondent no. 1 i.e. Shekoba Auto (P) Ltd., issued a letter dated 17th March, 1999 to all the complainant employees retrenching the complainants from 21st march, 1999 and this led to the challenge of their retrenchment by filing a complaint of unfair labour practice under Item 9 of Schedule IV of the MRTUPULP Act, 1971.3. It was the case of the complainant employees that the reasons for retrenchment are patently false, the calculation of compensation, service are also incorrect. No seniority list was displayed seven days prior to retrenchment so also no permission to retrench the employees under Sectionof the Industrial Disputes Act, 1947 was obtained. Hence there is noncompliance of the provisions of Sectionsof the Industrial Disputes Act, 1947 and consequently there is unfair labour practice under Item 9 of Schedule IV of the MRTUPULP Act, 1971. According to the complainant employees, respondent no. 1 has sent a letter to the complainants on 19th March 1999 stating that they are stopping production and, therefore, their action is not bonafide and it is apprehended that respondent no. 1 wants to get rid of the senior employees andproduction with the help of new recruits. Therefore, the proposed retrenchment is malafide. It was also their case that the respondent no. 1 has opened another unit at Hubli manufacturing the same product and they want to shift their assets to Hubli which also shows malafides on their part. Therefore, they sought a relief in the nature of declaration that the respondent nos. 1 and 2 have engaged in unfair labour practices and that they may be directed not to give effect to the notice of retrenchment issued to the complainant employees and continue to employ them.4. In reply, the Respondent No. 1 took the stand that the complaint is neither true nor bonafide nor it is legal. It was their case that in April, 1972, a partnership concern Electro Components Company was established. Auto Components Company, a new partnership firm came into being in November, 1978. Electro Components Company had decided to discontinue manufacture of auto condensers from their product line and this product was taken up by the new firm Auto Components Company and later on developed other products of its own. Majority of products of Auto Components Company were related to the automobile industry, whereas the product manufactured by Electro Components Company related to electronic industry. Though they accepted that Auto Components Company also took over the workmen working in Auto Condenser Section of Electro Components Company, who were willing to change over, but this was pursuant to letter dated 24th September, 1978 filed by the complainants themselves which clearly indicates the change over to the new employer on their own free will and this is how the Auto Components Company took over the employees of Electro Components Company. Electro Components Company thereafter totally discontinued manufacture of this product. According to the respondent employer the partnership firm Auto Components was converted into a private limited company under the name and style of Shekoba Auto Private Limited on 6th June, 1985. They have taken up new employees in addition to those who were taken over from Electro Components Company and in March, 1999 the Respondent No. 1 Shekoba Auto Pvt. Ltd., has discontinued its manufacturing activities.5. As regards the claim of the complainants that the respondent Nos. 1 and 2 are very close knit and the product is interchangeable, it is the case of the respondents that the product of Respondent nos. 1 and 2 are different and were not interchangeable as alleged. Their clients are separate, theirare separate and by no stretch of imagination can the product be construed to be interchangeable. According to them, even the directors are different and workers of Respondent Nos. 1 and 2 were not interchangeable though admittedly they are members of a common union, namely, Neotronic Pvt. Ltd., and Shekoba Auto Pvt. Ltd., Kamgar Sanghatana and that is how a common group of union activists interact with the management of both the companies. However, the demands, etc., are submitted separately and they are discussed by the common group with the management of Respondent Nos. 1 and 2 and the settlements were arrived at separately, which goes to show that the union and the concerned Government Agencies have accepted the fact that two companies are separate legal entities and it is specifically stated that the complaint is false, frivolous and made with the sole aim of misleading the Court and there is absolutely no functional integrality as alleged as the factory licences, Central Excise registration, Sales Tax registrations, Certificate of Incorporation under the Companies Act, E.S.I., registration numbers, Provident Fund numbers, M.S.E.B., power sanction/supply etc., are distinctly separate. The Respondents also denied the fact that they are together employing 130 employees. On the other hand, it is their case that the Respondent No. 1 had 44 employees and Respondent No. 2 had 69 employees. Therefore, this by itself establishes the position that Chapter VB of the Industrial Court, 1947 is not applicable and hence allegation ofbecomes baseless and without substance.6. In so far as Respondent No. 1 (i.e. Shekoba Auto (P) Ltd.,) is concerned, the manufacturing process in the factory of Respondent No. 1 has been totally discontinued and that the Respondent has used the word retrenchment instead of the word closure only because of the fact that the Respondent being a private limited company duly registered under the Companies Act, the Respondent cannot just close the doors like a private owner and the Respondent has to complete many formalities under the Companies Act and has also to complete business deals like recovery of bills and clearance of dues of suppliers, etc. and so far as the manufacturing activities and the workmen employed thereon are concerned, it is a complete closure. In their reply to the complaint, the Respondent also placed reliance on the judgment of the Supreme Court in the case of Haryana Seeds Development Corporation Ltd., vs. Presiding Officer and another (1997 II C.L.R. 395). The Supreme Court in the aforesaid case has observed that in case of closure, the rigor imposed under Section 25 (F) of the Industrial Disputes Act, stands excluded. In the alternative, it is their contention that all the requirements under Section 25(F) of the Industrial Disputes Act have been scrupulously complied with by the Respondent prior to the action of discontinuation of manufacturing process and Retrenchment of workmen engaged thereon. Paragraph 5 of the complaint in this respect is blatantly false, frivolous and mischievous and it is their case that the complainants have not been able to show how the compensation awarded to them is not correctly calculated and the documents filed by the complainants themselves would go to show that the Respondent did take into consideration the previous service of the workmen prior to their initiation in Shekoba Auto Pvt. Ltd. i.e., the present Respondent No. 1 and that while calculating the compensation service of 23 years has been taken into consideration in respect of all the employees who came over to Auto Components Company in 1978. This goes to show the bonafides of the Respondent and malafides of the complainant employees. It was the case of the Respondents that they have duly communicated to the Union of the complainant workmen about the stoppage of the manufacturing activities and, therefore, the claim of the employees of reemployment of retrenched workmen does not arise. In so far as the unit of Hubli is concerned, it is submitted that they do not own any unit at Hubli. There is a partnership firm in the name and style ofProducts Co. which does manufacture similar items like the items produced by the Respondent No. 1 and, therefore, on this count also the complaint is unsustainable and as the complainants have failed to show how the provisions of Section 25(N) of the Industrial Disputes Act, 1947 are applicable and the Respondent has also stated that it has paid all the legal dues to the complainants including the amount payable under Section 25(F) of the Industrial Disputes Act, without deducting any dues and on the other hand, they have suffered loss of Rs. 10,000/per day on account of wages of the workmen and, therefore, the complaint deserves to be dismissed.The learned Member of the Industrial Court by his order dated 29th September, 1999 allowed the complaint in favour of the complainant employees. The learned Member of the Industrial Court on the basis of the evidence on record arrived at a finding that the complainants have proved that the respondents have engaged in unfair labour practices under Item 9 of Schedule IV of MRTUPULP Act, 1971 and that they are entitled for the relief sought which were the two demands considered by him for adjudication. The order came to be challenged by preferring a writ petition in this Court. The Petitioner employer raised a preliminary issue before the learned Single Judge that the compliant has been filed by the complainants under Item 9 of Schedule IV of the MRTUPULP Act, 1971 which was not maintainable and cases of termination are to be tried by the Labour Court as contemplated under Section 7 of the Act by placing reliance on the decision of the Supreme Court in the case of M/s. Lokmat Newspapers Pvt. Ltd., vs. Shankarprasad (1999 II CLR 433) wherein it is laid down the proposition of law that the scope and ambit of Item 1 is extremely vide and also includes the cases of retrenchment. It was also the case of the Petitioner employer that the issue was considered by this Court in the case of Pepsi Co. India Holdings Pvt. Ltd., vs. Noshir Elavia, 2002 (1) CLR 953 wherein it was held that the cases of termination of service will have to be filed under Item 1 of Schedule IV and Item 9 cannot be invoked for the said purpose. It is submitted that the same view was followed by this Court in the case of Supertex (India) Corporation vs. Radhashyam Pandey, 2001 III CLR 299 and in Dilip Wawande vs. Industrial Court, Nagpur, 1995 II CLR 897, wherein it was held that the Industrial Court cannot deal with the complaint in respect of termination of services falling under Item 1 of Schedule IV of the MRTUPULP Act. This preliminary issue was contested by the employees on the ground that this being the issue which goes to the root of the matter, which was not taken up before the Industrial Court and, therefore, the said question cannot be decided but the learned Single Judge negatived the contention on behalf of the employees in view of the decision rendered by the Supreme Court in the case of Chittoori Subbanna vs. Kodappa Subbanna, AIR 1965 SC 1325   wherein it was held that a pure question of law not depended upon the determination of any question of fact should be allowed to be raised even at the last stage and that it is also needless to mention that the jurisdiction of the Court cannot be conferred by the conduct of the parties. Therefore, the learned Single Judge dealt with the matter on two issues. Firstly, as to whether the Industrial Court had jurisdiction to entertain the complaint and as regards the finding given by the Industrial Court in respect of functional integrality between the Petitioner and Respondent No.41 and on both the counts arrived at the finding that the Industrial Court not only lacked jurisdiction but even on merits no case has been made by the complainants and the Industrial Court has lost sight of the factual aspect while considering the provisions of the Industrial Disputes Act which do not contemplate two independent companies to be one industrial establishment or undertaking and the impugned order of the Industrial Court was found to be erroneous and was quashed and set aside.

Court's reasoning:
13. In our view, the learned Single Judge was not right in holding that the case of the appellant would fall under Item 1 of Schedule IV of the MRTUPULP Act, 1971 by placing reliance on M/s. Lokmat Newspapers Pvt. Ltd., and other judgments referred to in his order. We are in agreement with Mr. Deshmukh that the facts of the case as pleaded in the complaint clearly bring the complaint within the ambit of Item 9 of Schedule IV as held in the case of S.G. Chemicals and Dyes Trading Employees Union (supra) by the Supreme Court. On principle, the facts in the case of S.G. Chemicals and Dyes Trading Employees Union are almost similar with the case inis difficult to appreciate how this principle of interpretation can be invoked by learned counsel for the appellant in connection with item no. 1 of Schedule IV. The word discharge is a general word. It is followed by the word dismissal which contemplates only one category of cases or situations where penalty is imposed by the employer on the workmen concerned. The rule of ejusdem generis would have applied if the word discharge represented a particular species belonging to the genus reflected by the general word dismiss. This is a converse case where a general word discharge is followed by the word dismiss which is of a particular nature or pertains to a limited class or category of penal situations. Obviously, therefore, neither of them is a genus and nor of them is a species of the very same genus. The word discharge connotes an entirely different category of orders comprising of both simpliciter discharge orders not by way of penalty as well as discharge orders by way of penalty but not involving extremely pernicious results flowing from such orders while the word dismiss is purely an order of penalty and that too of an extreme type. Consequently, the aforesaid rule of interpretation cannot be of any avail to learned senior counsel for the appellant. On the contrary, as seen by us earlier, the words discharge and dismissal as employed by the Legislature in item no. 1 of Schedule IV covered different types of situations and circumstances under which they are passed. It is, therefore, not possible to agree with the submission of learned senior counsel for the appellant that unless the respondent shows that he was discharged by way of penalty, he cannot invoke any of the clauses of item no. 1 of SchedulePepsi Co. India Holdings Pvt. Ltd.s case the learned Single Judge while referring to S.G. Chemicals and Dyes Trading Employees Unions case distinguished the same without addressing the core issue as it observed that this judgment (S.G. Chemicals and Dyes Trading Employees Union) cannot be interpreted to mean that the Apex Court has given ato the provisions of tem 1 of Schedule IV which was not the ratio in the decision in S.G. Chemicals and Dyes Trading Employees Unions case. In our view, therefore, the decision on which reliance has been placed by the learned counsel for the Respondent and which led the learned Single Judge to hold that the Industrial Court will have no jurisdiction, does not appeal to reason. Therefore, we find that the issue of jurisdiction raised by the Respondent is baseless.C.U. Singh, the learned senior advocate appearing for the respondent employer, submitted that the learned Single Judge has examined the matter in detail and has come to the conclusion that the evidence on record clearly proved that these were two distinct units as the petitioners products trade mark was Borger whereas thewas the trade mark used by Respondent No. 41 i.e., the other unit Neotronics (P) Limited., and as they were producing different products, the Industrial Court has misdirected itself and has based its finding on excise certificate issued by the excise officers which also was not correct as Shekoba Auto Private Limpid was manufacturing plastic film capacitors whereas the Neotronics (P) Limited was manufacturing wire wound resistors and plastic film capacitors.What we find is that this fact has been dealt by the learned Single Judge in a very casual way by observing that in any event the excise certificate is only for revenue purpose and has nothing to do with the specific types of capacitors or the end usage of the same and as the witness for the employer has explained the line of production in hisand even if it is assumed that they were manufacturing same and similar product, it would not mean that the petitioner and the respondent no. 41 were functionally integrated.One important aspect of the case which has been overlooked is that when one of the original two firms was converted into two companies i.e. Shekoba and Neotronics, the workmen were absorbed in the two companies. It has been tried to be canvassed before us that it was so done so as not to result in unemployment of the workmen and it is not necessarily indicative of the fact that the workmen were absorbed in the two companies, the two companies are part of the same establishment. Further, the case of the respondent employer is to be understood in the backdrop that though the respondent, particularly in respect of Shekoba Auto Private Limited claims that in substance it was a closure but they did not declare it to be so but only resorted to retrenchment of their workmen on the pretext that manufacturing of product was discontinued due to want of orders and loss suffered by the company and, therefore, it was thought proper to retrench the workmen. Therefore, it is an admitted fact that Shekoba did not initiate any proceeding for closing down the undertaking.The learned Single judge while dealing with the matter under Article 226 which leaves very limited scope has not given any finding to the effect that the factors considered by the member of the Industrial Court are either perverse or not germane to the issue. It is equally well settled that the decision of the Tribunal on a question of fact which it has jurisdiction to determine is not liable to be questioned in proceedings under Article 226 of the Constitution of India unless at the least it is shown to be fully unsupported by evidence.