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PETITIONER: INDIAN HUME PIPE CO.  LTD.

       Vs.

RESPONDENT: THEIR WORKMEN

DATE OF JUDGMENT: 08/02/1968

BENCH: MITTER, G.K. BENCH: MITTER, G.K. HEGDE, K.S.

CITATION:  1968 AIR 1002            1968 SCR  (3) 130  CITATOR INFO :  RF         1969 SC  90  (8)

ACT:      Industrial  Dispute--Closure--Tribunal whether  can  go into  bona  fides  of  closure--Retrenchment--  ’Last  first go’--Tribunal not competent to apply principle without  plea being raised.

HEADNOTE: The Industrial Tribunal, deciding a company and its  workmen held that the ,company was not bona fide and that the should have  been applied by the company in retrenching  twelve  of its workmen.  In appeal to this Court, HELD:  (i)  Once  the Tribunal finds that  an  employer  has closed his ,factory as a matter of fact it is not  concerned to  go into the question as to the motive which  guided  him and  to  come to a conclusion that because of  the  previous history  of  the  dispute  between  the  employer  and   the employees  the  closure  was not justified  Such  a  closure cannot give rise to an industrial dispute. [135 D] Pipraich Sugar Mills Ltd. v. P.S.M. Mazdoor Union, [1957]  1 L.L.J.  235,  K.  M. Padmanabha Ayyar v.  State  of  Madras, [1954]  1  L.L.J.  469, Tea  Districts  Labour  Association, Calcutta v. Ex-employees of Tea Districts Labour Association and  Anr. [1960] 3 S.C.R. 207, Hatisingh  Manufacturing  Co. Ltd.   v.  Union  of  India,  [1960]  S.C.R.  528,   Express Newspapers (P) Ltd. v. The Workers, A.I.R. 1963 S.C. 569 and Andhra  Prabha  V.  Madras Union of  Journalists,  [1967]  3 S.C.R. 901, applied. (ii) The plea as to the ’application of the principle  ’last come first go’ was not taken in the written statement of the Union  and  the Tribunal was not competent to go  into  that question at all. [135 F]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1829  of 1907. Appeal  by special leave from the Award dated June 30,  1967 of  the Third Industrial Tribunal, West Bengal in  Case  No. VIII-87 ,of 1965.

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M.   C. Setalvad, K. P. Mookerjee and 1. N. Shroff, for  the appellant. Janardan  Sharma  and S. K. Nandi, for  the  respondents.The Judgment of the Court was delivered by Mitter,  J.  This is an appeal by special leave  against  an award ,dated June 30, 1967 of the Third Industrial Tribunal, West  Bengal, in Case No. VIII-87 of 1965 finding  that  the retrenchment of 12 workmen and the closure of the factory of the  appellant  were  both  illegal  and  unjustified.   The Tribunal accordingly directed 131 that  the  workers whose services had been purported  to  be terminated  on  the ground of closure must be deemed  to  be still in service of the company and they should receive  all their  wages and allowances with effect from the  date  when their services were terminated. The two issues which were referred by the order of the  Gov- ernment  of West Bengal dated April 23, 1965 under s. 10  of the  Industrial Disputes Act between the  appellant  Company and their workmen were               (1)   Whether  the closure of the  factory  at               Barakar is bona fide and in the  circumstances               Justified  ?  To what relief,if any,  are  the               workmen entitled ?               (2)   Whether   the   retrenchment   of    the               following  workmen  is  justified  ?   To-what               relief, if any, are they entitled ?               (1)   Kuldip  Goala, (2) Chandra Bahadur,  (3)               Gour  Baidyakar,  (4) Pradip  Kumar  Dey,  (5)               Dular  Chand Prasad, (6) Gangadhar Pandey  (7)               Mahendra  Bhagat, (8) Sunil Kumar  Chatterjee,               (9)   Balai  Chandra  Ghose,   (10)   Surendra               Kumbhakar,  (11)  Sagar  Chandra  Ghose,  (12)               Paresh Gope. The  facts about which there is no dispute are  as  follows. The  appellant  is a big engineering concern with  its  head office at Bombay and factories and establishments  numbering about  sixty  spread  all over India and  Ceylon.   In  West Bengal it had two factories, one at Barakar and the other at Konnagore  near  Calcutta.   The distance  between  the  two factories is about 140-miles.  The Barakar factory had about 85  workmen  daily-rated  as  well  as  monthly-rated.   The factory  was situated quite close to Grand Trunk road.   The whole area of the factory and its surroundings including the Grand  Trunk road was coal bearing land from which coal  had been extracted towards the end of the nineteenth century  or the  beginning  of the twentieth century.  On  December  18, 1962  there was a subsidence of the earth towards the  north of  the  Grand  Trunk  road  passing  through  Barakar  town affecting  a  surface  area  of about 100  X  60.   This  is corroborated  by a letter of the Inspecting Officer,  Circle III of the Coal Board Asansol to the Barakar Electric Supply Co.  Ltd., a copy whereof was sent to the  appellant.   This letter shows that the subsidence had affected a part of  the premises  of  the factory of the appellant and  appeared  to have, a trend of extending towards the occupied quarters of. the  appellant’s factory.  Simultaneously, there was  a  de- claration of the Mines Department of India that Barakar town near  Asansol  had been declared  unsafe.   The  declaration further  shows that this was the second time when the,  town had  been  so  declared unsafe and according  to  the  Mines Department this was 132 due  to the fact that the area involved was above a 70  year old  abandoned colliery.  It appears that there was  another

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subsidence  in  the  same area on May 4, 1963  as  a  result whereof  the  approach road to the appellant’s  factory  was badly  damaged.  There was also damage to a portion  of  the manager’s  quarters near the factory gate.  By letter  dated May  15,  1963 addressed to the Chief  Inspector  of  Mines, Government  of  India, the appellant wanted the site  to  be inspected  for the purpose of finding out whether there  was any chance of further subsidence.  That the subsidences were real  was not questioned before the Industrial Tribunal  nor is there any controversy regarding the same before us.  This has  been referred to in many official correspondence  which have  been exhibited in this case.  On July 18,  1963  there was a letter from the office of the Chief Inspector of Mines to the appellant that its factory was situate on a goaf made in the last part of the nineteenth century and was therefore dangerous  for  habitation.  It was also mentioned  in  that letter  that  the  factory having  been  declared  unstable, restarting  of  the  factory  on  that  site  could  not  be recommended.   On September 12, 1963 the head office of  the appellant  at Bombay wrote to its office at Barakar that  it was  considering  closing  down of the above  factory  as  a precautionary safety measure and that it was not thinking of shifting  the factory but intended to close  it  completely. The  last  portion  of  the  letter  seems,  to  have   been necessitated by enquiries started by the factory at  Barakar regarding  the availability of a suitable site not very  far away to which the factory could be shifted.  It appears that inspection had been made of a plot at Rajbandh but the  idea of  shifting  the factory to that site had to  be  given  up because of the unavailability of high tension electric line. The  intention  to close down the factory is  also  apparent from letters written by it to several authorities  including the Controller of Purchase and Stores, Durgapur Steel Plant, Burdwan  dated  November  12,  1963  and  to  the  Executive Engineer  Ganga Barrage Investigation  Division,  Berhampore dated  July  14, 1964 showing that in view of  the  intended closure  of  the factory it would not be in  a  position  to execute the orders from the Barakar factory. On  September 23, 1964 the company served notices on  twelve of its workmen to the effect that their services had  become surplus  to the appellant’s requirement and they were  being given one month’s notice of termination of service and would be  paid  all legal dues i.e., earned  wages,  leave  wages, retrenchment compensation etc. on October 23, 1964.  At  the intercession   of   the   Assistant   Labour   Commissioner, Government  of West Bengal, the appellant agreed  to  retain these 12 workmen in their employment at first till  November 4,  1964 and then fill December 12, 1964.  On  December  31, 1964  the company gave notice of closure and termination  of service to all the workmen individually.  ’The 133 workmen  were intimated that they would be paid one  month’s notice  wages  in lieu of one  months  notice,  retrenchment compensation  as per provisions of the  Industrial  Disputes Act, 1947, wages in lieu of earned leave due, if any, as  on to-date  as also for the proportionate earned leave for  the current year till the last day of service, gratuity  amount, if  due, as per terms of settlement award, earned wages  and such  other legally due amounts, if any.  Mention  was  also made of the bonus for the years 1962-63 and 1963-64. There is no dispute that the factory was closed on  December 31,  1964  and  the  dispute  raised  was  referred  to  the Industrial  Tribunal in April, 1965.  The Tribunal noted  in its award that the factory was closed by the appellant  with effect from January 1, 1965 but it went into the question as

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to  whether  the closure of the factory was  bona  fide  and justified  in the circumstances of the case and came to  the conclusion  that the reason given by the company to  justify the closure was mala fide for the purpose of dispensing with the  services of the Barakar factory workers who  had  since the formation of their union been fighting the appellant for betterment of their service conditions. There  can be no doubt that there had been disputes  between the  appellant  and its workers from 1957 to 1961  and  that other  Industrial  Tribunals  had  in  the  past  criticised strongly  the labour practice of the  appellant.   Examining the  evidence before it, the Tribunal was of the  view  that the  decision of the head office of the appellant at  Bombay to close the factory was in retaliation of the strike notice given  by  the Union in the middle of August 1963  over  the question  of  bonus  for 1961-62.  The  Tribunal  sought  to fortify  its conclusion observing that the factory  was  not closed immediately or at a reasonable time after the  actual subsidences in December 1962 or May 1963 and that it made no effort  to  render  the  factory  area  safe  from   further subsidence by sand stowing, a method which had been resorted to in respect of the subsidence of the Grand Trunk road.  It also  referred  to the evidence to the effect  that  several other  concerns which had factories in the neighbourhood  of the appellant did not, close down their factories. In  our opinion, it was not open to the Tribunal to go  into the  question as to the motive of the appellant  in  closing down  its factory at Barakar and to enquire whether  it  was bona fide, or mala fide with some oblique purpose, namely to punish the workmen for the union activities in fighting  the appellant.  It has been laid down by this Court in a  series of  decisions  that it is not for  Industrial  Tribunals  to enquire  into the motive to find out whether the closure  is justified or not.  As far back as 1957, it was 134 observed by this Court in Pipraich Sugar Mills Ltd. v. P. S. M.Mazdoor Union(1) that :               " where the business has been closed and it is               either  admitted or found that the closure  is               real  and bona fide any dispute  arising  with               reference  thereto  would, as held  in  K.  M.               Padmanabha  Ayyar v. State of Madras(2),  fall               outside the purview of the Industrial Disputes               Act.   And  that will a fortiori be so,  if  a               dispute  arises-if one such can be  conceived-               after the closure of the business between  the               quondam employer and employees." The use of the expression ’bona fide’ in the above quotation does  not refer to the motive behind the closure but to  the fact  of the closure.  The question about the bona fides  of the closure had to be examined in the case of Tea  Districts Labour   Association,  Calcutta  v.  Ex-employees   of   Tea Districts  Labour Association and another (3 ) .  There  two agencies  of  the appellant at Koraput  and  Berhampur  were closed  by  the appellant and that was the  finding  of  the Tribunal  This Court held that once it was established  that the  agencies had in fact been closed the finding about  the mala fides of the closure would not "justify the  conclusion that the said two agencies should be deemed to continue" and allow the Tribunal to make an award on that basis. In Hatisingh Manufacturing Co. Ltd. v. Union of India(4)  it was observed that :               "Loss of service due to closure stands on  the               same  footing  as  loss  of  service  due   to               retrenchment, for in both cases, the  employee

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             is  thrown out of employment suddenly and  for               no fault of his and the hardships which he has               to  face  are,  whether  unemployment  is  the               result of retrenchment or closure of business,               the  same.  If the true basis of the  impugned               provisions   is  the  achievement  of   social               justice,  it  is immaterial  to  consider  the               motives  of the employer or to decide  whether               the closure is bona fide or otherwise." Reference may also be made to Express Newspapers (P) Ltd. v. The Workers(5).  In this case the main question was  whether there was a closure or a lockout and it was observed by this Court (at p. 573):               "If the action taken by the appellant is not a               lockout  but  is  a  closure,  bona  fide  and               genuine, the dispute (1) [1957] 1 L.L.J. 235 at 239.   (2) [1954] 1 L.L.J. 469. (3) [1960] 3 S.C.R. 207.     (4) [1960] 3 S.C.R. 528 at 537. (5) A.I.R. 1963 S.C. 569. 135               which the respondents may raise in respect  of               such a closure is not an industrial dispute at               all.   On the, other hand, if, in fact and  in               substance it is a lockout, but the said action               has adopted the disguise, of a closure, and  a               dispute  is  raised  in  respect  of  such  an               action,  it  would be  an  industrial  dispute               which industrial adjudication is competent to                     X       X               deal with." The  question  of the motive of the employer in  closing  an establishment  had  to be examined by this  Court  again  in Andhra  Prabha  v. Madras Union of Journalists(1).   It  was pointed  out there that there might be more than one  motive working in the mind of the employer leading him to close his establishment and it was not for the Industrial Tribunal  to examine  that question meticulously and decide on  the  bona fides of the motive. In view of these decisions, our conclusion is that once  the Tribunal finds that an employer has closed its factory as  a matter  of fact it is not concerned to go into the  question as  to  the  motive.  which guided him  and  to  come  to  a conclusion  that  because  of the previous  history  of  the dispute  between the employer and the employees the  closure was  not justified.  Such a closure cannot give rise  to  an industrial dispute. The above conclusion is sufficient to allow the appeal,  but one,  last point remains.  The Tribunal had evidence  before it  of  at least two workers of the Barakar  factory  having been transferred in the past to other places.  On the  basis of this evidence, the Tribunal went into. the question as to whether  the  company  even  if  it  decided  to  effect   a retrenchment  of  the 12 workmen should  leave  applied  the principle  ’last come first go’ and found out whether  these workmen  could be transferred to other places if  they  were senior  to those retained.  It is not disputed that no  such plea  was  taken in the written statement of the  union  and with all respect to the Tribunal, it was not competent to go into that question at all.  There is no evidence here as  to the terms of employment of the workers in other units of the factory.  The nearest units to the Barakar factory were  the one  at Konnagore and the, other at Patna at a  distance  of 200 miles from Barakar.  The point not having been raised by the union and without going into the question as to  whether it. was feasible for the appellant to effect such transfers,

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the  Tribunal  should  not  have  attempted  to  apply,  the principle of ’last come first go’. In the result, we allow the appeal holding that the  closure of  the  factory at Barakar was bona fide and  genuine.   We also  hold that in view of that finding the  Tribunal  could not  examine the question of retrenchment of the 12  workmen and give them the (1)  [1967] 3 S.C.R. 901. 136 relief  it  sought  to do.  There is  no  dispute  that  the appellant did offer to pay the workmen all their dues on the basis  of the closure.  The appeal is allowed and the  award is  set aside.  We do not however propose to make any  order as to costs of this appeal. G.C.                        Appeal allowed. 137