http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: MAYURAKSHI COTTON MILLS & ORS.

       Vs.

RESPONDENT: PANCHRA MAYURAKSHI COTTON MILLS EMPLOYEES’ UNION & ORS.

DATE OF JUDGMENT:       08/03/2000

BENCH: S.N.Phukan, S.R.Babu

JUDGMENT:

     RAJENDRA BABU, J.  :

     The appellant-mills was purchased by the State of West Bengal  in  the  year  1990 in  the  course  of  liquidation proceedings  initiated pursuant to orders made by the  BIFR. It  is the case of the respondents that on the reopening  of the  mills, most of the workmen who were working  previously in  the erstwhile company were provided employment.  As  the mills  had  been newly set up, the management was not  in  a position  to  revise  the pay scales on account  of  certain financial difficulties.  On August 5, 1992, a notice of lock out  was issued by the then Manager of the mills on  account of certain reasons, with which we are not concerned in these proceedings.  The validity of the lock out was challenged in a  writ petition.  During the pendency of the writ petition, the  order  declaring lock out was withdrawn pursuant  to  a memorandum  of settlement arrived at between the workmen and the  management on February 27, 1993.  This fact was brought to  the  notice of the High Court.  Therefore,  the  parties concerned  sought for moulding the prayers appropriately and the  validity  of  the  settlement arrived  at  between  the workmen  and the management as aforesaid was also challenged and  it  was  brought to the notice of the High  Court  that several  workmen who were already working in the mills after reopening  have  been kept out of employment.   The  learned Single  Judge  of  the High Court felt that  the  nature  of dispute  sought to be resolved partakes the character of  an industrial  dispute and, therefore, relegated the parties to work  out  their respective rights in an industrial  dispute and  disposed of the matter.  On appeal, the Division  Bench went on to examine the provisions of Sections 25F and 25G of the  Industrial Disputes Act, 1947 [hereinafter referred  to as  ‘the  Act’]  and held that it is well settled  that  the service  condition of a workman in any industry who has been in  continuous service for one year under an employer  could not be retrenched unless notice of retrenchment is served in accordance  with the provision of Section 25F of the Act and paid  the  retrenchment  compensation  after  following  the procedure  laid  down  in Section 25G of the  Act  and  that termination  of service of a workman who had been in service for  more  than one year in contravention of  provisions  of Sections  25F and 25G of the Act would be illegal.  The High Court  thereafter  took  the view that it is not a  case  to enforce  private  rights  or purely  contractual  rights  or

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

obligation  or  to  avoid  it.  It was  a  case  to  enforce statutory rights conferred under Sections 25F and 25G of the Act.   On that basis, the High Court proceeded to hold  that the  livelihood of the workmen was involved which is part of Article  21 of the Constitution and hence workmen could  not have  been  compelled  to voluntarily enter  into  the  said settlement  for  termination  of   service  and  accept  the temporary  service for a period of 59 days which was clearly arbitrary  and  unlawful and in clear contravention  of  the provision  of  Sections  25F and 25G of the Act.   Thus  the appeal was allowed with a direction as follows :-

     "We  direct the respondents-company and/or authorities concerned  not to compel the appellants to voluntarily enter into  the said agreement in contravention of the law and not to  terminate the service of the workmen on that ground  and we  direct to treat the workmen concerned as employee  under employment of the company."

     This  order  of the Division Bench is under attack  in this appeal.

     The  learned  counsel did not so much dwell  upon  the question  whether  the appellant-mills is a ‘State’ for  the purpose of Article 12 of the Constitution or not and even if the appellant is held to be an instrumentality of the State, is  bound by the provisions of Part III of the  Constitution and  is amenable to the writ jurisdiction of the High Court, it  was not a fit case where the various contentions  raised between  the  parties  could  have been thrashed  out  in  a summary  proceeding.  The learned counsel further  submitted that  the  fact  that the company was in  financial  straits could not be seriously disputed inasmuch as in the course of the liquidation proceedings the Government had purchased the same  and thereafter because certain problems had arisen the management  declared  a  lock  out   and  pursuant  to   the settlement   entered  into  between   the  workmen  and  the management, the lock out was lifted subject to certain terms and  conditions  mentioned in the settlement.   The  learned counsel  further  submitted  that whether the terms  of  the settlement  amount  to unfair labour practice or results  in victimisation  of any workmen and whether any of the workmen who  are members of the respondent-union was a workman after reopening  of the mills after purchase by the Government and whether  continued to be so, are all questions of fact to be determined  in an appropriate proceeding and in the  present case,  reference to an industrial Tribunal would be the most proper  course.  Shri Dipankar Gupta, learned senior counsel appearing  for the State of West Bengal, supported the stand taken  by  the appellants and submitted that the  Government would  refer the dispute in relation to the validity of  the settlement or employment of the other workmen along with all other allied issues to an industrial Tribunal.

     Shri  Dholakia, learned senior Advocate appearing  for the  contesting respondents, submitted that the identity  of the  workmen  in question was not in serious dispute  and  a bare  perusal  of  the memorandum of settlement  arrived  at between  the workmen and the management itself would clearly indicate  that it was oppressive resulting in  victimisation of  workmen  or amounting to unfair labour practice  on  the part  of the management resulting in unemployment of a large number  of  workmen.   He further submitted that it  was  in those circumstances that the High Court made the order under

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

appeal  and that it is only in cases where the facts are  in dispute  that  an  adjudication by any other Tribunal  or  a civil court would arise but not in cases where the facts are not  in  dispute.   He  submitted that it  was  not  at  all difficult  for the management to find out as to who were the workmen on the reopening of the mills and provide employment to  all  of  them  and the  management  cannot  alter  their conditions  of service to their disadvantage.  He emphasised that  it  is  in  that context the High Court  had  given  a direction based on Sections 25F and 25G of the Act read with Article  21  of the Constitution and such an order which  is very  progressive in nature should not be interfered by this Court.

     We  have given our anxious consideration to the  rival submissions  made  by  the learned counsel on  either  side. Whether  a  settlement is fair or unfair or valid cannot  be examined  in the absence of factual background in which  the same was entered into.  If really the mills was in financial doldrums  and retrenchment had to take place in some form or the  other  and  if  a method was to be worked  out  by  the management  and the workmen, which is fair, it cannot easily be said that the mills should not work with lesser number of workmen  and provide a scheme for retrenchment or otherwise. It  may not be easy to state that such settlement is  unfair or amounts to victimisation.  The option was between closure of  the  mills  itself or opening of the mills  with  lesser number  of workmen.  Sometimes hard choices have to be  made and  sacrifices  are  expected to be made  by  either  side. These  aspects  have  to be borne in mind in  deciding  such questions.   Therefore,  we cannot in the abstract,  in  the absence  of  material before the Court, state that the  High Court could have come to the conclusion one way or the other and  particularly  based  on  the  theoretical  approach  to Sections  25F  and  25G  of the Act or  Article  21  of  the Constitution.  We are of the view that the order made by the Division  Bench  deserves  to be set aside and that  of  the learned   Single  Judge  be   restored,  however,  with  the modification  that  a reference shall be made, as stated  by Shri  Dipankar  Gupta, in respect of all matters arising  in this  case  as  to  the  employment,  non-  employment,  the validity  of the settlement and all other allied issues  and the  reliefs to be granted to the parties, to an appropriate industrial  Tribunal within a period of six weeks from today and  such  Tribunal  shall  enter  upon  the  reference  for adjudication as early as possible and decide the same within a period of six months from the date of reference to it.

     This  appeal shall stand disposed of accordingly.   In the  facts and circumstances of the case, there shall be  no orders as to costs.