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CASE NO.: Appeal (civil) 5074-5079 1996

PETITIONER: J.  K.  SYNTHETICS

       Vs.

RESPONDENT: RAJASTHAN TRADE UNION KENDRA & ORS.

DATE OF JUDGMENT:       12/12/2000

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

JUDGMENT:

S.  N.  VARIAVA, J.

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     These Appeals are against a common Judgment dated 13th November, 1995 passed by the Division Bench of the Rajasthan High  Court  in  five  Civil  Special  Appeals  and  a  Writ Petition.   In  1983 the Appellant Company had a "lay  off". According  to the Appellant the lay off became  necessitated because  there  was a 100% power cut and the  Company’s  own generators  were under repairs.  Thereafter on 15th January, 1983  the Appellant Company terminated the services of  1164 workmen.   According  to the Appellant this termination  was necessitated  because  of closure of a section of the  Nylon plant.   According to the Appellant Company this unit had to be closed because of huge losses and also because of lack of power.   On  17th  January, 1983 another 1201  workmen  were retrenched  by  the Appellant Company.  The Rajasthan  Trade Union  Kendra  (hereinafter  referred to as  RTUK)  filed  a Petition  in  the Rajasthan High Court (W.  P.  NO.  213  OF 1983)  challenging  the termination and retrenchment of  the 2367  workmen.  On 17th February, 1983 the Appellant Company lifted  its lay-off.  However, the workmen refused to report for  duty and proceeded on a strike.  On 7th March, 1983 the Appellant  filed  a Writ Petition (W.P.  No.  409  of  1983) challenging  the constitutional validity of Section 25-N  of the  Industrial  Disputes Act (hereinafter called  the  said Act).   On  28th  August, 1983 the Government  of  Rajasthan referred  the following disputes to the Industrial  Tribunal under  Section 10(H) of the said Act:  "1.  Whether the  lay off  in  4 Divisions of J.  K.  Synthetics Ltd., Kota  (viz. J.   K.  Synthetics, J.  K.  Acrylics, J.  K.  Staple & Tows and  J.   K.   Tyre  Cord, Kota) from January  10,  1983  to February  17,  1983 was legal and justified and if  not,  to what relief the workers are entitled?

     2.   Whether the retrenchment in 4 Divisions of J.  K. Synthetics  (viz.  J.  K.  Synthetics, J.  K.  Acrylics,  J. K.   Tyre  Cord  and  J.  K.  Staple  and  Tows,  Kota)  was justified  and  if  not,  to what  relief  the  workers  are entitled?

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     3.   Whether in case the provisions of Section 25-N of the   Industrial  Disputes  Act,  1947   are  held   to   be unconstitutional  by  the  Hon’ble High Court  in  the  Writ Petitions  (213/1983  and 409/1983) the retrenchment was  in accordance  with  other provisions of the said Act,  and  to what relief workers are entitled?

     4.   Whether  non-resumption of duty  by  unretrenched workmen  engaged in the four Divisions of J.  K.  Synthetics Ltd.,  Kota (viz.  J.  K.  Synthetics, J.  K.  Acrylics,  J. K.  Staple & Tows and J.  K.  Tyre Cord, Kota) was justified and  whether the workmen are entitled to any relief for this period from February 17, 1983 till they resumed duty."

     On  19th  October, 1983 a Full Bench of the  Rajasthan High  Court allowed the Writ Petition filed by the Appellant and  dismissed  the  Writ Petition filed by RTUK.   On  12th December,  1983 the Industrial Tribunal, with the consent of parties  and on the basis of pleadings, raised the following 8  issues:  "1.  Whether the lay off in four Divisions of J. K.   Synthetics,  Kota  (namely J.  K.  Synthetics,  J.   K. Acrylics, J.  K.  Staple & Tows and J.  K.  Tyre Cord, Kota) from  January  10th  to  February 17th 1983  was  legal  and justified?

     2.   Whether  the  retrenchment   in  aforesaid   four Divisions was justified?

     3.   The provisions of Section 25-N of the  Industrial Disputes  Act, 1947 having been held to be  unconstitutional by Hon’ble High Court of Rajasthan, whether the retrenchment in  the  aforesaid four Divisions of J.  K.   Synthetics  is still  in  accordance  with  the  other  provisions  of  the Industrial Disputes Act, 1947.

     4.    Whether  the  non-resumption  of  duty  by   un- retrenched  workmen engaged in the aforesaid four  Divisions from 17.2.83 was justified?

     5.   Whether for the reasons contained in para 25  and its  various  sub-paras  of statement of demands of  J.   K. Synthetics Ltd., the reference made to this Tribunal is mala fide, misconceived and untenable?

     6.   Whether  item  Nos.   1,  2 and  3  in  terms  of reference are not industrial disputes:

     7.    Whether  there  has  been   in  fact  any   dis- continuance/closure            of              undertakings/ departments/processes/operations/interconnec  ted  processes and  activities  in  Nylon   Division  before  retrenchment? Whether  the  above,  even if proved amounts to  closure  as known in Industrial Law?

     8.  To what relief the parties are entitled?"

     On  2nd  January, 1984 RTUK preferred a Special  Leave Petition  against  the Judgment of the Rajasthan High  Court dated  19th  October,  1983.   In this  Petition  leave  was granted  on  2nd  January, 1984.  By an  interim  order  the Appellant  Company  was directed to pay 1/3rd of  the  total wages  subject  to future adjustment.  It is claimed by  the Appellant  that on 22nd March, 1985 a settlement was arrived

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at  by the Appellant Company with three Unions affiliated to CITU  and two Unions working in the Company.  On 22nd March, 1985  a  joint Application was filed before  the  Industrial Tribunal  praying that the settlement be taken on record and that  an Award be made in terms of the settlement.  On  31st March,  1985 RTUK filed an Application before the Industrial Tribunal  that  the  Executive  Committee  had  not  met  to consider the settlement and that the representatives of CITU were  not  authorised to sign the settlement.  RTUK  opposed the  settlement  and claimed that the settlement  cannot  be binding  on the workmen.  On 5th April, 1985 the  Industrial Tribunal  ordered  a  secret poll to be taken  in  order  to ascertain  whether the workers had agreed to the settlement. Such poll was taken on 12th April, 1985.  1994 workers voted against  the settlement, whereas 1850 voted in favour of the settlement.   As  the  majority  of the  workers  had  voted against  the settlement the Industrial Tribunal held, on 7th May, 1985, that an Award could not be passed in terms of the settlement.   The Industrial Tribunal further held that  the question  whether  the  settlement could be looked  into  to modulate reliefs would be considered later on.  On 14th May, 1985  the Industrial Tribunal passed an Award.  The Tribunal held  that  the lay off was bona-fide and justified  due  to 100%  power  cut and failure of Company’s  generators.   The Tribunal  held  that strike in the Nylon Plant was  illegal. The  Tribunal held that the strike in the Acrylic Plant  was not  illegal.   The Tribunal held that there was closure  of the  Textile Section of the Nylon Plant.  The Tribunal  held that  on  these  counts  termination  of  1164  workers  was justified.   The  Tribunal ultimately held as follows:   "If the  reliefs  are  granted on the basis of the  findings  as contained  in  this  Award the financial burden  on  J.   K. Synthetics  will be about Rupees one Crores or one and  half crores.  If the settlements are looked into for granting the reliefs  to  the  workers then the financial burden  on  the company  shall  be  to  the extent of rupees  four  to  five crores.   Out  of  about  1,199 retrenched  workers  of  the running  plants, a large number of them have been  absorbed, some  have resigned.  About 650 workers remain who are to be re-employed.   Having given my serious thought to all  these circumstances,  I  am of the opinion that relief  should  be modulated   on  the  lines  of   the  settlements,  as   the settlements  to me appear to me just and fair in the  larger interest  of  the  majority of the workers as  well  as  for industrial  peace.   Even the Unions of the workers  of  the four  plants  affiliated to CITU have filed  an  application that  the settlements are more beneficial to the workers and in  their  larger  interest and therefore relief  should  be given   as  per  the  settlements.    The  Company  J.    K. Synthetics has neither supported the application nor opposed it.   Even Mr.  Poonamla at one stage urged that in case the findings  on the issues and the Award are less favourable to the  workers then the settlement arrived at the Tribunal can look  into  the  settlement.   But   according  to  him  the settlements  are not just and fair and are not favourable to the  workers.   But I am unable to agree with Mr.   Poonamla and  a  comparison  of  the terms  of  settlements  and  the findings on the various issues reported by me will show that the  findings are less favourable to the workers and if  the Award  is  given on the basis of these findings, it will  be less  favourable  to  the  workers than  the  terms  of  the settlements."

     On  this  basis the Industrial Tribunal  gave  various reliefs  to the workmen based mainly on the settlement.   We

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are informed that now the Appellant Company has accepted the Award  and  paid  as per this Award.  RTUK filed  a  Special Leave  Petition against the Award in August 1985.  Leave was granted  in  the Special Leave Petition.  Thus, before  this Court  Civil  Appeals filed by RTUK against the Judgment  of the Rajasthan High Court dated 19th October, 1983 as well as the Civil Appeal against the Award dated 14th May, 1985 were pending.  In the meantime, on 15th May, 1992 this Court held in the case of Workmen v.  Meenakshi Mills Ltd.  reported in (1992)  3  SCC  336, that Section 25-N of the said  Act  was valid  and  was not unconstitutional.  On 17th  March,  1993 this  Court  remanded  the  pending   matters  back  to  the Rajasthan  High  Court  for consideration on merits  on  the basis of the Judgment in Meenakshi Mills Ltd.  case (supra). On  25th  August,  1993 the Appellant Company filed  a  Writ Petition  (W.  P.  No.  6248 OF 1993) challenging the  Award of  the  Industrial Tribunal.  The Petitions pending in  the Rajasthan  High  Court came to be disposed off by  a  common Judgment  dated 25th March, 1994.  The learned single  Judge upheld  the  Award of the Industrial Tribunal.   The  single Judge  confirmed  the findings of the Tribunal in regard  to the  illegal  strike and closure.  The learned single  Judge upheld  the  finding that 1164 workmen have been  terminated because  of  closure  and that there  was  no  retrenchment. However,  the learned single Judge has held that in view  of the  Judgment  in  Meenakshi  Mills Ltd.’s  case,  the  1201 workers would be entitled to full wages.  Both the Appellant Company, RTUK and some other Unions filed Appeals before the Division  Bench of the Rajasthan High Court.  These  Appeals and  Writ Petition No.  6248 of 1983 came to be disposed off by  the  impugned Judgment dated 13th November,  1995.   The Division  Bench rejected Writ Petition No.  6248 of 1993  on grounds  of  delay  and  latches, as  well  on  ground  that Appellant  Company had already accepted the Award.  By  this Judgment the Division Bench has reversed the Judgment of the learned  single  Judge and not accepted the findings in  the Award  of  the Tribunal, except on the question  of  strike. The Division Bench has held that the question of closure was never  referred to the Industrial Tribunal and the  Tribunal could  not  have  gone  into that question.   On  facts  the Division Bench held that there was no closure.  The Division Bench  directed  reinstatement  of these  1164  workmen  and payment of full wages to them.  It is this Judgment which is assailed  before  us.  The Division Bench has  accepted  the findings  of the Industrial Tribunal and the Single Judge on strike.   These  findings have not been  seriously  assailed before  us and therefore require no interference.  On behalf of the Appellant Company it has been urged that the findings of  the  Division  Bench on closure are erroneous.   On  the other  hand, the Respondents have supported the findings  of the  Division  Bench  on  this   point.   The  question  for consideration  before  us is whether the Division Bench  was right  in concluding that the question of closure was  never referred  to  the Industrial Tribunal and/or  in  concluding that  there  was  no closure of any unit  of  the  Appellant Company.   As  has been set out hereinabove,  amongst  other disputes  which  have  had been referred to  the  Industrial Tribunal  was  Dispute No.  2, which reads as follows:   "2. Whether   the   retrenchment  in  4  Divisions  of  J.    K. Synthetics  (viz.  J.  K.  Synthetics, J.  K.  Acrylics,  J. K.   Tyre  Cord  and  J.  K.  Staple  and  Tows,  Kota)  was justified  and  if  not,  to what  relief  the  workers  are entitled?"

     Thus,  the Industrial Tribunal was required to go into

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the  question whether or not the retrenchment was justified. The Appellant had sought to justify retrenchment of the 1164 workmen  on the basis that there was a closure of a  section of  the  Nylon  Plant.   Thus  in   order  to  come  to  the conclusion,  whether or not retrenchment was justified,  the Industrial  Tribunal necessarily had to first decide whether or  not  there  was a closure.  This Court in  the  case  of Express  Newspapers  Ltd.   v Their Workers  and  Staff  and others  reported  in  1962 II LLJ 227 has held that  if  the Industrial  Tribunal  had  to   decide  whether  strike  was justified,  it would have to examine the question whether or not  the  dispute referred to it was an industrial  dispute. This  Court  held that the decision of this  question  would inevitably  depend  upon  the   view  which  the  Industrial Tribunal  may  take  as to whether the action taken  by  the Company  is  a  closure or a lock out.  It was  observed  as follows:  "It is also true that even if the dispute is tried by  the  industrial tribunal, at the very commencement,  the industrial  tribunal  will have to examine as a  preliminary issue  the question as to whether the dispute referred to it is  an  industrial dispute or not, and the decision of  this question  would  inevitably depend upon the view  which  the industrial  tribunal may take as whether the action taken by the appellant is a closure or a lock-out.  The finding which the industrial tribunal may record on this preliminary issue will  decide  whether it has jurisdiction to deal  with  the merit of the dispute or not."

     This  Court, in the case of Pipraich Sugar Mills  Ltd. v.   Pipraich Sugar Mills Mazdoor Union reported in 1956 SCR 872,  has held that the definition of an industrial  dispute as contained in the Industrial Disputes Act contemplates the existence  of  an industry and a subsisting relationship  of employer  and employees between the parties.  This Court has held  that  there could be no industrial dispute within  the meaning  of this Act where the industry has been closed  and the  closure is real and bona fide.  Thus, in our view,  the Division  Bench  erred in coming to the conclusion that  the Tribunal could not have gone into the question of closure as it  was  not referred to it.  In our view, on  the  disputes which  have been referred, particularly Dispute No.  2  (set out  hereinabove)  it  became absolutely necessary  for  the Tribunal  to first ascertain whether there was a closure and whether such closure was bona fide.  The next question which has to be decided is whether the Division Bench was right in concluding on facts that there was no closure.  The Division Bench  has come to its conclusion that there was no  closure by first concluding that there was no Textile Section in the Company and that the Textile Section was an inseparable part of  the entire plant.  The Division Bench has also drawn  an adverse  inference  against  the Appellant  Company  on  the ground  that the Company has not produced certain log  books to  show  what  parts of the Russian  Generating  sets  were missing.   It, therefore, drew an adverse inference that the non-  production of the log books necessarily meant that had those  log  books  been produced, it would have  shown  that Russian  Generating Sets were operable.  It therefore opined that  there was no sufficient cause for the alleged closure. In our view, the Division Bench has erred in arriving at the above  conclusions.  It must be remembered that at the  time the  disputes  were referred to the Industrial Tribunal  the term  ’closure’ had not been incorporated in the  Industrial Disputes  Act.   However, the concept of ’closure’ was  well known.   Therefore, even though in the reference and in  the pleading  the term ’closure’ may not have been  specifically

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used,  what  was essential was whether or not there  was  in fact  a closure as understood in Industrial Law.  Even prior to  the  disputes being referred the Appellant  Company  had been  claiming that there was dis-continuance of process  in the  Textile Section of the Nylon Plant.  They were claiming that  it  was  a   permanent  discontinuance.   A  permanent discontinuance   necessarily  meant   closure.   After   the disputes   were  referred  both   the  parties  filed  their pleadings.   On those pleadings specific issues were raised. One of the Issues raised was an Issue No.  7, which reads as follows:

     "7.    Whether   there   has    been   in   fact   any discontinuance/closure           of            undertakings/ departments/processes/operations/interconnec  ted  processes and activities in Nylon Division before retrenchment?"

     At the time when this issue was raised the Respondents did not contend that such an issue could not be raised as it was  not part of the dispute referred.  The Respondents  did not  contend that this Issue did not arise on the pleadings. This  is  because  the Respondents were aware  that  it  was always  the  case  of  the Appellant  that  there  had  been discontinuance  of  this Section.  It cannot be denied  that the  closure need not be of the entire plant.  A closure can also  be a part of the plant.  Before the Tribunal both  the parties  led evidence.  The Appellant Company proved  before the  Tribunal that it was suffering heavy losses.  It proved before  the Tribunal that in the Textile Section the  losses were  as follows:  "During 1979 Rs.  10.64 lacs,  1980  Rs. 56.93  lacs,  1981 Rs.  292.63 lacs and  1982 Rs.   532.49 lacs"

     Thus between 1979 and 1982 the losses had gone up from Rs.   10.64 lacs to Rs.  532.49 lacs.  Not only that, it was admitted  before the Industrial Tribunal that the  Appellant Company had following divisions in which the total number of workmen  employed  were as follows:  "S.No.  Division  Total number of permanent workmen employed .

     1.     Nylon   plant/Division     engaged   2209    in Plat/POY/MOY/yarn process:

     Nylon  Plant/Division  (engaged 1164  In  texturising, crdmping and Processes).

     2.  Tyre Cord Plant/Division 660

     3.  Synthetic Stapple Fibre Plant/Division.  703

     4.   Acrylic Plant/Division 527 -------- Total:-  5263 --------"

     Thus,  it is to be seen that in the Nylon Plant  there was  a  division  known  as a  Texturising  Division.   This Division was admittedly known as the Textile Division of the Nylon  Plant.  Therefore, it was a separate division in  the Nylon  Plant.  The Division Bench has also ignored the  fact that  before  the Industrial Tribunal not only witnesses  on behalf of the Appellant Company but even witnesses on behalf of  the Unions, particularly one Mr.  Satya Narayan  Tailor, have  admitted  that the Textile Section of the Nylon  Plant had  been closed.  Similarly, another Mr.  K.  D.  Chaudhary has  also  admitted  that the Textile Section of  the  Nylon Plant had been closed.  It was also an admitted position, on

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evidence before the Industrial Tribunal, that the workers of the   other  departments  of  the   Nylon  Plant  were   not transferred  to  the Textile Section and the workers of  the Textile  Section were not transferred to other  departments. Based  on evidence the Industrial Tribunal in its Award  has recorded  as  follows:   "The factum of the closure  of  the Textile  section  of  the  Nylon plant  has  not  been  very seriously  disputed  and  on behalf of the  Unions  and  the witnesses  for  RCTU  and  CITU as well  as  for  the  Staff Association  have  not  rebutted, the evidence  produced  on behalf  of  the  Company that the Textile section  has  been closed."

     Thus  before  the  Industrial Tribunal  there  was  no dispute  that  there  was Textile Section and there  was  no serious  dispute  that the Textile Section had been  closed. This  fact  has been completely overlooked by  the  Division Bench.  When facts are admitted or not seriously disputed at the  trial stage the Appellate Court cannot draw an  adverse inference  contrary  to admitted facts.  The Division  Bench should  have realized that the dispute regarding closure was contrary  to the evidence on record.  The Division Bench has thus  erred  in  coming to a conclusion that  there  was  no Textile Section and that there was no closure of the Textile Section.   The findings of the Division Bench in this behalf cannot  be  sustained, require to be and are set aside.   It must  be mentioned that the Division Bench has affirmed  the findings of the Single Judge based upon the decision of this Court  in Meenakshi Mills Ltd.’s case (supra).  In our view, those findings are correct and cannot be disturbed.  It must also  be mentioned that the Division Bench has in concluding directed    the   State    Government    and   the    Labour Commissioner-cum-Deputy  Secretary,  Labour   Department  to prosecute   the   Company  and   its  office   bearers   for contravention  of the provisions of the Industrial  Disputes Act  and  the  Rules framed thereunder.  In our  view,  such directions  were entirely unjustified and are unsustainable. We,  therefore set aside the Judgment of the Division  Bench and  restore  the Judgment of the single Judge of  the  High Court.   We,  however clarify that if the Government or  the Labour  Commissioner-cum-Deputy Secretary, Labour Department are  of the opinion that there has been any contravention of the  provisions of the Industrial Disputes Act or the  Rules framed  thereunder,  they  are at liberty on  their  own  to prosecute  if they feel it necessary to do so.  The  Appeals stand  disposed off accordingly.  There will be no Order  as to costs throughout.