http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

CASE NO.: Appeal (civil)  5834-5835 of 2007

PETITIONER: M/s. Hondaram Ramchandra

RESPONDENT: Yeshwant Mahadev Kadam

DATE OF JUDGMENT: 12/12/2007

BENCH: S.B. Sinha & Harjit Singh Bedi

JUDGMENT: J U D G M E N T (Arising out of SLP (C) NOS.15799-15800 of 2003) WITH

CIVIL APPEAL NO.5840-5841 OF 2007 (Arising out of SLP (C) NOS.15801-15802 of 2003)

S.B. Sinha, J.

1.      Delay condoned.

2.      Leave granted.          3.      A limited notice was issued by this Court as to whether the High  Court was right in directing reinstatement of the respondents-workmen  instead of directing payment of compensation in terms of Section 25FFF of  the Industrial Disputes Act, 1947. 4.      Appellant had a sales office at Mulji Jetha Cloth Market, Mumbai.   Respondents-workmen were employed therein.  The said shop was closed.   The factum of the closure of the shop is not in dispute.  What is disputed is  as to whether it was done in the year 1983 or 1991.  Upon closure of the said  shop, the respondents were transferred to work in a factory at Goregaon  which did not belong to the respondents.  An application for payment of  wages was filed against the appellant before the Prescribed Authority.  The  said application was dismissed, inter alia, on the premise that the  respondents had refused to join their duties at the transferred place.  A  domestic enquiry was purported to have been held in April, 1984 on the  premise that the respondents had neither reported for duties at Goregaon nor  at Mumbai.  The services of the respondents were terminated in December,  1985.  In January, 1986, the premises in which the sales office was being run  was admittedly handed over to another Company.  5.       An industrial dispute was raised by the respondents demanding their  reinstatement with full back wages as well as continuity in services. A  reference was made by the appropriate Government.   6.      A preliminary issue was raised as to whether in the said reference, the  domestic enquiry conducted against the respondents was fair and proper.   The said preliminary issue was decided in favour of the employer and  against the workmen by an order dated 5.12.1996.  The parties to the  reference, thereafter adduced their evidences before the Industrial Court.   7.      By an award dated 31.7.1996, the Presiding Officer of the Labour  Court, Mumbai held that the termination of the services of the respondents  was proper and valid and, thus, were not entitled to any relief.  Questioning  the correctness of the said award, the workmen filed writ applications.  A  learned single Judge of the High Court of Bombay allowed the said writ  petitions being W.P.No.1693 of 1997 and W.P.No.1691 of 1997 by a  judgment and order dated 30.08.1999 setting aside both the awards opining:- \023I do not find any merit in the contention advanced

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

on behalf of respondent No.1.  Firstly, as stated  hereinabove, there is nothing to show that a proper  Domestic Enquiry has been held.  Secondly, there  is no evidence on record to indicate that transfer  constituted service condition.  Thirdly, the  evidence on record clearly indicates that Khanna  Textile Industry was a separate legal entity vis-‘- vis respondent No.1 and under the circumstances,  the workman cannot be asked to join separate legal  entity. I have gone through the entire record.   There is no proof to show that the findings of the  Enquiry Officer were forwarded to the  chargesheeted employee.  The findings on record  show that the petitioner was asked to work for a  separate legal entity, without terminating his  services in accordance with law and without  paying him compensation under Section 25-F of  the Industrial Disputes Act, 1947.  He was also not  paid gratuity.  He was also not paid wages during  the period when the Enquiry was going on.  Taking  into account the above facts, the Labour Court  erred in dismissing the Reference\024.

         8.      An intra court appeal was preferred thereagainst wherein, inter alia, a  contention was raised by the appellant that the sales office of the appellant  having been closed, no award of reinstatement could have been passed.  The  said appeal was dismissed by a Division Bench of High Court by reason of  the impugned judgment dated 11.01.2000.         A review application preferred thereagainst has also been dismissed  by an order dated 17.01.2003.   9.      Mr. Shekhar Naphade, learned senior counsel appearing on behalf of  the appellant, submitted that keeping in view the admitted fact that the sales  office of the appellant was closed, the workmen were entitled only to the  amount of compensation payable in terms of Section 25FFF of the Industrial  Disputes Act, 1947 and not the relief of reinstatement with back wages.           It was urged that even the learned single Judge in the judgment  noticed:- \023Shri Khanna has further deposed that he has sold  the Sales Office.  The evidence of Shri Khanna  clearly indicates that Khanna Textile Industry was  a separate legal entity to which the workman was  sought to be transferred\024.

       Our attention was also drawn to the written statement filed on behalf  of the appellant wherein it was averred : \023There is no relation between the shop and the  Goregaon factory.  Prior to the 3-4 years from  today, the said place of my work was sold by the  company and prior to the sale the place of work  was given by the employer on leave and licence to  the 3rd party near about 10 years\024.

       It was furthermore brought to our notice that the following  contentions were raised before the Division Bench of the High Court, as  would appear from the Memo of Appeal:

\023That there is total non application of mind on the  part of the learned single judge in observing that  there is no evidence on record to indicate that  transfer constituted service condition and that  Khanna Dyeing was a separate legal entity viz-a- viz appellant herein.  Had the Learned Single  Judge appreciated the fact that asking the first

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

Respondent to resume duties at Goregaon factory  was an offer of alternate employment due to  closure of sales office where the first respondent  was employed, he ought to have come to the  conclusion that the action on the part of the  Appellant was bonafide and with intention to  secure employment of the Respondent and that the  Appellant was constrained to terminate the service  of the first Respondent for not attending his  duties\024.

10.     It appears from the records that the following contention was also  raised in the review petition :

\023The petitioner submits with great respect that this  fact was through oversight not gone into by the  learned Division Bench.  Had this fact been  considered by the Learned Division Bench and the  Learned Single Judge having held that the  Respondent\022s job was a non-transferable one, it is  respectfully submitted that reinstatement with the  Petitioner company would not have been granted.   Also payment of back wages would not have been  granted.  The Respondent at best was entitled to  closure compensation\024.

11.     The learned counsel for the respondents, on the other hand, contended  that the respondents have filed an application under Section 33(C-2) of the  Industrial Disputes Act, 1947 before the Labour Court, Mumbai which is  pending.  It was argued that the respondents may not be entitled for their  reinstatement but would indisputably be entitled to back wages in lieu of  reinstatement.             It was further submitted that the closure of the unit was affected only  in 1991 and not in 1983.

12.     From the records, it appears that the sales office of the appellant had  been closed down.  We have noticed heretobefore that there exists a dispute  as to whether the said closure, for all intent and purport, was effected in  1983 or 1991.  The High Court evidently committed an error in not taking  into consideration the factum of closure of the business from the premises of  the appellant, for the purpose of grant of relief.  If the undertaking of the  appellant had been closed down, the workmen were entitled to compensation  only in terms of Section 25FFF of the Industrial Disputes Act, 1947 and not  the relief of reinstatement with back wages.   13.     The question of passing an award directing reinstatement with full  back wages, in the aforementioned fact situation, did not and could not arise.   However, the purported order of transfer was evidently not a legal one.   Appellants furthermore initiated a domestic enquiry against the respondents.   It was held ex parte.  On the basis of the report made by the Enquiry Officer  in the said domestic enquiry alone the services of the respondents were  terminated.  It was at this stage a reference was made by the appropriate  government for adjudication of the dispute raised by the respondent herein in  terms of Section 10(1)(c) of the Industrial Disputes Act, 1947.

14.     Two questions arise for our consideration.        Firstly, whether the closure was affected in the year 1983 or 1991?    Secondly, whether the amount of compensation should be computed as if the  establishment of the appellant was closed in 1983 or 1991, as the case may  be, or are the workmen entitled to some other reliefs? 15.     Ordinarily, we would have remitted the matter back to the High Court  for consideration of the matter afresh to determine the said questions. Our  attention, although, has been drawn to the evidences brought on record, it is  difficult for us to arrive at one or the other opinion in regard to the question  as to when the establishment of the appellant was closed.  In the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

aforementioned premise it is also not possible for us to determine the effect  of termination of service of the workmen.   16.     We are, therefore, of the opinion that the interest of justice would be  subserved if the Labour Court, where the application of the respondents  under Section 33(C-2) of the Industrial Disputes Act, 1947 is pending,  should be directed to determine the aforementioned questions as the said  court can determine the said questions more effectively.  For the said  purpose, the Labour Court would permit the parties to adduce fresh  evidence.  We would request the Presiding Officer, Labour Court to pass an  award as expeditiously as possible. 17.     We, however, direct that the appellant, in the meanwhile, shall pay a  sum of Rs.25,000 each to the concerned workmen within four weeks from  the date of receipt of this judgment by way of litigation expenses.  The said  amount may also be deposited before the concerned Labour Court.    18.     With the aforementioned observations and directions, this appeal is  disposed of. No costs.