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PETITIONER: POTTERY MAZDOOR PANCHAYAT

       Vs.

RESPONDENT: THE PERFECT POTTERY CO. LTD. & ANR.

DATE OF JUDGMENT19/10/1978

BENCH: CHANDRACHUD, Y.V. ((CJ) BENCH: CHANDRACHUD, Y.V. ((CJ) KAILASAM, P.S. KOSHAL, A.D.

CITATION:  1979 AIR 1356            1979 SCC  (3) 762

ACT:      Industrial Disputes  Act  1947,  Section  10(1)(d)  and Madhya Pradesh  Industrial Relations  Act 1960.  Section 51- Tribunals whether  have jurisdiction  to go behind the terms of reference.

HEADNOTE:      The  respondent  was  engaged  in  the  manufacture  of stoneware  pipes   and  other  refractory  material  at  its factory. It  had taken  lease of  reference. The  respondent issued a  notice of  closure of  the factory  and mines,  on account of  financial difficulties. The factory was governed by the Madhya Pradesh Industrial Relations Act, 1960 and the Mines were governed by the Industrial Disputes Act, 1947.      A dispute  having been  raised by the workmen, the case relating to the factory was referred under section 51 of the State Act to an Industrial Court, while the dispute relating to the  Mines was  referred under  section 10(1)  (d) of the Central Act  to the  Central Government  Industrial Tribunal cum-Labour Court.      The main  question referred  under the  State  Act  was whether the proposed closure was proper and justified, while the  reference   under  the  Central  Act  was  whether  the employers were justified in closing down the mines.      The Industrial  Court held  that it had no jurisdiction either to  inquire into  the propriety  of the closure or to consider whether  there was or was not a real closure, while the Central  Government Industrial Tribunal held that though it had  no jurisdiction  to inquire whether the management’s decision  to   close  down   the  business  was  proper  and justified, it was entitled to consider whether, in fact, the business was closed.      In writ  petitions filed  by both sides, the High Court came to the conclusion that the jurisdiction of the Tribunal in industrial disputes is limited to the points specifically referred for  its adjudication  and  to  matters  incidental thereto and  that the Tribunal cannot go beyond the terms of reference made of. it.      Dismissing the appeals, ^      HELD: 1.  The references  being limited  to the  narrow question whether  the closure  was proper and justified, the

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Tribiunals by  the very  terms of  the  references,  had  no jurisdiction to  go behind  the fact  of closure and inquire into the  question whether  the business  was in fact closed down by the management. [130 E]      2. The  terms of  the references show that the point of dispute between  there parties  was  not  the  fact  of  the closure of  business but  the propriety and justification of the respondents  decision to  close down  the business.  The Tribunals. 127                     (Chandrachud, C. J.) were not  called upon  to adjudicate upon the question as to whether under  the   pretence of  closing the  business  the workers were locked out by the management. [130 C-D]      3. The  history  of  the  dispute  indicated  that  the dispute between  the parties  related not to the question as to  whether  the  business,  in  fact,  was  closed  by  the management  but  whether  there  was  any  justification  or propriety on the part of the management in deciding to close down  the   business.  There  is  a  clear  and  unequivocal admission on  the part  of the  workers before the Tribunals that the  business was  in fact  closed by  the  respondent. [130F, 131D]      4. The  concept of  ’closure’ as  envisaged in  section 2(8) of the State Act is perhaps wider than what is commonly understood by  that expression  but that  cannot assist  the appellant to contend that under the terms of the references, the Tribunals were entitled to enter into the question as to the fact  OF the  closure. If  ever it  was the  case of the appellant that  there was  in fact  no closure and there was really an  illegal lock-out,  the reference  would have been asked for  and made  not under section Sl under which it was made, but under section 82. 1132B. D]      5. The propriety of or justification for the closure of a business  in fact  and truly  effected,  cannot  raise  an industrial dispute  as contemplated by the State and Central Acts. [132 F]      The Management  of Express  Newspapers Ltd.  v. Workers and Staff  Employed under it and Others [1963] 3 S.C.R. 540, 548 referred to.

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 293-295 of 1971.      From the  Judgment and  Order dated  30-4-1970  of  the Madhya Pradesh  High Court  in M.P. No. 333/68 and 48 and 27 of 1969.      Gulab Gupta and Vineet Kumar for the Appellant.      V. M.  Tarkunde, D.  N. Misra  and O.C.Mathur  for  the Respondent.      The Judgmnent of the Court was delivered by      CHANDRACHUD, C. J. The respondent, M/s. Perfect Pottery Co. Ltd.,  was engaged in the manufacture of stoneware pipes and other  refractory  material  at  its  factory  known  as Perfect Pottery  Works, where it employed about 900 workmen. For the  purposes of  its factory,  respondent had  taken  a lease of  Poly Pather  Clay Mines,  wherein about 81 workmen were employed.  On April 24, 1967 respondent issued a notice of closure  of the  factory and  the Mines stating, that the management. had  decided  to  close  down  the  business  on account of financial difficulties and other reasons.      Consequent upon  the notice  of closure,  the appellant herein,  the   Pottery  Mazdoor   Panchayat,   applied   for

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initiation of conciliation pro 128 ceedings to  the Deputy  Labour Commissioner, Madhya Pradesh and to  the Regional  Labour Commissioner (C), Jabalpur. The reason  for   initiation  of   two  different   conciliation proceedings was  that Perfect  Pottery Works was an industry to which  the Madhya Pradesh Industrial Relations Act, 1960, applied, whereas  Poly Pather  Clay Mines  was  an  industry governed by the Industrial Disputes Act, 1947. We will refer to these  two Acts  as ’the  State Act’ and ’me Central Act’ respectively      Conciliation  proceedings  having  failed,  the  Madhya Pradesh State  Government, on  June 26,  1967,  referred  an industrial dispute  to the  arbitration  of  the  Industrial Court under  section 51 of the State Act. The main questions referred to the Industrial Court were:           Whether the  proposed closure by the management of      the  Perfect  Pottery  Co.  Ltd.,  Jabalpur,  of  their      pottery factory  at Jabalpur,  with effect from July 1,      1967, is proper and justified,  and           To  what   retrenchment   compensation   are   the      employees entitled, if it is decided that ’the proposed      closure is proper and justified ?      The reference was evidently made in order, in the first instance,  to   avert  the   closure  of  the  factory.  The Industrial Court  was there  fore  also  asked  to  consider whether any  interim relief should be granted by restraining the management  from closing  down  the  factory  until  the reference was finally adjudicated upon. The Industrial Court by an  interim Award dated June 30, 1967, having declined to issue a  prohibitory injunction,  the appellant  filed  Writ Petition No.  337 of  67 in  the Madhya  Pradesh High Court. That Petition  became infructuous  after the  closure of the factory and was not pressed.      On July  1, 1967 the respondent purported to close down the  business.  We  say  "purported",  because  whether  the business was,  truly and  in fact, closed or not is a matter on which  the parties  have joined  issue. The  case of  the appellant  is  that  respondent  had  closed  the  place  of business and  not the business itself. After the closure, or shall we  say the  ’alleged closure’, the Central Government on September  16,  1967,  made  a  reference  under  section 10(1)(d) of  the  Central  Act  to  the  Central  Government Industrial  Tribunal-cum  Labour  Court,  Jabalpur,  on  the following question:           Whether the  employers in  relation  to  the  Poly      Pather  Clay   Mines  of   Perfect  Pottery  Co.  Ltd.,      Jabalpur, were  justified in closing down the said mine      and retrenching the 129                     (Chandrachud, C. J.)      following 81  workers with effect from July 1, 1967. If      not, to what relief are the workmen entitled ?      In the  two references, one before the Industrial Court and the  other  before  the  Central  Government  Industrial Tribunal-cum-Labour Court,  ’the respondent  contended  that the respective Tribunals had no jurisdiction to consider the question as  regards the  propriety or  justification of the management’s decision  to close  down the  business  on  the other question, the respondent did not dispute its liability to pay  retrenchment compensation  to  the  workmen  but  it contended that neither of the two Tribunals had jurisdiction to go into that question.      The appellant’s  case before the Tribunals was that the so-called closure  of the  business was  merely a camouflage

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and was  in substance and essence, a lock out. In support of this contention  the appellant  pleaded that  the respondent was making  large profits  in its business, that no economic or financial  reasons could  have impelled  it to close down its business and the true reason of the supposed closure was to victimize  the workers  for their  Trade Union activities and to defeat the rights which flowed out of the Award given by the  Industrial Court, Madhya Pradesh, on March 16, 1966, under which  the workers  were entitled  to receive enhanced dearness allowance      The two  Tribunals came  to contrary  conclusion on the principal question  as to  whether they  had jurisdiction to inquire into  the propriety  of  or  justification  for  the closure. The  Central  Government  Industrial  Tribunal-cum- Labour Court  held by  its award  dated July 3, 1968 that it had no  jurisdiction to  inquire whether the decision of the management  to  close  down  the  business  was  proper  and justified but  that it  was entitled to consider whether, in fact, the  business was  closed.  On  the  other  hand,  the Industrial Court,  by its  award dated  p November  15, 1968 held that  it had no jurisdiction either to inquire into the propriety of  the  closure  or,  because  of  the  terms  of reference, to  consider whether  there was or was not a real closure.      As against  these decisions,  three Writ Petitions were filed in  the High  Court of  Madhya  Pradesh,  one  by  the appellant and  two by  the respondent which were disposed of by the High Court by a common judgment dated April 30, 1970. Dismissing the  Writ Petition  filed by  the  appellant  and allowing the  Writ Petitions filed by the respondent, it has granted to  the appellant a certificate to file an appeal to this Court under Article 133(1) (a) of the Constitution.      Two  questions  were  argued  before  the  High  Court: Firstly, whether  the tribunals had jurisdiction to question the propriety  or justification of the closure and secondly, whether they had jurisdiction 130 to go  into the  question of  retrenchment compensation. The High  Court   has  held  on  the  first  question  that  the jurisdiction of  the  Tribunal  in  industrial  disputes  is limited  to   the  points   specifically  referred  for  its adjudication and  to matters incidental thereto and that the Tribunal cannot go beyond the terms of the reference made to it. on  the second  question the High Court has accepted the respondent’s contention  that the  question of  retrenchment compensation has  to be  decided under section 33C(2) of the Central Act.      Having heard a closely thought out argument made by Mr. Gupta on behalf of the appellant, we are of the opinion that the High  Court is  right in its view on the first question. The very  terms of  the references  show that  the point  of dispute between  the parties was not the fact of the closure of its  business by  the respondent  but the  propriety  and justification of the respondent’s decision to close down the business. That  is why  the references were expressed to say whether the  proposed closure of the business was proper and justified. In  other words, by the references, the Tribunals were not  called upon  by the  Government to adjudicate upon the question  as to  whether there  was in fact a closure of business or  whether  under  the  pretence  of  closing  the business the  workers were locked out by the management. The references being  limited  to  the  narrow  question  as  to whether the  closure was proper and justified, the Tribunals by the  very terms of the references, had no jurisdiction to go behind  the fact of closure and inquire into the question

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whether  the  business  was  in  fact  closed  down  by  the management.      It is not necessary to rely exclusively on the terms of references for coming to this conclusion. The history of the dispute  and   the  various   documents  on  record  of  the references themselves  indicate that the dispute between the parties related  not to  the  question  as  to  whether  the business, in  fact, was closed by the management but whether there was  any justification or propriety on the part of the management in  deciding to  close down the business. On June 22,1967,  the  General  Secretary  of  the  appellant  Union addressed a  letter to  the  Regional  Labour  Commissioner, Jabalpur, by which the present dispute was raised. The first paragraph  of  that  letter  says:  "that  the  Company  had notified is decision to close down the mine with effect from July 1,  1967, that  some of  the workers  were served  with notices of  retrenchment individually  but that retrenchment compensation was  not  paid  by  the  management  which  was illegal and  violative of  the provisions  of the Industrial Disputes Act".  This grievance   assumes the validity of the decision to  close down  the business and proceeds to make a claim arising  out of  a valid  closure namely,  a claim for retrenchment compensation. The second paragraph of the 131                     (Chandrachud, C. J.) the aforesaid  letter begins  by saying that "the closure of the mine  and the  factory is malafide". The reasons for the closure are then set out in that paragraph which winds up by saying that  the Union  was of  the opinion that the closure was not  for business  reasons but  was a  malafide decision taken in  order to  drive the  Union out of existence and to cheat the workers of their lawful dues.      On  June   28,  1967,  the  Managing  Director  of  the respondent sent  a reply to the Regional Labour Commissioner dealing with the contentions made by the Union in its letter of June  22,, 1967.  The Managing Director contended that no industrial dispute  existed or  was apprehended and that the Conciliation officer  had, therefore,  no jurisdiction under the Act  to hold  any proceedings.  In the order dated April 30, 1970,  of   the  Industrial  Tribunal-cum-Labour  Court, Jabalpur, reference  has been made to an affidavit which was filed on  behalf of  the workers for the purpose of securing an interim  award. We  have, looked  at  the  affidavit  for ourselves and  are in  agreement with  the view expressed by the Tribunal that there is a clear and unequivocal admission on the  part of  the workers in that affidavit to the effect that the  business was in fact closed by the respondent. The High Court  has also  referred to a statement dated June 16, 1967, in  which it  was stated on behalf of the workmen that since the  establishment had  already closed down, there was no necessity for making submissions on the point relating to the reduction in the number of employees and revision of the workload.      Learned  counsel   for  the  appellant  relies  upon  a judgment  of   this  Court  in  The  Management  of  Express Newspapers Ltd.  v. Workers  and Staff Employed under it and others,(1) in  which it was observed that if, in fact and in substance, the closure of the business is a lock out and the business has  been apparently  closed  for  the  purpose  of disguising a  lock out and a dispute is raised in respect of such a  closure it  would be  an industrial dispute which an Industrial Tribunal  is competent  to deal with. There, can, with respect,  be no  quarrel with  this proposition but the true question  which arises  for consideration is whether in the instant case there was any dispute at all, whether there

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was in fact a closure or whether the management purported to close the  business as  a cloak or disguise for what in fact and substance  was a  lock out.  As we have shown earlier no such dispute  was ever raised, the limited dispute which was raised by  the appellant  being whether  the closure  of the business was effected for a proper and a justifiable reason.      The appellant’s  counsel also drew our attention to the definition of  ’closure’ in  section 2(8)  of the  State Act according to which ’closure’      (1) [1963] 3 S.C.R. 540, 548 132 to the  extent material,  means the  closing of any place or part of  a place  of employment  or  the  total  or  partial suspension of  work by  an employer  or the total or partial refusal  by  an  employer  to  continue  to  employ  persons employed by  him whether such closing, suspension or refusal is or is not in consequence of an industrial dispute. It may perhaps be that the concept of ’closure’ in the State Act is wider than  what is  commonly understood  by that expression but we  do not  appreciate how  the circumstance that even a partial closure  of a business is closure within the meaning of the  State Act can assist the appellant in its contention that  under   the  terms  of  the  present  references,  the Tribunals were entitled to enter into the question as to the fact of  the closure.  In this  connection the provisions of section 82 of the state Act, to which Mr. Tarkunde appearing on behalf  of the  respondent drew  our attention,  are very significant. That section provides that the State Government may make  a reference  to a  Labour Court  or the Industrial Court for  a declaration  whether any proposed strike, lock- out, closure or stoppage will be illegal. If ever it was the case of  the appellant that there was in fact no closure and there was  really an  illegal lock-out,  the reference would have been  asked for  and made  not under  section 51  under which it was made, but under section 82.      We are,  therefore, of the view that the High Court was right in coming to the conclusion that the two Tribunals had no jurisdiction to go behind the references and inquire into the question  whether the  closure of business, which was in fact effected"  was decided  upon  for  reasons  which  were proper and  justifiable. The  propriety of  or justification for the  closure of  a business, in fact and truly effected, cannot raise  an industrial  dispute as  contemplated by the State and Central Acts.      It is  unnecessary to  consider the  second question as regards the  payment of  retrenchment  compensation  and  we will, therefore,  express  no  opinion  as  to  whether  the Tribunals  had   jurisdiction  to  go  into  that  question. Happily, the  parties have  arrived at  a settlement on that question under  which, the respondent agrees to fix within a period  of   six  months   from   today   the   retrenchment compensation payable to the retrenched workers in accordance with the  provisions of  section 25FFF  of the  Central Act, namely, the  Industrial Disputes  Act, 1947, without the aid of the  proviso to  that  section.  After  the  retrenchment compensation is  so fixed, a copy of the decision fixing the compensation payable  to each of the workers will be sent by the respondent  to the appellant Union. The workers or their legal representatives,  as the  case may  be, will  then  be entitled to  receive the  retrenchment compensation from the respondent, which  agrees to  pay  the  same  to  them.  The respondent will  be entitled  to set  off of  the amounts of retrenchment compen- 133                     (Chandrachud, C.J.)

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sation already paid to the workers against the amounts found due to    them  under  this  settlement.  On  receiving  the retrenchment  compensation   the  workers   concerned  shall withdraw the  applications, if any, filed by them for relief in that behalf.      We would  only like  to add that the compensation which will be  paid to  the workers  will be  without prejudice to their right,  if any,  to get employment from the respondent in the new business as and when occasion arises.      The appeals are accordingly dismissed but there will be no order as to costs. N.V.K.                                    Appeals dismissed. 134