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PETITIONER: S.G. CHEMICAL AND DYES TRADING EMPLOYEES’ UNION

       Vs.

RESPONDENT: S.G. CHEMICALS AND DYES TRADING LIMITED AND ANOTHER

DATE OF JUDGMENT03/04/1986

BENCH: MADON, D.P. BENCH: MADON, D.P. REDDY, O. CHINNAPPA (J)

CITATION:  1986 SCR  (2) 126        1986 SCC  (2) 624  1986 SCALE  (1)1048

ACT:      Industrial DLsputes Act, 1947 : Section 25-0 :      "An  undertaking   of  an   industrial  establishment"- Interpretation of.      Closure of such an "undertaking" - When illegal.      Maharashtra Recognition  of Trade Unions and Prevention of Unfair  Labour Practices  Act, 1971 : Section 28 and Item 9, Schedule  IV :  Settlement -  Termination of  Services of Workmen in contravention thereof - Whether unlawful.      Constitution of  India,  Article  136  -  Resort  to  - ’Whether  permissible   where  equally   efficacious  remedy available.

HEADNOTE:      Sub-s. (1)  of 8.  25-o of the Industrial Disputes Act, 1947 obligates  an employer,  who intends  to close  down an undertaking of an industrial establishment, to which Chapter V-B applies,  to submit  an application for prior permission at least  ninety days  before the date on which the intended closure  is   to  become   effective,  to   the  appropriate Government. Sub-s.  (6) of  8. 25-0  provides that  where no application under  sub-s. (1)  is made  within the specified period or  where permission has been refused, the closure of the undertaking  shall be  illegal from the date of closure, and the  workmen shall be entitled to all the benefits under any law  for the  time being in force, as if the undertaking had  not  been  closed  down.  Section  25-K  specifies  the industrial establishments  to which  Chapter V-B  applies as those in  which not  less  than  one  hundred  workmen  were employed on  an average  per working  day for  the preceding twelve months.      Item 9 of Schedule IV to the Maharashtra Recognition of Trade Union and Prevention of Unfair Labour Practices Act, 127 1971 lists  failure to  implement an  award,  settlement  or agreement ss  one of  the general unfair labour practices on the part of the employers.      The respondent-company,  a wholly owned subsidiary, was operating in  Bombay in  three Divisions, st three different places, the  Pharmaceutical Division  at  Worli  having  110 employees, the  Laboratory  and  Dyes  Division  at  Trombay having 60 employees, and the Marketing and Sales Division at

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its Registered Office at Churchgate having 90 employees. The holding company  had a  chemicals and  dyes factory  in  the State of Gujarat which was sold out in 1984. Since the buyer company proposed  to handle  the  sales  through  their  own distribution channels  and the services of the staff working st the  Registered  Office  were  no  longer  required,  the respondent-company  by   its  notice  dated  July  16,  1984 intimated the  Government of  Maharashtra that in accordance with the  provisions of  sub-s. (1)  of  s.  25-FFA  of  the Industrial  Disputes  Act  (which  applies  to  undertakings employing fifty  or more  workmen) it intended to close down the  undertaking/  establishment/office  at  its  Registered Office. In  the said  notice, the  number of  workmen on the rolls was stated to be ninety. The company thereafter closed down the  said  Division  terminating  the  services  of  84 employees, while  retaining the  remaining six  to attend to the work upon such closure.      The Employees’ Union thereupon filed a complaint before the Industrial  Court under  s. 28  of the  Maharashtra Act, read with Item 9 of Schedule IV thereto, contending that the closure of  the Marketing and Sales Division was contrary to s. 25-0  of the Industrial Disputes Act, and, therefore, the employees continued  to be  in service,  notwithstanding the notice of  closure, and  were entitled  to  full  wages  and allowances, in  terms of  the settlement  dated February  1, 1979 entered  into with  the company,  and as these were not paid the  company had  committed an  unfair labour  practice under Item  9 of  Schedule IV  to the Maharashtra Act. Their case was  that there  was functional integrality amongst all the three  M visions  of the  respondent-company, and as the aggregate number  of employees  in those  Divisions exceeded one  hundred   the  company   was  bound  tc  apply  to  the appropriate Government  for permission under s. 25-0(1). The failure of  the company  to do  so had  rendered the closure illegal under 8. 25-0(6). 128      The Industrial  Court dismissed  the complaint  holding (i) that  8. 25-0  of the  Industrial Disputes  Act was  not applicable inasmuch as the number of workmen employed at the industrial establishment  at Trombay at no time had been one hundred or  more as  required by  s.  25-K,  (ii)  that  the Churchgate Office not being a part of the Trombay factory in legal parlance,  it was  not an undertaking of an industrial establishment within  the meaning  of  Chapter  V-B  of  the Industrial Disputes  Act, and  (iii) that even assuming that 8. 25-0 was attracted, a violation of that section would not constitute an  act of unfair labour practice under Item 9 of Schedule IV to the Maharashtra Act.      On the  question whether  s.  25-0  of  the  Industrial Disputes Act applied to the closure of the Churchgate Office and whether  the Trombay factory and the Churchgate Division constituted one establishment.      Allowing the appeal by special leave, the Court, ^      HELD: 1. The closing down of the Churchgate Division of the  respondent-company   was  illegal,   as   it   was   in contravention of  the provisions of s.25-0 of the Industrial Disputes Act  1947. The  company was  guilty of  the  unfair labour practice  specified in  Item 9  of Schedule IV to the Maharashtra Recognition  of Trade  Unions and  Prevention of Unfair  Labour  Practices  Act,  1971  for  its  failure  to implement the  settlement entered  into with  the appellant- Union. [159 F; 160 A; 159 H]      The workmen,  whose services were terminated on account of such  illegal closure  continue  in  employment  and  are

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entitled to  receive from  the company their full salary and all other  benefits under  the  settlement  retrospectively. [161 C]      2.1 Section 25-0 of the Industrial Disputes Act applies to  the   closure  of   an  undertaking   of  an  industrial establishment and  not  to  the  closure  of  an  industrial establishment. [149 C]      2.2 The Trombay factory of the respondent-company is an industry within the meaning of the term in cl.(j) of 8. 2 of the Industrial  Disputes Act,  for it carries on the work of manufacturing and processing of dyes. That factory is also a 129 "factory" as  defined in cl. (m) of s.2 of the Factories Act 1948, and  is, therefore, an industrial establishment within the meaning  of that expression as defined in 8. 25-L of the Industrial Disputes Act. [144 F-G]      2.3 The  Act does not require that an undertaking of an industrial  establishment   should  also  be  an  industrial establishment or  that it  should be  located  in  the  same premises as  the industrial  establishment.  In  the  modern industrial world  it is often not possible for all processes which ultimately  result  in  the  finished  product  to  be carried out at one place. In many cases these functions with regard to the use, sale, transport, delivery and disposal of the  article   or  substance  manufactured  are  distributed amongst  different   departments  and  divisions  housed  in different buildings situate at different places. [149 D; 146 G; 147 A; 146 F]      2.4 The  term ’undertaking’ being not defined, wherever it occurs  in the Act, unless a specific meaning is given to that term by the particular provision it is to be understood in its  ordinary meaning  and sense  connoting  thereby  any works, enterprise,  project  or  business  undertaking,  not necessarily covering  the entire industry or business of the employer. So  understood, if  an undertaking in its ordinary meaning and  sense is a part of an industrial establishment, so that both taken together constitute one establishment, s. 25-0 would  apply to the closure of the undertaking provided the condition  laid down  in s.  25-K of  not less  than one hundred workmen being employed on an average per working day for the  preceding twelve months is fulfilled. [149 D-F; 150 A; D-E]      Management of  Hindustan Steel  Limited v.  The Workmen and others,  [1973] 3  S.C.R. 303  and Workmen  of the Straw Board Manufacturing  Company Limited   v.  M/s. Straw  Board Manufacturing  Company   Limited  ,  [1974]  3  S.C.R.  703, referred to.      2.5 The  functions of  the Churchgate  Division and the Trombay factory  of the respondent were neither separate nor independent of  each other  but were so integrally connected as to constitute these two into one establishment. There was complete functional  integrality between  them. The  Trombay factory could  never have  functioned independently  without the 130 Churchgate Division being there. A factory cannot produce or process goods unless raw materials required for that purpose are  purchased.   Equally,  there   cannot  be   a   factory manufacturing  or  processing  goods  unless  the  goods  so manufactured or  processed are  marketed and  sold. The  one without the  other is  a practical impossibility. Similarly, no factory  can run  unless salaries  and  other  employment benefits are paid to the workmen, nor can a factory function without the  necessary accounting and statistical data being prepared. These  are integral  parts  of  the  manufacturing

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activities of a factory. [152 E; 154 F; 154 C-D]      The Associated  Cement Companies  Limited, Chaibassa Ce ment Works, Jhinkpani v. Their Workmen, [1960] 1 S.C.R. 703; Workmen of  the Straw  Board Manufacturing  Company Ltd.  v. M/s. Straw  Board Manufacturing  Co. Ltd.,  119741 3  S.C.R. 703; South  India Millowners’  Association  and  others.  v. Coimbatore  District  Textile  Workers’  Union  and  others, [1962] 1  Lab. L.  J. 223  S.C. and  Western India Match Co. Ltd. v. Their Workmen, [1964] 3 S.C.R. 560, referred to.      The total  number of  workmen employed  at the relevant time in  the Trombay  factory and the Churchgate Division of the respondent-company was one hundred and fifty. Therefore, if the  respondent-company wanted  to close  the  Churchgate Division it  was required  to satisfy the requirements of 8. 25-0 of  the Industrial  Disputes Act. Section 25-FFA had no application in such a situation. [154 F-G]      3.1 Merely  because registration  was  required  to  be obtained under  a particular  statute, it  did not  make the business or undertaking or industry so registered a separate legal entity  except where  a registration  of incorporation was obtained  under the  Companies Act.  The fact  that  the Trombay factory was registered under the Factories Act while the Churchgate  Division  was  registered  as  a  commercial establishment under  the Bombay Shops and Establishments Act was no  bar to  treating  them  as  one  establishment.  The Factories Act  and the  Bombay Shops  and Establishments Act are regulatory  statutes and  the  registration  under  both these Acts  is compulsory  for providing certain benefits to the workmen employed in the factory or the establishment, as the case may be. [155 B; 154 H; 155 A; 155 C] 131      3.2 A  factory as  defined in  cl. (m)  of s.2  of  the Factories Act is excluded from the definition of "commercial establishment" contained  in cl.  (4) of  s. 2 of the Bombay Shops and  Establishments Act,  and is  not mentioned in the list  of   establishments  set  out  in  the  definition  of "establishment" given  in cl.  (8) of  s. 2  of the said Act because various  matters in  respect of  which provision  is made under  that Act  are also provided for in the Factories Act.  There  is,  however,  nothing  to  prevent  the  State Government from  declaring, under the latter part of cl. (8) of s. 2 a factory to be an establishment for the purposes of the Bombay Shops and Establishments Act. [157 B-C]      4. It  is an  implied  condition  of  every  agreement, including a settlement, that the parties thereto will act in conformity with  law. Such a provision is not required to be expressly stated in any contract. If the services of workmen are terminated  in violation of any of the provisions of the Industrial Disputes  Act, such  termination is  unlawful and ineffective and  the workmen would ordinarily be entitled to reinstatement and payment of full backwages. [159 D]      In the  instant case, there was a settlement arrived at between the  respondent-company  and  the  Employees’  Union under which  certain wages were to be paid by the Company to its workmen,  but the  company closed  down  its  Churchgate Division without complying with the provisions of s.25-0(1), which amounted  to an  illegal closure under s. 25-0(6). The workmen whose  services  were  terminated  were,  therefore, entitled to  receive from  the date  of closure their salary and other  benefits payable  to them  under the  settlement. These having  not been  paid to them, there was a failure on the part  of the  company to  implement the  settlement  and consequently the  company was  guilty of  the unfair  labour practice  specified   in  Item  9  of  Schedule  IV  to  the Maharashtra Act.  The Union was thus justified in filing the

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complaint under s. 28 of that Act complaining of such unfair labour practice. [159 E-F; 161 C; 159 H; 160 A]      Mharashtra General  Kamgar Union  v.  Glass  Containers Pvt. Ltd. & Anr., [1983] 1 Lab. L. J. 326, overruled.      5. Article  136 of  the Constitution is not designed to permit direct  access to  the Supreme  Court in  cases where other equally  efficacious remedy is available and where the question 132 is not  of public importance. Though the powers of the Court under that  Article are very wide still the grant of special leave to  appeal is  in the  discretion of the Court. In the instant case,  a large number of workmen had been thrown out of employment  who could  ill afford  the luxury of fighting from court  to court,  and  the  questions  raised  were  of considerable  importance  both  to  the  employers  and  the employees, which  were valid  reasons for  exercise  of  the discretion. [137 B; 138 E]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION : Civil Appeal No. 830 of 1986.      From the  Judgment and  Order dated  26th July, 1985 of the Industrial  Court, Maharashtra  in Complaint  (ULP)  No. 1273 of 1984.      Dr. Y.S. Chitale and Mrs. S. Ramachandran for the Appellant.      Mahesh Bhatt,  P.H. Parekh  and Miss  Indu Malhotra for the Respondents.      The Judgment of the Court was delivered by      MADON, J. This is an Appeal by Special Leave granted by this Court  against  the  order  of  the  Industrial  Court, Maharashtra dismissing  a complaint  filed by  the Appellant Union under  section 28  of the  Maharashtra Recognition  of Trade Unions  and Prevention of Unfair Labour Practices Act, 1971 (Maharashtra Act No.1 of 1972) complaining of an unfair labour practice on the part of the First Respondent Company, namely, a failure to implement the Settlement dated February 1, 1979,  entered into  between the  Appellant Union and the First Respondent  Company.  This  Act  will  hereinafter  be referred to in short as "the Maharashtra Act".      The First  Respondent Company,  S.G. Chemicals and Dyes Trading Limited  (hereinafter referred  to as "the Company") is a wholly owned subsidiary of Ambalal Sarabhai Enterprises Limited and  carries on  the  business  of  pharmaceuticals, pigments and chemicals. The Second Respondent is the General Manager (Marketing)  of the  Company. The  Appellant  Union, S.G. 133 Chemicals and  Dyes Trading  Employees’  Union  (hereinafter referred to  as "the  Union") is  a trade  union  registered under the  Trade Unions  Act, 1926  (Act  No.  16  of  1926) representing the  employees of  the  Company.  In  1984  the Company was  operating in  Bombay through  three  Divisions, namely,  the   Pharmaceuticals  Division   at   Worli,   the Laboratory and  Dyes Division  at Trombay  and the Marketing and Sales  Division at  Express  Building,  Churchgate.  The Registered Office  of the  Company was  also situate  in the same place  as the  Marketing Division,  namely, in  Express Building. Ambalal  Sarabhai Enterprises  Limited is also the owner of  a chemicals and dyes factory called S.G. Chemicals and Dyes,  situate at Ranoli in Baroda District in the state of Gujarat.

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    By a  notice dated  July 16, 1984, given in Form XXIV-B prescribed by  Rule 82-A of the Industrial Disputes (Bombay) Rules, 1957,  the Company  signing itself as "SG Chemicals & Dyes Trading Limited (Chemicals & Dyes Division)", intimated to the  Secretary, Government of Maharashtra, Industries and Labour Department,  Bombay,  that  in  accordance  with  the provisions of  sub-section  (1)  of  section  25FFA  of  the Industrial Disputes  Act, 1947  (Act No.  14  of  1947),  it intended to close down "the Undertaking/Establishment/Office of Chemicals  & Dyes  Division, located at Express Building, 14 ’E’  Road, Churchgate,  Bombay-400020, with  effect  from 17th September  1984". In  the said  notice  the  number  of workmen on  the roll  was stated  to be  ninety, the name of "the Undertaking  (and  the  Establishment  proposed  to  be closed)" was  given as  "Chemicals & Dyes Division Office of SG Chemicals  & Dyes  Trading Limited".  The ’Industry’  was described  in  the  said  notice  as  "Marketing  and  Sales operations of  Chemicals and  Dyes".  In  the  Statement  of Reasons annexed  to the said notice it was stated as follows :           "Ambalal Sarabhai Enterprises Ltd., have agreed to           sell its  business and  Undertaking  known  as  SG           Chemicals and  Dyes, situated  at Ranoli  to  M/B.           Indian  Dyestuff  Industries  Ltd.,  Bombay,  with           effect from  25-6-1984. Chemicals  & Dyes Division           of SG  Chemicals  and  Dyes  Trading  Limited  was           rendering staff and other services to SG Chemicals           and Dyes  as also to their Marketing Companies who           handled the  sale of SG Chemicals & Dyes products.           Indian 134           Dyestuff Industries  Ltd., propose  to handle  the           future  sale  of  SG  Chemicals  &  Dyes  products           through  their   own  distribution   channels.  SG           Chemicals &  Dyes and the Marketing Companies have           informed us  that the staff services offered by us           to them  would  no  longer  be  required  by  them           resulting in  there being  no work  for the  staff           working at  Express Building office of Chemicals &           Dyes Division  of SG  Chemicals and  Dyes  Trading           Limited. The  Management has,  therefore, no other           alternative  but   to  close   down  their  office           operations of Chemicals & Dyes situated at Express           Building, 14 ’E’ Road, Churchgate, Bombay 400020." Copies of  the said  notice were sent to the Commissioner of Labour, Maharashtra,  the  Deputy  Commissioner  of  Labour, Maharashtra, and the Union.      By its  letter dated  July 16,  1984, addressed  to the Company, the  Union raised  a demand  not to  terminate  the services of  the employees pursuant to the said notice dated July 16,  1984. The  Company none  the less  closed down the said Division  at Churchgate  with effect from September 17, 1984. The Company retained only six employees who, according to it,  were to  attend to  the work  consequent  upon  such closure.  The   Company  did  not  pay  to  the  eighty-four employees whose  services were  terminated any  salary after September 17, 1984. According to its counter affidavit filed in reply  to the  Petition for  Special Leave to Appeal, the Company has, however, offered to these eighty-four employees retrenchment  compensation   under  section   25FFF  of  the Industrial Disputes  Act aggregating  to Rs.  22,02,670  and eighty-two out  of these eighty-four employees have accepted such compensation aggregating to Rs. 22,00,162.      The  Union   filed  on  October  8,  1984,  before  the Industrial Court  Maharashtra, Bombay,  a  Complaint,  being

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Complaint (ULP)  No. 1273  of 1984,  under section 28 of the Maharashtra Act read with Item 9 of Schedule IV thereto. The contention of  the Union  in the said Complaint was that the closure of  the Churchgate  Division  was  contrary  to  the provisions of  section 25-O  of the  Industrial Disputes Act and, therefore, the employees continued to be in the service of the Company 135 notwithstanding the said notice of closure and were entitled to  full  wages  and  all  allowances  as  provided  in  the Settlement dated  February 1, 1979, entered into between the Company and  the Union,  which were  not paid  to them  and, therefore,  the  Company  had  committed  an  unfair  labour practice under Item 9 of Schedule IV to the Maharashtra Act. Under section  26 of  the  Maharashtra  Act,  unfair  labour practices mean  any of the practices listed in Schedules II, III and  IV to  the Maharashtra  Act. Under  section 27,  no employer or  trade union  and no  employees are to engage in any unfair  labour practice.  Under section  28,  where  any person has  engaged in  or is  engaging in any unfair labour practice, then  any trade  union  or  any  employee  or  any employer  or   any  Investigating  Officer  appointed  under section 8  of the Maharashtra Act may, within ninety days of the occurrence  of  such  unfair  labour  practice,  file  a complaint before  the court  competent  to  deal  with  such complaint. The  competent court  in the present case was the Industrial Court.  Schedule IV  to the Maharashtra Act lists what constitute "General Unfair Labour Practices on the part of employers". Item No 9 of Schedule IV is as follows :           "9. Failure  to  implement  award,  settlement  or           agreement." It was  the case  of the  Union that the aggregate number of workmen employed  in the  three  Divisions  of  the  Company exceeded one hundred and, therefore, for the purposes of the said section  25-O, it  was the  aggregate strength  of  the workmen of  the Company  employed in all its three Divisions which was  to be  taken into account as there was functional integrality amongst all the three Divisions, and, therefore, under section  25-O of  the  Industrial  Disputes  Act,  the Company was bound to apply to the appropriate Government for prior permission  for such  closure  at  least  ninety  days before  the  date  on  which  such  closure  was  to  become effective. According  to the Union, as such prior permission was not  applied for,  the closure of the Chemicals and Dyes Division Office of the Company at Churchgate was illegal and such  closure,  therefore,  amounted  to  an  unfair  labour practice as  it amounted  to a failure to implement the said Settlement dated February 1, 1979. On the examination of the evidence led before it, the Industrial Court held: 136           "There can  be no doubt that part of the work done           at the head office at Churchgate was in connection           with or  incidental to  the  Trombay  factory  and           there  does  appear  some  functional  integrality           between the factory and the head office, but in my           view, this fact is irrelevant in this complaint." The  reason   why  the   Industrial  Court   considered  the functional integrality  between the  Trombay factory and the Churchgate office  as irrelevant  was that  according to  it before section  25-O could  apply,  the  number  of  workmen employed  in  an  industrial  establishment  as  defined  by section 25-L  of the  Industrial Disputes  Act should not be less than one hundred and that admittedly at no time had the number of workmen at the Trombay Factory been one hundred or more. The  Industrial Court further held that the Churchgate

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office was  not in  legal parlance  a part  of  the  Trombay factory  and  the  Company  was  not  bound  to  follow  the procedure prescribed  by section  25-O for  by no stretch of imagination could  the Churchgate Division be held to be "an undertaking  of  an  industrial  establishment"  within  the meaning of  Chapter V-B  of the Industrial Disputes Act. The Industrial Court  also held  that the  Head  Office  of  the Company located  at Churchgate  was governed  by the  Bombay Shops and  Establishments Act,  1948 (Bombay  Act No.  79 of 1948) while  the establishment  at Trombay  was a factory as defined in  the Factories  Act, 1948  (Act No.  63 of 1948), and, therefore,  these  were  two  separate  legal  entities governed by  the provisions  of two independent and separate Acts. Further,  according to  the Industrial  Court assuming section 25-O  was attracted,  the violation  of that section would not constitute an Act of unfair labour practices under Item No.  9 of  Schedule IV  to  the  Maharashtra  Act.  For reaching this  conclusion, the  Industrial Court relied upon the decision  of a  learned Single  Judge of the Bombay High Court  in   Maharashtra  General   Kamgar  Union   v.  Glass Containers Pvt. Ltd. and another, [1983] 1 Lab. L.J. 326, in which the  learned Single Judge had held that non-compliance with any  statutory provision  such as  section 25FFA of the Industrial Disputes  Act cannot  by regarded as a failure by the employer to implement an award, settlement or agreement. The  Industrial   Court  consequently   dismissed  the  said Complaint by  its order  dated July  26, 1985. It is against the said  order of  the Industrial  Court that  the  present Appeal by  Special Leave  granted by  this  Court  has  been filed. 137      The Union  has directly  come to  this Court  in appeal against the said order of the Industrial Court without first approaching the  High Court  under Article 226 or 227 of the Constitution for the purpose of challenging the said order. The powers of this Court under Article 136 are very wide but as clause  (1) of  that Article  itself states, the grant of special leave to appeal is in the discretion of the Court. Article 136  is, therefore,  not designed  to permit  direct access to  this Court where other equally efficacious remedy is available  and  where  the  question  is  not  of  public importance. Today,  when the dockets of this Court are over- crowded, nay  - almost choked, with the flood, or rather the avalanche, of  work pouring  into the  Court, threatening to sweep away  the present  system of administration of justice itself, the Court should be extremely vigilant in exercising its discretion  under Article  136. The reason stated at the Bar for not first approaching the High Court to get the same relief was  that in  view of  the judgment  of  the  learned Single Judge of the High Court in Maharashtra General Kamgar Union v.  Glass Containers  Pvt. Ltd.  and another if a writ petition were  filed in  the High  Court, it would certainly have been dismissed, forcing the employees through the Union to come  to this  Court in  appeal against  the order of the High Court.  When we  consider  that  here  are  eighty-four workmen who  have been thrown out of employment and can ill- afford the  luxury of  fighting from court to court and that some  of   the  questions   arising  in   the  case  are  of considerable  importance  both  to  the  employers  and  the employees, the  reason given  for directly  coming  to  this Court must  be held  to be valid and this must be considered to be  a fit  case for this Court to exercise its discretion and grant Special Leave to Appeal.      Turning now  to the  merits of  this Appeal,  the first question which falls to be considered is whether section 25-

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0 of  the Industrial  Disputes Act applied to the closure of the Churchgate  Office. According to the Union, the case was governed by  section 25-O while according to the Company, it was section  25FFA which  applied to the case. Under section 25FFA(1),  an   employer  who   intends  to  close  down  an undertaking is  to give, at least sixty days before the date on which  the intended  closure is  to become  effective,  a notice  in   the  prescribed   manner  to   the  appropriate Government stating  clearly the  reasons  for  the  intended closure of the 138 undertaking.  The   proviso  to  the  said  sub-section  (1) provides that  section 25FFA  shall not  apply inter alia to "an undertaking  in which  (i) less  than fifty  workmen are employed, or  (ii) less  than fifty workmen were employed on an average  per working day in the preceding twelve months." The other exclusion from the application of section 25FFA is irrelevant for  the purpose  of this  Appeal. Thus, where an employer intends  to close  down an  undertaking in which 50 workmen or  more are  employed, he is to give at least sixty days’ notice  in the  prescribed manner  to  the  Government stating  the   reasons  for  the  intended  closure  of  the undertaking and under section 25FFF(1), where an undertaking is closed  down for  any reason whatsoever every workman who has been in continuous service for not less than one year in that undertaking  immediately before  such closure, is to be entitled to  notice and  compensation in accordance with the provisions of  section  25F  as  if  the  workman  had  been retrenched.      Section 25-O  features in Chapter V-B of the Industrial Disputes Act.  This Chapter  was inserted  in the Industrial Disputes Act  by the  Industrial Disputes  (Amendment)  Act, 1976 (Act  No. 32  of 1976), with effect from March 5, 1976, and contains sections 25K to 25S. Section 25-O as originally enacted was  substituted by  section 14  of  the  Industrial Disputes (Amendment)  Act, 1982  (Act No. 46 of 1982). Under section 1(2) of the Amendment Act, 1982, the said Act was to come into  force on such date as the Central Government may, by  notification  in  the  Official  Gazette,  appoint.  The Industrial Disputes  Act as  also the  Amendment Act,  1982, were further  amended by the Industrial Disputes (Amendment) Act, 1984  (Act No.  49  of  1984).  By  section  7  of  the Amendment Act,  1984, sub-section  (2) of  section 1  of the Amendment Act, 1982, was amended by inserting the words "and different dates may be appointed for different provisions of this Act"  after the  words "by notification in the Official Gazette, appoint".  Under section 1(2) of the Amendment Act, 1984, the  said Act  was to  come into force on such date as the Central  Government may, by notification in the Official Gazette, appoint,  and different  dates may be appointed for different provisions  of the said Act. By Ministry of Labour and Rehabilitation  (Department of  Labour) Notification No. S.O. 605(E), dated August 18, 1984, published in the Gazette of India Extraordinary, Part II, Section 3(ii), dated August 18, 1984, 139 at page 2, the whole of the Amendment Act, 1984, was brought into force  with effect from August 18, 1984. By Ministry of Labour   and    Rehabilitation   (Department    of   Labour) Notification  No.   S.O.  606(E),  dated  August  21,  1984, published in  the Gazette  of India  Extraordinary, Part II, Section 3(ii)  dated August  21, 1984,  at page  2,  several sections of  the Amendment  Act, 1982,  including section 14 which substituted  section 25-O  of the  Industrial Disputes Act, were brought into force on August 21, 1984. Sub-section

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(1) of section 25-O as substituted provides as follows :           "25-O. Procedure for closing down an undertaking.-           (1) An  employer who  intends  to  close  down  an           undertaking  of  an  industrial  establishment  to           which  this   Chapter  applies   shall,   in   the           prescribed manner, apply, for prior. permission at           least ninety  days before  the date  on which  the           intended closure  is to  become effective,  to the           appropriate  Government,   stating   clearly   the           reasons  for   the   intended   closure   of   the           undertaking and  a copy  of such application shall           also   be    served    simultaneously    on    the           representatives of  the workmen  in the prescribed           manner :           Provided that  nothing in  this sub-section  shall           apply  to   an  undertaking   set   up   for   the           construction of buildings, bridges, roads, canals,           dams or for other construction work." Under sub-section  (2) of section 25-O, where an application for permission to close down an undertaking of an industrial establishment has  been made,  the appropriate Government is to make  such enquiry  as it  thinks fit  and after giving a reasonable opportunity  of being  heard to the employer, the workmen and  the persons interested in such closure, it may, having regard to the genuineness and adequacy of the reasons stated by  the employer, the interests of the general public and all  other relevant factors, by order and for reasons to be recorded  in writing,  grant  or  refuse  to  grant  such permission and a copy of such order is to be communicated to the employer  and the  workmen. Under sub-section (3), where the appropriate Government does not communicate the order 140 granting or  refusing to  grant permission  to the  employer within a  period of  sixty days  from the date on which such application was  made, the  permission applied  for is to be deemed to  have been  granted on  the expiration of the said period of sixty days. The other sub-sections of section 25-O are not relevant except sub-section (6) and (8) which are as follows :           "(6) Where  no application  for  permission  under           sub-section  (1)   is  made   within  the   period           specified therein,  or where  the  permission  for           closure has  been  refused,  the  closure  of  the           undertaking shall be deemed to be illegal from the           date of  closure and the workmen shall be entitled           to all  the benefits  under any  law for  the time           being in  force as if the undertaking had not been           closed down.           "(8) Where  an  undertaking  is  permitted  to  be           closed  down   under  sub-section   (2)  or  where           permission for  closure is  deemed to  be  granted           under  sub-section   (3),  every  workman  who  is           employed in  that undertaking  immediately  before           the date  of application for permission under this           section, shall be entitled to receive compensation           which shall be equivalent to fifteen days’ average           pay for every completed year of continuous service           or any part thereof in excess of six months". Section 25K(1)  specifies the  industrial establishments  to which Chapter V-B applies. Section 25K(1) is as follows :           "25K. Application of Chapter V-B. -           (1) The  provisions of this Chapter shall apply to           an  industrial   establishment   (not   being   an           establishment of  a seasonal character or in which           work is  performed only  Intermittently) in  which

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         not less than one hundred workmen were employed on           an average  per  working  day  for  the  preceding           twelve months." The words  "one hundred"  were  substituted  for  the  words "three  hundred"  in  section  25K  by  section  12  of  the Amendment Act, 141 1982, which  section was  also brought  into force on August 21, 1984.  Section 25L  defines the  expression  "industrial establishment" for the purposes of Chapter V-B and is in the following terms :           "25L. Definitions. -           For the purposes of this Chapter, -           (a) ’industrial establishment’ means -           (i) a  factory as defined in clause (m) of section           2 of the Factories Act. 1948;           (ii) a  mine as  defined in  clause  (j)  of  sub-           section (1)  of section  2 of the Mines Act, 1952;           or           (iii) a  plantation as  defined in  clause (f)  of           section 2 of the Plantations Labour Act, 1951;           (b) notwithstanding  anything  contained  in  sub-           clause (ii) of clause (a) of section 2, -           (i) in  relation to  any company in which not less           than fifty-one  per  cent  of  the  paid-up  share           capital is held by the Central Government, or           (ii) in  relation to  any corporation  not being a           corporation  referred  to  in  sub-clause  (i)  of           clause (a)  of section  2 established  by or under           any law made by Parliament,           the Central  Government shall  be the  appropriate           Government. The definition  given in  section 25L is for the purposes of Chapter V-B only. In addition thereto, a new clause, namely, clause (ka)  was inserted  in section  2 of  the  Industrial Disputes  Act   to  define   the   expression   "’industrial establishment or  undertaking" by clause (d) of section 2 of the Amendment Act, 1982. The relevant provisions of the said clause (ka) are as follows : 142           "(ka) ’industrial  establishment  or  undertaking’           means an establishment or undertaking in which any           industry is carried on :           Provided that where several activities are carried           on in an establishment or undertaking and only one           or some  of such  activities is or are an industry           or industries, then, -           (a)  if   any  unit   of  such   establishment  or           undertaking carrying  on any  activity,  being  an           industry, is  severable from  the  other  unit  or           units of  such establishment  or undertaking, such           unit shall  be deemed  to be a separate industrial           establishment or undertaking;           (b) if  the predominant  activity or  each of  the           predominant  activities   carried   on   in   such           establishment or  undertaking or  any unit thereof           is an  industry and  the other activity or each of           the  other   activities   carried   on   in   such           establishment or  undertaking or  unit thereof  is           not severable  from and  is, for  the  purpose  of           carrying on,  or aiding  the carrying  on of, such           predominant activity  or  activities,  the  entire           establishment or  undertaking or,  as the case may           be,  unit   thereof  shall  be  deemed  to  be  an           industrial establishment or undertaking".

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Clause (b)  of section  2 of  the Amendment  Act, 1982, also inserted a new clause, namely, clause (cc) defining the term "closure". The said clause (cc) is as follows :           "(cc) ’closure’  means the  permanent closing down           of a place of employment or part thereof". Clauses (b) and (d) of section 2 of the Amendment Act, 1982, were brought  into force  on August  21, 1984. Clause (j) of section 2  of the  Industrial Disputes  Act defines the term "industry" as follows :           "(J)  ’industry’   means  any   business,   trade,           undertaking, manufacture or calling of employers 143           and includes  any  calling,  service,  employment,           handicraft, or  industrial occupation or avocation           of workmen". By clause  (c) of  section 2 of the Amendment Act, 1982, the definition of "industry" given in clause (j) of section 2 of the Industrial  Disputes Act  was substituted. Clause (c) of section 2  of the  Amendment Act,  1982, does  not, however, appear to  have been brought into force yet and in any event was not in force when the Company gave the notice of closure as also  when it closed down its Churchgate Division. It is, therefore,  unnecessary   to  reproduce  the  definition  of "industry" as substituted by the Amendment Act, 1982.      At the  date  when  the  Company  gave  the  notice  of closure, namely,  on July 16, 1984, the section in force was section  25-0   as  originally  enacted  by  the  Industrial Disputes (Amendment)  Act, 1976. In the case of the State of Maharashtra the  original section  25-0 was substituted by a new  section   by  the   Industrial  Disputes   (Maharashtra Amendment) Ordinance,  1981 (Maharashtra Ordinance No. 16 of 1981),  which  Ordinance  was  repealed  by  the  Industrial Disputes (Maharashtra  Amendment) Act, 1981 (Maharashtra Act No.  3   of  1982).  The  said  Act  came  into  force  with retrospective effect  on October  27, 1981, namely, the date of the  promulgation of  the said  Ordinance. Both  the said Ordinance and  the said  Act had  received the assent of the President. It  was, therefore,  section 25-0  as in force in the State  of Maharashtra  which  was  applicable  when  the Company  gave   the  notice  of  closure.  It  is,  however, unnecessary to set out the provisions of either the original section 25-0  or of  that section as applicable in the State of Maharashtra  for under  both of  them the  provisions for giving a notice seeking permission of the government for the intended closure  at least  ninety days  before the  date on which the  intended closure  was to become effective and the consequences of not obtaining such prior permission were the same as  in G  section 25-O  as substituted by the Amendment Act, 1982. What is, however, material is that at the date of the giving  of the  notice of closure, section 25-K required not less  than three  hundred workmen  to be  employed in an industrial establishment.  The said  Maharashtra Act of 1982 which replaced  the said  Ordinance had  inserted a new sub- section (1A)  in section 25K of the Industrial Disputes Act. The said sub-section (1A) was as follows : 144           "(1A) Without  prejudice to the provisions of sub-           section (1),  the appropriate Government may, from           time to  time, by  notification  in  the  Official           Gazette, apply  the provisions of section 25-O and           section  25-R   in  so   far  as   it  relates  to           contravention of sub-section (1) or (2) of section           25-O, also  to an  industrial  establishment  (not           being an  establishment of a seasonal character or           in which work is performed only intermittently) in

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         which such  number of  workmen, which  may be less           than three  hundred but not less than one hundred,           as may  be specified  in  the  notification,  were           employed on  an average  per working  day for  the           preceding twelve months." No notification  under the said sub-section (1A) which would apply to  the company has been brought to the notice of this Court. Even assuming that there was no such notification, by the Amendment  Act, 1982,  with effect from August 21, 1984, the requirement  of not  less than three hundred workmen was substituted by  a requirement  of not  less than one hundred workmen. Thus, at the date of closure, which is the material date for the purposes of this Appeal, section 25K as amended by the  Amendment Act, 1982, was in force and was applicable to the Company along with section 25-O as substituted by the Amendment Act,  1982. The parties have also gone to trial on the footing that the requirement under section 25-K was "not of less than one hundred workmen".      The Trombay  factory of the Company carries on the work of manufacturing  and processing  dyes. It  is not  disputed that the  Trombay factory  is an industry within the meaning of that  term as  defined in  clause (j) of section 2 of the Industrial Disputes  Act. It  is also  not disputed that the Trombay factory  is a  factory as  defined by  clause (m) of section 2  of  the  Factories  Act  and  is,  therefore,  an industrial  establishment   within  the   meaning  of   that expression as  defined in  section  25L  of  the  Industrial Disputes Act.  What was,  however,  disputed  was  that  the Trombay Factory  is an  industrial  establishment  to  which Chapter V-B  applies because  at no  time did  it employ one hundred workmen.  It was  also disputed  that the Churchgate Division of  the Company was an undertaking of an industrial establishment inasmuch as the Chruchgate 145 Division was  not a factory within the meaning of clause (m) of the  Factories Act.  The Company’s  contentions  in  that behalf found favour with the Industrial Court.      It is  not possible  to accept  the  above  conclusions reached by  the Industrial Court. Clause (m) of section 2 of the Factories  Act, 1948,  defines  the  term  "factory"  as follows:           "(m) ’factory’  means any  premises including  the           precincts thereof -           (i) whereon  ten or  more workers  are working, or           Were working  on any  day of  the preceding twelve           months, and  in any  part of which a manufacturing           process is being carried on with the aid of power,           or is ordinarily so carried on, or           (ii) whereon  twenty or  more workers are working,           or were working on any day of the preceding twelve           months, and  in any  part of which a manufacturing           process is  being carried  on without  the aid  of           power, or is ordinarily so carried on, -           but  does  not  include  a  mine  subject  to  the           operation of  the Mines  Act, 1952 (XXXV of 1952),           or a  mobile unit belonging to the armed forces of           the Union,  a railway  running shed  or  a  hotel,           restaurant or eating place;           Explanation. - For computing the number of workers           for the purposes of this clause all the workers in           different relays  in a  day shall  be  taken  into           account."      The first thing to notice about clause (m) of section 2 of the  Factories Act  is that  it defines  a  "Factory"  as meaning "any  premises including  the precincts thereof" and

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it does not define it as meaning "any one premises including the precincts thereof". Under this definition, therefore, it is not  required that  the industrial  establishment must be situate in any one premises only. The second thing to notice about clause (m) is that the premises must be such as in any part thereof a 146 manufacturing process  is being  carried on.  The expression "manufacturing process"  is defined in clause (k) of section 2 of the Factories Act. The said clause (k) is as follows :           "(k) ’Manufacturing process’ means any process for           -           (i)  making,   altering,  repairing,  ornamenting,           finishing,  packing,  oiling,  washing,  cleaning,           breaking up, demolishing, or otherwise treating or           adapting any  article or  substance with a view to           its use, sale, transport, delivery or disposal, or           (ii) pumping  oil,  water,  sewage  or  any  other           substance, or           (iii)  generating,  transforming  or  transmitting           power, or           (iv) composing  types for  printing,  printing  by           letter press,  lithography, photogravure  or other           similar process or book binding ; or           (v)   constructing,   reconstructing,   repairing,           refitting,  finishing  or  breaking  up  ships  or           vessels ; or           (vi) preserving  or storing  any article  in  cold           storage".           (Emphasis supplied) Thus, the  different processes  set out in sub-clause (i) of clause (k)  of section  2 must  be with  a view  to the use, sale, manufactured.      In the modern industrial world it is often not possible for all  processes which  ultimately result  in the finished product to  be carried out at one place and by reason of the complexity and  number  of  such  processes  and  the  acute shortage of  accommodation in  many cities, several of these processes are  often  carried  out  in  different  buildings situate at 147 different places. Further, in many cases these functions are distributed amongst different departments and divisions of a factory and  such departments  and divisions  are housed  in different buildings.  That a  factory can  be housed in more than one  building is  also clear  from  section  4  of  the Factories Act which provides as follows :           "4. Power  to declare  different departments to be           separate factories  or two or more factories to be           a single factory. -           The State  Government may,  on an application made           in this behalf by an occupier, direct, by an order           in writing, that for all or any of the purposes of           this Act  different departments  or branches  of a           factory  of   the  occupier   specified   in   the           application shall be treated as separate factories           or that  two or  more factories  of  the  occupier           specified in the application shall be treated as a           single factory."      Section 25L  is not  the only section in the Industrial Disputes   Act   in   which   the   expression   "industrial establishment" is  defined. This  expression is also defined in the  Explanation to  section 25A  in terms identical with clause (a)  of section  25L. While  the definition  given in section  25L  is  for  the  purposes  of  Chapter  V-B,  the

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definition given  in the  Explanation to  section 25A is for the purposes  of sections  25A,  25C,  25D  and  25E.  Under section 25C, if a workman in an industrial establishment has been laid  off, subject  to the  other conditions set out in that section  being satisfied,  such workman  is entitled to compensation as  specified in  that section.  Under  section 25E, no compensation is to be paid to a workman who has been laid off  inter alia  "if such laying-off is due to a strike or slowing  down of production on the part of the workman in another  part   of  the   establishment",  this   particular provision being  contained in  clause (iii)  of section 25E. The  meaning   of  the   expression  "another  part  of  the establishment" occurring in clause (iii) of section 25E fell to be  interpreted by  this Court  in The  Associated Cement Companies Limited, Chaibasa Cement Works, Jhinkpani v. Their Workmen, [1960]  1 S.C.R.  703; s.c. [1960] 1 Lab. L.J. 497. The facts of that case were that the appellant company owned a 148 factory which  was situate  in the  State of  Bihar. It also owned a  limestone quarry which was situate about a mile and a half  from the  factory. Limestone being the principal raw material for the manufacture of cement, the factory depended exclusively for  the supply of limestone on the said quarry. On behalf  of the  labourers in the limestone quarry certain demands were  made on  the management  of the company but as they were  rejected the  labourers went  on strike;  and  on account of the non-supply of limestone due to the strike the management had to close down certain sections of the factory and to lay-off the workers not required during the period of closure of  the sections  concerned. Subsequently, after the dispute between  the  management  and  the  workers  of  the limestone quarry  was settled and the strike came to an end, a demand  was made  on behalf  of the workers of the factory who had been laid-off during the strike, for payment of lay- off  compensation  under  section  25-C  of  the  Industrial Disputes Act,  but the management refused the demand relying on clause (iii) of section 25E. The Industrial Tribunal took the view  that the  limestone quarry  was not  part  of  the establishment of  the cement factory and that the workmen in the factory  were not disentitled to lay-off compensation by reason of  clause (iii) of section 25E. The company’s appeal was allowed  by this  Court. On  behalf of  the workmen  the Explanation to  section 25A  was relied upon. With reference to the said Explanation, this Court said (at pages 715-16) :           "The Explanation  only gives  the meaning  of  the           expression ’industrial  establishment’ for certain           sections of  the Act;  it does  not purport to lay           down  any   test  as   to  what   constitutes  one           ’establishment’.  Let  us  take,  for  example,  a           factory which  has different  departments in which           manufacturing processes  are carried  on with  the           aid of  power. Each  department, if it employs ten           or more  workmen, is  a factory within the meaning           of cl.(m) of s.2 of the Factories Act, 1948; so is           the entire  factory where  1,000  workmen  may  be           employed. The Explanation  merely states  that  an           undertaking of  the nature of a factory as defined           in cl.(m) of s.2 of the Factories Act, 1948, is an           industrial establishment. It has no bearing on the           question if in the example taken, the factory as a           whole or 149           each department  thereof should  be treated as one           establishment. That question must be determined on

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         other considerations, because the Explanation does           not deal  with the  question of one establishment.           In our  view, the  true scope  and effect  of  the           Explanation is  that it  explains what categories,           factory,  mine  or  plantation,  come  within  the           meaning    of     the    expression    ’industrial           establishment’; it does not deal with the question           as to  what constitutes one establishment and lays           down no tests for determining that question."      Section 25-0  applies to the closure of "an undertaking of an  industrial establishment"  and not  to the closure of "an industrial establishment". Section 25L, however, defines only the  expression "industrial  establishment" and not the expression "an  undertaking of an industrial establishment". It also  does not define the term "undertaking". Section 25L does not  require that  "an  undertaking  of  an  industrial establishment" should  also be an "industrial establishment" or that  it should  be located  in the  same premises as the "industrial establishment". The term "undertaking" though it occurs in  several sections  of the Industrial Disputes Act, as for  instance, sections  25FF, 25FFA  and 25FFF,  is  not defined anywhere  in the Act. Even the new clause (ka) which was inserted  in section  2  by  the  Amendment  Act,  1982, defines  the   expression   "industrial   establishment   or undertaking" and  not the term "undertaking" simpliciter. It would appear  from the opening words of clause (ka), namely, "’industrial  establishment   or   undertaking’   means   an establishment  or  undertaking  in  which  any  industry  is carried on",  that the term "undertaking" in that definition applies to  an industrial  undertaking. It would thus appear that the  words "undertaking"  wherever  it  occurs  in  the Industrial Disputes  Act, unless a specific meaning is given to  that  term  by  that  particular  provision,  is  to  be understood in  its ordinary  meaning  and  sense.  The  term "undertaking"  occurring   in   section   25FFF   fell   for interpretation by  this Court  in  Management  of  Hindustan Steel Limited v. The Workmen & Ors., [1973] 3 S.C.R. 303. In that case, this Court held (at page 310) : 150           "The word undertaking as used in s. 25FFF seems to           us  to  have  been  used  in  its  ordinary  sense           connoting thereby any work, enterprise, project or           business undertaking.  It is not intended to cover           the entire industry or business of the employer as           was suggested  on behalf  of the  respondent. Even           closure or  stoppage of  a part of the business or           activities of the employer would seem in law to be           covered by  this  sub-section.  The  question  has           indeed to be decided on the facts of each case." The above  passage was cited with approval and reiterated in Workmen of  the Straw Board Manufacturing Company Limited v. M/s. Straw  Board Manufacturing  Company Limited,  [1974]  3 S.C.R. 703, 719.      It is  thus clear  that the  word "undertaking"  in the expressions "an  undertaking of an industrial establishment" in section 25-0 means an undertaking in its ordinary meaning and sense  as defined by this Court in the case of Hindustan Steel Limited. If an undertaking in its ordinary meaning and sense is  a part of an industrial establishment so that both taken together  constitute one  establishment, section  25-O would apply  to the  closure of the undertaking provided the condition laid  down in  section 25K is fulfilled. The tests to determine  what constitutes  one establishment  were laid down by  this Court in Associated Cement Company’s Case. The relevant passage is as follows :

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         "What then  is ’one establishment’ in the ordinary           industrial or  business  sense?  The  question  of           unity of  oneness presents  difficulties when  the           industrial establishment consists of parts, units,           I departments,  branches etc.  If it  is  strictly           unitary in  the sense  of having  one location and           one unit  only,  there  is  little  difficulty  in           saying  that   it  is  one  establishment.  Where,           however, the  industrial  undertaking  has  parts,           branches, departments,  units etc.  with different           locations, near  or distant,  the question  arises           what tests  should be applied for determining what           constitutes  ’one  establishment’.  Several  tests           were referred to in the course of arguments before           us, such as 151           geographical  proximity,   unity   of   ownership,           management and  control, unity  of employment  and           conditions  of  service,  functional  integrality,           general unity  of  purpose  etc.  .  .  .  It  is,           perhaps, impossible to lay down any one test as an           absolute invariable  test for  all cases. The real           purpose of  these tests  is to  find out  the true           relation between  the parts,  branches, units etc.           If in  their true  relation  they  constitute  one           integrated whole, we say that the establishment is           one; if on the contrary they do not constitute one           integrated whole,  each unit  is then  a  separate           unit. How  the relation  between the units will be           judged must  depend on  the facts  proved,  having           regard to  the scheme  and object  of the  statute           which gives the right of unemployment compensation           and  also  prescribes  disqualification  therefor.           Thus,  in   one  case   the  unity  of  ownership,           management and  control may be the important test;           in another  case functional integrality or general           unity may  be the  important test;  and  in  still           another case,  the important test may be the unity           of employment.  Indeed, in a large number of cases           several tests  may fall  for consideration  at the           same time." E These tests  have been accepted and applied by this Court in different cases,  for instance,  in South India Millowners’’ Association and Ors. v. Coimbatore District Textile Workers’ Union &  Ors., [1962]  1 Lab.  L.J. 223  S.C., Western India Match Co.  Ltd. v.  Their Workmen, [1964] 3 S.C.R. 560; s.c. [1963] 2  Lab. L.J.  459 and  Workmen  of  the  Straw  Board Manufacturing  Company   Limited   v.   M/s.   Straw   Board Manufacturing  Company   Limited.  In  Western  India  Match Company’s case  the Court  held on  the facts that there was functional integrality  and interdependence  or community of financial control and management of the sales office and the factory in  the appellant  company and  that the two must be considered part  of one  and the  same  unit  of  industrial production. In  the Straw Board Manufacturing Company’s case the Court held (at page 713) :           "The most important aspect in this particular case           relating to  closure, in  our opinion,  is whether           one  unit   has  such  componental  relation  that           closing of 152           One must  lead to  the closing of the other or the           one   cannot    reasonably   exist   without   the           other.Functional integrality  will assume an added           significance in  a case  of closure of a branch or

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         unit."      What  now  falls  to  be  ascertained  is  whether  the undertaking of the Company, namely, the Churchgate Division, formed part  of the industrial establishment of the Company, namely, the Trombay factory, so as to constitute the Trombay factory and  the Churchgate  Division one  establishment. If they did  and the  total strength of the workmen employed in the Churchgate  Division and  at the Trombay factory was one hundred or  more, then  section 25-O would apply. If they do not, then  the section  which would  apply would  be section 25FFA. This is a question of fact to be ascertained from the evidence led  before the  Industrial Court.  At the relevant time the  number of employees in the Worli Division was 110, in the  Churchgate  Division  was  90  and  in  the  Trombay Division was  60, aggregating  in  all  to  260.  The  Worli Division does  not fall  for consideration  in  this  Appeal because the  evidence in the case is confined to the Trombay factory and  the Churchgate  Division and  does not refer to the Worli  Division except  in passing. The evidence clearly establishes that  the functions  of the  Churchgate Division and  the   Trombay  factory   were  neither   separate   nor independent  but   were  so   integrally  connected   as  to constitute the  Churchgate Division  and the Trombay factory into one  establishment. Until  1965  the  Company  had  its various departments,  such as pharmaceutical sales, dyes and chemicals sales,  laboratory (which  is now  in the  Trombay factory), accounts,  purchases, personnel and administration and  other   departments   housed   in   Express   Building, Churchgate, while its factory was situate at Tardeo. In 1965 the factory  as also  the laboratory were shifted to Trombay and in 1971 the Pharmaceutical Sales Division was shifted to Worli.  Even  after  the  Company  began  carrying  out  its operation  at  three  separate  places,  namely.  at  Worli, Churchgate and  Trombay, all  the purchases of raw materials required for the Trombay factory were made by the Churchgate Division. The  Churchgate Division  also  looked  after  the marketing and  sales of the goods manufactured and processed at the Trombay factory. The statistical work of the Company, namely, productwise  sales  statistics,  industrywise  sales statistics, partywise sales 153 statistics,  monthly  sales  performance  statistics,  sales forecast statistics,  collection forcast  statistics,  sales outstanding statistics  and other statistical work, was also done in  the Churchgate  Division. The orders for processing of dyes and instructions in respect thereof were issued from the Churchgate  Division to the Trombay factory. The work of making payment of salaries, overtime, conveyance allowances, medical  expenses,   leave   travel   allowance,   statutory deductions  such   as  for   provident   fund,   income-tax, professional tax, etc., in respect of the workmen working at the Trombay factory was also done in the Churchgate Division and an  employee from  the Churchgate Division used to go to the Trombay  factory on  the last  day  of  each  month  for actually making  payment of  the salaries  etc. The  work of purchasing statutory  items, printing  forms, etc.,  for the Trombay factory  and the Worli Division was also done by the Churchgate Division  and  the  maintenance  of  the  Express Building at  Churchgate and  of the  factory at  Trombay was done by personnel in the Churchgate Division. The Churchgate Division also  purchased uniforms,  rain coats and umbrellas for the  workmen working  in the Trombay factory in addition to the workmen working in the Express Building. The services of  the   workmen  working   in  the  Trombay  factory  were transferable and  workmen were  in fact transferred from the

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Trombay factory to the Churchgate Division.      While the  Union examined  eight witnesses, P.S. Raman, Executive (Administration)  of  the  Company  was  the  only witness examined  by the  Company. Raman has admitted in his evidence that the marketing and sales operations of the dyes processed at the Trombay factory were done in the Churchgate Division, that  personnel from  the Churchgate Division were sent to the Trombay factory in connection with the technical matters relating to the factory, that the procurement of raw materials and the work of technical advice on processing and standardization of  goods manufactured  and processed at the Trombay factory  as also the final marketing of the finished products of  the  Trombay  factory  were  all  done  by  the Churchgate Division. He has further admitted that the supply of stationery  to the  Trombay factory was largely done from the Churchgate Division and that the ultimate decisions with regard to  the workload,  assignment of job, etc. were taken by the  top management  of the Company at the Head Office of the Company  in Express  Building. Raman  has also  admitted that 154 samples relating  to the  products to  be processed  at  the Trombay factory were received at the Churchgate Division and salary sheets  in respect of workmen employed in the Trombay factory were  prepared in  the Churchgate  Division and that all preparations  in respect  of disbursement  of wages  and salaries of  the employees  working in  the Trombay  factory were also  done in the Churchgate Division. Raman’s evidence further shows  that there were no accountants at the Trombay factory and  all the  work relating  to the  accounts of the Trombay factory  was done  at  the  Head  Office  and  Raman himself had  to go  to Trombay  sometimes in connection with the work  of the factory. It is thus clear from the evidence on the  record that  the Trombay  factory could  never  have functioned independently  without  the  Churchgate  Division being there.  A factory  cannot  produce  or  process  goods unless  raw   materials  required   for  that   purpose  are purchased. Equally,  there cannot be a factory manufacturing or processing  goods unless  the goods  so  manufactured  or processed are  marketed and  sold. The one without the other is a  practical impossibility. Similarly, no factory can run unless salaries  and other  employment benefits  are paid to the workmen nor can a factory function without the necessary accounting and  statistical data  being prepared.  These are integral parts of the manufacturing activities of a factory. All these  factors existed in the present case and there can be no  doubt that  the Trombay  factory and  the  Churchgate Division  constituted   one  establishment.  me  fact  that, according to  the Company,  a major  part of the work of the Churchgate Division  was that  of marketing  and selling the products of the Ranoli factory belonging to Ambalal Sarabhai Enterprises Limited is irrelevant. m e Trombay factory could not have  conveniently existed  and functioned  without  the Churchgate  Division  and  the  evidence  shows  a  complete functional integrality  between the  Trombay factory and the Churchgate Division  of the  Company. The  total  number  of workmen employed at the relevant time in the Trombay factory and the  Churchgate Division  was one hundred and fifty and, therefore,  if   the  Company   wanted  to  close  down  its Churchgate Division,  the section of the Industrial Disputes Act which applied was section 25-O and not section 25FFA.      The next contention raised on behalf of the Company was that the Trombay factory was registered under the Factories 155 Act while  the  Churchgate  Division  was  registered  as  a

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commercial  establishment   under  the   Bombay  Shops   and Establishments Act and, therefore, they could not be treated as one.  According to  the Industrial  Court, this  fact  of registration  under   two  different  Acts  constituted  the Trombay  factory   and  the  Churchgate  Division  into  two separate legal  entities. It  is as difficult to follow this contention of  the  Company  as  it  is  to  understand  the conclusion reached  by the  Industrial Court. Merely because registration is  required to  be obtained under a particular statute, it  does not  make the  business or  undertaking or industry so  registered a separate legal entity except where a  registration  of  incorporation  is  obtained  under  the Companies Act.  m e  Factories Act  and the Bombay Shops and Establishments  Act   are  regulatory   statutes   and   the registration  under   both  these  Acts  is  compulsory  for providing certain  benefits to  the workmen  employed in the factory or  the establishment, as the case may be. What was, however, relied  upon  was  the  definition  of  "commercial establishment" given  in clause  (4) of  section  2  of  the Bombay Shops  and Establishments  Act. me said clause (4) is as follows :           "(4)   ’Commercial    establishment’   means    an           establishment  which  carries  on,  any  business,           trade or  profession or  any  work  in  connection           with, or incidental or ancillary to, any business,           trade or  profession and includes establishment of           any  legal   practitioner,  medical  practitioner,           architect, engineer, accountant, tax consultant or           any other technical or professional consultant and           also  includes  a  society  registered  under  the           Societies Registration Act, 1860, and a charitable           or other  trust, whether  registered or not, which           carries on  whether for  purposes of  gain or not,           any business,  trade  or  profession  or  work  in           connection with or incidental or ancillary thereto           but does  not include a factory, shop, residential           hotel, restaurant,  eating house, theatre or other           place of public amusement or entertainment.           (Emphasis supplied.) 156 Clause (9) of section 2 of the said Act defines "factory" as meaning "any  premises which is a factory within the meaning of clause  (m) of  section 2  of the Factories Act, 1948, or which is deemed to be a factory under section 85 of the said Act". The definition of "Commercial establishment" in clause (4)  of   section  2   clearly  shows   that  a   commercial establishment is  one of  the categories of "establishment". "Establishment" is  separately  defined  in  clause  (8)  of section 2 as follows :           "(8)  ’Establishment’  means  a  shop,  commercial           establishment,  residential   hotel,   restaurant,           eating house,  theatre, or  other place  of public           amusement  or  entertainment  to  which  this  Act           applies and  includes such  other establishment as           the State  Government may,  by notification in the           Official Gazette,  declare to  be an establishment           for the purposes of this Act". It will be noticed that the word "factory" does not occur in the  definition   of  "establishment"  while  a  factory  is expressly  excluded   from  the  definition  of  "commercial establishment". The  reason is  obvious. mere  are  separate Chapters in  the Bombay  Shops and  Establishment Act  which provide for  various matters  such as  opening  and  closing hours, daily  and weekly  hours of  work, interval for rest, holidays in a week, etc., in respect of different categories

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of   establishment,    such   as    shops   and   commercial establishments,  residential   hotels  and  restaurants  and eating  houses  and  theatres  or  other  places  of  public amusement or  entertainment. Under  section 7(1) of the said Act, the  employer of  every establishment is to send to the Inspector of  the local  area concerned  a  statement  in  a prescribed form together with the prescribed fees containing various  particulars   including  "the   category   of   the establishment,  i.e.,  whether  it  is  a  shop,  commercial establishment, residential  hotel, restaurant, eating house, theatre   or    other   place   of   public   amusement   or entertainment". On  receipt of  such statement  and the fees the Inspector,  if satisfied  about the  correctness of  the statement, is  to register the establishment in the Register of  Establishments.     The   form  of   the   Register   of Establishments is  given in Form appended to the Maharashtra Shops and  Establishments Rules, 1961, made under section 67 of the  Bombay shops and Establishments Act. m is Form shows that the Register is 157 divided into  five parts.  Part I consists of shops; Part II consists of  commercial establishments; Part III consists of residential hotels;  Part IV  consists  of  restaurants  and eating houses;  and Part  V consists  of theatres  and other places of Public amusement or entertainment.      A factory  as defined in clause (m) of section 2 of the Factories Act is excluded from the definition of "commercial establishment" contained  in clause  (4) of section 2 of the Bombay Shops and Establishments Act, and is not mentioned in the list  of establishments  set out  in the  definition  of "establishment" given in clause (8) of section 2 of the said Act because various matters in respect of which provision is made under  the said  Act  are  also  provided  for  in  the Factories Act.  There is,  however, nothing  to prevent  the State Government  from declaring,  under the  latter part of clause (8)  of section 2, a "factory" to be an establishment for the purposes of the Bombay Shops and Establishments Act.      Under section  4 of the Bombay Shops and Establishments Act, certain  provisions of  that Act set out in Schedule II to the  said Act  are not  to apply  to the  establishments, employees and  other persons mentioned in the said Schedule. Further, under  section 4,  the  State  Government  has  the power, by notification published in the Official Gazette, to add to,  omit or  alter any  of the  entries in Schedule II. Several of  the entries  set out  in Schedule II show that a number of  industrial establishments,  using that expression in  its   ordinary  sense,   are   covered   by   the   term "establishment" such  as, ice  and  ice-fruit  manufacturing establishments  (Entry  24);  any  establishment  wherein  a manufacturing process  defined in clause (k) of section 2 of the  Factories   Act  is   carried  on   (Entry   34);   dal manufacturing  establishments   (entry  46);  establishments commonly known  as general  engineering  works  wherein  the manufacturing process  is carried  on with  the aid of power (Entry 54); such establishments manufacturing bricks as open earlier than  5.30 a.m.  (Entry 96); establishment of Jayems Chemicals, Nashik Road, Deolali, Nashik (Entry 106); Biotech Laboratories,  Poona   (Entry  160);  employees  in  Messrs. Manganese Ore (India) Ltd., Nagpur (Entry 183); employees in tanneries and leather manufactory (Entry 187); ILAC Limited, Calico Chemicals Plastics and Fibres Division Premises, Anik Chembur, Bombay - 400074 (Entry 208); flour mills in Greater 158 Bombay  (Entry  220);  and  Trombay  Thermal  Power  Station Construction Project,  Unit 5,  of the  Tata  Power  Company

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Ltd., Bombay (Entry 243). It may be mentioned that while the laboratory  of  the  Company  was  located  in  the  Express Building before  it was  shifted to  the Trombay factory, it was registered under the Bombay Shops and Establishments Act and not under the Factories Act.      The  error   made  by   the  Industrial  Court  was  in considering   that   an   undertaking   of   an   industrial establishment should  itself be an industrial establishment, that is,  a factory as defined in clause (m) of section 2 of the Factories  Act. This  supposition is not correct for, as already pointed  out, there  is no  requirement contained in the Industrial  Disputes  Act  that  an  undertaking  of  an industrial  establishment   should  also  be  an  industrial establishment.      The last  contention on  the merits which was raised on behalf of the Company was that though the Company might have acted in  contravention of the provisions of section 25-0 of the Industrial Disputes Act, it nonetheless would not amount to a  failure to  implement the Settlement dated February 1, 1979, entered  into between  the Company  and the Union and, therefore, the  act of  closing down the Churchgate Division was not  an unfair  labour practice  under section 28 of the Maharashtra Act  read with  Item No. 9 of Schedule IV to the said  Act.   This  contention  too  found  favour  with  the Industrial Court.  For  reaching  the  conclusion  that  the closing down  of the  Churchgate Division  was not an act of unfair labour  practice on  the part  of  the  Company,  the Industrial Court  relied upon  the  decision  of  a  learned Single Judge  of the  Bombay  High  Court  in  the  case  of Maharashtra General  Kamgar Union  v. Glass-Containers  Pvt. Ltd. and  another. The  relevant passage in that judgment is as follows (at page 331) :           "It is  difficult to accept the submission made on           behalf of  the Union  that non-compliance with any           statutory provisions  such  as  s.25-FFA  must  be           regarded as  failure by  the employer to implement           an award,  settlement or  agreement. The  position           might  be   different  in   relation  to   certain           statutory provisions  which are  declared to  hold           the field 159           until replaced  by specific  provisions applicable           to certain specific undertakings. For example, the           Model Standing  Orders  may  govern  a  particular           employer  and   his  workmen   till  repulsed   or           substituted by certified Standing Orders specially           framed for  that  employer  and  approved  in  the           manner provided  under the  statute or  the rules.           This would not imply that provisions such as those           contained  in   s.  25FFA  or  s.  25-FFF  of  the           Industrial Disputes  Act can  be held or deemed to           be a  part of  the contract of employment of every           employee.  Any   such  interpretation   would   be           stretching the  language of  item 9  to an  extent           which is not justified by the language thereof". It is  not possible  to accept  as correct the view taken in the  said   case.  It  is  an  implied  condition  of  every agreement, including  a settlement, that the parties thereto will act in conformity with the law. Such a provision is not required to  be expressly  stated in  any contract.  If  the services of  a workman are terminated in violation of any of the  provisions   of  the   Industrial  Disputes  Act,  such termination is  unlawful and  ineffective  and  the  workman would ordinarily be entitled to reinstatement and payment of full back wages. In the present case, there was a Settlement

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arrived at  between the  Company and  the Union  under which certain wages were to be paid by the Company to its workmen. The Company  failed to  pay such  wages from  September  18, 1984,  to   the  eighty-four  workmen  whose  services  were terminated on  the  ground  that  it  had  closed  down  its Churchgate Division.  As already  held, the  closing down of the  Churchgate   Division  was   illegal  as   it  was   in contravention of  the provisions  of  section  25-0  of  the Industrial Disputes  Act. Under  sub-section (6)  of section 25-0, where  no application for permission under sub-section (1) of  section 25-0 is made, the closure of the undertaking is to  be deemed  to be illegal from the date of the closure and the workmen are to be entitled to all the benefits under any law  for the  time being in force, as if the undertaking had not  been closed  down.  The  eigty-four  workmen  were, therefore, in  law entitled  to receive  from September  18, 1984, onwards their salary and all other benefits payable to them under  the Settlement dated February 1, 1979. These not having been paid to them, there was a failure on the part of the Company to 160 implement the  said Settlement  and consequently the Company was guilty of the unfair labour practice specified in Item 9 of Schedule  IV to  the Maharashtra  Act, and  the Union was justified in  filing the  Complaint under  section 28 of the Maharashtra Act complaining of such unfair labour practice.       It  was lastly  submitted that  several employees must have taken  up alternative employment during the intervening period between  the date  of the  closure of  the Churchgate Division and  the hearing  of this  Appeal and  an  inquiry, therefore, should  be directed  to be  made into the amounts received by  them from  such alternative employment so as to set off  the amounts  so received against the back wages and future salary  payable to  them. It  is difficult to see why these  eithty-four   workmen  should   be  put   to  further harrassment for  the wrongful  act of  the  Company.  It  is possible that  rather than  starve while  awaiting the final decision on  their complaint  some of these workmen may have taken alternative  employment. The  period which has elapsed is, however,  too short  for the  moneys  received  by  such workmen from  the alternative  employment taken  by them  to aggregate to  any sizeable  amount, and  it would be fair to let the  workmen retain  such amount  by way of solatium for the shock  of having  their services terminated, the anxiety and agony  caused thereby, and the endeavours, perhaps often fruitless, to find alternative employment.      It was  also submitted  that most  of the  workmen have already accepted  the retrenchment  compensation offered  by the Company  and cannot  receive full  back wages  or future salary until  the amount  of such  compensation received  by them is  adjusted. Learned  Counsel for  the Union  has very fairly  conceded   that  the   workmen  cannot   retain  the retrenchment compensation  and also claim full back wages as also  future   salary  in   full  and  that  the  amount  of retrenchment compensation  received by the workmen should be adjusted against  the back  wages and  future salary.  There would be no difficulty in adjusting the amount of back wages against the  amount of retrenchment compensation received by the concerned  workmen but  if thereafter there is still any balance  of   retrenchment  compensation   remaining  to  be adjusted, it  would be too harsh to direct that such workmen should continue  in service and work for the Company without receiving any  salary until  the balance of the retrenchment compensation stands 161

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fully adjusted;  and, therefore,  so far as future salary is concerned, only  a part of it can be directed to be adjusted against  the   balance  of  the  retrenchment  compensation, provided there  is any  such balance  left after setting off the back wages.      In the  result, this Appeal must succeed and is allowed and the  order dated July 26, 1985, passed by the Industrial Court, Maharashtra,  Bombay, dismissing  the Complaint (ULP) No. 1273  of 1984  filed by  the Appellant Union against the Respondents is  set aside  and the said Complaint is allowed and it  is declared  that  the  closure  of  the  Churchgate Division of  S.G. Chemicals  and Dyes  Trading  Limited  was illegal and  the workmen  whose services  were terminated on account of such illegal closure continued and are continuing in the  employment of  the Company on and from September 18, 1984, and  are entitled  to receive  from the  Company their full salary  and all  other benefits  under  the  Settlement dated February 1, 1979, entered into between the Company and the Appellant  Union, from  September 18,  1984, until today and thereafter  regularly until  their services are lawfully terminated according  to law.  If any workman whose services were purported  to be  terminated by the closing down of the Churchgate Division of the Company has received retrenchment compensation from the Company, the amount of back wages will be set  off against  such retrenchment  compensation and  if after  such   setting  off   any  balance   of  retrenchment compensation still remains, it will be adjusted by deducting twenty per  cent from  the periodic  salary payable  to such workmen.      The Respondent  Company will pay to the Appellant Union the costs of this Appeal. P.S.S.                                       Appeal allowed. 162