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PETITIONER: WORKMEN  OF  THE  INDIAN LEAF  TOBACCO  DEVELOPMENT  COMPANY

       Vs.

RESPONDENT: MANAGEMENT OF THE INDIAN LEAF TOBACCO DEVELOPMENT  CO. LTD.,

DATE OF JUDGMENT: 27/09/1968

BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SHELAT, J.M. VAIDYIALINGAM, C.A.

CITATION:  1970 AIR  860            1969 SCR  (2) 282  CITATOR INFO :  F          1973 SC 878  (10)  R          1987 SC1478  (8)

ACT:     Industrial  Dispute--Closure of  branches or  depots--No closure  of business itself--Whether  managerial   activity, not referable to industrial tribunals--Rights of workmen  in closed depots.

HEADNOTE:     The   respondent  was  carrying  on  the   business   of purchasing,  handling and selling tobacco.  In 1962, it  was maintaining 21 depots where the principal work was  handling tobacco  and the work  of  purchasing  was done on  a  small scale.  In 1963, it gave notice that 8 out of the 21  depots would  be closed down.  An industrial dispute was raised  by the  workmen  and the demands off the workmen,  namely:  (1) that  no depot worked during 1962 should be closed; and  (2) no  workman who worked in 1962 should be  retrenched,   were referred   to the Industrial  Tribunal.  The  Tribunal  held that  the stoppage of work at the 8 depots and  the  closure was genuine and real, that there was no transfer of the work that   was being carried on at those depots to other  buying points  established  by  the respondent,  and  repelled  the suggestion of the appellants that it was a mala fide  device adopted  for  carrying on the same business in  a  different manner, and decided both the issues against the workmen.     In appeal to this Court,     HELD’: (1) A genuine closure of depots or branches, even though  it did not amount to. closure of the business  could not  be  interfered  with by  an  Industrial  Tribunal,  and therefore,  the  issue  was  incorrectly  referred  by   the Government for adjudication by the Tribunal.  The closure is stoppage  of  p.art  of  the activity  or  business  of  the respondent.  Such stoppage is an-act of management which  is entirely  in  the  discretion  of  the  respondent  and  n0. Industrial  Tribunal  can  interfere  with  the   discretion exercised in such a matter, or can have the power to  direct the respondent to continue a part of the ’business which  it had  decided to shut down. or direct it to reopen  a  closed depot or branch. [284 G-H; 285 A-C]

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   (2)  On that finding, no question could arise   of   the retrenchment being set aside by the Tribunal, because, there was  no  business for which the workmen would  be  required. All  that the workmen could claim was compensation for  loss of the service, and, in a case where a dispute may arise  as to whether workmen discharged  are entitled  t0 compensation under  s. 25F or s. 25FFF, of the Industrial  Disputes  Act, 1947, it may -become necessary to decide whether the closure amounts to closure in law or not.  But, in the present case, the workmen have all been paid retrenchment compensation  at the  higher   rate  laid  down in  s.  25F   and  therefore, received adequate compensation. [287 F-H; 288 A]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION:  Civil Appeal No. 556  of 1966. 283      Appeal by special leave from the order dated August 13, 1964   of  the  Industrial  Tribunal,  Andhra   Pradesh   in Industrial Dispute No. 41 of 1963.      M.K.  Ramamurthi, Shyamala Pappu and Vineet Kumar,  for the appellants.      K. Srinivasamurthy and Naunit Lal, for the respondent.      The Judgment of the Court was delivered by      Bhargava, J.  This appeal, by special leave, has arisen out  of  an award made ’by the Industrial  Tribunal,  Andhra Pradesh,  at Hyderabad in an industrial dispute between  the respondent,  the Imperial Tobacco Co., as well as  exporting the  tobacco  to various (hereinafter referred  to  as  "the Company"),  and its  workmen. Admittedly, the Company is  an associate of the Imperial Tobacco Company Ltd., and the main business  carried  on by the Company is that  of  purchasing tobacco  of all varieties and qualities,  stemming,  grading and  packing of tobacco  and supplying  it to  the  Imperial Tobacco  Co.,  as well as exporting the tobacco  to  various foreign  countries  in  the world.   The  Company  has  been carrying  on  this business for about 40 years  and  handles almost  35  per cent of the tobacco grown in  the  State  of Andhra  Pradesh.   For  the work of  stemming,  grading  and packing  tobacco,  the  Company has two  factories,  one  at Anaparty in East Godavari District, and the other at Chirala in  Guntur District.  In connection with this business,  the Company,  in  the  year 1962,  was   maintaining  21  depots where, according to the workmen, the appellants, the Company was  carrying on the work of collecting tobacco, though  the Company’s  case  was that the principal work done  at  these depots  was that of handling the tobacco purchased at  other places and only included the work of purchasing tobacco on a small scale.      On  16th  August, 1963, the Company gave a  notice   to the Union of the appellant workmen  that 8 out of 21  depots mentioned therein would be closed down with effect from 30th September,  1963.   Thereafter, an  industrial  dispute  was raised by the workmen which related to the closure of  these 8 depots, as well as to a number of other demands, including revision  of basic wages and dearness allowance,  additional discomfort  allowance,  etc. The State  Government,  by  its Order  dated 14th November, 1963, referred the  dispute  for adjudication under s. 10(1)(d)  of  the Industrial  Disputes Act, 1947 to the Industrial Tribunal, Hyderabad.  The  first issue  which was referred for adjudication, was  as  follows :--               "How  far the demands of the union, viz.,  (i)

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             that no  depot which worked during 1962 season               should.  be closed, and (ii) that  no  workman               who   worked   in   1962   season’should    be               retrenched, are justified ?" 284 There were ten other issues, but we need not reproduce them, as we are not concerned with them in this appeal.     In the proceedings for adjudication, the Company took  a preliminary  objection  that the closure  the depots  was  a managerial  function, that there could not be an  industrial dispute  over such closure, that the Government,  therefore, had no power to refer this issue for adjudication, and  that the  Tribunal   also   had no power  to  adjudicate  on  it. Thereupon,  the Tribunal framed a .preliminary issue  as  to "whether  the employer is justified in alleging  that  Issue No. 1 framed by the Government cannot be deemed to relate to an  industrial dispute, and as such, whether the  Government had  the power to refer it for adjudication".  The  Tribunal decided this preliminary issue by giving an interim award on the  13th  August,  1964.   The  preliminary  objection  was allowed and a further direction was made that the effect  of this  decision  on Issue No. 1 will be decided  later  after hearing the parties, There,after, the Tribunal proceeded  to hear the reference on this question as well as on all  other issues  referred to it and’, ultimately, gave its  award  on 11th December, 1964. In that award, both the parts of  issue No.  1 were decided against the workmen.  The  workmen  have now  come up in this appeal against the interim award  dated 13th August, 1964 as well as against the final award insofar as it relates to issue No. 1.     The decision given by the Tribunal in the interim award, holding  that the reference covered by issue No. 1  was  not competent,  has been challenged by learned counsel  for  the appellants  on the ground that the closure of a  depot  does not amount to closure of business in law and, since the same business  was continued by the Company at at least 13  other depots,  the  closure  of the 8th  depots  in  question  was unjustified.  For  the proposition that the closure  of  the depots  did  not  amount to  closure  of  business,  learned counsel  rolled  on  the views expressed by  this  Court  in Pipraich  Sugar Mills Ltd. v. Pipraich Sugar  Mills  Mazdoor Union(1),  where  the  Court explained the  reason  for  the decision given by the Labour Appellate Tribunal in the  case of  Employees  of Messrs  India  Reconstruction  Corporation Limited,   Calcutta   v.   Messrs.   India    Reconstruction Corporation  Ltd., Calcutta(2).  It, however, appears to  us that  this  question raised on behalf of the  appellants  is totally   immaterial  insofar  as.  the  question   of   the jurisdiction  of  the Tribunal to decide the first  part  of issue  No. 1 is concerned.  The closure of the 8  depots  by the Company, even if it is held not to amount to closure  of business  of  the Company, cannot be interfered with  by  an Industrial  Tribunal if, in fact, that closure  was  genuine and real.  The closure may be treated as stoppage of part of the  activity or business of the Company.  Such stoppage  of part  of  a (1) [1956] S.C.R. 872.      (2) [1953] L.A.C. 5 63. 285 business  is an act of management which is entirely  in  the discretion  of  the Company carrying on  the  business.   No Industrial  Tribunal, even in a reference under s.  10(1)(d) of   the  Industrial  Disputes  Act,  can   interfere   with discretion  exercised   in such  a matter and can  have  any power to direct a Company to continue a part of the business which  the  Company  has decided to shut  down.   We  cannot

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possibly  accept  the  submission  made  on  behalf  of  the appellants that a Tribunal under the Industrial Disputes Act has  power to issue orders directing a Company to  reopen  a closed  depot or branch, if the Company, in fact, closes  it down.      An example may be taken of a case where a Bank with its headquarters  in  one  place and a  number  of  branches  at different  places decides to close down one of the  branches at  one of those places where it is functioning.  We  cannot see  how,  in   such   a case,  if  the  employees  of  that particular branch raise an industrial dispute, the Bank  can be  directed by the Industrial Tribunal to continue  to  run that  branch.   It  is for the Bank to  decide  whether  the business  of the branch should be continued or not, and  no. Bank  can  be  compelled  to  continue  a  branch  which  it considers undesirable to do.     In  these  circumstances, it is clear  that  the  demand contained  in the first part of Issue No. 1 was  beyond  the powers  and jurisdiction of the Industrial Tribunal and  was incorrectly  referred. for adjudication to it by  the  State Government.                  .     of course, if a Company closes down a branch or a depot, the  question can always arise as to the relief to which the workmen   of that branch or depot are entitled and, if  such a  question  arises and becomes the  subject-matter  of   an industrial   dispute,  an Industrial Tribunal will be  fully competent  to adjudicate on it.  It is unfortunate that,  in this  case,  when dealing with the  preliminary  issue,  the Tribunal  expressed  its decision in the  interim  award  in general words holding that Issue No. 1 as a whole was beyond its  jurisdiction.  If the reasoning in the interim award is taken  into  account, it is dear that the Tribunal  on  that reasoning  only  came  to the conclusion  that  it  was  not competent to direct reopening of the 8 depots which had been closed,  so.  that the Tribunal should  have held  that  the first part of Issue No. 1 only was outside its jurisdiction.       So far as the second part of that issue is  concerned, as we have said above, it was competent for the Tribunal  to go into it and decide whether the claim of the workmen  that they  should  not  be  retrenched  was  justified.   On   an examination  of the interim award and the final  award,  we, however, find that the Tribunal in fact did (1) [1956] S.C.R. 872. 286 do  so.  The case reported in Pipraich Sugar  Mills  Ltd.(1) was  also concerned only with the question as to the  relief that  can be granted to workmen when there is closure  of  a business.  No question arose either before the Court, or  in the cases considered by the Court, of an Industrial Tribunal making a direction to the employers to continue to run or to reopen  a  closed  branch  of  the  business.   The   Labour Appellate Tribunal in the case of Employees of Messrs  India Reconstruction  Corporation  Ltd., Calcutta(1)  was  dealing with  the question of retrenchment compensation as a  result of the closure of one of the units of the company concerned, and  it held that the workmen were entitled to  retrenchment compensation  in  accordance with law.  This Court,  in  the case  of Pipraich Sugar Mills Ltd. (2), only explained   why the   Labour  Appellate Tribunal was justified  in  granting retrenchment   compensation  in  that  case.   The   opinion expressed  by the Court was that, though there is  discharge of  workmen both when there is retrenchment and  closure  of business,  the compensation is to be awarded under  the  law no.t for discharge as such but for discharge on retrenchment and  if,  as  is conceded, retrenchment  means  in  ordinary

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parlance  discharge  of  the  surplus,  it  cannot   include discharge  on closure of business.  It was in  this  context that  the Court went on to add that in the case of Employees of M/s. India Reconstruction Corporation Ltd., Calcutta (1 ) what  had happened was that one of the units of the  Company had  been closed which would be a case of  retrenchment  and not a case of closure of business.  It may be noted that, at the  time  when this decision was given,  section  25FF  and section  25FFF  had not been introduced  in  the  Industrial Disputes   Act,   and  the  only   right   to   retrenchment compensation granted to the workmen was conferred by section 25F. It was in the light of the law then prevailing that the Court  felt  that  the  decision  of  the  Labour  Appellate Tribunal   in   the  case  of  Employees   of   M/s.   India Reconstruction  Corporation  Lid(1)  granting   retrenchment compensation.  could  be justified on the  ground  that  the services  of  the workmen had not been dispensed with  as  a result   of  closure  cf  business,  but  as  a  result   of retrenchment.   That  question does not arise  in  the  case before us.  Since then, as we have indicated above, s.  25FF and s. 25FFF have been added in the Industrial Disputes Act, and the latter section specifically lays down what rights  a workman  has when an undertaking is closed down.  In a  case where  a dispute may arise as to whether workmen  discharged are  entitled to compensation under s. 25F of s.  25FFF   it may  become   necessary  decide Whether the  closure,  as  a result  of  which  the services have  been  dispensed  with, amounts to a closure in law or not.  In the case before  us, it was admitted by 1earned counsel for both parties that the workmen, who have been discharged as a result of the closure of the 8 depots (1) 1953 L.A.C. 563.     (2) [1956] S.C.R. 872. 287 of the Company, have all been paid retrenchment compensation at  the  higher rate laid down in s. 25F, so that,  in  this case,  it  is not necessary to decide the  point  raised  on ’behalf of the workmen.     In  connection with the second part of issue No.  1,  it was  also urged by learned counsel for the  appellants  that the   business, which was being carried on at the 8  depots, had  not  in  fact  been closed down  and  had  merely  been transferred  to  buying points situated in  and  around  the closed  depots, including two new buying points  established by  the  Company after the closure of these 8  depots.   The argument  was  that the workmen were old employees  who  had served  the Company for a long time  and  were  entitled  to certain  benefits  as a result of that  long  service.   The Company  closed these 8 depots mala fide with the object  of depriving the workmen of those benefits. and merely  altered the  nature  of  the  business by  closing  the  depots  and carrying  on the stone business at the buying points.   This point urged by learned counsel cannot, however, be  accepted in view of the findings of fact recorded by the Tribunal.     The Tribunal examined in detail the allegations made  on behalf of the workmen in this respect.  In fact, the interim award  mentions  that,  for  the  purpose  of  deciding  the preliminary issue and the first issue, evidence was recorded by  the   Tribunal  for more than a week  and  arguments  of Advocates  of  the  parties were heard  for  even  a  longer period.  After examining the evidence, the Tribunal came  to the  conclusion that the stoppage of the work at the  depots was genuine and that the work which was being carried on  at the  depots  had not been transferred to the  buying  points established by the Company.  The closure of the business  at the  depots  was  necessitated  by  reasons  of   expediency

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inasmuch  as the Company had to reduce its purchases in  its quest  for  quality  and its ’desire  to  run  the  business economically.  The principal work, which used to be done  at the  depots,  was  not that of purchasing  tobacco,  but  of handling it and that work was not transferred at all to, any buying point.  The Tribunal, thus, came to the finding  that the  closure of these depots was real and genuine  and  that the  suggestion  of the appellants that only  a  device  was adopted  of  carrying on the same business  in  a  different manner  had no force at all.  if the same business had  been continued, though under a different guise, the claim of  the workmen not to be retrenched could possibly be considered by the  Tribunal; but, on the finding that there was a  genuine closure  of the business that used to be carried on  at  the depots,  no question could arise of the  retrenchment  being set aside by the Tribunal.   The Tribunal could not ask  the Company to re-employ or reinstate the workmen, because there was no business for which the workmen could be required.  In these circumstances all that the workmen 288 could  claim was compensation for loss of their service  and in  that  respect, as we have indicated above,  the  workmen have received adequate compensation.     Consequently,  the appeal has no force and is  dismissed but we make no order as to. costs. V.P.S.                                     Appeal dismissed. L2 S.C.I./69--2,500--6-I-70--GIPF. 289