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CASE NO.:

Appeal (civil) 5074-5079 1996

PETITIONER:

J. K. SYNTHETICS

Vs.

RESPONDENT:

RAJASTHAN TRADE UNION KENDRA & ORS.

DATE OF JUDGMENT: 12/12/2000

BENCH:

S.R.Babu, S.N.Variava

JUDGMENT:

S. N. VARIAVA, J.

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These Appeals are against a common Judgment dated 13th

November, 1995 passed by the Division Bench of the Rajasthan

High Court in five Civil Special Appeals and a Writ

Petition. In 1983 the Appellant Company had a "lay off".

According to the Appellant the lay off became necessitated

because there was a 100% power cut and the Company's own

generators were under repairs. Thereafter on 15th January,

1983 the Appellant Company terminated the services of 1164

workmen. According to the Appellant this termination was

necessitated because of closure of a section of the Nylon

plant. According to the Appellant Company this unit had to

be closed because of huge losses and also because of lack of

power. On 17th January, 1983 another 1201 workmen were

retrenched by the Appellant Company. The Rajasthan Trade

Union Kendra (hereinafter referred to as RTUK) filed a

Petition in the Rajasthan High Court (W. P. NO. 213 OF

1983) challenging the termination and retrenchment of the

2367 workmen. On 17th February, 1983 the Appellant Company

lifted its lay-off. However, the workmen refused to report

for duty and proceeded on a strike. On 7th March, 1983 the

Appellant filed a Writ Petition (W.P. No. 409 of 1983)

challenging the constitutional validity of Section 25-N of

the Industrial Disputes Act (hereinafter called the said

Act). On 28th August, 1983 the Government of Rajasthan

referred the following disputes to the Industrial Tribunal

under Section 10(H) of the said Act: "1. Whether the lay

off in 4 Divisions of J. K. Synthetics Ltd., Kota (viz.

J. K. Synthetics, J. K. Acrylics, J. K. Staple & Tows

and J. K. Tyre Cord, Kota) from January 10, 1983 to

February 17, 1983 was legal and justified and if not, to

what relief the workers are entitled?

2. Whether the retrenchment in 4 Divisions of J. K.

Synthetics (viz. J. K. Synthetics, J. K. Acrylics, J.

K. Tyre Cord and J. K. Staple and Tows, Kota) was

justified and if not, to what relief the workers are

entitled?

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3. Whether in case the provisions of Section 25-N of

the Industrial Disputes Act, 1947 are held to be

unconstitutional by the Hon'ble High Court in the Writ

Petitions (213/1983 and 409/1983) the retrenchment was in

accordance with other provisions of the said Act, and to

what relief workers are entitled?

4. Whether non-resumption of duty by unretrenched

workmen engaged in the four Divisions of J. K. Synthetics

Ltd., Kota (viz. J. K. Synthetics, J. K. Acrylics, J.

K. Staple & Tows and J. K. Tyre Cord, Kota) was justified

and whether the workmen are entitled to any relief for this

period from February 17, 1983 till they resumed duty."

On 19th October, 1983 a Full Bench of the Rajasthan

High Court allowed the Writ Petition filed by the Appellant

and dismissed the Writ Petition filed by RTUK. On 12th

December, 1983 the Industrial Tribunal, with the consent of

parties and on the basis of pleadings, raised the following

8 issues: "1. Whether the lay off in four Divisions of J.

K. Synthetics, Kota (namely J. K. Synthetics, J. K.

Acrylics, J. K. Staple & Tows and J. K. Tyre Cord, Kota)

from January 10th to February 17th 1983 was legal and

justified?

2. Whether the retrenchment in aforesaid four

Divisions was justified?

3. The provisions of Section 25-N of the Industrial

Disputes Act, 1947 having been held to be unconstitutional

by Hon'ble High Court of Rajasthan, whether the retrenchment

in the aforesaid four Divisions of J. K. Synthetics is

still in accordance with the other provisions of the

Industrial Disputes Act, 1947.

4. Whether the non-resumption of duty by un-

retrenched workmen engaged in the aforesaid four Divisions

from 17.2.83 was justified?

5. Whether for the reasons contained in para 25 and

its various sub-paras of statement of demands of J. K.

Synthetics Ltd., the reference made to this Tribunal is mala

fide, misconceived and untenable?

6. Whether item Nos. 1, 2 and 3 in terms of

reference are not industrial disputes:

7. Whether there has been in fact any dis-

continuance/closure of undertakings/

departments/processes/operations/interconnec ted processes

and activities in Nylon Division before retrenchment?

Whether the above, even if proved amounts to closure as

known in Industrial Law?

8. To what relief the parties are entitled?"

On 2nd January, 1984 RTUK preferred a Special Leave

Petition against the Judgment of the Rajasthan High Court

dated 19th October, 1983. In this Petition leave was

granted on 2nd January, 1984. By an interim order the

Appellant Company was directed to pay 1/3rd of the total

wages subject to future adjustment. It is claimed by the

Appellant that on 22nd March, 1985 a settlement was arrived

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at by the Appellant Company with three Unions affiliated to

CITU and two Unions working in the Company. On 22nd March,

1985 a joint Application was filed before the Industrial

Tribunal praying that the settlement be taken on record and

that an Award be made in terms of the settlement. On 31st

March, 1985 RTUK filed an Application before the Industrial

Tribunal that the Executive Committee had not met to

consider the settlement and that the representatives of CITU

were not authorised to sign the settlement. RTUK opposed

the settlement and claimed that the settlement cannot be

binding on the workmen. On 5th April, 1985 the Industrial

Tribunal ordered a secret poll to be taken in order to

ascertain whether the workers had agreed to the settlement.

Such poll was taken on 12th April, 1985. 1994 workers voted

against the settlement, whereas 1850 voted in favour of the

settlement. As the majority of the workers had voted

against the settlement the Industrial Tribunal held, on 7th

May, 1985, that an Award could not be passed in terms of the

settlement. The Industrial Tribunal further held that the

question whether the settlement could be looked into to

modulate reliefs would be considered later on. On 14th May,

1985 the Industrial Tribunal passed an Award. The Tribunal

held that the lay off was bona-fide and justified due to

100% power cut and failure of Company's generators. The

Tribunal held that strike in the Nylon Plant was illegal.

The Tribunal held that the strike in the Acrylic Plant was

not illegal. The Tribunal held that there was closure of

the Textile Section of the Nylon Plant. The Tribunal held

that on these counts termination of 1164 workers was

justified. The Tribunal ultimately held as follows: "If

the reliefs are granted on the basis of the findings as

contained in this Award the financial burden on J. K.

Synthetics will be about Rupees one Crores or one and half

crores. If the settlements are looked into for granting the

reliefs to the workers then the financial burden on the

company shall be to the extent of rupees four to five

crores. Out of about 1,199 retrenched workers of the

running plants, a large number of them have been absorbed,

some have resigned. About 650 workers remain who are to be

re-employed. Having given my serious thought to all these

circumstances, I am of the opinion that relief should be

modulated on the lines of the settlements, as the

settlements to me appear to me just and fair in the larger

interest of the majority of the workers as well as for

industrial peace. Even the Unions of the workers of the

four plants affiliated to CITU have filed an application

that the settlements are more beneficial to the workers and

in their larger interest and therefore relief should be

given as per the settlements. The Company J. K.

Synthetics has neither supported the application nor opposed

it. Even Mr. Poonamla at one stage urged that in case the

findings on the issues and the Award are less favourable to

the workers then the settlement arrived at the Tribunal can

look into the settlement. But according to him the

settlements are not just and fair and are not favourable to

the workers. But I am unable to agree with Mr. Poonamla

and a comparison of the terms of settlements and the

findings on the various issues reported by me will show that

the findings are less favourable to the workers and if the

Award is given on the basis of these findings, it will be

less favourable to the workers than the terms of the

settlements."

On this basis the Industrial Tribunal gave various

reliefs to the workmen based mainly on the settlement. We

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are informed that now the Appellant Company has accepted the

Award and paid as per this Award. RTUK filed a Special

Leave Petition against the Award in August 1985. Leave was

granted in the Special Leave Petition. Thus, before this

Court Civil Appeals filed by RTUK against the Judgment of

the Rajasthan High Court dated 19th October, 1983 as well as

the Civil Appeal against the Award dated 14th May, 1985 were

pending. In the meantime, on 15th May, 1992 this Court held

in the case of Workmen v. Meenakshi Mills Ltd. reported in

(1992) 3 SCC 336, that Section 25-N of the said Act was

valid and was not unconstitutional. On 17th March, 1993

this Court remanded the pending matters back to the

Rajasthan High Court for consideration on merits on the

basis of the Judgment in Meenakshi Mills Ltd. case (supra).

On 25th August, 1993 the Appellant Company filed a Writ

Petition (W. P. No. 6248 OF 1993) challenging the Award

of the Industrial Tribunal. The Petitions pending in the

Rajasthan High Court came to be disposed off by a common

Judgment dated 25th March, 1994. The learned single Judge

upheld the Award of the Industrial Tribunal. The single

Judge confirmed the findings of the Tribunal in regard to

the illegal strike and closure. The learned single Judge

upheld the finding that 1164 workmen have been terminated

because of closure and that there was no retrenchment.

However, the learned single Judge has held that in view of

the Judgment in Meenakshi Mills Ltd.'s case, the 1201

workers would be entitled to full wages. Both the Appellant

Company, RTUK and some other Unions filed Appeals before the

Division Bench of the Rajasthan High Court. These Appeals

and Writ Petition No. 6248 of 1983 came to be disposed off

by the impugned Judgment dated 13th November, 1995. The

Division Bench rejected Writ Petition No. 6248 of 1993 on

grounds of delay and latches, as well on ground that

Appellant Company had already accepted the Award. By this

Judgment the Division Bench has reversed the Judgment of the

learned single Judge and not accepted the findings in the

Award of the Tribunal, except on the question of strike.

The Division Bench has held that the question of closure was

never referred to the Industrial Tribunal and the Tribunal

could not have gone into that question. On facts the

Division Bench held that there was no closure. The Division

Bench directed reinstatement of these 1164 workmen and

payment of full wages to them. It is this Judgment which is

assailed before us. The Division Bench has accepted the

findings of the Industrial Tribunal and the Single Judge on

strike. These findings have not been seriously assailed

before us and therefore require no interference. On behalf

of the Appellant Company it has been urged that the findings

of the Division Bench on closure are erroneous. On the

other hand, the Respondents have supported the findings of

the Division Bench on this point. The question for

consideration before us is whether the Division Bench was

right in concluding that the question of closure was never

referred to the Industrial Tribunal and/or in concluding

that there was no closure of any unit of the Appellant

Company. As has been set out hereinabove, amongst other

disputes which have had been referred to the Industrial

Tribunal was Dispute No. 2, which reads as follows: "2.

Whether the retrenchment in 4 Divisions of J. K.

Synthetics (viz. J. K. Synthetics, J. K. Acrylics, J.

K. Tyre Cord and J. K. Staple and Tows, Kota) was

justified and if not, to what relief the workers are

entitled?"

Thus, the Industrial Tribunal was required to go into

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the question whether or not the retrenchment was justified.

The Appellant had sought to justify retrenchment of the 1164

workmen on the basis that there was a closure of a section

of the Nylon Plant. Thus in order to come to the

conclusion, whether or not retrenchment was justified, the

Industrial Tribunal necessarily had to first decide whether

or not there was a closure. This Court in the case of

Express Newspapers Ltd. v Their Workers and Staff and

others reported in 1962 II LLJ 227 has held that if the

Industrial Tribunal had to decide whether strike was

justified, it would have to examine the question whether or

not the dispute referred to it was an industrial dispute.

This Court held that the decision of this question would

inevitably depend upon the view which the Industrial

Tribunal may take as to whether the action taken by the

Company is a closure or a lock out. It was observed as

follows: "It is also true that even if the dispute is tried

by the industrial tribunal, at the very commencement, the

industrial tribunal will have to examine as a preliminary

issue the question as to whether the dispute referred to it

is an industrial dispute or not, and the decision of this

question would inevitably depend upon the view which the

industrial tribunal may take as whether the action taken by

the appellant is a closure or a lock-out. The finding which

the industrial tribunal may record on this preliminary issue

will decide whether it has jurisdiction to deal with the

merit of the dispute or not."

This Court, in the case of Pipraich Sugar Mills Ltd.

v. Pipraich Sugar Mills Mazdoor Union reported in 1956 SCR

872, has held that the definition of an industrial dispute

as contained in the Industrial Disputes Act contemplates the

existence of an industry and a subsisting relationship of

employer and employees between the parties. This Court has

held that there could be no industrial dispute within the

meaning of this Act where the industry has been closed and

the closure is real and bona fide. Thus, in our view, the

Division Bench erred in coming to the conclusion that the

Tribunal could not have gone into the question of closure as

it was not referred to it. In our view, on the disputes

which have been referred, particularly Dispute No. 2 (set

out hereinabove) it became absolutely necessary for the

Tribunal to first ascertain whether there was a closure and

whether such closure was bona fide. The next question which

has to be decided is whether the Division Bench was right in

concluding on facts that there was no closure. The Division

Bench has come to its conclusion that there was no closure

by first concluding that there was no Textile Section in the

Company and that the Textile Section was an inseparable part

of the entire plant. The Division Bench has also drawn an

adverse inference against the Appellant Company on the

ground that the Company has not produced certain log books

to show what parts of the Russian Generating sets were

missing. It, therefore, drew an adverse inference that the

non- production of the log books necessarily meant that had

those log books been produced, it would have shown that

Russian Generating Sets were operable. It therefore opined

that there was no sufficient cause for the alleged closure.

In our view, the Division Bench has erred in arriving at the

above conclusions. It must be remembered that at the time

the disputes were referred to the Industrial Tribunal the

term 'closure' had not been incorporated in the Industrial

Disputes Act. However, the concept of 'closure' was well

known. Therefore, even though in the reference and in the

pleading the term 'closure' may not have been specifically

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used, what was essential was whether or not there was in

fact a closure as understood in Industrial Law. Even prior

to the disputes being referred the Appellant Company had

been claiming that there was dis-continuance of process in

the Textile Section of the Nylon Plant. They were claiming

that it was a permanent discontinuance. A permanent

discontinuance necessarily meant closure. After the

disputes were referred both the parties filed their

pleadings. On those pleadings specific issues were raised.

One of the Issues raised was an Issue No. 7, which reads as

follows:

"7. Whether there has been in fact any

discontinuance/closure of undertakings/

departments/processes/operations/interconnec ted processes

and activities in Nylon Division before retrenchment?"

At the time when this issue was raised the Respondents

did not contend that such an issue could not be raised as it

was not part of the dispute referred. The Respondents did

not contend that this Issue did not arise on the pleadings.

This is because the Respondents were aware that it was

always the case of the Appellant that there had been

discontinuance of this Section. It cannot be denied that

the closure need not be of the entire plant. A closure can

also be a part of the plant. Before the Tribunal both the

parties led evidence. The Appellant Company proved before

the Tribunal that it was suffering heavy losses. It proved

before the Tribunal that in the Textile Section the losses

were as follows: "During 1979 Rs. 10.64 lacs, 1980 Rs.

56.93 lacs, 1981 Rs. 292.63 lacs and 1982 Rs. 532.49

lacs"

Thus between 1979 and 1982 the losses had gone up from

Rs. 10.64 lacs to Rs. 532.49 lacs. Not only that, it was

admitted before the Industrial Tribunal that the Appellant

Company had following divisions in which the total number of

workmen employed were as follows: "S.No. Division Total

number of permanent workmen employed .

1. Nylon plant/Division engaged 2209 in

Plat/POY/MOY/yarn process:

Nylon Plant/Division (engaged 1164 In texturising,

crdmping and Processes).

2. Tyre Cord Plant/Division 660

3. Synthetic Stapple Fibre Plant/Division. 703

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

--------"

Thus, it is to be seen that in the Nylon Plant there

was a division known as a Texturising Division. This

Division was admittedly known as the Textile Division of the

Nylon Plant. Therefore, it was a separate division in the

Nylon Plant. The Division Bench has also ignored the fact

that before the Industrial Tribunal not only witnesses on

behalf of the Appellant Company but even witnesses on behalf

of the Unions, particularly one Mr. Satya Narayan Tailor,

have admitted that the Textile Section of the Nylon Plant

had been closed. Similarly, another Mr. K. D. Chaudhary

has also admitted that the Textile Section of the Nylon

Plant had been closed. It was also an admitted position, on

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evidence before the Industrial Tribunal, that the workers of

the other departments of the Nylon Plant were not

transferred to the Textile Section and the workers of the

Textile Section were not transferred to other departments.

Based on evidence the Industrial Tribunal in its Award has

recorded as follows: "The factum of the closure of the

Textile section of the Nylon plant has not been very

seriously disputed and on behalf of the Unions and the

witnesses for RCTU and CITU as well as for the Staff

Association have not rebutted, the evidence produced on

behalf of the Company that the Textile section has been

closed."

Thus before the Industrial Tribunal there was no

dispute that there was Textile Section and there was no

serious dispute that the Textile Section had been closed.

This fact has been completely overlooked by the Division

Bench. When facts are admitted or not seriously disputed at

the trial stage the Appellate Court cannot draw an adverse

inference contrary to admitted facts. The Division Bench

should have realized that the dispute regarding closure was

contrary to the evidence on record. The Division Bench has

thus erred in coming to a conclusion that there was no

Textile Section and that there was no closure of the Textile

Section. The findings of the Division Bench in this behalf

cannot be sustained, require to be and are set aside. It

must be mentioned that the Division Bench has affirmed the

findings of the Single Judge based upon the decision of this

Court in Meenakshi Mills Ltd.'s case (supra). In our view,

those findings are correct and cannot be disturbed. It must

also be mentioned that the Division Bench has in concluding

directed the State Government and the Labour

Commissioner-cum-Deputy Secretary, Labour Department to

prosecute the Company and its office bearers for

contravention of the provisions of the Industrial Disputes

Act and the Rules framed thereunder. In our view, such

directions were entirely unjustified and are unsustainable.

We, therefore set aside the Judgment of the Division Bench

and restore the Judgment of the single Judge of the High

Court. We, however clarify that if the Government or the

Labour Commissioner-cum-Deputy Secretary, Labour Department

are of the opinion that there has been any contravention of

the provisions of the Industrial Disputes Act or the Rules

framed thereunder, they are at liberty on their own to

prosecute if they feel it necessary to do so. The Appeals

stand disposed off accordingly. There will be no Order as

to costs throughout.