M-S. HONDARAM RAMCHANDRA v. YESHWANT MAHADEV KADAM (DEAD) THROUGH LRS

Citation: [2007] 13 S.C.R. 471

Court: Supreme Court of India

Bench: S.B. SINHA, H.S. BEDI

Case summary

M-S. HONDARAM RAMCHANDRA v. YESHWANT MAHADEV KADAM (DEAD) THROUGH LRS.pdf

Judgment text

MIS. HONDARAM RAMCHANDRA v. YESHWANT MAHADEV KADAM (DEAD) THROUGH LRS. DECEMBER 12, 2007 [S. B. SINHA AND HARJIT SINGH BEDI, JJ. ] Industrial Disputes Act, 1947-s. 25FFF-Closure of undertaking-High Court directing reinstatement ofworkmen instead · of directing payment of compensation in terms of s. 25FFF- Correctness of-Held, not correct-Workmen entitledto compensation only in terms ofs. 25FFF and not reliefofreinstatement with back wages. .. 4 The question which arose for consideration in the present appeal is whether in the aftermath ofthe closure ofthe sales office ofAppellant, the High Court erred in directing re-instatement ofthe respondentsworkmen instead ofdirecting paymentofcompensation tothem in tenns ofs. 25FFF ofthe Industrial Disputes Act, 1947. Disposing ofthe appeals, the Court HELD: 1. The High Court evidently committed an error in not taking into consideration the factum ofclosure ofthe business from the premises of the appellant, for the purpose of grant of relief.

If the undertaking ofthe appellant had been closed down, theworkmen were entitled to compensation only in tenns ofSection 25FFF ofthe Industrial Disputes Act, 1947 and not the reliefofreinstatement with backwages. The question ofpassing an award directing reinstatementwith full back wages, in the aforementioned fact situation, did not and could not arise. (Paras 12and13) [476-B-C] 2. Two questions arise for consideration; firstly, whether the closure was affected in the year 1983 or 1991 and secondly, whether the amount ofcompensation should be computed asifthe establishment ofthe appellantwas closed in 1983or1991, as the case may be, or are the workmen entitled to some other reliefs. Interest ofjusticewould be subserved iftheLabour Court, where the application ofthe respondents under Section 33(C-2) ofthe Act is pending, be directed to determine the aforementioned questions as the said Court can determine the said questions more effectively.

[Paras 14 and16] [476-F; 477-A-BJ CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 5834- 5835 of2007. From the final Judgment and Order dated 11. 1. 2000 ofthe High Court of Judicature at Bombay in Appeal No. 1340 of 1999 in Writ Petition No. 1693 of 1997 WITH C. A. Nos. 5840-5841 of 2007. Shekhar Naphade, Shivaji M. Jadhav, Himanshu Gupta, Brij Kishor Sah and Rahul Joshi for the Appellant. K. Sarada Devi for the Respondents. The Judgment ofthe Court was delivered by S. B. SINHA, J. 1. Delay condoned. 2. Leave granted. 3. A limited notice was issued by this Court as to whether the High Court was right in directing reinstatement ofthe respondents-workmen instead ofdirecting payment ofcompensation in terms ofSection 25FFF ofthe Industrial Disputes Act, 1947. 4. Appellant had a sales office at Mulji Jetha Cloth Market, Mumbai. Respondents-workmen were employed therein. The said shop was closed. The factum ofthe closure ofthe shop is not in dispute.

What is disputed is as to whether it was done in the year 1983 or 1991. Upon closure of the said shop, the respondents were transferred to work in a factory at Goregaon which did not belong to the respondents. An application for payment ofwages was filed against the appellant before the Prescribed Authority. The said application was dismissed, inter alia, on the premise t that the respondents had refused to join their duties at the transferred place. A domestic enquiry was purported to have been held in April, 1984 on the premise that the respondents had neither reported for duties at Goregaon nor at Mumbai. The services of the respondents were terminated in December, 1985. In January, 1986, the premises in which ' \. _ the sales office was being run was admittedly handed over to another -4 Company. 5. An industrial dispute was raised by the respondents demanding their reinstatement with full back wages as well as continuity in services.

A reference was made by the appropriate Government. 6. A preliminary issue was raised as to whether in the said reference, the domestic enquiry conducted against the respondents was fair and proper. The said preliminary issue was decided in favour ofthe employer and against the workmen by an order dated 5. 12. 1996. The parties to \ the reference, thereafter adduced their evidences before the Industrial Court. 7. By an award dated 31. 7. 1996, the Presiding Officer ofthe Labour Court, Mumbai held that the termination ofthe services ofthe respondents was proper and valid and, thus, were not entitled to any relief Questioning the correctness ofthe said award, the workmen filed writ applications. learned single Judge ofthe High Court ofBombay allowed the said writ petitions being W. P. No. 1693of1997 and W. P. No. 1691 ofl997 by ~ judgment and order dated 30. 08. 1999 setting aside both the awards oplll1llg:- "I do not find any merit in the contention advanced on behalfof respondent No.

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

Taking into account the above ,,/ ~ facts, the Labour Court erred in dismissing the Reference". 8. An intra court appeal was preferred thereagainst wherein, inter alia, contention was raised by the appellant that the sales office ofthe appellant having been closed, no award ofreinstatement could have been passed. The said appeal was dismissed by a Division Bench ofHigh Court by reason ofthe impugned judgment dated 11. 01. 2000. review application preferred thereagainst has also been dismissed by an order dated 17. 01. 2003. 9. Mr. Shekhar Naphade, learned senior counsel appearing on behalf ofthe appellant, submitted that keeping in view the admitted fact that the sales office ofthe appellant was closed, the workmen were entitled only to the amount of compensation payable in terms of Section 25FFF of the Industrial Disputes Act, 1947and not the relief ofreinstatement with back wages.

It was urged that even the learned single Judge in the judgment noticed:- ' "Shri Khanna has further deposed that he has sold the Sales Office. The evidence ofShri Khanna clearly indicates that Khanna Textile Industry was a separate legal entity to which the workman was sought to be transferred". Our attention was also drawn to the written statement filed on behalf ofthe appellant wherein it was averred: 'There is no relation between the shop and the Goregaon factory. Prior to the 3-4 years from today, the said place ofmy work was sold by the company and prior to the sale the place ofwork was MIS. HONDARAM RAM CHANDRA v. YESHWAN'r 475 given by the employer on leave and licence to the 3rd party near about 10 years".

It was furthermore brought to our notice that the following contentions were raised before the Division Bench ofthe High Court, as would appear from the Memo ofAppeal: "That there is total non application of mind on the part of the learned singlejudge in observing that there is no evidence on record to indicate that transfer constituted service condition and that Khanna Dyeing was a separate legal entity viz-a-viz appellant herein. Had the Learned Single Judge appreciated the fact that asking the first Respondent to resume duties at Goregaon factory was an offer ofalternate employment due to closure ofsales office where the first respondent was employed, he ought to have come to the conclusion that the action on the part ofthe Appellant was bonafide and with intention to secure employment of the D \ Respondent and that the Appellant was constrained to terminate the service ofthe first Respondent for not attending his duties". 10.

It appears from the records that the following contention was also raised in the review petition : "The petitioner submits with great respect that this fact was through oversight not gone into by the learned Division Bench. Had this fact been considered by the Learned Division Bench and the Learned Single Judge having held that the Respondent's job was a non-transferable one, it is respectfully submitted that reinstatement with the Petitioner company would not have been granted. Also payment of back wages would not have been granted. The Respondent at best was entitled to closure compensation". . 11. The learned counsel for the respondents, on the other hand, contended that the respondents have filed an application under Section 33(C-2) ofthe Industrial Disputes Act, 1947 before the Labour Court, Mumbai which is pending. It was argued that the respondents may not be entitled for their reinstatement but would indisputably be entitled to back wages in lieu ofreinstatement.

It was further submitted that the closure ofthe unit was affected only in 1991 and not in 1983. 12. From the records, it appears that the sales office ofthe appellant had been closed down. We have noticed heretobefore that there exists a dispute as to whether the said closure, for all intent and purport, was effected in 1983 or 1991. The High Court evidently committed an error in not taking into consideration the factum ofclosure ofthe business from the premises of the appellant, for the purpose of grant of relief. Ifthe undertaking ofthe appellant had been closed down, the workmen were entitkd to compensation only in terms ofSection 25FFF ofthe Industrial Disputes Act, 1947 and not the reliefofreinstatement with back wages. 13. The question ofpassing an award directing reinstatement with full back wages, in the aforementioned fact situation, did not and could not arise. However, the purported order of transfer was evidently not a legal one.

Appellants furthermore initiated a domestic enquiry against the respondents. It was held ex parte. On the basis of the report made by the Enquiry Officer in the said domestic enquiry alone the services ofthe respondents were terminated. It was at this stage a reference was made by the appropriate government for adjudication ofthe dispute raised by the respondent herein in terms ofSection 10(1)(c) ofthe Industrial Disputes Act, 1947. 14. Two questions arise for our consideration. Firstly, whether the closure was affected in the year 1983 or 1991? Secondly, whether the amount ofcompensation should be computed as ifthe establishment ofthe appellant was closed in 1983or1991, as the case may be, or are the workmen entitled to some other reliefs? 15. Ordinarily, we would have remitted the matter back to the High Court for consideration of the matter afresh to determine the said questions.

Our attention, although, has been drawn to the evidences brought on record, it is difficult for us to arrive at one or the other opinion in regard to the question as to when the establishment ofthe appellant was closed. In the aforementioned premise it is also not possible for us to determine the effect oftermination ofservice ofthe workmen. ? 16. We are, therefore, ofthe opinion that the interest ofjustice would be subserved ifthe Labour Court, where the application ofthe respondents under Section 33(C-2) ofthe Industrial Disputes Act, 1947 is pending, should be directed to detennine the aforementioned questions as the said court can determine the said questions more effectively. For the said purpose, the Labour Court would pennit the parties to adduce fresh -> evidence. We would rt;quest the Presiding Officer, Labour Court to pass an award as expeditiously as possible. 17. We, however, direct that the appellant, in the meanwhile, shall pay a sum ofRs.

25,000 each to the concerned workmen within four weeks from the date of receipt of this judgment by way of litigation expenses. The said amount may also be deposited before the concerned Labour Court. 18. With the aforementioned observations and directions, this appeal is disposed of. No costs. B. B. B. Appeals disposed of. -r