| SooperKanoon Citation | sooperkanoon.com/351402 |
| Subject | Labour and Industrial |
| Court | Mumbai High Court |
| Decided On | Mar-15-2001 |
| Case Number | Writ Petition No. 1632 of 2000 |
| Judge | Mr. R.J. Kochar, J. |
| Reported in | 2001(2)ALLMR654; 2001(2)BomCR631; (2001)3BOMLR663; 2001(2)MhLj1 |
| Acts | Industrial Disputes Act, 1947 - Sections 2, 25F, 25FF, 25FFF, 25FFA, 25G, 25-K, 25-K(1) and 25(O); Maharashtra Mathadi Hamal and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969 |
| Appellant | The Dyes and Chemical Workers Union |
| Respondent | Bombay Oil Industries Ltd. and anr. |
| Appellant Advocate | Ms Nishita Mhatre and ;Mr. P.M. Patel, Advs. |
| Respondent Advocate | Mr. K.K. Singhvi, ;Mrs. H.R. Patankar and ;Mr. V.P. Sawant, Advs. |
| Disposition | Writ petition rejected |
R.J. Kochar, J.
The issue of functional Integrality of more than one undertakings owned by even one employer is no more res integra. The Supreme Court has very succinctly prescribed the test to be applied to decide this question. Even this High Court has in different matters considered the contention raised in a number of such matters on the point of undertakings being different or independent or Interdependent. The petitioner union has once again pressed this point in service in the present petition.
2. We are only at the stage of admission. I may mention here that the first Inning of this litigation was contested by the parties on the point whether in computing the number of workmen employed during the preceding period of 12 months should include the persons employed by the labour contractor and the workers enrolled with Mathadi Board. According to the employers in this matter, while computing the number of workmen, to apply the provisions of Chapter VB of the Industrial Disputes Act, 1947, the aforesaid categories of the persons cannot be Included as the workmen employed by them. In the case of NGKU v. TheIndian Gum Industries. I had taken a view that the aforesaid categories cannot be included in the category of workmen employed by the industrial establishment while applying the provisions of Chapter VB of the Act. My learned brother Dr. Chandrachud, J. had a contrary view and, therefore, he had referred the issue to be decided by a Larger Bench of this Court. On reference by the learned Chief Justice, the Division Bench of this Court (B. N. Shrikrishna and S. D. Gundewar, JJ.) by its Judgment dated 23rd January, 2001 has extensively considered this contentious issue and has finally settled as far as this Court is concerned. The Division Bench has preferred to accept the view taken by me and answer the reference as under :-
'23. In the result, we answer the question referred to us as under :-
(i) For the purpose of computation of the total number of workmen employed on an average per working day for the last twelve months, as contemplated under Section 25-K(1) of the Industrial Disputes Act, only persons who answer the definition of workman' as contained in Section 2(s) of the Industrial Disputes Act are liable to be included. Mathadi workmen and contractor's workers cannot be included in computing such number. As far as workmen of other industrial establishments are concerned, they can be Included only if there is functional Integrality between the industrial establishment whose case under Section 25-K is being considered and such other establishments.
(ii) We answer the reference accordingly.'
I have heard the learned Counsel for both the parties at quite a length on the second contentious issue of functional integrality which was raised by the petitioner union. Both the learned Counsel have cited several judgments on this point to which I would make reference at an appropriate stage here in below :-
3. Before I touch the main point I would dispose of an oral application made by Ms. Mhatre, the learned Counsel for the petitioner that the petitioner may be allowed to amend the petition in terms of the draft amendments handed in by her. She has submitted that the amendments have become necessary as the petitioner union has lately received an agreement between the first respondent Company and the Grocery Markets and Shops Board for Greater Mumbai, a statutory board constituted under the provisions of the Maharashtra Mathadi Hamal and Other Manual Workers (Regulation of Employment and Welfare) Act, 1969. In the proposed amendment it is mentioned that the respondent Company had paid to the Mathadi workers, working in its establishment, consequent upon closure effected by the first respondent, an amount of ad hoc ex gratia as closure compensation paid to the regular workmen and also to the security guards employed through the security board. The learned Counsel has submitted that the petitioner union did not have this agreement neither when it had filed the petition not when it made submissions before the Division Bench. She has, therefore, prayed that the amendment may be allowed in the main petition. Shri K. K. Singhavi, the learned Counsel for the respondent Company has opposed any such amendment to be allowed in the petition at this stage as the Division Bench had already decided the disputes between the parties and that it was too late to relyupon the agreement proposed to be Inserted in the petition by way of proposed amendments.
4. I have considered the oral prayer made by the learned Counsel for amendment of the petition in terms of the draft amendments. Taking a very liberal view of the proposed amendments and assuming that the petitioner union came to know about the aforesaid agreement after the decision of the Division Bench, in my opinion, the amendments should be allowed as it would not cause any prejudice to the respondent Company. I, therefore, allow the petitioners to amend the petition in terms of the draft amendments. The petitioner is directed to carry out the amendment within four weeks from today. On the merits of the amendments, I held that merely because the respondent Company had made an ad hoc ex gratia payment to the Mathadi workers on par with its regular workmen on humanitarian ground as stated in the agreement, it will not create employer-employee relationship between the respondent Company and the Mathadi workers who received the said ex-gratia amount did not become workmen or security guards did not become the persons employed by the respondent Company. Merely because the respondents had extended their token of good will to all such Mathadi workers and security guards who were associated with the working of the Company for some time, this token of good will does not make the respondents as employers of the recipient of the ex gratia amounts. According to me, therefore, the amendments do not take the petitioner union any farther to get the benefit of Chapter VB of the Act.
5. The respondent No. 1 employer has two undertakings viz., one at Seweree and one at Bhandup. There is no dispute that the respondent is one industrial establishment and the one owner and one employer. There is no dispute that there is a unity of ownership and management. However, these are the two separate undertakings situated at different and far off places though within the local limits of Greater Mumbai. By a notice dated 1.6.1998, the respondent Company declared its intention to close down the Bhandup factory under section 25FFA of the Act, with effect from 1.8.1998 after 60 days statutory notice. The Bhandup factory had employed about 80 workmen while the Seweree factory had employed about 74 workmen. According to the petitioner union, the aforesaid notice of closure under Section 25FFA was null and void and was inoperative in law as it was in contravention of section 25(O) of Chapter VB of the Act as no prior permission of the State Government was taken. According to the union, both the units are owned and managed by one and the same employer, i.e., the respondent No. 1 and therefore, the total number of workmen of both the units must be counted as employed by the Respondent No.1. Ms. Mhatre, therefore, contended that the total number of workmen has exceeded 100 workmen employed on an average per working day for the preceding 12 months of the notice of closure so as to attract the provisions of Chapter VB. According to her, there is breach and violation of the mandatory provisions of Section 25(O) of the Act by the respondent Company. The petitioner union having failed to rope in the Mathadi workers in the 'tally of the workmen employed', to exceed the number of 100, it is the second attempt to retain its contention that the employment of both the units must be taken together as both are ownedand managed by one and the same industrial establishment and they cannot be treated distinct or separate.
6. I may mention here a factor which was introduced unnecessarily by the learned Counsel for the petitioner that the respondent Company had entered into an agreement on 30th November, 1995 with one distinct and separate legal entity viz., Marico Industries Ltd. Under the said agreement the Seweree factory was given to the said Company on licence or on conducting basis with the brand name and the premises and the workers. She has also pointed out that there is a third unit, viz., Hindustan Polymides and Fibre. According to the learned Counsel the Marico as well as the Hindustan Polymides are functioning as one and the same Industrial establishment under the respondent Company. Ms. Mhatre pointed out that all these units were a family arrangement and the workmen employed under all these units should be aggregated to consider the question of applicability of Chapter VB of the Act. She has also relied upon one arbitration award given by Mr. Justice Malvankar (Retd.) in an industrial dispute of charter of demand referred to the learned Arbitrator for adjudication. The learned Judge held that the edible oil division at Seweree and Bhandup both were functioning unitarily. It was pointed out by the learned Counsel that the said arbitration award was binding on the respondent Company, and therefore, the question of functional integrality was decided once and for ever between the parties. The learned Counsel pointed out that the Marico had purchased the brand name of the respondent Company. It was carrying on its manufacturing activities on the premises of the respondent Company at Seweree with the continued employment of workmen along with plant and machinery. According to her, in the aforesaid circumstances, coupled with the arbitration award, the learned Member of the Industrial Court could not have taken a different view as the arbitration award was binding on the Industrial Court. The learned Member of the Industrial Court had by his judgment and order dated 22.3.2000 dismissed the complaint filed by the petitioner union challenging the closure of the respondent Company as unfair labour practice within the meaning of Item 9 of Schedule IV of the Act as unfair labour practice, being in breach and violation of the statutory provision of Section 25(O) of the I.D. Act, Ms. Mhatre relied upon the following judgments in support of her contention.
(i) Management of Express Newspapers (Private) Ltd. , Madras v. The Workers and Ors.,'.
(ii) Industrial Perfumes Ltd. v. Industrial Perfumes Workers Union.
I am afraid the aforesaid decisions are of no assistance to the learned Counsel. The Supreme Court was dealing with the question of distinction between the lock out and closure and the issue of functional integrality of two undertakings was not the question before the Supreme Court. The facts and issues were totally different before the Supreme Court. In the judgment before the learned Single Judge the question was whether the closure in question was real or genuine and whether in fact there was a closure in law.
7. Shri K. K. Singhavi, the learned Counsel for the respondent Company has submitted that the two undertakings i.e., Seweree and Bhandup were totally different in the sense that they were independent of each other. The learned Counsel submitted that there was no dispute about the ownership and the management and even the unitary nature of the profit and loss account and the balance sheet as the respondent Company was the one industrial establishment owning the two separate and distinct undertakings. Shri Singhavi pointed out that both the undertakings were not interdependent but were independent of each other. He pointed out that the very fact that the closure of the Bhandup undertaking has not at all adversely affected the working of the Seweree factory would establish that there was no mutual dependence between them. He has also pointed out that the Bhandup unit was established in the year 1962 and the same was 'a deemed Limited' Company under the Companies Act. He further pointed out that the Marico Industries Ltd. came into existence in the year 1988 and was a limited Company incorporated under the Companies Act and was listed on the National Stock Exchange and Bombay Stock Exchange. The said Marico Industries Ltd. has its four factories spread all over India at places such as Maharashtra, Kerala, Goa with regional offices and two distribution centres and 26 depots spread all over India. He further pointed out that the Company known as Hindustan Polymides and Fibres Ltd. was formed as a Limited Company under the Companies Act in the year 1965. It was functioning at District Pune and at Dound. He has further pointed out that the Bhandup factory was manufacturing and selling fatty acids and other chemicals while Seweree unit was engaged in the manufacturing of consumer products viz., Safola Oil, Parachute Coconut oil etc. The fatty acids and chemicals manufactured at Bhandup unit were not in any way used in the consumer products of the Seweree unit. Shri Singhavi has also pointed out that even the manufacturing activities of fatty acids was stopped long back. In any way, the production of consumer items as Seweree unit was never dependent on the production of the fatty acids and chemicals of the Bhandup unit. They could not be the raw material for the consumer items. Shri Singhavi has further pointed out that both the companies viz., Marico and Hindustan were independently carrying on their business activity and there was no interconnection of any nature between them and the respondent Company.
8. The service conditions of all the units are different and all the workmen of these Companies are represented by different unions. It was also pointed out that except three directors other directors of all these three Companies are different. The profit and loss account and the balance sheet of respondent No. 1 Company and the Marico and Hindustan are different and separate. Shri Singhavi has further laid stress on the fact that in spite of the closure of the manufacturing activities at Bhandup, the activities of Seweree factory under the Marico Industries and the Hindustan were and are continued. Shri Singhavi has also pointed out that provident fund account number and E.S.I. Code number of all these three Units are separate and independent. Shri Singhavi has pointed out from the evidence of the petitioner union that the closure of the Bhandup factory had not affected the activities of Marico at Seweree and HindustanPolymides and that all these companies were functioning even after the closure of the Bhandup factory. He has relied upon the following judgments :-
(i) Wyre Forest District Council v. Secretary of State for Environment and Anr.,
(ii) Knightsbridge Estates Trust Ltd. v. Byrne & Ors.
(iii) Hodd - Barrs v. Commissioners of Inland Revenue.
(iv) Vanguard Fire & General Insurance Co. v. Eraser & Ross & Anr.;
(v) National Buildings Construction Corporation v. Pritam Singh Gill & Ors..;
(vi) Workmen of the Food Corporation of India v. M/s. food Corporation of India.;
(vii) A. P. State Electricity Employees Union v. Commissioner of Labour, Gout, of A. P..;
(viii) Union of India v. M. Bhaskaran etc..;
(ix) Jayram Karsan Tank v. Du. Regional Director, ESI,;
(x) Isha Steel Treatment, Bombay v. Association of Engineering Workers Bombay and Ors.,;
(xi) Pratap Press etc. v. Their Workmen,
(xii) Yeshwant G. Chikhalkar & Ors. u. Killick Nixon Ltd. & Ors.
(xiii) Noor Niwas Nursery Public School v. Regional Provident Fund Commr. & Ors.,;
10. Shri Singhavi has also submitted as the last limb of his argument that the complaint of unfair labour practice filed by the petitioner union under Item 9 of Schedule IV of M.R.T.U., and P.U.L.P. Act itself was not maintainable under Section 28 of the said Act as the petitioner union wanted Inclusion of the Mathadi Workers and the Security Guards in the list of workmen employed by the petitioner Company. Shri Singhavi pointed out that the Supreme Court in the recent judgment in Vividh Kamgar Sabha v. Kalyani Steels Ltd. & Anr., has held that if there is a dispute about the question of employer employee relationship, the complaint of unfair labour practice would not be maintainable and that such question if raised will have to be adjudicated before a proper forum. According to me this question does not survive in view of the Judgment of the Division Bench holding that the Mathadi Workers and SecurityGuards could not be counted in the number of workmen employed in the Company as contemplated in Chapter VB of the I.D. Act.
11. There is absolutely no doubt left in my mind that the Industrial Court was right in its conclusion that the two undertakings of the respondent Company at Bhandup and Seweree were independent and were not inter-dependent of each other. The very fact that the closure of the Bhandup undertaking has not at all affected the working of the Seweree unit has established that there was no functional Integrality between the two undertakings and their activities were different and severable from each other. This is the law succinctly laid down by the Supreme Court in the following three judgments :-
(i) Pratap Press (supra)
(ii) Isha Steel (supra)
(iii) Noor Niwas Nursery Public School (supra).
In the case of Pratap Press, the Supreme Court has observed that,
'Where two units belong to a proprietor, there is almost always likelihood also of unity of management. In all such cases, therefore, the Court has to consider with care how far there is 'functional integrality' meaning thereby such functional interdependent that one unit cannot exist conveniently and reasonably without the other and on the further question whether in matters of finance and employment the employer has actually kept the two units distinct or integrated.'
This test has been followed by the Supreme Court in the case of Isha Steels (supra). The Supreme Court has observed in para 7 as under :-
'In the above decision this Court has held that the unit of ownership, supervision and control that existed in respect of the two mills involved in that case and the fact that the conditions of the series of the workmen of the two mills were substantially identical were not by themselves sufficient in the eye of law to hold that there was functional integrality between the mills. It held that it was a clear case of closure of an independent unit and not of a part of an establishment. The decision of the learned Single Judge of the High Court that the fact that the two units were situated in a distance of 200 metres, the fact that both the units were controlled by the same employer and that the business of heat treatment processing carried on in the two units was identical had left no room for doubt that the two units were really integral cannot be sustained. The decision in S. G. Chemicals v. Dyes Trading Limited and Another, is not of much assistance to the workmen. The Pharmaceutical Division was at Worli, the Laboratory and Dyes Division was at Trombay and the Marketing and Sales Division was at Churchgate. In 1984 the Company which was managing the said three divisions of business was sold out. As the buyers proposed to handle the future sales of the Company through their own distribution channels, they found that the services of the staff working at the Churchgate office were no longer required. Therefore, the management closed down the office at Churchgate. The question was whether there was functional integrality between the office at the Churchgate and the factory at Trombay. This Court on a consideration of the material before it in that case, held that the functions of the Churchgate division and the Trombay factory were neither separate nor independent but were so integrallyconnected, as to constitute the Churchgate and the Trombay factory into one establishment, because the Churchgate division used to purchase the raw material required by the Trombay factory for producing or processing the goods. It used to market and sell the goods so manufactured or processed by that factory and it also used to disburse the salary and other employment benefits and maintain accounts etc. of the workmen. These were considered to be Integral parts of the manufacturing activities of the factory at Trombay, because the factory could never have functioned independently without the Churchgate division being there. It is not the case of the workmen in the present case that the II Unit could not continue to function after the closure of the I Unit. As already mentioned, the II Unit continuing to function as usual even now notwithstanding the stoppage of the activities at the I Unit. The question of application of Section 25G of the Act arises only when the services of the workmen are retrenched. In Santosh Gupta u. State Bank of Patiala, it is laid down that if the termination of service of a workman in a given case falls either under section 25FF or under section 25FFF, of the Act it would not be a termination falling under Section 25F of the Act, this Court has observed in that case that after the enactment of Section 25FF and section 25FFF retrenchment included every kind of termination of service except those not expressly included in Section 25F or not expressly provided for by other provisions of the Act such as Sections 25FF and 25FFF. Hence if the case is one of genuine closure then the question of applying Section 25G of the Act which is applicable to a case of retrenchment would not arise.'
The Supreme Court has also very significantly observed in the next paragraph i.e., para 8 that it was not necessary that in order to effect closure of business, the management should close down all the branches of its business. The Division Bench of this Court in the case of Yeshwant C. Chikhalkar (supra) following the tests laid down by the Supreme Court as above and after considering the definition of Industrial establishment or undertaking given in the Industrial Disputes Act held that six divisions of the Company were Independent of each other as their activities were severable from each other and all the six divisions were held to be independent undertakings. In the case of Noor Niwas (supra) again the Supreme Court has followed Its well established test of whether one unit can exist conveniently and reasonably without the other.
12. The Industrial Court has correctly decided the issue on the basis of the evidence before it that the activities of both the undertakings were independent and not Inter-dependent. The Industrial Court has rightly relied upon the evidence of the petitioner union itself to show that the other undertaking at Seweree was continued in spite of the closure of the Bhandup unit. There is further no doubt that the other independent companies viz., Marico and Hindustan were also not affected by the closure of the Bhandup unit of the respondent Company. All have survived the closure of the Bhandup unit. It is not the case of the union also that these undertakings are in any way affected by the closure of the Bhandup unit. The contention of the petitioner union is based only on a fact that there are some common directors in all these companies and that they are the members of one family. If we apply this test then all the industrialestablishments which are distinct and separate legal entities having independent legal existence will have to be treated as one on the ground that they belong to one family e.g. either Birlas or Tatas to illustrate. Following the test laid down by the Supreme Court in my opinion, there was no functional integrality between Bhandup unit and Seweree unit of the respondent Company and the other companies viz., Marico and Hindustan also have their own independent existence.
13. In these circumstances, the workmen employed by all these undertakings cannot be counted to test the legality and validity of the closure of the Bhandup unit of the respondent Company. I, therefore, hold that the Chapter VB of the I.D. Act is not attracted to the closure of the Bhandup unit.
14. I have followed the established law in deciding this matter and my view is not contrary to any precedent cited by both the learned Counsel. I have not reproduced the observations and facts from the judgments cited before me as I felt that it was not necessary.
15. I do not find any infirmity or illegality in the view taken by the Industrial Court in the impugned order to warrant my interference under Article 226 of the Constitution of India. The writ petition is, therefore, rejected with no orders as to costs.