1. In this writ petition the petitioners which are a registered trade union have impugned the decision give by the Industrial Court in Complaint ULP 301 of 1978. By the impugned decision the learned Member of the Industrial Court dismissed the Complaint filed by the Union and vacated the ad-interim injunction which was pending against the Employer till the date of his decision. The 1st respondent to the petition is the employer who was the opponent to the said Complaint. The 2nd respondent is the Tribunal whose order is impugned. I shall refer to the petitioners and the 1st respondent as the Union and the employer respectively in this judgment.
2. It would appear that the relations between the employees of the 1st respondent Company became strained towards the middle of 1977 and the Employer filed a Complaint before the Industrial Court being Complaint ULP No. 288 of 1977. After further deterioration of the situation on 13th October, 1977, a lock-out was declared by the Employer. The Union made a reference to the Labour Court for a declaration that the lock-out is illegal. It succeeded before the Labour Court but the Employer filed a Revision before the Industrial Court and obtained stay. Ultimately, the Industrial Court reversed the order of the Labour Court declaring the lock-out illegal.
3. During this period the Employer sought permission to effect closure under S. 25(O) of the Industrial Disputes Act. This permission was sought under the statutory provisions as it then existed on August 16, 1977 but on November 9, 1977, the Government of Maharashtra refused the permission. On May 25, 1978, a second application was made to the Government but on August 29, 1978, the said second application met with the identical fate viz. rejection.
4. It would appear that sometime in September 1978, the Supreme Court struck down some of the provisions of the Industrial Disputes Act, 1947, pertaining to closure and in particular S. 25(o) and part of S. 25R. Emboldened by that decision, the Employer on 9th October, 1978 gave one more notice to the workmen. Copy of this notice is part of Ex A to the petition. It mentions that the earlier notice of closure advertised in the Free Press Journal of 2nd October, 1978 shall stand cancelled. The notice goes on to state further that the manufacturing unit will be closed down after the expiry of one month from the date of the notice and the service of the employees also shall stand terminated with effect from the said date. It goes on to provide further 'that, upon termination of the services of the concerned workmen employees, they shall be paid all legal dues, payable to them upon closure of manufacturing units as per law.'
5. On 30th October, 1978, the Union filed the complaint before the Industrial Court complaining of unfair practice allegedly falling under item I (b) of Schedule II and item 9 of Schedule IV of M.R.T.U. Act, 1971. After filing the complaint the Union applied for interim reliefs and ad interim injunction was granted restraining the Employer from effecting the closure as proposed by the notice dated 26th October, 1978 and a show cause notice was issued. The Employer filed its written statement in the form of an affidavit denying that it had engaged in any unfair labour practice. In the said written statement it was pointed out that the employees and workmen were the members of the Sarva Shramik Sangh in the year 1973. Thereafter they became members of the General Employees Union and sometime in May 1977, the workmen changed allegiance and joined the petitioner Union. The Employer denied that it had threatened closure of the factory on account of formation of the Union. The Employer also denied that there was any award or settlement or agreement which remained unimplemented so as to amount to unfair labour practice falling under item 9 of Schedule IV of the said Act.
6. The learned Member of the Industrial Court framed three points for decision as under :
'(i) Is it proved that the respondent Company has been threatening a lock out or closure if a union should be organised - amounting to an unfair labour practice falling under item 1(b) of Sch. II of the said Act ?
(ii) Is is proved that the respondent Company has failed to implement award, settlement or an agreement as alleged by the complainant union - amounting to an unfair labour practice falling under item 9 of Sch. II of the said Act ?
(iii) Whether it is necessary to issue any order of cease and desist or an injunction restraining the respondent company in any action ?'
He answered all the three points against the Union and in favour of the Employer.
7. Now for the time being I propose to reserve my view on points (i) and (ii), since what the learned Member of the Industrial Court did was not to restrict his judgment only to the said two points and reject the complaint as not covered by the two items indicated in points (i) and (ii) but he went on somewhat astoundingly to hold, which was totally unnecessary that in effecting the closure the Employer had complied with all the requirements of the Industrial Disputes Act, and particularly with S. 25-FFA. In view of the extensive discussions in the impugned order dealing with this aspect, it has become necessary for me to express my views on the validity and legality of the closure although I am inclined to concur broadly with the decision of the Industrial Court on points (i) and (ii) for reasons I will subsequently indicate. In my opinion, it was totally unnecessary for the Industrial Court to go into the other aspects of the matter. Equally starling is the manner in which it has dealt with the problem, with the result that the conclusions in my opinion, are so perverse that they have to be characterised as such and declared to be an improper and invalid exposition of law. If the learned Member of the Industrial Court had restricted his decision only to points (i) and (ii) and non-suited the complaint on that footing which footing appears to be correct, then there would not have been any occasion even for entertaining the miscellaneous petition and for giving a detailed judgment of the provisions in S. 25-FFA of the Industrial Disputes Act, 1947.
8. Section 25-FFA contemplates 60 days notice to be given by the Employer to the Government of the Employer's intention to close down the undertaking. It must be given in the prescribed manner to the appropriate Government and must state fairly the reasons for the intended closure. Ss. (2) permits the Government to make an order on being satisfied of exceptional circumstances to the effect that the provisions of Ss. (1) need not apply to any particular undertaking for a specific period. The prescribed form has been framed under Rule 82-A and the form requires that full details are to be submitted to the Secretary, Government of Maharashtra Industries and Labour Department, Sachivalaya, Bombay 400 032. We then have S. 30-A of the Act which impose a penalty on the Employer who closes down the undertaking without complying with the provisions of S. 25-FFA. Such an employer is punishable with imprisonment for a term which may extend to 6 months or with fine which may extend to Rs. 5,000/- or with both.
9. Thus, we have a statutory provision which directs the Employer to give a mandatory notice in the prescribed manner before the closure is to become effective and imposes a penalty which includes a sentence of imprisonment upto 6 months on the employer which violates this provision.
10. The learned Member of the Industrial Court has in an extremely topsy-turvy manner held that notices given to the Government prior to 26th October, 1978, seeking the permission under the statutory provisions subsequently struck down by the Supreme Court were and must be deemed to be sufficient compliance with the requirements of S. 25-FFA. As stated earlier the two permissions were sought by the Employer on 16th August, 1977 and 25th May, 1978 respectively. Both were under S. 25(O) and in connection with both the applications the Government subsequently refused permission to the Employer to close down the undertaking. It passes all bounds of comprehension as to how these applications of notices under different statutory provisions which were rejected by the Government (and this worked out) can be deemed to be sufficient compliance with requirements of S. 25-FFA. The view expressed by the Member, Industrial Court is so startling that it deserves to be characterised as totally erroneous and perverse.
11. The next point is to consider what is the result of an employer closing the undertaking in fact without complying with the requirements of S. 25-FFA and as I shall explain later on with S. 25-FFA also ?
12. Mr. Ramaswamy with his usual industry has drawn my attention to the observations of the Calcutta High Court in Walford Transport Ltd. v. State of West Bengal, which seems to be to the effect that a breach of the provisions of S. 25-FFA would not render the closure invalid or illegal. The view was taken by a Single Judge in his judgment in Walford Transport Ltd. v. State of West Bengal and others : (1978)IILLJ110Cal and approved by the Division Bench in Walford Transport Ltd. v. State of West Bengal and Others (1979) LIC 10.
13. It is to be noted however, that the Calcutta High Court was directly considering the question of the validity of the Reference made by the Government viz. whether the closure was real and to what relief the workmen were entitled to. The observations relied on by Mr. Ramaswamy were made by the Court when it was considering the power of the Government to make a reference. It was the power of the Government to make a reference which was directly in issue and the observations recording the effect of non-compliance with S. 25-FFA appears to have been made incidentally and are clearly obiter.
14. The language of S. 25-FFA is clearly mandatory. There is a clear violation in the instant case, in my opinion, by the Employer of the requirements contemplated by S. 25-FFA and thereby the Employer has rendered itself liable to the penalty contemplated by S. 30-A. Since the Employer is a private limited company, it is presumed that all the then directors and perhaps even the persons in actual management of the undertaking would become liable to suffer the penalty. As an aside I would observe that in such cases it is the bounden duty of the government to take necessary steps to bring such persons to book, particularly, when they had chosen to ignore and could have ignored but for the miscellaneous petition and the judgment, the very salutary provisions contained in S. 25-FFA.
15. To sum up I am in total disagreement with the view of the learned Member of Industrial Court that the earlier applications were sufficient compliance with the requirements of S. 25-FFA. It is clear to me that in this case there has been no compliance with the requirements of S. 25-FFA and that thereby the Employer has made himself liable to the penal provision of S. 30-A. Ordinarily what is made penal and which attracts a sentence of imprisonment cannot be regarded as legally valid or effective. This is a broad rule of construction or interpretation which is not required to be departed from. Thus, a closure effected in fact, without compliance with the requirements of S. 25-FFA must be held to be devoid of legal effect, invalid and illegal for the reasons already indicated.
16. This brings us to a consideration of the provisions contained in S. 25-FFF. The said section also provides for certain compensation to be offered to the workmen in case of closing down of undertakings. We are really not concerned with the proviso or the elaborate provisions contained in Ss. (1-A) (1-B), and (2) which provide for special cases. The general provision contained in Ss. (1) of S. 25-FFF is that the workmen affected by the closure shall be entitled to notice and compensation in accordance with the provisions of S. 25-F as if the workman had been retrenched. Now the marginal not to S. 25-F speaks of conditions precedent to retrenchment of workmen. It provides for certain notices to be given and for certain payments to be made. Now the settled legal position appears to be that although the retrenchment notice and payment of compensation must be regarded as conditions precedent to the retrenchment becoming effective the same position would not follow in respect of the compensation which is prescribed by S. 25-FFF. Reference may be made only to a decision of the Supreme Court in M/s. Avon Services Production Agencies (P) Ltd. v. Industrial Tribunal, Haryana and others : (1979)ILLJ1SC .
17. In paragraph 16 of the above judgment the Division Bench of the Supreme Court has compared the language employed in S. 25-F with that employed in S. 25-FFF(1) and noted the effect of difference on the rights of workmen. The Division Bench, accordingly, held that the payment of compensation was not condition precedent to effecting the closure.
18. The aforesaid decision of the Supreme Court and other decisions dealing with the liability of the Employer to pay compensation to the workmen under S. 25-FFF has however not laid down anywhere that the employer, although not bound to offer payment as condition precedent, may not make payment at all of the amount or need not make payment of the amount of compensation within a reasonable period. In my view all such and similar provisions must be read particularly when they have been interpreted so as not to render payment condition precedent, that such payment must be made or effectively and reasonably offered to be made within a reasonable period from the date of closure. Not to read such provisions in the manner above indicated would be to make a mockery of the salutary protection given by such provisions to the workmen. What would be reasonable cannot be fixed with rigidity but in the given circumstances it is always easy to hold what is not reasonable. In the instant case, right upto the time of the impugned decision of the Industrial Court, the Employer did not indicate to the workmen that they could collect the payment due to them under S. 25-FFF or even to indicate the place from which the payment would be made. As a matter of fact, since the ad interim injunction was granted and vacated only in February 1979, the simple effect would be that there could have been no effective or valid closure till the date on which the ad interim injunction was raised. This is irrespective of the fact of non-compliance with S. 25-FFF. Even if we extend the starting point of Employer's liability to this later date viz. The date of decision of the learned Member of the Industrial Court, which was sometime in February 1979, then surely the Employer was bound to make payment or make effective offer of payment to the workmen within say, three to four months of the said decision at the latest. Mr. Ramaswamy fairly conceded that for over one year thereafter, no such payment has been made and that even today out of about 480 employees, only about 350 or 360 had been paid.
19. It was pointed out to me that there was some correspondence with regard to the bank guarantee to be furnished by the Employer but that was under totally different circumstances. I was informed at the bar that the bank guarantee was furnished in respect of the dues payable to such workmen who had not collected then when the Employer wanted to remove the plant and machinery from the premises of the undertaking. This was necessary because the land and premises were subsequently put to different use by the Employer. In my view, therefore, the Employer has contravened both S. 25-FFA, and 25-FFF the former by not giving the necessary notice and the latter by not making or offering payment of the dues or compensation to the concerned workmen within a reasonable time of the closure becoming effective.
20. Although the position is not clear, it would appear to be the Employer's contention that he had already effected the closure by the date which he gave notice viz. 26th October, 1978 although the notice spoke of the closure after a month from the date thereof by which time the closure had been stayed by ad interim injunction. In my view the normal legal position, apart from the statutory provisions, would be that there could be no effective or valid closure of the undertaking till 28th February, 1979, when the ad interim injunction was vacated by the Member of the Industrial Court.
21. In my opinion, therefore, although, either sometime towards the end of 1978 or beginning of 1979, the Employer had in fact closed down the undertaking, the said closure having been stayed was clearly ineffective upto 28th February, 1979 and was thereafter also legally ineffective and not binding on the employees because of non-compliance by the Employer with S. 25-FFA and S. 25-FFF of the Industrial Disputes Act.
22. The portion of the decision of the learned Member of the Industrial Court to the contrary is, in my opinion, perverse and requires to be quashed.
23. This brings us to points 1 and 2 decided by the Industrial Court in favour of the Employer and against the Union.
24. Item 1 of the Schedule II of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereinafter referred to as MRTU Act) reads as under :
'Schedule II. Unfair Labour Practices on the part of employers.
1. To interfere with, restrain or coerce employees in the exercise of their right to organise, form, join or assist a trade union and to engage in concerted activities for the purposes of collective bargaining or other mutual aid or protection, that is to say -
(a) threatening employees with discharge or dismissal, if they join a union;
(b) threatening a lock-out or closure, if a union should be organised;
(c) granting wage increase to employees at crucial period of union organisation, with a view to undermining the efforts of the union at organisation;'
Item 9 of Schedule Iv provides as follows :
'Schedule IV - General Unfair Labour Practices on the part of employers.
1 to 8 ...... ......
9. Failure to implement award, settlement or agreement.'
25. 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 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. 25-FFA 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.
26. Thus, the complaint made by the Union which was disposed of by the learned Member of the Industrial Court would not be covered by the said entry in item 9 of Schedule IV.
27. This brings us to a consideration of item I of Schedule II.
28. In a recent judgment a learned single Judge of this Court in Nichani Hotels Corporation v. Bombay Labour Union and other (1981) L.I.C. 1235, has indicated the broad approach to be followed when dealing with this and similar entries in the Schedules to the M.R.T.U. Act. If that approach is applied to item I of Schedule II, (a), (b) and (c) following the words 'that is to say' must be regarded as merely illustrative of the unfair labour practices covered by the earlier operative words of item I and not unduly constrictive or restrictive.
29. The difficulty however is that the opening three lines of item I are couched and in somewhat narrow language. The question to be posed is whether the closure has been threatened by the Employer to interfere with, restrain or coerce the employees in the exercise of their right to organise, form, join or assist a trade union In the Instant case we have correspondence to show that as far back as June 10, 1978, the President of the Union had informed the employer that all the workmen of the Employer, except 5 or 6, had joined The Maharashtra General Kamgar Union from the month of May 1978. It has already been mentioned that prior thereto they were members of General Employees Union and still earlier of Sarva Shramik Sangh.
30. In an employer threatens closure at or about the time when his workmen are about to join a union or even transfer allegiance from one union to another, then possibly that attempt on the part of the employer would constitute unfair labour practice and be covered by item I. In the instant case however, some difficulty exists in coming to any such conclusion because the change of allegiance took place in May 1978. Can it be said that the notice given in October 1978 is connected with the change over In the instant case the relations between the Employer and the workmen had already been strained since the later part of 1977 and as far back as May 1978 the Employer had sought closure. If indeed there had been no previous applications for closure or the history of litigation in the Labour and Industrial Court from September 1977 onwards, it would have been possible to hold that the subsequent notice of October 1978 is a continuation of the earlier application to the Government of May 1978 and since that earlier application is round about the period when the employees had changed alligiance, the complaint would possibly be covered by item I of Schedule II. In this case bearing in mind the history of industrial relations between the Employer and the workmen with industrial strife persisting from July or August 1977 onwards (without assigning any fault on part of either party) it would not be proper to hold that it was the change of allegiance to the petitioner's Union that resulted in the closure application either of May 1978 or the subsequent notice of October 26, 1978.
31. Thus although the Tribunal has totally and grossly misdirected itself on S. 25-FFA and S. 25-FFF and on the question of legality and validity of the closure, it would have to be held correct in its view on the non-maintainability of the complaint either under item 9 of Schedule IV or item I of Schedule II.
32. If the Industrial Court had restricted its judgment only to the points Nos. (i) and (ii) which it had framed, this elaborate judgment would have been unnecessary. Perhaps the petition may not have been even admitted and the workmen would have been left to follow their separate remedies under such provisions of law as are available to them.
33. In the view that I have taken, the Rule will have to be discharged and the judgment of the Tribunal on points (i) and (ii) will have to be confirmed. However, it is expressly made clear that the view of the Tribunal on the compliance by the Employer with S. 25-FFA is totally erroneous and its further view on the fact of non-compliance with that provisions also appears to be incorrect. In my opinion, there has been specific non-compliance both with S. 25-FFA and S. 25FFF, with the result that the closure must be held to be illegal, invalid and ineffective. The remedy of the workmen however is not by preferring a complaint under S. 3 of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. To that extent only the dismissal of the complaint is proper and cannot be interfered with. In the result Rule to stand discharged but with no order as to costs.
34. I direct to Prothonotary to send a copy of this Judgment to the Secretary to the Government of Maharashtra. Industries and Labour Department, Sachivalaya, Bombay 4000 032, for necessary action as indicated It will be open to the workmen also to draw the attention of the Government of Maharashtra to these observations to induce the Government to prosecute the Employer as also to make a Reference, if so, advised.