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Karunagappilly Taluk Cashewnut Workers' Union Vs. Minerva Cashew Co. (P) Ltd. and Ors. (08.08.1977 - KERHC) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1978)IILLJ244Ker
AppellantKarunagappilly Taluk Cashewnut Workers' Union
RespondentMinerva Cashew Co. (P) Ltd. and Ors.
Cases ReferredIn Kalinga Tubes Ltd. v. Their Workmen
Excerpt:
.....however, urges that the evidence before the tribunal would only point out that the closing of the factory was on account of unavoidable circumstances and the finding entered by the industrial tribunal is perfectly sustainable in the circumstances stated and proved before the industrial tribunal. there are a number of supplemental facts which show that the management was faced with a situation in which it could well take a decision to close down the undertaking. on the morning of october 2, that they were rescued by the sub-divisional officer with the help of a strong police cordon. notwithstanding all this the legislature provided that in spite of the aforesaid difficulties or impediments or obstacles the conditions of the proviso would not be satisfied merely by the happening or..........menon, learned counsel for the petitioner points out that the issue referred to the tribunal was 'closure compensation to workers and staff in the thevtilakkara factory'. the reference itself was based on a conciliation settlement whereunder it was agreed by both sides that the factory would be deemed to have closed down from 28-2-1971. closure being an admitted fact the only dispute was whether compensation was payable under the normal rule or under the exception in section 25fff. therefore, mr. menon contends, as per the terms of reference and the admitted facts of the case, it was not open for any party to dispute that there was no closure on 28-2-1971. the tribunal could not have gone into the question at all. it is also urged alternatively that even assuming that the tribunal could.....
Judgment:

Chandrasekhara Menon, J.

1. The award of the Industrial Tribunal, Alleppey in respect of the dispute between the management of M/s. Minerva Cashew Co. (P) Ltd., Quilon and their workmen represented by the petitioner-union and by other trade unions is impugned in this original petition. The Cashew Company concerned is the first respondent, the other trade unions who were parties to the dispute respondents 2 to 7 and the Industrial Tribunal, the 8th respondent in this petition. Exhibit P1 is a copy of the award under attack. The reference of the dispute to the Tribunal was on the basis of a memorandum of settlement arrived at between the management and the union in conciliation proceedings under the auspices of the District Labour Officer, Quilon. The terms of the settlement were drawn up on 28-2-1971 and the same had been produced before Tribunal. A copy of the same is marked in this proceedings as Ext. R1 filed along with the counter-affidavit filed by the 1st respondent. For a batter understanding of the case it will be useful to quote from the same :

There were complaints from the above mentioned unions representing workers and staff in the cashew factory at Thevalakkara that the management of M/s. Minerva Cashewnut Co. (P) Ltd., were not providing continuous work to the workers and that the workers were put to grant hardship on account of this. The matter was discussed at several joint conferences held by the District Labour Officer, Quilon. The management expressed their inability to undertake to provide continuous work due to lack of sufficient funds, non-availability of rawnuts, etc. It was however, stated by the management that the Cashew Development Corporation had agreed to take over the factory on lease provided the service of the workers and staff are terminated and their claims settled. The unions were also agreeable to this suggestion. Further discussions were, therefore, held in the light of the above, and a settlement arrived at, at the final conference held on 28-2-71, as per the following terms :

Terms of Settlement

The factory under reference shall deemed to have been closed with effect from 28-2-1971.

2. The parties agreed that the issue regarding closure conpensation shall be referred for adjudication under Section 10(2) of the Industrial Disputes Act, 1947. They shall make the necessary application for reference in the manner prescribed in Rule 3 of the Kerala Industrial Disputes Rules, 1957.

3. Leave with wages and bonus due to workers and staff for the period they worked will be disbursed on 15-3-1971.

2. By the award dated 20-1-1975, the Tribunal held - (1) the factory was closed down for reasons beyond the control of the management ; (ii) that compensation payable shall not exceed 3 months' average pay, as laid down in the proviso to Section 25FFF(1) of the Industrial Disputes Act (hereinafter referred to as the Act) and (iii) the above compensation would be payable, only if the factory is not returned to the management after the 5-year period of lease.

3. Here also for a proper appreciation of the arguments advanced in the case, I think it is necessary to quote the Tribunal in regard to its findings and the basis of the same.

30. If the closure of the concern is to be taken into consideration, whether it is a closure coming under Section 25FFF(1) or under the proviso to Section 25FFF(1), is to be decided. From the foregoing discussions of the evidence adduced in this case by both the parties, it is only just and reasonable on my part to come to the conclusion that the management has closed the concern on 28-2-1971 not because of their own accord, but because of the unavoidable circumstances beyond their control. Although this kind of closure is not envisaged under Section 25FFF(1) explanation to the proviso, this closure which was brought upon the management by persuading, pressurising, cajoling and coaxing them and making it impossible for them to continue the work, cannot be considered as a closure pure and simple but can only be considered as a closure on account of unavoidable circumstances beyond the control of the employer. Thus, since the undertaking is closed on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workmen shall not exceed their average pay for three months. But this compensation need be paid to the workmen only on the termination of the present lease period, and that if the concern is not given back to the management by the Corporation and not conducted by the management with the available quota of raw nuts due to the factory from the Cashew Corporation of India.

4. Mr. M. P. Menon, learned Counsel for the petitioner points out that the issue referred to the Tribunal was 'closure compensation to workers and staff in the Thevtilakkara Factory'. The reference itself was based on a conciliation settlement whereunder it was agreed by both sides that the factory would be deemed to have closed down from 28-2-1971. Closure being an admitted fact the only dispute was whether compensation was payable under the normal rule or under the exception in Section 25FFF. Therefore, Mr. Menon contends, as per the terms of reference and the admitted facts of the case, it was not open for any party to dispute that there was no closure on 28-2-1971. The Tribunal could not have gone into the question at all. It is also urged alternatively that even assuming that the Tribunal could not have gone into the question, its jurisdiction was only to find whether or not there was a closure of the factory before the date of reference. If there was no such closure, the Tribunal could not have awarded any compensation. And if there was closure, the Tribunal could not have postponed payment of compensation as has been done, by proceeding as if the closure might come into effect some time in the future. As noted earlier the Tribunal has said that the compensation need be paid to the workmen only on the termination of the lease period and the concern is not given back to the management by the Corporation and the factory not run by the management with the available quota of raw nuts due to the factory. Mr. Menon's arguments in the matter was supported by Mr. Rajasekharan Nair, learned Counsel for some of the other unions who are respondents in this petition.

5. I will deal with this aspect of the case before going into the other questions raised. Mr. Sivasankara Panicker, appearing for the management quite rightly did not support the postponement of compensation, if any, due to the workers till after the lease period, as has been done by the Tribunal. What he urged was that the Tribunal could and should consider the question whether there has been a closure of the business in fact which feature of the case has not been duly considered by the Tribunal. Payment of compensation to workers arises only in cases of closing down of the business finally and irrevocably and not in any case like this where the Management has temporarily closed down its business for the purpose of leasing out the factory to the Corporation. Mr. Panicker points out that this leasing out itself was induced by the pressure exerted by the workmen. In this context he referred to the case Tatanagar Foundry v. Their Workmen 1970-I L.L.J. 348, where an earlier Supreme Court decision in the Express Newspapers case 1962-II L.L.J. 227 has been referred for the preposition that in the case of closure, the employer does not merely close down the place of business but he closes the business finally and irrevocably.

6. One has to take into account the fact that in that case the Court was only considering the question whether there was a real closure of the business or whether there was a lock-put by the management. The Court was in fact dealing with the question whether the closure was genuine and bona fide in the sense that it is a closure in fact and not a mere pretence of closure. The motive behind the closure is immaterial and what is to be seen is whether it is an effective one. As far as the present case is concerned the circumstances are clear that there has been an effective closure of the business retrenching the workmen for the purpose of leasing out the factory to the Corporation. Moreover, in the light of the terms of the settlement which states that the factory under reference shall be deemed to have been closed with effect from 28-2-1971, it is not legally possible for the management to take up the plea that there was no real closure of the business in fact I am also in agreement with the counsel for the unions that there was no case for the management before the Industrial Tribunal that there was no closure of business. In para 2 of Ext. R3 which is the counter-statement submitted by the management before the Tribunal it is stated :

The only issue referred for consideration of this Hon'ble Tribunal is ' Closure compensation for the workers and staff in the Thevalakkara Factory'. It is submitted that the management were compelled to close their activities with effect from 28-2-1971 and since no settlement could be arrived at regarding the alleged benefits, due to the workers, the matter of compensation consequent on closure referred to this Hon'ble Tribunal.

Paras 9 and 10 of the same could also be usefully quoted in this connection :

9. It is in these circumstances explained above, which are beyond the control of the management, since that the management were compelled to stop the business and hand over the factory. There is no retrencement in fact and in law.

10. Even otherwise the closure is for reasons beyond the control of the management, since the closure was thrust on the management as already stated. It was a situation created by the workers for their own betterment and prosperity. According to the workers Cashew Development Corporation is a better employer for them, who it seems is prepared to assure continuous work to the workers.

In the light of their own pleadings the management cannot now put forward their case that there was no closure of the business. The witnesses on behalf of the management have also spoken before the Tribunal on the basis of a closure of the business. There cannot be any doubt that in these circumstances the Tribunal committed a serious error of law in directing that the compensation have to be paid to the workers only on the termination of the lease period and also if the concern is not given back to the management by the Corporation and not conducted by the management. Such direction is clearly contrary to law and has to be quashed.

7. The petitioner also contends that the findings of the Tribunal that the closure was on account of unavoidable circumstances beyond the control of the employer is also vitiated by errors of law apparent on the face of the record. Even under the explanation to the proviso to Section 25FFF(1), financial loss, accumulation of stock, expiry of licence or lease, exhaustion of mines, etc., are not treated as unavoidable circumstances. What the Tribunal has stated is that the closure was 'brought upon the management by persuading, pressurising, cajoling and coaxing them and making it impossible for them to continue their work.' The solitary evidence, the counsel for the petitioner points out, in support of this is that of a Director of the company who as M.W.4 deposed before the Tribunal that the unions had started agitations before the factory and the head office and have also stated that there was high level pressure to hand over the factory to the Corporation. Mr. Menon, the learned Counsel for the petitioner, takes up the position that these will not spell out unavoidable circumstances beyond the control of the employer. Mr, Panicker. learned Counsel for the management, however, urges that the evidence before the Tribunal would only point out that the closing of the factory was on account of unavoidable circumstances and the finding entered by the Industrial Tribunal is perfectly sustainable in the circumstances stated and proved before the Industrial Tribunal. He contends that Section 25FFF(1) of the Act is not exhaustive. He points out that but for the existence of the pressure exerted by the workers there was no reason to execute the lease deed by the management to the Kerala State Cashew Development Corporation.

8. In this context, I would again at the risk of repetition quota the following from the Memorandum of Settlement - Ext. R1.

The management expressed their inability to undertake to provide continuous work due to lack of sufficient funds, non-availability of raw nuts, etc, It was, however, stated by the management that the Cashew Development Corporation had agreed to take over the factory on lease provided the service of the workers and staff are terminated and their claims settled. The unions were also agreeable to this suggestion.

In the light of the above which appears in the settlement duly signed by the management it is difficult to accept their case of pressure being exerted over them by the workers to lease out the factory. Even if there was any such pressure, can it be said that the business was closed on account of the unavoidable circumstances beyond the control of the employer as contemplated in the proviso to Section 25FFF(1). The relevant portion of the Section reads as follows :

Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of Sub-section (2) be entilted to notice and compensation in accordance with the provisions of Section 25F, as if the workmen had been retrenched :Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under Clause (b) of Section 25F shall not exceed his average pay of three months.

9. In Kalinga Tubes Ltd. v. Their Workmen 1969-1 L.L.J. 577, a closure of business was brought about by a ' gherao'. The facts stated in the decision itself leading to the closure may be quoted here ;

10. There can be no manner of doubt from what has been found by the Tribunal itself that a large number of workers about 150 of them virtually staged a gherao during the several hours preceding the declaration of closure. If their demand was purely one in respect of bonus there was no justification for keeping about 40 members of the Adminstrative staff virtually confined inside the building and stopping all ingress and egress as apparently was the case till the police came to the rescue. It is in the evidence of Shri Harekrishna Mahapatra who was Officer in charge of the Police Station, Choudwar and whose evidence does not appear to have been fully read by the Tribunal that he arrived at the Administrative Office at 4 or 5 p.m. on October 1, 1967. He reported the incident to the Superintendent of Police and the Sub-Divisional Officer, Cuttack. The latter directed the Executive Officer, Choudwar to take charge of the situation. He came to the spot. Other officers also arrived. It was on a warning by the Sub-Divisional Officer that force would be used unless the workers left that they went away and allowed the officers to leave the building. During the period he was there some canteen boys brought tiffin at about 11.30 p.m. for the staff but it was not allowed to be taken to them. Some of the workers threw the same away and some partook of it.

11. A question immediately arises whether the management could take a quick decision to close the undertaking of manufacturing iron pipes and poles on account of the gherao the magnitude of which was not inconsequential and which was likely to result in deterioration of relations between the management and the workers as also the apprehension expressed by the staff of danger to personal safety.

It is not possible to say in categorical terms that closure in the aforesaid background and circumstances would not be genuine or that a great deal of suspicion would attach to the action taken simply because the company was a profitable and going concern. There are a number of supplemental facts which show that the management was faced with a situation in which it could well take a decision to close down the undertaking. The Deputy Chief Accounts Officer wrote a letter to the Manager (Administration) on October 7, 1967 (Ext. 3) giving his version of what was experienced by him. It was pointed out, that the staff had to pass through anxious hours under conditions of torture due to wrongful confinment. It was only at 5.30 a.m. on the morning of October 2, that they were rescued by the Sub-Divisional Officer with the help of a strong police cordon. The letter concluded by saying considering the above circumstances unless an assurance is given and adequate arrangements are made for the protection and safety of the staff in the Administrative Office Building, I regret my inability to attend office from tomorrow. An application received from the staff of the Accounts Department on similar lines (Ext. 4) was also enclosed. As mentioned before, the Tribunal has itself noted and castigated the conduct of the workmen and the Secretary of their union who was present during the material period and who did not make any effort to persuade the assembled workmen to leave the premises of the Administrative Building.

The Court considered the question whether in the circumstances the undertaking was closed for any reasons whatsoever ' of it was on account of unavoidable circumstances' beyond the control of the employer. The Court answers the question as follows :

21. The explanation appearing in the proviso gives some indication of the anxiety of the Legislature to expressly rule out certain contingencies which ordinarily could have been pleaded by the employer as unavoidable circumstances beyond his control. In the normal working of business of a commercial undertaking financial losses or accumulation of undisposed of stocks and the expiry of the period of the lease or the licence can ordinarily go along way in establishing that it has virtually become impossible to carry on the business. For instance if a company is heading towards liquidation its business will, in normal course, have to be closed down. Similarly if the period of lease of the site on which a factory has been set up has expired and there is no provision for its renewal or extension it would ordinarily present insurmountable difficulty in the way of the working of an undertaking by a company or a commercial concern. Notwithstanding all this the Legislature provided that in spite of the aforesaid difficulties or impediments or obstacles the conditions of the proviso would not be satisfied merely by the happening or existence of the circumstances, embodied in the explanation. The reason for doing so seems to be that whenever such difficulties as are mentioned in the explanation arise, the employer is not expected to sit idle and not to make an all out effort like a prudent man of business in the matter of tiding over these difficulties for saving his business. The Legislature was apparently being very stringent and strict about the nature of the circumstances which would bring them within the proviso. The laying down of two pre-conditions therein in the language in which they are couched is significant and must be given due effect.

22. After considering the entire facts and circumstances of the present case we are not satisfied that the closure of the undertaking was due to unavoidable circumstances beyond the control of the appellant. Thus compensation would be payable as if the undertaking was closed down ' for any reason whatsoever' within Section 25FFF(1) of the Act.

10. In the light of the above decision, I have no hesitation to quash the decision of the Tribunal that the factory in the present case was closed on account of unavoidable circumstances beyond the control of the employer. In the circumstances and of the admitted facts of the case, I am of the view that the proviso to Section 25FFF(1) is not attracted.

11. Therefore, I would quash Ext. P1 and direct that Tribunal to take back the matter to file and dispose of the same in accordance with law and in the light of what I have stated above. The O.P. is disposed of as above. There will be no order as to costs in the circumstances of the case.


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