A mala fide closure does not necessarily mean that the closure is unreal and nonexistent.

Judgment

GAJENDRAGADKAR, J. : This appeal by special leave arises from an industrial dispute between the appellant, the Tea Districts Labour Association, and the respondents the ex-employees of the appellant and another. The dispute which was referred to the industrial tribunal for its adjudication consisted of two items :-

"(a) Whether the retrenchment of ten workers of Koraput and Ganjam agencies of Tea Districts Labour Association effected on the 30th November, 1956, was justified, if not, to what relief those workers are entitled?

(b) Whether the closure of the Koraput and Ganjam agencies contemplated by Messrs. Jardine Henderson Ltd., Secretaries, Tea Districts Labour Association with effect from the 31st May, 1957, is bona fide : If so, whether the affected workers are entitled to some other alternative employment in any other establishment under the same management. If not bona fide, to what relief those workers are entitled?"

On this reference the award which was passed by the Tribunal directs the appellant to pay to the ten retrenched workmen all the pay and allowances to which they were entitled from November 30, 1956 to May 31, 1957, and it further orders the appellant to pay all its employees of the Berhampur and Koraput agencies, including the said ten retrenched workmen, all their pay and allowances from May 31, 1957, till one month after the publication of the award within which time the Management, if it so choses, may close down the agencies, and in that event there would be no necessity for further notice of retrenchment to those ten retrenched workmen . The award has further added that if no bona fide closure is effected the ten retrenched workmen would be entitled to statutory notice if the Management still wants to retrench them. In regard to the other employees the award provides that they shall be entitled to all their pay and allowances as before and the agencies will in the eye of law be continuing agencies. The validity of the latter portion of the award in particular is challenged before us by the appellant in the present appeal by special leave.

2. The appellant is a Company Limited by Guarantee of performance of service only for its members and was formed in 1917. The appellant s members are the owners of several tea gardens in West Bengal and Assam and its chief object is to recruit labour from different parts of India and to supply it to the said tea gardens according to their requirements. Jardine Henderson Ltd. have since 1953 been and still are the Secretaries of the appellant. The appellant had a number of establishments in different parts of India which were known as Local Agencies, Local Forwarding Agencies and Forwarding Agencies. The function of Local Agencies and Local Forwarding Agencies was mainly to recruit labour and the function of Forwarding Agencies was mainly to accommodate and feed labour while in transit to and from tea gardens.

3. Towards the end of the appellant s financial year 1955-56, the appellant s Secretary received estimates from the constituent members regarding their estimated requirements of labour for the seasons from 1956 to 1959, and it appeared that these estimates were between 6,000 to 10,000 adults per annum. whereas in the past the appellant s organisation catered for the recruitment of about 30,000 labourers per annum. This appreciable decline in the activities and business of the appellant raised the problem of closing some of its agencies. In or about the beginning of March, 1957, it became apparent to the appellant that the requirement of labour was rapidly falling and that it would be necessary to close some of its agencies. Thereupon, the question was considered by the appellant s general committee held on March 7, 1957, and it was decided inter alia that the two local agencies at Koraput and Berhampur (Ganjam) should be closed, if possible by April 1, 1957, It was in pursuance of this resolution that the appellant ultimately decided to close down the said tw