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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
SURAJ GOVINDARAJ, J.
Stanzen Links (India) Ltd. – Petitioner
Versus
H.V. Nagesha S/o Shri Venkatappa – Respondent
W.P. Nos. 6781, 6783, 6786, 6788, 6790, 6791, 6794, 6795, 6797, 6798, 6799, 6800, 6804, 6806, 6838, 6907, 6972, 6973, 6974, 6975, 6976, 7031, 7032 of 2020, 2525, 2526 of 2021
Decided On : 04-11-2022
Industrial Disputes Act, 1947 - Section 25FF, 25F, 25M, 25N and 25-O - Dispute - Settlement - Seeking for quashing of the awards - Petitioner is stated to have begun the business as a partnership firm manufacturing motor core laminations using power presses catering mainly to customers manufacturing AC and DC Motors, Alternators and Generators - In year, petitioner entered into a joint venture with Toyota Iron Works, Japan and began the supply of automobile components to Toyota Kirloskar and other Tier 1 Toyota Group companies - Petitioner started undergoing losses in year , which continued to increase over the passage of time - On account of the workers not cooperating, several contracts entered into by petitioner with its customers could not be performed and the material delivered, which resulted in one of its major customers cancelling the contract and blacklisting petitioner - Petitioner was constrained to sell its land and building and machinery to M/s Stanzen Toyotestu India Private Limited-respondent No. 2 for a sum of Rs. 16,50,00,000/- in order to recoup losses and to make payment of due amounts to various creditors of petitioner - Whether purchaser can be said to be successor-in-interest of vendor for the purpose of industrial adjudication - Whether a purchaser of an industrial concern can be held to be a successor-in-interest of vendor will have to be decided on a consideration of several relevant facts.
Finding of Court : Court of considered opinion that situation having arisen on account of alleged non-cooperation of workmen in not manufacturing and delivering products in time so as to keep petition company going workmen cannot take advantage of their own wrongs to contend that they are required to be continued in employment when there is no business to said factory - Workmen being aware of competitive market and being aware of customer of petitioner requiring products within a given timeframe, they ought to have cooperated with petitioner to achieve production and supply products. Knowing fully well that petitioner has suffered losses to an extent of Rs. 13 crores, workmen ought to have helped petitioner in getting over losses - Not having done that, petitioner was left with no option but to sell its business which it has done - Applying principles laid down in Anakapalle Cooperative Agricultural and Industrial Society’s1 case, only right that workmen would get upon a transfer of undertaking in terms of Section 25FF of ID Act is compensation which has been paid by petitioner - Court of considered opinion that requirement of Section 25FF have been complied with in present facts and circumstances.
Result : Petitions are allowed.
ORDER :
1. The petitioner-employer is before this Court seeking for quashing of the awards dated 21.12.2019 passed by the I Addl. Labour Court, Bengaluru in I.D. Nos. 101, 90, 35, 64, 98, 76, 88, 108, 63, 103, 53, 17, 361, 73, 24, 12, 55, 71, 65, 27, 37, 30, 69, 39 and 105 of 2016.
2. In all the above matters, the petitioner is the employer, 1st respondent is the workman and 2nd respondent is stated to be the purchaser of the business of the petitioner.
3. The petitioner is stated to have begun the business on 12.04.1981 as a partnership firm manufacturing motor core laminations using power presses catering mainly to customers manufacturing AC and DC Motors, Alternators and Generators. In the year 1998, the petitioner entered into a joint venture with Toyota Iron Works, Japan and began the supply of automobile components to Toyota Kirloskar and other Tier 1 Toyota Group companies.
4. The petitioner has been entering into settlements with the Union periodically, the last and relevant settlement being entered into on 29.10.2014 was valid up to 31.03.2017.
5. The petitioner started undergoing losses in the year 2012-13, which continued to increase over the passage of time i.e. 2013-14, 2014-15, 2015-16, etc. On account of the workers not cooperating, several contracts entered into by the petitioner with its customers could not be performed and the material delivered, which resulted in one of its major customers cancelling the contract and blacklisting the petitioner.
6. It is in that background, the petitioner was constrained to sell its land and building and machinery to M/s Stanzen Toyotestu India Private Limited-respondent No. 2 for a sum of Rs. 16,50,00,000/- in order to recoup the losses and to make payment of due amounts to various creditors of the petitioner.
7. On account of the proposed transfer in terms of sale agreement entered into between the petitioner and respondent No. 2, the services of employees, including respondent No. 1 in each of the petitions were terminated under Section 25FF of Industrial Disputes Act, 1947 [hereinafter referred to as ‘ID Act’] by way of various termination letters which have been issued enclosing the details of the amounts due as on that date which includes three months salary in lieu of notice, 15 days of salary for every completed year of service, bonus for the year 2015-16 with proportionate amount till 30.06.2016, salary in lieu of unutilised leave till 30.06.2016, gratuity as per Gratuity Act, 1972.
8. Several employees had approached the Labour court, raising a dispute. In the said proceedings, 49 employees amicably settled the matter with the Management, and individual disputes were disposed of as settled between the parties upon the petitioner making certain payments to the said employees. However, 42 employees, including respondent No. 1 did not settle the matter, and therefore, the matter came to be adjudicated.
9. The dispute filed by respondent No. 1 and others came up before the I Addl. Labour Court, Bangalore, under Section 10(4) of ID Act. Pleadings being complete, evidence being led, the Labour court by its order dated 21.12.2019, allowed the dispute, partly ordering the reinstatement of 42 employees and payment of 25% back wages. It is aggrieved by the same that the petitioner is before this Court.
10. Sri. S.N. Murthy, learned Senior counsel appearing for the petitioner would submit that:
10.2. It is on account of the employees/workmen not discharging their duties, not agreeing to work overtime, not agreeing to the delivery schedule fixed by the purchaser/customer of the petitioner, that the productivity of the petitioner kept dropping and petitioner incurred a loss to the tune of Rs. 49,28,934/- for the year 2012-13, Rs. 1,91,27,633/- for the year 2013-14, Rs. 3,69,65,206/- for the year 2014-15, so on and so f
Point of Law : When termination of services is under Section 25FF of ID Act, there is no question of requirement of misconduct on part of workmen or issuance of a charge sheet or disciplinary enquiry....
The Management's transfer of workmen was ruled illegal due to violations of the Industrial Disputes Act during pending conciliation, affirming the Labour Court's authority to review such actions.
The court affirmed that a transfer of service is a lawful exercise of management's discretion and does not constitute termination unless explicitly stated in the employment contract.
Section 33C(2) is more comprehensive than Section 33C(1). Section 33C(2) applies not only to cases of settlement or award or cases under Chapter VA of the Act, but to other cases as well. By a proces....
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