JUDGMENT- Dr. D.Y. CHANDRACHUD, J.:---On 25th December, 1999, an agreement was entered into between the petitioner and the respondent under section 44(1) of the Bombay Industrial Relations Act, 1946 (“the B.I.R. Act”). The respondent is a representative Union of employees engaged in the Cotton Textile Industry for the local area of Greater Bombay under the provisions of the Act. The agreement between the parties commenced with a recital to the effect that the petitioner had been facing serious financial difficulties since 1998 due to a recession in demand coupled with the unavailability of finance. On 20th December, 1999, the petitioner had issued a notice of change under section 42(1) of the B.I.R. Act by which it had intended to discontinue the working of several department situated in the Textile Mill of the petitioner situated at Lower Parel, Mumbai. Clause 1 of the agreement provides that the petitioner shall rationalise the employment strength at the unit at Lower Parel by offering a scheme of Voluntary Retirement to the employees referred to therein. Clause 2 provides for the compensation that would be paid to employees accepting voluntary retirement and in Clause 3 it has been provided that an additional 'lump sum ex gratia payment' of Rs. 50,000/- would be paid to each employee to tide over the initial period of unemployment. Under Clause 2 employees availing of the Voluntary Retirement Scheme (VRS”) were to be entitled to receive ex gratia payment equivalent to 38 days wages/salaries for every completed year of service in excess of six months apart from the payment of gratuity. The wages and salaries for the month of September 1999 were agreed to be paid by the sale of goods lying in the premises of the Mills, while the workmen would be paid half the normal wages for the months of October and November 1999 in full and final satisfaction of their claim (Clauses 4 and 5). Under Clause 8, the Voluntary Retirement Scheme was to be announced on a date to be determined by the company and was to be kept open for a period of 7 days. The petitioner reserved the right to accept or reject a request for voluntary retirement and was to determine within a period of 7 days from the closing date for the receipt of applications whether the response was adequate enough to implement the scheme. The petitioner was facing a financial crunch and accordingly a provision was made in Clause 9 to the effect that the payment of benefits to the workmen who had accepted voluntary retirement was to be made within a period of 15 months subject to the sale of the assets of the Textile Mills at Lower Parel. Provision was made for the payment of interest at the rate of 12% p.a. in the event that payment is not made of benefits payable under the scheme to the employees within the aforesaid period of 15 months. Clause 9 of the agreement provided as follows :

“9. The payment of VRS benefits, gratuity, balance ex gratia payment etc. shall be made within a period of 15 months from the date of acceptance of resignation by post dated cheques drawn in favour of each workmen, subject to sale of Assets of the Lower Parel Mills. The post dated cheques as stated herein above shall be deposited in Escrow account and dealt with by the Escrow Agent in accordance with an Escrow agreement which is being executed simultaneously with this agreement by the same parties, and the terms of which shall be deemed to be a part of this agreement. If the payment of VRS as agreed above is not completed till the expiry of 15 months from the date of acceptance of resignation, the management shall pay interest @ 12% p.a. on the balance amount payable till final payment is made under the scheme.”

By and as a result of Clause 10 of the agreement, it was provided that upon the implementation of the scheme for Voluntary Retirement, the petitioner will operate only certain specified sections of the Textile Mill. Clause 14 provided for the abolition of posts on the employees opting for VRS

Click Here to Read the rest of this document