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2018 Supreme(Del) 1847
IN THE HIGH COURT OF DELHI AT NEW DELHI
C. HARI SHANKAR, J.
Dal Singar & Ors. - Petitioners
Versus
Material Movement Pvt. Ltd. - Respondent
W.P. (C) 4179 of 2011
Decided On : 17-07-2018
Advocate Appeared:
For the Petitioners: Mr. A.Y. Khan
For the Respondent: Mr. Harvinder Singh
The closure of an undertaking, which is “genuine and real”, is immune from interference, at the hands of the Labour Court or the Industrial Tribunal and that, in such cases, the only relief that would be available to the workmen of such an undertaking, would be by way of compensation, the quantum whereof would depend on whether the case would fall within the main part of Section 25 FFF(1), of the Industrial Dispute Act, or the proviso, thereto. No direction, for reinstating of workmen employed in an undertaking, which was closed, could be issued, where the closure was found to be “genuine and real”.
Headnote:
The court examined the closure of a factory and the rights of the workers under the Industrial Disputes Act, 1947. The court held that the closure was genuine and real and not a sham, and that the workers were entitled to compensation under Section 25 FFF(1) of the Act. The court remanded the matter to the Labour Court to determine the amount of compensation payable to the workers.
Fact of the Case:
The petitioners were workmen employed with the respondent-Company on various dates between 1st November, 1986 and 1st January, 1996. The respondent contended that it had closed down its Badarpur factory w.e.f. 13th October, 1998, after fulfilling all formalities prescribed in that regard by the ID Act, and that no question of reinstatement, against the closed unit, could arise. The respondent further contended that the requisite sixty days’ notice of closure, contemplated by Section 25-FFA of the ID Act, had been served on the appropriate government on 13th August, 1998.
Finding of the Court:
The court held that the closure of the Badarpur factory was genuine and real and not a sham. The court further held that the workers were entitled to compensation under Section 25 FFF(1) of the Industrial Disputes Act, 1947.
Issues: Whether the closure of the Badarpur factory was genuine and real or a sham.
Ratio Decidendi: The court held that the closure of the Badarpur factory was genuine and real and not a sham based on the following factors: * The respondent had issued the requisite sixty days’ notice of closure, contemplated by Section 25-FFA of the ID Act, to the appropriate government on 13th August, 1998. * The respondent had put up a notice regarding closure of the factory on the notice board of the Badarpur factory on 12th September, 1998. * The respondent had sent a communication to the Chief Inspector of Factories, informing him about the closure of the factory. * The respondent had surrendered its license, in respect of the Badarpur factory, to the Chief Inspector of Factories. The court further held that the workers were entitled to compensation under Section 25 FFF(1) of the Industrial Disputes Act, 1947, because the closure of the factory was not attributable to “unavoidable circumstances beyond the control of the employer.”
Final Decision: The court allowed the writ petition in part, quashed the impugned Award, dated 8th July, 2010, passed by the Labour Court, and remanded the matter to the Labour Court to consider the compensation payable to the petitioners-workmen in the light of Section 25 FFF(1) of the Industrial Disputes Act, 1947, keeping in mind the observations and findings contained in the judgment. The court requested the Labour Court to decide the reference, to the extent it stands remanded, expeditiously, and preferably within a period of six months from the date of receipt of a certified copy of the judgment.
C. Hari Shankar, J.
1. Section 25 FFA, and sub-section (1) of Section 25 FFF, of the Industrial Disputes Act, 1947 (hereinafter referred to as “the ID Act”), read thus:
“25 FFA. Sixty days’ notice to be given of intention to close down any undertaking
(1) An employer who intends to close down an undertaking shall serve, at least sixty days before the date on which the intended closure is to become effective, a notice, in the prescribed manner, on the appropriate government stating clearly the reasons for the intended closure of the undertaking:
Provided that nothing in this section shall apply to –
(a) an undertaking in which –
(i) less than fifty workmen are employed, or
(ii) less than fifty workmen were employed on an average per working day in the preceding twelve months.
(b) an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work or project.
(2) Notwithstanding anything contained in sub-section (1), the appropriate government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like, it is necessary so to do, by order, direct that provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.”
25 FFF. Compensation to workmen in case of closing down of undertakings
(1) 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 entitled to notice and compensation in accordance with the provisions of section 25 F, as if the workman 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 25 F, shall not exceed his average pay for three months:
Explanation: An undertaking which is closed down by reason merely of-
(i) financial difficulties (including financial losses); or
(ii) accumulation of undisputed off stocks; or
(iii) the expiry of the period of the lease or license granted to it; or
(iv) in case where the undertaking is engaged in mining operations, exhaustion of the minerals in the area in which operations are carried on, shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section.”
2. Within, and around, these statutory provisions, revolves the present dispute.
3. The petitioners are workmen, who were employed with the respondent-Company on various dates between 1st November, 1986 and 1st January, 1996. The respondent was engaged in manufacture of conveyors, crushers, rubber belts, and associated items, used in construction and building works.
4. The petitioners contend that they were regularly working with the respondent when, suddenly, they were prevented from entering the premises of the respondent’s factory, located near Oriental Structural Plant, Village Tughlakabad Mehrauli-Badarpur Road, New Delhi-110044 (hereinafter referred to as “the Badarpur factory”) on 13th October, 1998, and were informed that the factory had closed down. This resulted in a notice being issued, by five of the petitioners, to the respondent, protesting against the closure of its factory and demanding their reinstatement with consequential benefits. The respondent replied, vide letter dated 2nd December, 1998, that the closure of its factory was in accordance with the provisions of Section 25 FFA of the Industrial Disputes Act, 1947 (hereinafter referred to as “the ID Act”) supra.
5. According to the respondent, it had issued the requisite notice, contemplated by Section 25-FFA of the ID Act (supra), in Form-Q, on 13th August, 1998, to the Secretary (Labour), Delhi Administration, informing that the r
