IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
RAKESH KAINTHLA, J.
Managing Director M/s Devyani Food Industries Limited and anr. - Petitioners
Versus
State of Himachal Pradesh through Labour Inspector - Respondent
Cr. MMO No. 374 of 2022
Decided on : 26-02-2024
JUDGMENT :
Rakesh Kainthla, J.
Labour Commissioner, Baddi (complainant) filed a complaint against the present petitioners for the commission of an offence punishable under Section 25 (R) of the Industrial Disputes Act, 1947 read with H.P. Industrial Dispute Rules, 1974. It was asserted that the management of M/s Devyani Food Industry served a notice of closure upon the Labour Commissioner, Himachal Pradesh vide an e-mail dated 16.5.2020 under Section 25 (FFA) of the Industrial Disputes Act, 1947 stating that the management had decided to permanently close their factory/establishment. The Joint Labour Commissioner directed the Labour Officer, Baddi to conduct an inquiry regarding the number of workmen employed by the management in the preceding 12 months before serving the notice. It was also directed that all affected workmen should be given their full and final dues as per the provisions of applicable labour laws. The Labour Officer informed the Labour Commissioner vide letter dated 27.6.2020 that Management had given an impression that it was not closing the factory an d that the factory would run at normal course. The production and dispatch activities of the unit were going on smoothly. Management did not produce the record despite the repeated visits of the Labour Officer; hence, the Labour Officer obtained the figure of workers from the Devyani Karamchari Sangh, as per which 86 workers were working in the factory. He also reported that there were no exceptional circumstances to show that the factory could not carry out its business. Rakesh Sharma (President, Bhartiya Mazdoor Sangh, Himachal Pradesh) made a complaint dated 29.07.2020 stating that the notice of closure was not given to the workers of the Company. The services of some of the workers were terminated without any notice. 105-110 workers were engaged in the company. The request was made to refer the matter to the Labour Court for adjudication. The Labour Commissioner directed the Labour Officer to reinvestigate the matter vide letter dated 30.6.2020 and ascertain the total strength of the workers. The Labour Officer reinvestigated the matter and submitted a revised report dated 1.7.2020 informing that 150 workmen were employed in the factory. He also supplied the list of 150 workmen provided to him by Devyani Karamchari Sangh. The Labour Officer concluded that no exceptional circumstances justified t he closure of the business. The Joint Labour Commissioner asked the Factory Manager not to close the factory without obtaining permission as required under Section 25 (O) of the Industrial Disputes Act vide letter dated 01.07.2020. Labour Officer, Baddi informed the Labour Commissioner that the management had closed the establishment on 6.7.2020 despite the letter of the Labour Commissioner in violation of Section 25 (O) of the Industrial Disputes Act which is punishable under Section 25 (R); hence, a complaint was filed against the Management by the Labour Inspector for taking action as per the law.
2. Being aggrieved from the complaint, the present petition has been filed for quashing the summoning order and bailable warrants issued by the Court, as well as, the complaint filed by the Labour Inspector. It is asserted that the company planned to close its plant and sent a letter dated 7.5.2020 regarding the notice of closure. An e-mail was sent to the Labour Officer to conduct an inquiry. The Labour Officer served a show cause notice upon the company, which was duly replied to. The company filed a civil suit against the workers and obtained an injunction order. The company affixed a notice on the notice board on 6.7.2020 stating that the final settlement amount would be transferred to the workmen by the evening of 6.7.2020 in their accounts. The experience letter will be given on 7.7.2020. A supplementary demand letter was received from the union, which was duly replied to. The matter was referred to the Industrial Tribunal-cum-Labour Court, Shimla for adjudicat
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The management's factory closure without requisite permission violated Sections 25(O) and 25(R) of the Industrial Disputes Act, establishing grounds for criminal charges.
The court established that a closure permitted under the Industrial Disputes Act remains valid unless successfully challenged within a reasonable timeframe.
The court upheld the legality of the closure of the industrial establishment, affirming that the majority acceptance of a severance package by workers binds all, including dissenting individuals.
The refusal to permit closure of a business under Section 25(o) of the Industrial Disputes Act, 1947 was arbitrary and not sustainable, as the employer is not required to submit restructuring plans.
The provisions of Section 25-O of the Industrial Disputes Act are directory, allowing closure based on accumulated losses, and potential unemployment cannot prevent a company from closing a loss-maki....
The deeming fiction under Sec. 25-O(3) of the ID Act is not triggered if the closure applications are incomplete and deficiencies are communicated by the State Government within 60 days. The petition....
The provisions of Section 25-O of the Industrial Disputes Act are directory, allowing for closure applications to be valid even if adjudicated after one year from the refusal of closure permission.
The validity of closure negates grounds for reinstatement unless framed properly within statutory provisions under the Industrial Disputes Act.
Closure of business does not constitute retrenchment under the Industrial Disputes Act, 1947, reaffirming that termination due to closure is outside statutory definitions of retrenchment.
The court affirmed that employee status as 'workman' under the Industrial Disputes Act hinges on actual job functions, not merely titles, impacting claims for closure compensation.
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