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2012 Supreme(Mad) 196
High Court of Judicature at Madras
K. CHANDRU
Management of Holwart Engineering Company Rep. by its sole proprietor R. Ramamoorthy
Versus
S. Dhanasekar & Another
W.P.Nos.32516 to 32520 of 2007, 32271 of 2007 to 32275 of 2007, 29981 of 2007 to 29985 of 2007, 19719 of 2006 to 19721 of 2006 & MP.Nos.1 to 1/2007 in three WPs, 1 & 2 of 2012 1 to 1 of 2006, 1 and 2 of 2009
Decided On :Decided On : 10-01-2012
For the Petitioner - Vijaya Narayan, Senior Counsel for Anand Sashidharan, Advocate.
For the Respondents - Shaji Paul, Sankara subbu, Advocates.
The main legal point established in the judgment is that in case of closure, there cannot be individual non-employment issues, and workers accepting closure compensation and signing full and final settlement receipts cannot later claim reinstatement or reemployment.
Headnote:
Industrial Disputes Act - Closure - Section 2 A(2) - 25-F, 25-G, 25-N, 25-O - The judgment discusses the closure of an industrial establishment and the legal provisions related to retrenchment, closure compensation, and non-employment issues. The court analyzes the evidence presented and the interpretation of the term 'closure' under the Industrial Disputes Act, 1947.
Fact of the Case:
The petitioner, Holwart Engineering Company, challenged the Awards passed by the Labour Court in response to individual disputes raised by the workers under Section 2 A(2) of the Industrial Disputes Act, 1947. The workers claimed illegal termination and sought reinstatement with backwages and other benefits. The company contended that it was a case of closure and that the workers had accepted closure compensation and signed full and final settlement receipts.
Finding of the Court:
The Labour Court held that the closure notice was invalid, and the workers were entitled to reinstatement with 50% backwages. Another Presiding Officer also ruled in favor of the workers, stating that the closure was to victimize the workers, and they were entitled to reinstatement with 50% backwages.
Issues: The main issues were whether the closure was valid, whether the workers were entitled to reinstatement and backwages, and whether the individual disputes were maintainable under Section 2 A(2) of the Industrial Disputes Act.
Ratio Decidendi: The court found that the closure was not valid as the company was found to be functioning at a different location, and the workers were entitled to reinstatement with backwages. The court also emphasized that in case of closure, there cannot be individual non-employment issues, and the workers had accepted closure compensation and signed full and final settlement receipts.
Final Decision: The court set aside the impugned Awards and allowed the writ petitions, concluding that the closure was valid, and the workers were not entitled to reinstatement and backwages.
1. The petitioner in these writ petitions is the Management of Holwart Engineering Company represented by its sole proprietor R.Ramamoorthy. In each of these writ petition, the challenge is to the Award passed by the II Additional Labour Court in various industrial disputes raised under Section 2 A(2) of the Industrial Disputes Act, 1947 by the contesting first respondent.
2. The writ petitions were admitted on different dates. Pending the WPs, interim stay were granted. Although interim stay was granted during 2006 and 2007, some of the aggrieved first respondents have filed applications only during 2007 and 2012. Persons, who filed vacate stay petitions are M/s.K.Munusamy, S.P.Ganesan and A.R.Bharathy. The other workers have not filed any application and even these vacate stay applications were yet to be heard.
3. In W.P.Nos.19719 of 2006 and 32520 of 2007, counter affidavits have been filed by the first respondent. This Court on finding that the petitioner have not typed out the depositions made before the Labour Court, directed the Labour Court vide order dated 04.01.2012 to send the original records filed before the Labour Court for perusal by this Court. Accordingly, the Registry had summoned those records and circulated them for perusal by this Court.
4. The petitioner company is a sole proprietor concern and registered as a small scale industry with the Department of Commerce. It was having its location at Door Nos.430 to 433, Anna Salai, Nandanam, Chennai-35. They were involved in the manufacture of crank shaft, vibration dampers and lubeoil pumps. The workmen were employed in different categories viz., fitter, turner, grinder, maintenance engineer and miller. By a notification dated 07.03.1998, the petitioner issued a notice of closure of their factory at No.434, Anna Salai. Letters to that effect were addressed to the Secretary to Government, Labour Department with copies marked to various statutory authorities. The reason for closure as set out in the closure notice read as follows:-
"Financial constraints order position being bad and adding to these labour problems in the matter of maintaining production and discipline.
The workmen so terminated on account of this closure will be paid notice pay and closure compensation as if they are retrenched."
5. The number of workers, who are covered by the closure notice were estimated at 35 and their names were also mentioned in the annexure to the closure notice. The workers upon seeing the notice sent a communication dated 30.07.1998 stating that since the Management had closed the company, they requested their legal dues to be settled by individual letters. It was thereafter, the petitioner/Management paid the notice pay and closure compensation. They also obtained a stamped receipts from each of the worker for having received the legal dues. The stamped receipts of each of the worker contained the following text and they were duly signed by all the workers.
"Received from Holwart Engineering company situated at 435, Mount Road, Nandanam, Madras 600 035 an amount of Rs.15034.00 (Rupees Fifteen thousand and thirty found only) in respect of notice pay of closure compensation and wages due by cheque No.4309 dated 07.03.1998 and 107965 dated 30.09.1995 drawn on Canara Bank, Kasturbai Nagar and an amount of Rs.14624.00 (Rupees Fourteen thousand and six hundred and twenty four only) being Gratuity, Bonus and leave salary in full and final settlement of all my claims. have no further or other claim monetary or otherwise including that of reinstatement/reemployment."
6. Subsequent to the settlement of their accounts, the Trade Union which represented the workers sent a protest letter dated 09.03.1998 contending that the closure declared by the management was illegal. The Union demanded the workmen to be reemployed with service continuity and backwages. They have also stated that the Management removed the machineries to another company by name Wipromech and were g
