The liability for compensating workers following an illegal closure lies with the party that engaged them, necessitating a determination by the Labour Court.

JUDGMENT :

R. SUBRAMANIAN, J.

Challenge in the above writ appeals is to the common order made by the writ Court dated 05.10.2012 in W.P.Nos. 29877 & 29878 of 2008. Both the writ petitions were filed by the Management against the award passed by the Industrial Tribunal, Chennai in I.D.Nos. 48 & 25 of 2004 dated 23.07.2008 & 24.07.2008 respectively.

2. Reference in those two industrial disputes was made by the Government on the question of the illegal cessation of operation by the appellant / Mill. The question that was referred to in both the industrial disputes was identical and it reads as follows:-

"Whether the demand of the Union to revoke the illegal cessation of the opertion of the factory from 02.05.2003 by the Management and payment of back wages with continuity of service is justified."

3. The main contention of the Management before the Industrial Tribunal was that the land, building and the machinery of the Mills were leased out to one Selvamani and others, who started business in the name of M/s.Jupiter Packing Company. The said Company engaged labourers independently and was doing the business of reeling by getting yarn from the Spinning Mills. It is also contended that the Jupiter Packing Company purchased yarn not only from the petitioner Mill but also from others. After expiry of the lease in favour of the Jupiter Packing Company on 27.10.1990, one M/s.Raja Packing Company took over the business along with the workers and they were doing business of cone winding and reeling between 28.10.1990 and 26.10.1995.

4. It is claimed that one Shanmugam took over the packing business and was doing business from 25.10.1998 to 29.11.2003. Therefore, it was the contention of the Management that right from 27.10.1986, till the industrial disputes were raised by the workmen represented by the Union the appellant / Management was only a lessor collecting rent from the lessees. It was contended that the workmen never received any wages from the appellant / Management and there was no employer - employee relationship. When the dispute was raised, reference was made to the Court on 09.06.2024 vide G.O.(D).No.663 of the Labour and Employment Department. When the reference was made, the name of the appellant / Management was not included. Subsequently, an erratum was issued on 12.01.2006 citing the Management as a 2nd respondent. On a challenge to the said erratum in W.P.No.4171 of 2006, this Court held that all the contentions raised could be raised in the ID itself and there was no merit in the challenge to the erattum.

5. It was the contention of the Management that it was the lessee namely, M/s.Kamatchi Packing which was responsible for functioning of the Mill and also payment of the salary for the said workers. If at all any closure permission ought to have been obtained, it should have been obtained from the lessee and not by the lessor / Management as the workmen were appointed by the lessee.

6. The lessee namely, M/s. Kamatchi Packing resisted the claim of the workmen contending that the agreement was entered into for a period of five years from 18.11.1998 and the Management was always with the Principal Employer and the members of the Union were appointed by the Management. Clause "g" of the Leave and License agreement dated 18.11.1998 was relied upon by the lessee to contend that if the closure is attributable to the lessor then, it is the lessor who would be liable for the payment of salary and other benefits to the workmen, if the Mill ceased working. Reliance was also placed on Clause 4 of the said agreement.

7. The Tribunal on the basis of the materials placed and also on the basis of the undertaking made by the learned counsel for the appellant herein in a proceeding before this Court namely, in W.P.No.24560 of 2004 wherein, permission granted to the Management for sale of few machineries by the Company Law Board was under challenge was relied upon by the Tribunal to conclude that there was an undertaking by the Management to