The essence of closure vs. retrenchment under the Industrial Disputes Act is distinct, with different legal implications for employee rights.

JUDGMENT

In both these writ petitions award dated 3.11.2009 in I.D.No.65/2006 of the Industrial Tribunal, Palakkad is under challenge.

2. For the purpose of convenience the parties are referred to in accordance with the cause title in W.P. (C)No.23360/2010. Petitioner in W.P.(C)No.23360/2010 is a company incorporated under the Companies Act, 1956. Fourth respondent is another company which was closed down with effect from 25.5.2005. The said company is the petitioner in W.P.(C)No.15664/2010.

3. A dispute was raised by the respondents 1 and 2 challenging the justifiability of the closure of the factory of the 4^th respondent company and termination of 8 employees. Unions raised dispute against the petitioner in W.P.(C)No.23360/2010. On failure of conciliation, the dispute was reported to the State Government which made a reference in turn to the Industrial Tribunal. The issue referred for adjudication is extracted hereunder:-

“(i) Whether the retrenchment of workmen namely, 1) Sri.Aruchami 2) Sri.Jayaprakash, 3) Sri.Krishnan 4) Santha, 5) Sri.Makhbool, 6) Smt.Pazhaniamma, 7) Smt.Devaki, 8) Smt.Pathayi and closure of the establishment is justifiable, if not what relief they are entitled to?”

4. Ext.P1 claim petition was filed by the respondents 1 and 2 jointly. Petitioners in both these writ petitions filed separate counter statements. Unions filed a rejoinder refuting the averments of the managements. MW1 and MW2 were examined on the side of the management and Exts.M1 to M23 were marked. WW1 to WW4 were examined on the side of Unions and Exts.W1 to W19 were marked. The Tribunal concluded in Ext.P3 award that closure of the factory of the 4^th respondent was illegal and consequently retrenchment of the workmen was also illegal and unsustainable. With respect to two among the workmen who had received compensation and gratuity, the Tribunal held that they shall not be entitled for the benefit of the award. With respect to remaining 6 workmen Tribunal held that their retrenchment was not justified and hence they were entitled to full wages from the date of their retrenchment/termination of service till the date of their reinstatement in service or their services are terminated in accordance with law. Petitioners in both writ petitions were held jointly or severally liable to implement the award.

5. Heard the learned Senior Counsel appearing for the petitioner in W.P.(C)No.23360/2010, the learned counsel appearing for the petitioner in W.P. (C)No.15664/2010 and the learned counsel appearing for the workmen in both cases.

6. The learned Senior Counsel appearing for the petitioner in W.P.(C)No.23360/2010 assailed the award raising various contentions. The learned Senior Counsel submitted that the reference was bad for the reason that it was too vague and incorrect. The Government referred virtually three issues by way of the reference. First aspect was regarding “retrenchment of workmen”. The second aspect was “justifiability of closure of the establishment”. The third issue incorporated was about the reliefs the workmen would be entitled to in case it was found that the retrenchment and closure were not justifiable. He submitted that in view of the specific provisions of the Industrial Disputes Act , retrenchment is not involved when an establishment is closed. Hence, he submitted that the reference was basically misdirected. He also submitted that the Tribunal has committed serious errors in considering the dispute and deciding the same. The Tribunal has proceeded without any clarity of the b