# S.G. CHEMICAL AND DYES TRADitlG EMPLOYEES' UNION v. S.G. omuCALS AND DYES TRADilC LIMITED AND ANOTHER

- **Citation:** [1986] 2 S.C.R. 126
- **Court:** Supreme Court of India
- **Decided:** 1986-04-03
- **Case number:** Civil Appeal No. 830 of 1986
- **Bench:** 0. Chinnappa Reddy, D.P. Madon
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/s-g-chemical-and-dyes-traditlg-employees-union-v-s-g-omucals-and-dyes-tradilc-9382
- **Pages:** 36

## Headnote

Industrial Disputes Act, .1947 : Section 25--0 :
"An undertaking of an industrial establishment"-
Interpretation of.
Closure of such an "undertaking" - When illegal.
Maharashtra Recognition of Trade Unions and Prevention
of Unfair Labour Practices Act, 1971 : Section 28 and Item 9,
Schedule IV : Settlement - Termination of Services of Workmen
in contravention thereof - Whether unlawful.
Constitution of India, Article 136 - Resort to - \;!tether
permissible where equally efficacious remedy available.
Sub-s'. (1) of s. 25--0 of the Industrial Disputes Act,
E
1947 ·obligates an e.,Ployer, who intends to close down an
undertaking of an industrial establishment, to which Chapter
V-B applies, to submit an application for prior permission at
', . least ninety days before the date on which the intended
·'closure is to become effective, to the appropriate Government.
Sub.:.S •. (6) of s. 25--0 provides that where no application under T
. F
sub-s. (1) is made within, the specified period or where
permission has been refused, the . closure of the undertaking
shall be illegal from the date rof closure, and the workm?n
shall be entitled to all the benefits under any law for the
time being in force, as if the undertaking had not been closed
down. Section 25-K specifies the industrial establishments to
G
which Chapter V-B. applies as those in which not less than one *
hundred workm?n were employed on an average per working day
for the preceding twelve months.
H
Item 9 of Schedule IV to the Maharashtra Recognition of
Trade Unions and Prevention of Unfair Labour Practices Act,
S,G, CHEMICAL EMP. UNION v. S.G, CHEMICALS
127
~ 1971 lists failure to implement an award, settlement or
agreement as one of the general unfair labour practices on the
part of the employers.
The respondent-company, a wholly owned subsidiary, was
operating in Bombay in three Divisions, at three different
places, the Pharmaceutical Division at Worli having 110
~employees, the Laboratory and Dyes Division at Trombay having
60 employees, and the Marketing and Sales Division at its
Registered Office at Churchgate having 90 employees. The
..,
holding company had a chemicals and dyes factory in the State
of Gujarat which was sold out in 1984. Since the buyer company
.J. proposed to handle the sales through their own distribution
channels and the services of the staff working at the
~Registered Office
were
no
longer
required,
the
respondent-company by its notice dated July 16, 1984 intimated
the Government of Maharashtra that in accordance with the
provisions of
sub-s. (1) of s. 25-FFA of the Industrial
Disputes Act (which applies to undertakings employing fifty or
more workmen) it intended to close down the undertaking/
establishment/office st its Registered Office. In the said
notice, the number of workmen on the rolls was stated to be
· ,;. ninety. The company thereafter closed down the said Division
terminating the services of 84 employees, while retaining the
remaining six to attend to the work upon such closure.
-
The Employees' Union thereupon filed a complaint before
the Industrial Court under s. 28 of the Maharashtra Act, resd
·,(with Item 9 of Schedule IV thereto, contending that the
~
closure of the Marketing and Sales Division was contrary to
--\ s. 25--0 of the Industrial Disputes Act, and, therefore, the
'--
.
employees continued to be in service, notwithstanding the
notice of closure, and were entitled to full wages and
allowances, in terms of the settlement dated February 1, 1979
entered into with the company, and as these were not paid the
company had c011111itted an unfair labour practice under Item 9
of Schedule IV to the Maharashtra Act. Their case was that
..-.
there was
functional integrality amongst all the three
--{ Divisions of the respondent-company, and as the aggregate
number of employees in those Divisions exceeded one hundred
the company was bound tc apply to the appropriate Government
for permission under s. 25--0(1). The failure of the company to

## Text

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126
S.G. CHEMICAL AND DYES TRADitlG EMPLOYEES' UNION
v.
S.G. omuCALS AND DYES TRADilC LIMITED AND ANOTHER
APRIL 3, 1986
(0. CHINNAPPA REDDY AND D.P. MADON, JJ.]
Industrial Disputes Act, .1947 : Section 25--0 :
"An undertaking of an industrial establishment"-
Interpretation of.
Closure of such an "undertaking" - When illegal.
Maharashtra Recognition of Trade Unions and Prevention
of Unfair Labour Practices Act, 1971 : Section 28 and Item 9,
Schedule IV : Settlement - Termination of Services of Workmen
in contravention thereof - Whether unlawful.
Constitution of India, Article 136 - Resort to - \;!tether
permissible where equally efficacious remedy available.
Sub-s'. (1) of s. 25--0 of the Industrial Disputes Act,
E
1947 ·obligates an e.,Ployer, who intends to close down an
undertaking of an industrial establishment, to which Chapter
V-B applies, to submit an application for prior permission at
', . least ninety days before the date on which the intended
·'closure is to become effective, to the appropriate Government.
Sub.:.S •. (6) of s. 25--0 provides that where no application under T
. F
sub-s. (1) is made within, the specified period or where
permission has been refused, the . closure of the undertaking
shall be illegal from the date rof closure, and the workm?n
shall be entitled to all the benefits under any law for the
time being in force, as if the undertaking had not been closed
down. Section 25-K specifies the industrial establishments to
G
which Chapter V-B. applies as those in which not less than one *
hundred workm?n were employed on an average per working day
for the preceding twelve months.
H
Item 9 of Schedule IV to the Maharashtra Recognition of
Trade Unions and Prevention of Unfair Labour Practices Act,
S,G, CHEMICAL EMP. UNION v. S.G, CHEMICALS
127
~ 1971 lists failure to implement an award, settlement or
agreement as one of the general unfair labour practices on the
part of the employers.
The respondent-company, a wholly owned subsidiary, was
operating in Bombay in three Divisions, at three different
places, the Pharmaceutical Division at Worli having 110
~employees, the Laboratory and Dyes Division at Trombay having
60 employees, and the Marketing and Sales Division at its
Registered Office at Churchgate having 90 employees. The
..,
holding company had a chemicals and dyes factory in the State
of Gujarat which was sold out in 1984. Since the buyer company
.J. proposed to handle the sales through their own distribution
channels and the services of the staff working at the
~Registered Office
were
no
longer
required,
the
respondent-company by its notice dated July 16, 1984 intimated
the Government of Maharashtra that in accordance with the
provisions of
sub-s. (1) of s. 25-FFA of the Industrial
Disputes Act (which applies to undertakings employing fifty or
more workmen) it intended to close down the undertaking/
establishment/office st its Registered Office. In the said
notice, the number of workmen on the rolls was stated to be
· ,;. ninety. The company thereafter closed down the said Division
terminating the services of 84 employees, while retaining the
remaining six to attend to the work upon such closure.
-
The Employees' Union thereupon filed a complaint before
the Industrial Court under s. 28 of the Maharashtra Act, resd
·,(with Item 9 of Schedule IV thereto, contending that the
~
closure of the Marketing and Sales Division was contrary to
--\ s. 25--0 of the Industrial Disputes Act, and, therefore, the
'--
.
employees continued to be in service, notwithstanding the
notice of closure, and were entitled to full wages and
allowances, in terms of the settlement dated February 1, 1979
entered into with the company, and as these were not paid the
company had c011111itted an unfair labour practice under Item 9
of Schedule IV to the Maharashtra Act. Their case was that
..-.
there was
functional integrality amongst all the three
--{ Divisions of the respondent-company, and as the aggregate
number of employees in those Divisions exceeded one hundred
the company was bound tc apply to the appropriate Government
for permission under s. 25--0(1). The failure of the company to
do so had rendered the closure illegal under s. 25--0(6).
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128
SUPREME COURT REPORTS
[1986) 2 s.c.R.
The Industrial Court dismissed the complaint holding (i) ~
that s. 25--0 of the Industrial Disputes Act was not applicable
inasmuch as the number of workmen employed at the industrial
establishment at Trombay at no time had been one hundred or
more as required by s. 25~, (ii) that the Churchgate Office
not being a part of the Trombay factory in legal parlance, it
was not an undertaking of an industrial establishment within
the meaning of Chapter V-B of the Industrial Disputes Act, and ~
(iii) that even assuming that s. 25--0 was attracted, a
violation of that section would not constitute an act of
unfair labour practice under Item 9 of Schedule IV to the
Maharashtra Act.
On the question whether s. 25-0 of the Industrial
Disputes Act applied to the closure of the Churchgate Off ice )..
and whether the Trombay factory and the Churchgate Division
constituted one establishment.
Allowing the appeal by special leave, the Court,
HELD: 1. The closing down of the Churchgate Division of
the respondent-company was illegal, as it was in contravention
of the provisions of s.25-0 of the Industrial Disputes Act
)."
1947. The compsny was guilty of the unfair labour practice
specified in Item 9 of Schedule IV to the Maharashtra
Recognition of Trade Unions and Prevention of Unfair Labour
Practices Act, 1971 for its fail~re to implement the settlement entered into with the appellant-Union. [159 F; 160 A; -
F
G
159 HJ
>-
The workmen, whose services were terminated on account )-
of such illegal closure continue in employment and are /
entitled to receive from the company their full salary and all
other benefits under the settlement retrospectively. [161 CJ
2.1 Section 25-0 of the Industrial Disputes Act applies
to
the
closure
of
an
undertaking
of
an
industrial
establishment
and
not to the closure of an industrial
establishment. [149 CJ
2.2 The Trombay factory of the respondent-company is itn
H
industry within the meaning of the term in cl.(j) of s. 2 of
the Industrial Disputes Act, for it carries on the work of
manufacturing and processing of dyes. That factory is also s
j..
•
..
s.G. CHllMICAL EMP. UNION v. s.G. CHEMICALS
129
.i "factory" as defined in cl. (m) of s.2 of the Factories Act
1948, and is, therefore, an industrial establishment within
the meaning of that expression as defined in s. 25:..L of the
Industrial Disputes Act. [144 F-<i]
2.3 The Act does not require that an undertaking of an
industrial
establishment
should
also be
an
industrial
-
~ establishment or that it should be located in the same
premises as the industrial establishment. In the modern
industrial world it is often not possible for all processes
which ultimately result in the finished product to be carried
,out at one place, In many cases these functions with regard to
-~the use, sale, transport, delivery and disposal of the article
or substance manufactured are distributed amongst different
;_ departments
and
divisions housed
in different buildings
situate at different places. [149 D; 146 G; 147 A; 146 F]
2,4 The term 'undertaking' being not defined, wherever
it occurs in the Act, unless a specific meaning is given to
that term by the particular provision it is to be understood
in its ordinary meaning and sense connoting thereby any works,
enterprise, project or business undertaking, not necessarily
-' covering the entire industry or business of the employer. So
understood, if an undertaking in its ordinary meaning and
sense is a part of an industrial e~tablishment, so that both
taken together constitute one establishment, s. 25--0 would
apply to the closure of the undertaking provided the condition
laid down in s. 25-K of not less than one hundred workmen
~ being employed on an average per working day for the preced-
~
ing twelve months is fulfilled. [149 D-F; 150 A; D-E]
--\.
Management of Hindustan Steel Limited v. The Worl<men and
others, [1973] 3 S,C,R. 303 and Worlcmen of the Straw Board
Manufacturing
Company
Limited
v.
K/s.
Stnw
Board
Manufacturing Colllpany Limited, [1974 l 3 s.c.R. 703, referred
to.
...._
2.5 The functions of the Churchgate Division and the
-\' Trombay factory of the respondent were neither separate nor
independent of each other but were so integrally connected as
to constitute these two into one establishment. There was
complete functional integrality between them. The Trombay
factory could never have functioned independently without the
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130
SUPREME COURT REPORTS
[1986] i S.C.R.
Churchgate Division being there. A factory cannot produce or \or
process goods unless raw materials required for that purpose
are
purchased.
Equally,
there
cannot
be
a
factory
manufacturing or processing
goods
unless
the goods
so
manufactured or processed are marketed and sold. The one
without the other is a practical impossibility. Similarly, no
factory can run unless salaries and other employment benefits
are paid to the workmen, nor can a factory function without ~
the necessary accounting and statistical data being prepared.
These are integral parts of the manufacturing activities of a
factory. [152 E; 154 F; 154 C-D]
The Associated
r
nt Companies Lillited,
Chaibaasa .L.
C
nt Worts, Jhinkpani v. Thefr Worben, [1960] l S.C.R. 703;.
Worlmen of the Straw 1loard Manufacturing Company Ltd. v. M/e. ;,
Straw Board Manufacturi~ Co. Ltd., [l 974 J 3 s.c.R. 703; South
India MillOll!leTII'
Association and others. v. Coillbatore
District Textile Worlters' Union and others, [1962] l Lab. L.
J. 223 s.c. and Western India Match Co. Ltd. v. their Worlmelll,
[1964] 3 s.c.R. 560, referred to.
The total number of workmen employed at the relevant
time in the Trombay factory and the Churchgate Division of the ,.__
respondent-company was one hundred and fifty. Therefore, if
the respondent-company wanted to close the Churchgate Division
it was required to satisfy the requirements of s. 25--0 of the
Industrial Disputes Act. Section 25-FFA had no application in
such a situation. [154 F-<;]
,., -
3.1 Merely because registration was required to be .
}-
obtained under a particular statute, it did not make the r
business or undertaking or industry so registered a separate·
legal entity except where a registration of incorporation was
obtained under the Companies Act. The fact that the Trombay
factory was registered under the Factories Act while the
,
Churchgate
Division
was
registered
as
a
commercial
establishment under the Bombay Shops and Establishments Act
was
no bar to treating them as one establishment. The
...,
Factories Act and the Bombay Shops and Establishments Act are ,__
regulatory statutes and the registration under both these Acts
is compulsory for providing certain benefits to the workmen
employed in the factory or the establishment, as the case may
be. [155 B; 154 H; 155 A; 155 C]
S.G. CHEMICAL EMP. UNION v. S.G. CHEMICALS
131
3.2 A factory as defined in cl.
(m)
of s.2 of 'the
Factories Act is excluded from the definition of "commercial
establishment''.. contained in cl. (4) of s. 2 of the Bombay
Shops and Establishments Act, and is not mentioned in the list
of establishments set out in the definition of "establishment"
given in cl. (8) of s. 2 of the said Act because various
_ +- mtters in respect of which provision is made under thst Act
are also provided for in the Factories Act. There is, however,
nothing to prevent the State Government from declaring, under
the latter part .of cl. (8) of s. 2 a factory to be an
establishment for the purposes of the Bombay Shops
and
Establishments Act. [157 B-C]
4. It is · an implied condition of every agreement,
"'I including a settlement, thst the parties thereto will act in
conformity with law. Such a provision is not required to be.
expressly stated in any contract. If the services of workmen
are terminated in violation of any of the provisions of the
Industrial Disputes Act, such termination is unlawful and
ineffective and the workmen wuld ordinarily be entitled to
·reinstatement and payment of full backwages. [159 D)
In the instant case, there was a settlement arrived at
between the respondent-comiiany and the Employees' Union under
which certain wages were to be paid by the Company to its
workmen, but the company closed down its Churchgate Division
without complying with the provisions of s. 25-0(1 ), which
amounted to an illegal closure under s. 25-o(6). The workmen
'1hose services were terminated were,
therefor~, entitled to
receive from the date of closure · their salary and other
benefits payable to them under the settlement. These hsving
~not been paid to them, there was a failure on the part of the
company to implement the settlement and consequently the
company was guilty of the unfair labour practice specified in
Item 9 of Schedule IV to the Maharashtra Act. The Union was
thus justified in filing the complaint under s. 28 of thst Act
complaining of such unfair labour practice. [159 E-F; 161 c;
, 159 H; 160 A)
r
Maharashtra General ~r
Union v. Glass· Containers
Pvt. Ltd. & Anr., [1983] I Lab. L. J. 326, overruled.
I
5. Article 136 of the Constitution' is not designed to
permit direct access to the Supreme Court in cases where other
equally efficacious remedy is available and where the question
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132
SUPREME COURT REPORTS
[1986] 2 S.C.R.
is not of public importance. Though the powers of the Court
'>--
under that Article are very wide still the grant of special
,;.
leave to appeal is in the discretion of the Court. In the
instant case, a large number of workmen had been thrown out of
employment who could ill afford the luxury of fighting from
court to court, and the questions raised were of considerable
importance both to the employers and the employees, which were
valid reasons for exercise of the discretion. [ 137 B; 138 El
-•
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 830 of
1986.
From the Judgment and Order dated 26th July, 1985 of the ,\.__
Industrial Court, Maharashtra in Complaint (ULP) No. 1273 of
1984.
~
Dr.
Y.S. Chitale and Mrs.
S. Ramachandran for the
Appellant.
Mahesh Bhatt, P.H. Parekh and Miss Indu Malhotra for the
Respondents.
The Judgment of the Court was delivered by
MADON, J. This is an Appeal by Special Leave granted by
this
Court against the order of the Industrial Court,
Maharashtra dismissing a complaint filed by the Appellant
Union under section 28 of the Maharashtra Recognition of Trade
Unions and Prevention of Unfair Labour Practices Act, 1971
(Maharashtra Act No.l of 1972) complaining of an unfair labour
practice on the part of the First Respondent Company, namely,
a failure to implement the Settlement dated February l, 1979,
entered into . between the Appellant Union and the First
Respondent Company. This Act will hereinafter be referred to
in short as "the Maharashtra Act".
The First Respondent Company, S.G. Chemicals and Dyes
,
-
•
Trading Limited (hereinafter referred to as "the Company") is
.,
a wholly owned subsidiary of Ambalal Sarabhai Enterprises r
Limited and carries on the business of pharmaceuticals,
pigments and chemicals. The Second Respondent is the General
Manager (Marketing) of the Company. The Appellant Union, S.G.
-
S.G. CHEMICAL EMP. UNION v. S.G. CHEMICALS [MADON, J,]
133
-le Chemicals and Dyes
Trading Employees'
Union
(hereinafter
referred to as "the Union") is a trade union registered under
the Trade Unions Act, 1926 (Act No. 16 of 1926) representing
the employees of the Company.
In 1984 the Company was
operating in Bombay through three Di vis:lons, namely, the
Pharmaceuticals Di vision at Worli, the Laboratory and Dyes
Division at Trombay and the Marketing and Sales Division at
l, Express Building, Churchgate. The Registered Office of the
l
Company was also situate in the same place
as the Marketing
Division,
namely,
in Express
Building.
Ambalal
Sarabhai
Enterprises Limited is also the owner of a chemicals and dyes
factory called S.G. Chemicals a~d Dyes, situate at Ranoli in
• Baroda District in the state of Gujarat.
_,,,\
By a notice dated July 16, 1984, given in Form XXIV-B
A prescribed by Rule 82-A of the Industrial Disputes (Bombay)
Rules, 1957, the Coq>any signing itself as "SG Chemicals &
Dyes Trading Limited (Chemicals & Dyes Division)", intimated
to the Secretary, Government of Maharashtra, Industries and
Labour
Department,
Bombay,
that in accordance with the
provisions of
sub-secti~n (I) of section 25FFA of
the
Industrial Disputes Act,
1947 (Act No.
14 of 1947), it
intended to close down "the Undertaking/Establishment/Office
,-( of Chemicals & Dyes Division, located at Express Building, 14
'E' Road, Churchgate,
Bombay-400020, with effect from 17th
September 1984". In the said notice the number of workmen on
the roll was stated to be ninety, the name of "the Undertaking
(and the Establishment proposed to be closed)" was given as
'i "Chemicals & Dyes Di vision Office of SG Chemicals & Dyes
< \ Trading Limited", The 'Industry' was described in the said
_ '-( ?otice as "Marketing and Sales operations of Chemicals and
-"'-Dyes". In the Statement of Reasons annexed to the said notice
it was stated as follows :
-
"Ambalal Sarabhai Enterprises Ltd. , have agreed to
sell its business and Undertaking known as SG
Chemicals and Dyes, situated at Ranoli to M/s.
Indian Dyestuff
Industries Ltd.,
Bombay,
with
effect from 25-6-1984. Chemicals & Dyes Division of
SG Chemicals and Dyes Trading Limited was rendering
staff and other services to SG Chemicals and Dyes
as also to their Marketing Companies who handled
the sale of SG Chemicals & Dyes products. Indian
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SUPREME COURT REPORTS
[1986] 2 S.C.R.
Dyestuff Industdes Ltd., propose to handle the "'-
future sale of SG Chemicals & Dyes products through
their own distribution channels. SG Chemicals &
,._
Dyes and the Marketing Companies have informed us
that the staff services offered by us to them would
no longer be required by them resulting in there
being no work for the staff working at Express
Building office of Chemicals & Dyes Division of SG
Chemicals and Dyes Trading Limited. The Management ·!
has, therefore, no other alternative but to close
down their office operations of Chemicals & Dyes
situated
at
Express
Building,
14
'E'
Road,
Churchgate, Bombay 400 020."
Copies of the said notice were sent to the Commissioner
of
Labour,
Maharashtra,
the
Deputy
Commissioner
of
Labour, ,l
Maharashtra, and the Union.
' -
By its letter dated July 16, 1984, addressed to the
Company,
the Union raised a demand not to terminate the
services of the employees pursuant to the said notice dated
July 16, 1984. The Company none the less closed down the said
Division at Churchgate with effect from September 17,
1984.
The Company retained only six employees who, according to it, }-.
were to attend to the work consequent upon such closure. The
Company did not pay to the eighty-four employees whose
services were terminated any salary after September 17, 1984.
According to its counter affidavit filed in reply to the
Petition for Special Leave to Appeal,
the Company has, >-
however, offered to these eighty-four employees retrenchment
compensation under section 25FFF of the Industrial Disputes ),
I.
Act aggregating to Rs. 22,02,670 and eighty-two out of these -.-
eighty-four
employees
have
accepted
such
co~ensation
~
aggregating to Rs. 22,00,162.
The Union filed on October 8, 1984, before the Industrial
Court Maharashtra, Bombay, a Complaint, being Complaint (ULP)
No. 1273 of 1984, under section 28 of the Maharashtra Act read
with Item 9 of Schedule IV thereto. The contention of the
Union in the said Complaint
was
that the closure of the 'rChurchgate Division was contrary to the provisions of section
25-0 of the Industrial Disputes Act and, therefore, the
employees continued to be in the service of the Company
•
-
S.G. CHJJ1ICAL EMP. UNION v. S.G. CHEMICALS [MADON, J.)
135
_...{,notwithstanding the said notice of closure and were entitled
to full wages and all allowances as provided in the Settlement
dated February 1, 1979, entered into between the Company and
the Union, which were not paid to them and, therefore, the
Company had committed an unfair labour practice under Item 9
of Schedule IV to the Maharashtra Act. Under section 26 of the
Maharashtra Act, unfair labour practices mean any of the
:_.·practices . 'listed in Schedules II, III and
IV to the
Maharashtra Act. Under section 27, no employer or trade union
and no employees are to engage in any unfair labour practice.
Under section 28,-where any person has engaged in or is
engaging in any unfair labour practice, then any trade union
or any employee or any employer or any Investigating Officer
appointed under section 8 of the Maharashtra Act may, within
·-._,ninety days of the occurrence of such unfair labour practice,
'file a complaint before the court competent to deal with such
complaint. The competent court in the present case was the
Industrial Court. Schedule IV to the Maharashtra Act lists
what constitute "General Unfair Labour Practices on the part
of employers". Item No 9 of Schedule IV is as follows :
"9. Failure to implement award,
settlement or
agreem?nt."
'
It was the case of the Union that the aggregate number of
'!-workmen employed in the three Divisions of the Company exceeded one hundred and, therefore, for the purposes of the said
section 25-0, it was the aggregate strength of the workmen of
the Company eaployed in all its three Divisions which was to
be taken into account as there was functional integrality
a11JJngst all the three Divisions, and, ·therefore, under section
i-1°25-0 of the Industrial Disputes Act, the Company was bound to
'
apply to the appropriate Government for prior permission for
such closure at least ninety days before the date on which
such closure was to become effective. According to the Union,
as such prior permission was nqt applied for, the closure of
the Chemicals and Dyes Di vision Of flee of_ the Company at
Churchgate was illegal aAd snch closure, therefore, a11JJunted
~to an unfair labour practice as it amounted to a failure to
,
implement the said Settlement dated February 1, 1979.
On the
examination of the evidence led before it, the Industrial
Court held:
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SUPREME COURT REPORTS
[1986) 2 s.c.R.
"There caq be no doubt that part of the work done)....
at the head office at Churchgate was in connection
. with or incidental to the Trombay factory and there
does appear some functional integrality between the
factory ;md the head office, . but in my view, this
fact is irrelevant in this complaint."
'
The reason why the Industrial Court considered the functiona~
integrality between the Trombay factory and the Churchgate
office as irrelevant was that according to it before section
25-0 ·could apply, the number of workmen employed in an
industrial establishment as defined by section 25-L of the
Industrial Disputes Act should not be less than one hundred
and that admittedly at no time had the number of workmen at
the Trombay Factory been one hundred or more.
The Industrial('
Court further held that the Churchgate office was not in legal
parlance a part of the
Trombay factory and the Company was
not bound to follow the procedure prescribed by section 25-0
'
.
for by no stretch of imagination could the Churchgate Division
be held to be "an undertaking of an industrial establishment"
within the meaning of Chapter V-B of the Industrial Disputes
Act.
The Industrial Court also held that the Head Office of
the Company located at Churchgate was governed by the Bombay
E
Shops and Establishments Act, 1948
(Bombay Act No. 79 of
1948) while the establishment at Trombay was a factory as.{
·defined in the Factories Act, 1948 (Act No. 63 of 1948), and,
therefore, these were two separate legal entities governed by
· the provisions of two independent and separate Acts. Further,
according to the Industrial Court assuming section 25-0 was
'
.
: F···,., attracted, the violation of that section would not constitute
'
·an Act of unfair labour practices under Item No. 9 of Schedule~
IV to the Maharashtra Act.
For reaching this·conclusion, thef
Industrial Court relied upon the decision of a learned Single
Judge of the Bombay High Court in Maharashtra General ~ar
Union v. Glass Containers Pvt. rid. and another, (1983) 1 Lab.
G
L.J. 326, in which the learned Single Judge had held that
non-compliance with any statutory provision such as section
25FFA of the Industrial Disputes Act cannot by regarded as a
.. · failure by the employer to implement an award, settlement or;.(
agreement.
The Industrial Court consequently dismissed t'.1.e
said Complaint by its order dated July 26, 1985.
It is
H ·
against the said order of the Industrial Court that the
present Appeal by Special Leave granted by this Court has been
filed.
S.G. CHEMICAL EMP. UNION v. S.G. CHEMICALS [MADON, J.]
137
--1
The Union has directly come to this Court in appeal
against the said order of the Industrial Court without first
approaching the High Court under Article 2 26 or 227 of the
Constitution for the purpose of challenging the said order.
The powers of this Court under Article 136 are very wide but
as clause ( 1)
of that Article itself states, the grant of
special leave to appeal is in the discretion of the Court.
Article 136 is, therefore, not designed to permit direct
\-'access to this Court where other equally efficacious remedy is
available and where the question is not of public importance.
Today,
when the dockets of this Court are over-crowded, nay -
almost choked, with the flood, or rather the avalanche, of
) work pouring into the Court, threatening to sweep away the
-
present system of administration of justice :ltself, the Court
should be extremely vigilant in exercising its discretion
~ under Article 136.
The reason stated at the Bar for not first
approaching the High Court to get the same relief was that in
•view of the judgment of the learned Single Judge of the High
Court in Maharashtra General Kangar Union v. Glass Containers
Pvt. Ltd. and another if a writ petition were filed in the
High Court, it would certainly have been dismissed, forcing
the employees through the Union to come to this Court in
appeal against the order of the High Court.
When we consider
-~ that here are eighty-four workmen who have been thrown out of
employment and can ill-afford the luxury
of fighting from
court to court and that some of the questions arising in the
•
case are of considerable importance both to the employers and
the employees, the reason given for directly coming to this
Court must be held to be valid and this must be considered to
\
be a fit case for this Court; to exercise its discretion and
grant Special Leave to Appeal.
Turning now to the merits of this Appeal, the first
4uestion which falls to be considered is whether section 25-0
of the Industrial Disputes Act applied to the closure of the
Churchgate Office.
According to the Union, the case was
governed by section 25-0 while according to the Company, it
was section 25FFA
which applied to the case.
Under section
25FFA(l), an employer who intends to close down an undertaking
-\ is to give, at least sixty days before the date on which the
intended closure is to become effective, a notice in the
prescribed
manner
to
the appropriate Government
stating
clearly
the
reasons
for
the
intended
closure
of
the
A
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SUPREME COURT REPORTS
[1986] 2 S.C.R.
undertaking.
The
proviso to the said
sub-section (1) ~
provides that section 25FFA shall not apply inter alia to "an
undertaking in which (i) less than fifty workmen are employed,
or (ii) less than fifty workllEn were employed on an average
per working day in the preceding twelve months."
The other
exclusion from the application of section 25FFA is irrelevant
for the purpose of this Appeal.
Thus, where an employer
intends to close down an undertaking in which 50 workmen or
more are employed, he is to give at least sixty days' notice i
in the prescribed manner to the Government stating the reasons
for the intended closure of the undertaking and under section
25FFF(l), 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, is to be entitled to notice and compensation in accordance with the provisions of section 25F as if ~
the workman had been retrenched.
Section 25-0 features in Chapter V-B of the Industrial
Disputes Act.
This Chapter was inserted in the Industrial
Disputes Act by the lndustrial Disputes (Amendment) Act, 1976
(Act No. 32 of 1976), with effect
from March 5, 1976, and
contains sections 25K to 25S.
Section 25-0 as originally
enacted was
substituted by section 14 of the Industrial ;,._
Disputes (Amendment) Act, 1982 (Act No. 46 of 1982).
Under
section 1(2) of the Amendment Act, 1982, the said Act was to
co!IE into force on such date as the Central Government may, by
notification in the Official Gazette, appoint.
The Industrial
Disputes Act as also the Amendment Act, 1982, were further
amended by the Industrial Disputes (Amendment) Act, 1984 (Act '('
No. 49 of 1984).
By section 7 of the Amendment Act,
1984,
sub-section (2) of section 1 of the Amendment Act, 1982, was
amended by inserting the words "and different dates may be
appointed for different provisions of this Act" after the
words "by notification in the Official Gazette, appoint".
Under section 1(2) of the Amend!IEnt Act, 1984, the said Act
was to come into force on such date as the Central Govern11Ent
may, by notification in the Official Gazette, appoint,
and
different dates may be appointed for different provisions of
the
said Act.
By
Ministry
of
Labour and Rehabilitation 'r-
(Department of Labour)
Notification No. S.O. 605(E), dated
August
18,
1984,
published
in
the
Gazette
of
India
Extraordinary, Part II, Section 3(ii), dated August 18, 1984,
-
S.G. CHEMICAL EMP. UNION v. S,G, CHEMICALS [MADON, J.]
139
"- at page 2, the whole of the Amendment Act, 1984, was brought
into force with effect from August 18, 1984.
By Ministry of
Labour and Rehabilitation (Department of Labour) Notification
No. S.O. 606(E), dated August 21, 1984, published in the
Gazette of India Extraordinary, Part II, Section 3(ii) dated
August 21, 1984, at page 2, several sections of the Amendment
Act, 1982, including section 14 which substituted section 25--0
of the Industrial Disputes Act, were brought into force on
t. August 21, 1984. Sub-section (1) of sectiot\ 25--0 as substi-
~ tuted provides as follows :
.
I
"25--0. Procedure for closing dovn an UDdertaking.-
( l) An employer who intends to close down an
undertaking of an industrial establishment to which
this Chapter applies shall, in the prescribed
manner,
apply,
for prior permission at least
ninety days before the date on which the intended
closure is to become effective, to the appropriate
Government, stating clearly the reasons for the
intended closure of the undertaking and a copy of
such
application
shall
also
be
served
simultaneously
on
the
representatives
of
the
workmen in the prescribed manner
Provided that nothing in this sub-section shall
apply to an undertaking set up for the construction
of buildings, bridges, roads,
canals, dams or for
other construction work."
, Under
sub-section (2) of section 25--0, where an application
-\ for permission to close down an undertaking of an industrial
'establishment has been made, the appropriate Government is to
make such enquiry as it thinks fit and after giving a
reasonable opportunity of being heard to the employer, the
workmen and the persons
interested in such closure, it may,
having regard to the genuineness and adequacy of the reasons
stated by the employer, the interests of the general public
-{ and all other relevant factors, by order and for reasons to
be recorded
in writing, grant or refuse to grant such
permission and a copy of such order is to be communicated to
the employer and the workmen.
Under sub-section ( 3), where
the appropriate Government does not co11111micate the order
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SUPREME COURT REPORTS
[1986] 2 s.c.R.
granting or refusing to grant permission to the employer k
within a period of sixty days from the da,te on which such
application was made, the permission applied for is to be
deemed to have been granted on the expiration of the said
period of sixty days.
The other sub-sections of section 25-0
are not relevant except sub-section (6) and (8) which are as
follows :
" ( 6) Where
no application for permission under -f
sub-section (1) is made within the period specified
therein, or where the permission for closure has 4
been refused, the closure of the undertaking shall
be deemed to be illegal from the date of closure
and the workmen shall be entitled to all the-'
benefits under any law for the time being in force ,)_
as if the undertaking had not been closed down.
"(8) Where an undertaking is permitted to be closed
down under sub-section (2)
or where permission
for
closure
is
deemed
to
be
granted
under
sub-section (3), every workman who is employed in
that undertaking immediately before the date of
application for permission under this section,
'>-
shall be entitled to receive compensation which
shall be equivalent to fifteen days' average pay
for every completed year of continuous service or
any part thereof in excess of six months".
Section 25K(l) specifies the industrial establishments to 'r
which Chapter V-B applies.
Section 25K(l) is as follows :
"25K.
Application of Chapter V-B. -
(I) The provisions of this Chapter shall apply to
an
industrial
establishment
(not
being
an
establishment of a seasonal character or in which
work is performed only intermittently) in which not
less than one hundred workmen were employed on an
average per working day for the preceding twelve
months."
The words "one hundred" were substituted for the words "three
hundred" in section 25K by section 12 of the Amendment Act,
).
S.G. CHEMICAL EMP. UNION v. S.G. CHEMICALS [MADON, J.]
141
~ 19.82, which section was also brought into force on August 21,
1984.
Section
25L
defines
the
expression
"industrial
t
establishment" for the purposes of Chapter V-B and is in the
following terms :
"25L. Definitions. -
For the purposes of this Chapter, -
(a) 'industrial establishment' means -
A
B
(i) a factory as defined in clause (m) of section
c
2 of the Factories Act, 1948;
(ii) a mine as defined in clause (j) of sub-section
(1) of section 2 of the Mines Act, 1952; or
(iii) a plantation as defined in clause (f) of
o
section 2 of the Plantations Labour Act, 1951;
(b)
notwithstanding
anything
contained
in
sub-clause (ii) of clause (a) of section 2, -
(i) in relation to any company in which not less
E
than
fifty-one per cent
of the paid-up share
capital is held by the Central Government, or
(ii) in relation to any corporation not being a
corporation referred to in sub-clause (i) of clause
\
(a) of section 2 established by or under any law
F
made by Parliament,
the Central Government shall be the appropriate
Government."
The definition given in section 25L is for the purposes of
Chapter V-B only. In addition thereto, a new clause, namely,
clause (ka} was inserted in section 2 of the Industrial
~ Disputes Act to define the expression "'industrial establishment or undertaking" by clause (d) of section 2 of the
Amendment Act, 1982.
The relevant provisions of the said
clause (ka) are as follows :
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[19861 2 s.c.R.
"(ka) 'industrial establishment or undertaking' "
means an establishment or undertaking in which any
industry is carried on :
Provided that where several activities are carried
on in an establishment or undertaking and only one
or some of such activities is or are an industry or
industries, then, --
(a)
if any
unit
of
such
establishment
or
undertaking carrying on any activity, being an
industry, is severable from the other unit or units
of such establishment or undertaking, such unit
shall
be deemed to be a
separate
industrial
establishment or undertaking;
(b) if the predominant activity or each of the
predominant
activities
carried
on
in
such
establishment or undertaking or any unit thereof is
an industry and the other activity or each of the
other activities carried on in such establishment
or undertaking or unit thereof is not severable
from and is, for the purpose of carrying on, or )-
aiding
the
carrying
on
of,
such
predominant
activity or activities, the entire establishment or
undertaking or, as the case may be, unit thereof
shall be deemed to be an industrial establishment
or undertaking''.
Clause (b) of section 2 of the Amendment Act, 1982,
inserted a new clause, namely, clause (cc) defining the
"closure". The said clause (cc) is as follows :
also
term )-
"(cc) 'closure' means the permanent closing down of
a place of employment or part thereof''.
Clauses (b) and (d) of section 2 of the Amendment Act, 1982,
were brought into force on August 21, 1984. Clause (j) of
section 2 of the Industrial Disputes Act defines the term r
"industry" as follows :
"(j)
'industry'
means
any
business,
trade,
undertaking, manufacture or calling of employers
S.G. CHEMICAL EMP. UNION v. S.G. CHEMICALS [MAtloN, J.]
143
and includes any calling, service, employment,
handicraft, or industrial occupation or avocation
of workmen".
By clause ( c) of section 2 of the Amendment Act, 1982, the
definition of "industry". given in clause (j) of section 2 of
the Industrial Disputes Act was substituted. Clause (c) of
section 2 of the Amendment Act, 1982, does not, however,
appear to have been brought into force yet and in any event
was not in force when the Company gave the notice of closure
as also when it closed down its Churchgate Division. It is,
therefore,
unnecessary
to
reproduce
the
definition
of
"industry" as substituted by the Amendment Act, 1982.
At the date when the Company gave the notice of closure,
namely, on July 16, 1984, the section in force was section
25-0
as
originally enacted
by
the Industrial Disputes
(Amendment) Act, 1976. In the case of the State of Maharashtra
the original section 25-0 was substituted by a new section by
the Industrial Disputes (Maharashtra Amendment) Ordinance,
1981 (Maharashtra Ordinance No. 16 of 1981), which Ordinance
was
repealed
by
the
Industrial
Disputes
(Maharashtra
Amendment) Act, 1981 (Maharashtra Act No. 3 of 1982). The said
~ Act came into force with retrospective effect on October 27,
1981, namely, the date of the prollJllgation of the said Ordinance. Both the said Ordinance and the said Act had received
the assent of the President. It was, therefore, section 25-0
as in force in the State of Maharashtra which was applicable
i
when the Company gave the notice of closure. It is, however,
unnecessary to set out the provisions of either the original
section 25-0 or of that section as applicable in the State of
"\_Maharashtra for under both of them the provisions for giving a
notice seeking permission of the government for the intended
closure at least ninety days before the date on which the
intended closure was to become effective and the consequences
of not obtaining such prior permission were the same as in
section 25-0 as substituted by the Amendment Act, 1982. What
is, however, material is that at the date of the giving of the
--.{ notice of closure, section 25-K required not less than three
hundred workmen to be employed in an industrial establishment.
The said Maharashtra Act of 1982 which replaced the said
Ordinance had inserted a new sub-section (lA) in section 25K
of the Industrial Disputes Act.