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Judgment
Vikramajit Sen, Ag. C.J.
This appeal assails the order of the learned Single Judge dated 21.10.2005 passed in W.P.No.21718/2000, upholding the Award dated 03.11.1999 passed by the Industrial Tribunal Bangalore in I.D.No.9/1990. The Tribunal had passed orders declaring that the closure of the Mills by the appellant-Binny Limited for the period 26.12.1988 to 06.08.1989 to be illegal, and directing the Management to pay wages and other consequential benefits for the said period to each of the Workmen.
Before us, a feeble endeavor had been made by Mr. Kasturi, learned senior counsel for the appellant-Binny Mill Limited to contend that in actuality, no closure of the Mill had taken place. He sought to contend that the Workmen had left service of their volition from time to time, with the result that the workforce has now dwindled only to a few Workmen today. This contention has to be summarily rejected, in view of the notice dated 25.10.1988 issued by the appellants u/s 25FFA of the Industrial Disputes Act 1947 (hereafter referred to as ''the I.D. Act''). The said provision stipulates that an employer who intends to close down an undertaking shall serve, at least sixty days before the date on which the intended closure is to become effective, a notice on the appropriate Government, stating clearly the reasons for the intended closure of the undertaking. The focal issue is whether the provisions of Section 25-0, which uncontrovertedly have not been complied with, should have mandatorily been adhered to by the appellant. This provision is reproduced for ease of reference:-
25-0. Procedure for closing down an undertaking:
(1) 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.
(2) Where an application for permission has been made under sub-section (1), the appropriate government, after making 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 may, having regards to the genuiness 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 shall be communicated to the employer and the Workmen.
(3) Where an application has been made under sub-section (1) and the appropriate government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.
(4) An order of the appropriate government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order.
(5) The appropriate government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a Tribunal for adjudication:
PROVIDED that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
(6) Where no application for permission under cub-section (1) is made within the period specified therein, or where the permission for closure has 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.
(7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.
(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 years of continuous service or any part thereof in excess of six months.
It has been argued by Shri Kasturi that at the material time Section 25-0 was not on the statute book for the reason that a Single Judge of this Court had upheld the challenge to its vires in Stumpp Schuele and Somappa Ltd. and M. Shivkumar Vs. State of Karnataka, Union of India and Workmen of Electronic Divisions of Stumpp Schuele and Somappa Ltd., . However, that decision had been reversed by the Division Bench in Union of India -Vs- Stumpp, Scheule & Somappa Ltd 3989 (II) LLJ 4 and this view has subsequently been affirmed by the Apex Court. It will be relevant to immediately underscore that Section 25-0 of the Industrial Disputes Act postulates the grant or refusal to grant such permission by the appropriate Government. The far reaching consequence of refusal to grant permission for closure is dealt with in sub-section (6). It ordains that in such an event, the closure of an undertaking shall be deemed to be illegal from the date of its closure and the Workmen shall be entitled to all the benefits under any law for the time being in force, as if the undertaking has not been closed down -
(underling added by us).
The consequence of the failure on the part of the Management to adhere to the mandatory requirements of the provisions of Section 25-0 of the Industrial Disputes Act has been elaborately considered in Oswal Agro Furane Ltd. and Another Vs. Oswal Agro Furane Workers Union and Others, . In particular, the Apex Court had to decide whether a settlement arrived at between the Management and the Workmen would obviate compliance with the provisions of Section-25-O. Their Lordships clarified the law in these words:
A settlement within the meaning of. Section 2(p) read with sub-section (3) of Section-18 of the Act undoubtedly binds the Workmen but the question which would arise is, would it mean that thereby the provisions contained in Sections 25-N and 25-O are not required to be complied with?. The answer to the said question must be rendered in the negative. A settlement can be arrived at between the employer and Workmen in case of an industrial dispute. An industrial dispute may arise as regards the validity of a retrenchment or a closure or otherwise. Such a settlement, however, as regards retrenchment or closure can be arrived at provided such retrenchment or closure has been effected in accordance with law. Requirements of issuance of a notice in terms of Sections 25-N and 25-0, as the case may be and/or a decision thereupon by the appropriate Government are clearly suggestive of the fact that thereby a public policy has been laid down. The State Government, before granting or refusing such permission is not only required to comply with the principles of natural justice by giving an opportunity of hearing both to the employer and the Workmen but also is required to assign reasons in support thereof and is also required to pass an order having regard to the several factors laid down therein. One of the factor besides others which is required to be taken into consideration by the appropriate Government before grant or refusal of such permission is the interest of the Workmen. The aforementioned provisions being imperative in character would prevail over the right of the parties to arrive at a settlement. Such a settlement must conform with the statutory conditions laying down a public policy. A contract which may otherwise be valid, however, must satisfy the tests of public policy not only in terms of the aforementioned provisions but also in terms of Section-23 of the Indian Contract Act.
It is trite that having regard to the maxim "ex turpi causa non oritur action", an agreement which opposes public policy as laid down in terms of Sections 25-N and 25-0 of the Act would be void and of no effect. Parliament has acknowledged the governing factors of such public policy. Furthermore, the imperative character of the statutory requirements would also be borne out from the fact that in terms of sub-section (7) of Section 25-N and sub-section (6) of Section 25-O, a legal fiction has been created. The effect of such a legal fiction is now well known. (See East End Dwellings Co. Ltd. Vs. Finsbury Borough Council, Om Hemrajani Vs. State of U.P. and Maruti Udyog Ltd Vs. Ram Lal).
This would be an opportune time for us to mention that the question/issue on the constitutionality of Section 250 of the I.D. Act has been repulsed by the Constitution Bench in Orissa Textile and Steel Ltd. -Vs- State of Orissa AIR 2002 Supreme Court 708. In view of the dictum of the Apex Court in Oswal Agro, it is not necessary for us to go into the complexity and details of the settlement allegedly arrived at between the appellant and the respondents. The exposition of the law admits of no debate namely that regardless of any settlements arrived at between the Management and its workforce, the failure to fall within the four corners of Section 25O of the I.D Act will inexorably result in rendering the closure of an establishment illegal with the significant repercussion that the Workmen would be entitled to receive all their emoluments for the complete period. The statutory deterrent is salutary and as it combats the unfair labour practice of stifling the rights of the Workmen to earn their livelihood. In these circumstances, the concurrent findings of the Industrial Tribunal Bangalore as well as the learned Single Judge brook no interference by us.
This conclusion will remain unaltered even in the face of the submissions of the learned senior counsel that the appellant-Management could not have filed an application u/s 25O, since at the relevant point of time that provisions had been struck down, Such are the vagaries and vicissitudes of litigation. Even if equitable principles were to be infused into the conundrum by us, we would loathe to absolve the Management since they would lay the entire burden on the shoulders of the Workmen, which is indeed too much for them to carry.
Considerable time has been taken with regard to settlements arrived at between the Management and the Workmen. Mr. Subbarao, learned senior counsel for Respondents 4 & 5 vehemently contended that the settlement is between the Management and its puppet union and not by the majority workforce which, in any event cannot be fastened on the entire workforce. In this regard, several decisions of the Hon''ble Supreme Court have been cited before us. Mr. Kasturi. learned Senior Counsel draws our attention to Barauni Refineries Pragatisheel Shramik Parishad -vs- Indian Oil Corporation Ltd (1991) I LLJ 46 where their Lordships noted that settlements can be categorized in two viz., those arrived at within and without conciliation proceedings. It was held that "a settlement arrived at in the course of conciliation proceedings with a recognized majority union will be binding on all Workmen of the establishment, even those who belonging to the minority union which had objected to the same. To that extent, it departs from the ordinary law of contract. The object obviously is to uphold the sanctity of settlements reached with the active assistance of the Conciliation Officer and to discourage an individual employee or a minority union from scuttling the settlement"
(underlining is ours).
In National Engineering Industries Ltd. Vs. State of Rajasthan and Others, , the principles laid down in Barauni Refineries were reiterated after noticing the earlier decisions in K.C.P. Limited Vs. Presiding Officer and Others, and Herbertsons Limited Vs. The Workmen of Herbertsons Limited and Others, . Therefore, no useful purpose will be served by referring to several other Judgments cited by Mr. Kasturi, learned senior counsel for the appellant-Management. Since the learned Single Judge has accepted the findings of fact rendered by the Industrial Tribunal, there is scant necessity for us to analysis the multitude of decisions given by the Apex Court on the ambit of powers conferred under Articles-226 & 227 of the Constitution. Succinctly stated, in a case where the Industrial Tribunal records a finding of fact, the same shall not be interfered with in exercise of extraordinary writ jurisdiction unless perversity in arriving at that decision is manifest.
There is an admission by the Management-witness in his cross-examination which should not be lost sight of He baa admitted that the Mills were closed "without obtaining prior permission. It is correct to suggest that We did not obtain the permission u/s 25-0 of the I.D, Act. At the time of closure, there were 4500 Workmen on the roll.......It is correct to suggest that as against nine months wages, we have paid a lump sum amount of Rs. . 2,000/-........Thus we have not paid wages for the period 25.12.1988 to. 05.03.1989." The conclusion of the Presiding Officer of the Industrial Tribunal in paragraph-14 of the Award is to the effect that the so-called settlement dated 19.07.1989 had not been signed by all the unions. The learned senior counsel appearing on behalf of the Management has not succeeded in substantiating that the said settlement had the concurrence of majority of the Workmen/workforce through the union leaders. Certainly, the Tribunal was neither satisfied on this point, nor on the adequacy of the compensation of Rs. .2000/-. The sole purpose of Section 25-0 of the I.D. Act is that the Labour/workforce should not be exploited and guise of the closure should not be utilized by the Management as a tool to terminate their services. This is also our opinion that with regard to the two subsequent Settlements dated 13.09.1994 and 31.10.1994. These Settlements are not on the basis of the representation made by or consent given by the majority of the Workmen.
The failure to conform to the statutory mandate contained in Section 25-0 results in the transgressor sustaining the liability for payment of wages to the Workmen for the period of the illegal closure. Once this statutory liability occurs it is not possible to dilute it except where another statutory provision permits it. We must always keep in mind that capital and labour abidingly are strange bedfellows and can never be in pari delicto. This is why labour protection through legislation became necessary. There was justified criticism that in the past the labour movement became unexpectedly powerful and arguably destructive for industrial development. But today there is a healthy balance between these generally incompatible forces; except in stray cases, such as the present one where law is misutilized by one of them to deny just and undeniable dues of the other. We have possibly ventured beyond the path, but that is because of our conviction that statutory liability cannot be negotiated away. The Conciliation Officer is devoid of powers in this regard. Therefore, the so-called Settlements arrived at between the adversaries would remain legally inefficacious so far as the liability arising from a transgression of Section 25-0 is concerned.
This dispute had been referred to Mediation. Regretfully, it turned out be an exercise in futility. Indubitably, the Management is in possession of assets running into several crores much in excess of all its liabilities. Even before us, Mr. Subbarao learned senior counsel appearing en behalf of the Workmen submitted that the Workmen were willing to agree to a reduction of the claim of approximately Rs. .25,000/- being wages for the closure period, obviously together with interest at a reasonable rate. On behalf of the Management, this was not responded to. Viewed from every angle therefore, the appeal is devoid of merit.
It is regrettable that so often litigation is reduced to a scourge for the weak inasmuch as its protraction over several years, in the present case decades, results in rendering statutory relief as a mirage, some of the workers have died without the benefit of their wages because of vexatious litigation succumb to accepting niggardly settlements. This matter is an alarming example.
The appeal is accordingly dismissed with costs of ( Rs. )1,00,000/-.