M/S. Hondaram Ramchandra Vs. Yeshwant Mahadev Kadam
 Insc 1264 (12 December 2007)
S.B. Sinha & Harjit Singh Bedi
(Arising out of SLP (C) NOS.15799-15800 of 2003)
CIVIL APPEAL NO.5840-5841 OF 2007 (Arising out of SLP (C) NOS.15801-15802 of
2003) S.B. Sinha, J.
1. Delay condoned.
2. Leave granted.
3. A limited notice was issued by this Court as
to whether the High Court was right in directing reinstatement of the
respondents-workmen instead of directing payment of compensation in terms of
Section 25FFF of the Industrial Disputes Act, 1947.
4. Appellant had a sales office at Mulji Jetha
Cloth Market, Mumbai.
Respondents-workmen were employed therein. The
said shop was closed.
The factum of the closure of the shop is not in
dispute. What is disputed is as to whether it was done in the year 1983 or
1991. Upon closure of the said shop, the respondents were transferred to work
in a factory at Goregaon which did not belong to the respondents. An
application for payment of wages was filed against the appellant before the
Prescribed Authority. The said application was dismissed, inter alia, on the
premise that the respondents had refused to join their duties at the
transferred place. A domestic enquiry was purported to have been held in April,
1984 on the premise that the respondents had neither reported for duties at Goregaon
nor at Mumbai. The services of the respondents were terminated in December,
1985. In January, 1986, the premises in which the sales office was being run
was admittedly handed over to another Company.
5. An industrial dispute was raised by the
respondents demanding their reinstatement with full back wages as well as
continuity in services. A reference was made by the appropriate Government.
6. A preliminary issue was raised as to whether
in the said reference, the domestic enquiry conducted against the respondents
was fair and proper.
The said preliminary issue was decided in favour
of the employer and against the workmen by an order dated 5.12.1996. The
parties to the reference, thereafter adduced their evidences before the Industrial Court.
7. By an award dated 31.7.1996, the Presiding
Officer of the Labour Court, Mumbai held that the termination of the services of the
respondents was proper and valid and, thus, were not entitled to any relief.
Questioning the correctness of the said award, the workmen filed writ
applications. A learned single Judge of the High Court of Bombay allowed the
said writ petitions being W.P.No.1693 of 1997 and W.P.No.1691 of 1997 by a
judgment and order dated 30.08.1999 setting aside both the awards opining:-
I do not find any merit in the contention advanced on behalf of respondent
No.1. Firstly, as stated hereinabove, there is nothing to show that a proper
Domestic Enquiry has been held. Secondly, there is no evidence on record to
indicate that transfer constituted service condition. Thirdly, the evidence on
record clearly indicates that Khanna Textile Industry was a separate legal
entity vis-`- vis respondent No.1 and under the circumstances, the workman
cannot be asked to join separate legal entity. I have gone through the entire
There is no proof to show that the findings of
the Enquiry Officer were forwarded to the chargesheeted employee. The findings
on record show that the petitioner was asked to work for a separate legal
entity, without terminating his services in accordance with law and without
paying him compensation under Section 25-F of the Industrial Disputes Act,
1947. He was also not paid gratuity. He was also not paid wages during the
period when the Enquiry was going on. Taking into account the above facts, the Labour Court erred in dismissing the
8. An intra court appeal was preferred thereagainst
wherein, inter alia, a contention was raised by the appellant that the sales
office of the appellant having been closed, no award of reinstatement could
have been passed. The said appeal was dismissed by a Division Bench of High
Court by reason of the impugned judgment dated 11.01.2000.
A review application preferred thereagainst has
also been dismissed by an order dated 17.01.2003.
9. Mr. Shekhar Naphade, learned senior counsel
appearing on behalf of the appellant, submitted that keeping in view the
admitted fact that the sales office of the appellant was closed, the workmen
were entitled only to the amount of compensation payable in terms of Section
25FFF of the Industrial Disputes Act, 1947 and not the relief of reinstatement
with back wages.
It was urged that even the learned single Judge
in the judgment noticed:- Shri Khanna has further deposed that he has sold
the Sales Office. The evidence of Shri Khanna clearly indicates that Khanna
Textile Industry was a separate legal entity to which the workman was sought to
Our attention was also drawn to the written
statement filed on behalf of the appellant wherein it was averred :
There is no relation between the shop and
the Goregaon factory. Prior to the 3-4 years from today, the said place of my
work was sold by the company and prior to the sale the place of work was given
by the employer on leave and licence to the 3rd party near about 10 years.
It was furthermore brought to our notice that
the following contentions were raised before the Division Bench of the High
Court, as would appear from the Memo of Appeal:
That there is total non application of mind
on the part of the learned single judge in observing that there is no evidence
on record to indicate that transfer constituted service condition and that Khanna
Dyeing was a separate legal entity viz-a- viz appellant herein. Had the Learned
Single Judge appreciated the fact that asking the first Respondent to resume
duties at Goregaon factory was an offer of alternate employment due to closure
of sales office where the first respondent was employed, he ought to have come
to the conclusion that the action on the part of the Appellant was bonafide and
with intention to secure employment of the Respondent and that the Appellant
was constrained to terminate the service of the first Respondent for not attending
10. It appears from the records that the
following contention was also raised in the review petition :
The petitioner submits with great respect
that this fact was through oversight not gone into by the learned Division
Bench. Had this fact been considered by the Learned Division Bench and the
Learned Single Judge having held that the Respondents job was a
non-transferable one, it is respectfully submitted that reinstatement with the
Petitioner company would not have been granted.
Also payment of back wages would not have been
granted. The Respondent at best was entitled to closure compensation.
11. The learned counsel for the respondents, on
the other hand, contended that the respondents have filed an application under
Section 33(C-2) of the Industrial Disputes Act, 1947 before the Labour Court, Mumbai which is
pending. It was argued that the respondents may not be entitled for their
reinstatement but would indisputably be entitled to back wages in lieu of
It was further submitted that the closure of the
unit was affected only in 1991 and not in 1983.
12. From the records, it appears that the sales
office of the appellant had been closed down. We have noticed heretobefore that
there exists a dispute as to whether the said closure, for all intent and
purport, was effected in 1983 or 1991. The High Court evidently committed an
error in not taking into consideration the factum of closure of the business
from the premises of the appellant, for the purpose of grant of relief. If the
undertaking of the appellant had been closed down, the workmen were entitled to
compensation only in terms of Section 25FFF of the Industrial Disputes Act,
1947 and not the relief of reinstatement with back wages.
13. The question of passing an award directing
reinstatement with full back wages, in the aforementioned fact situation, did
not and could not arise.
However, the purported order of transfer was
evidently not a legal one.
Appellants furthermore initiated a domestic
enquiry against the respondents.
It was held ex parte. On the basis of the report
made by the Enquiry Officer in the said domestic enquiry alone the services of
the respondents were terminated. It was at this stage a reference was made by
the appropriate government for adjudication of the dispute raised by the
respondent herein in terms of Section 10(1)(c) of the Industrial Disputes Act,
14. Two questions arise for our consideration.
Firstly, whether the closure was affected in the
year 1983 or 1991? Secondly, whether the amount of compensation should be
computed as if the establishment of the appellant was closed in 1983 or 1991,
as the case may be, or are the workmen entitled to some other reliefs?
15. Ordinarily, we would have remitted the
matter back to the High Court for consideration of the matter afresh to
determine the said questions. Our attention, although, has been drawn to the
evidences brought on record, it is difficult for us to arrive at one or the
other opinion in regard to the question as to when the establishment of the
appellant was closed. In the aforementioned premise it is also not possible for
us to determine the effect of termination of service of the workmen.
16. We are, therefore, of the opinion that the
interest of justice would be subserved if the Labour Court, where the
application of the respondents under Section 33(C-2) of the Industrial Disputes
Act, 1947is pending, should be directed to determine the aforementioned
questions as the said court can determine the said questions more effectively.
For the said purpose, the Labour Court would permit the parties to adduce fresh
evidence. We would request the Presiding Officer, Labour Court to pass an award as
expeditiously as possible.
17. We, however, direct that the appellant, in
the meanwhile, shall pay a sum of Rs.25,000 each to the concerned workmen
within four weeks from the date of receipt of this judgment by way of
litigation expenses. The said amount may also be deposited before the concerned
18. With the aforementioned observations and
directions, this appeal is disposed of. No costs.