The Management of M/s.R.S.L.'B' Tannery Vaduvanthangal 632 204, Katpadi Taluk, Vellore District v. The Presiding Officer, Labour Court, Vellore

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 23.07.2008CORAMTHE HON'BLE MR.JUSTICE S.NAGAMUTHUW.P.No.2296 of 2008 &M.P.Nos.1 to 3 of 2008The Management of M/s.R.S.L.'B' TanneryVaduvanthangal 632 204,Katpadi Taluk,Vellore District. . . Petitioner Vs1.The Presiding Officer, Labour Court, Vellore.2.M.Sekar3.K.Paranthaman4.M.Kesavan5.R.Manogaran6.S.Marimuthu7.K.Kumaresan8.G.Kasinathan9.G.Ravichandran10.S.Rajendiran11.M.Jagadeesan12.K.Kumaravel13.K.Rajendiran14.S.Mahendiran15.G.Tharani16.G.Ranganathan17.V.Ganesan18.S.Dhandapani19.M.D.Rajendiran20.R.Babu21.C.Subramani22.C.Murugesan23.C.Venkatesan24.R.Srinivasan25.V.Venkatesan26.S.Mahendiran27.K.K.Sampath28.C.Muniswamy https://hcservices.ecourts.gov.in/hcservices/

29.G.Vadivel30.K.M.Murugesan31.L.Venkatesan32.P.M.Govindaswamy33.R.Nedunchelian34.M.Arumugam35.P.Mahadevan36.V.Kotti37.M.Gunasekaran38.K.Karthivelu39.M.Krishnamurthy40.G.Annadurai41.G.Ravi42.G.Rajendran43.M.Shan Basha .. Respondents Writ Petition filed under Article 226 of the Constitution ofIndia to issue a writ of certiorari calling for the records of thefirst respondent with respect to the order passed in computationpetitions Nos.151/05, 212/05, 213/05, 214/05, 216/05, 217/05, 228/05,229/05, 346/05, 347/05, 361/05, 362/05 dated 31.10.2007 on the fileof the first respondent Labour Court and quash the same. For Petitioner : Mr.S.R.Shanmuga Dass For Respondents : Mr.S.T.VaradharajuluO R D E RBy consent of the learned counsel on either side, the writpetition itself is taken up for disposal.2. Challenging a common award made on the petitions filed by therespondents herein under Section 33 C(2) of the Industrial DisputesAct, the petitioner, who is the respondent before the Labour Court,has come forward with this petition.3. The petitioner is an industrial establishment and therespondents are workmen in the said establishment. According to thepetitioner, due to general recession in leather business and severefinancial crunch, the establishment could not be operated and sosuspension of production was declared by the establishment by noticedated 12.04.2002 setting out the reasons for declaring suchsuspension of production. Proper notices were also sent to statutoryauthorities.4. It is further stated by the petitioner that when thesuspension of production was declared, all the workers were informedthat whoever was willing to resign would be paid all the legal dues. https://hcservices.ecourts.gov.in/hcservices/ In pursuance of the same many workers came forward and submittedtheir resignation and the same were also accepted by the Company,consequently the workmen have also obtained settlement of ProvidentFund accumulation.5. Challenging the notice dated 12.04.2002 suspending production,the workers union has raised an industrial dispute and the same is,as of now, pending before the Industrial Tribunal, Chennai, inI.D.No.46 of 2002. While so, the respondents filed petitions Nos.151,212 to 217, 228, 229, 346, 347, 361 and 362 of 2005 before the firstrespondent, Labour Court, Vellore under Section 33C(2) of the I.D.Act. In these petitions, the workers contended that the Managementhad in fact closed down the Industrial establishment and it was not amere suspension of production as stated by the Management. Since nopermission was obtained under Section 25 (o) of the IndustrialDisputes Act from the Government, the said closure of theestablishment, according to the workmen, is illegal and so, from suchdate of deemed closure, the workmen are entitled to all the monetarybenefits. In other words, the contention of the workmen is that theright to claim compensation is a pre existing right by operation ofLaw under Section 25(O) of the Act and so without any prioradjudication in respect of their claim, the Labour Court has gotjurisdiction to compute the benefits under Section 33 C (2) of theAct.6. The contention of the Management before the Labour Court wasthat there was no closure, as it was contended by the workmen, but,on the contrary, what was done by the Management was in fact onlymere suspension of production of work. The petitioner contended thatthe said disputed question should have been adjudicated upon by anappropriate authority under Section 10 of the Industrial Disputes Actand if only there is such adjudication by the said authority, thenthe workmen will be entitled in maintaining a petition under Section33C(2) of the Act. 7. Before the Labour Court, on the side of the workmen twowitnesses were examined as P.W.1 and P.W.2 and two documents wereexhibited as Ex.P1 and Ex.P2. On the side of the Management a lonewitness was examined as R.W.1 and as many as 24 documents wereexhibited as Ex.R1 to Ex.R24. 8. On considering all the materials available, the Labour Courthas concluded that the pendency of the Industrial Dispute inI.D.No.46 of 2002 before the Industrial Tribunal, Chennai is not abar for the Labour Court to decide the Petitions filed by the workmenunder Section 33 C(2) of the Act. The Labour Court has also foundthat it was actually closing down the Industrial establishment andnot mere suspension of production as it is claimed by the Management.The Labour Court, therefore, calculated the amounts due to theworkmen and accordingly ordered for the payment of the same by the https://hcservices.ecourts.gov.in/hcservices/ Management. It is the said common award which is under challenge inthis writ petition.9. I have heard Mr.S.R.Shanmuga Dass, the learned counsel for thepetitioner and Mr.S.T.Varadharajulu, the learned counsel for therespondent and also perused the records carefully.10. From the rival stands taken by the parties, the followingquestion arises for consideration;"1.Whether the Labour Court was right inentertaining Petition under Section 33 C(2) of theAct, when there had been no prior adjudication inrespect of entitlement of the workmen for wages.""2.Whether the Labour Court was right inholding that the petitioner/Management has closeddown the establishment."11. Now, let me analyse the law on this subject. Section 25 (O)of the Industrial Disputes Act deals with closure of Industrialestablishments. The relevant sub Sections read as follows;"(1)Procedure for closing down anundertaking.-(1) An employer who intends to closedown an undertaking of an industrial establishmentto which this Chapter applies shall, in theprescribed manner, apply, for prior permission atleast ninety days before the date on which theintended closure is to become effective, to theappropriate Government, stating clearly thereasons for the intended closure of theundertaking and a copy of such application shallalso be served simultaneously on therepresentatives of the workmen in the prescribedmanner: Provided that nothing in this sub-section shallapply to an undertaking set up for theconstruction of buildings, bridges, roads, canals,dams or for other construction work.(2) Where an application for permission hasbeen made under sub-section(1), the appropriateGovernment, after making such enquiry as it thinksfit and after giving a reasonable opportunity ofbeing heard to the employer, the workmen and thepersons interested in such closure may, havingregard to the genuineness and adequacy of thereasons stated by the employer, the interest on https://hcservices.ecourts.gov.in/hcservices/ the general public and all other relevant factors,by order and for reasons to be recorded inwriting, grant or refuse to grant such permissionand a copy of such order shall be communicated tothe employer and the workmen.(3)Where an application has been made undersub-section (1) and the appropriate Governmentdoes not communicate the order granting orrefusing to grant permission to the employerwithin a period of sixty days form the date onwhich such application is made, the permissionapplied for shall be deemed to have been grantedon the expiration of the said period of sixtydays.(6) Where no application for permission undersub-section (1) is made, within the periodspecified therein, or where the permission forclosure has been refused, the closure of theundertaking shall be deemed to be illegal from thedate of closure and the workman shall be entitledto all the benefits under any law for the timebeing in force as if the undertaking had not beenclosed down.12. A plain reading of 25 (O) would go to establish that beforeclosing down the industrial establishment, the employer is requiredto obtain prior permission from the Government following theprocedure including the procedure relating to prior notice. Section25(O) (6) makes it very clear that in case where no such applicationfor permission was ever made or where permission for closure wasrefused, then the closure of the undertaking shall be deemed to beillegal from the date of closure and as a consequence, the workmenshall be entitled to all benefits as if the industrial establishmenthas not been closed. Thus by means of legal fiction, it should beunderstood that the industrial establishment was working and therewas no closure. Therefore, in cases where the question is whether theworkmen are entitled for all the benefits, it should be first decidedas to whether the industrial establishment has in fact been closedand that the prior permission was obtained or not. 13. Now, the question is as to Whether the said question can bedecided by the Labour Court while deciding the claims of Workmenunder Section 33C(2) of the Act.14. At this juncture, it is necessary to extract 33 C of theIndustrial Disputes Act, 1947 which is as follows; https://hcservices.ecourts.gov.in/hcservices/ "Recovery of money due form an employer.-(1)Where any money is due to a workman from anemployer under a settlement or an award or underthe provisions of (Chapter VA or Chapter VB,) theworkman himself or any other person authorised byhim in writing in this behalf, or, in the case ofthe death of the workman, his assignee or heirsmay, without prejudice to any other mode ofrecovery, make an application to the appropriateGovernment for the recovery of the money due tohim, and if the appropriate Government issatisfied that any money is so due, it shall issuea certificate for that amount to the Collector whoshall proceed to recover the same in the samemanner as an arrear of land revenue:Provided that every such application shall bemade within one year from the date on which themoney became due to the workman from the employer:Provided further that any such applicationmay be entertained after the expiry of the saidperiod of one year, if the appropriate Governmentis satisfied that the applicant had sufficientcause for not making the application within thesaid period.(2) Where any workman is entitled to receivefrom the employer any money or any benefit whichis capable of being computed in terms of money andif any question arises as to the amount of moneydue or as to the amount at which such benefitshould be computed, then the question may, subjectto any rules that may be made under this Act bedecided by such Labour Court as may be specifiedin this behalf by the appropriate Government(within a period not exceeding three months)(Provided that where the presiding officer ofa Labour Court considers it necessary or expedientso to do, he may, for reasons to be recorded inwriting, extend such period by such further periodas he may think fit.)15. A close reading of Section 33C(1) and (2) of the Act wouldmake it obvious that Sub Section (1) deals only with “any money” dueto a workman from an employer under a settlement or an award or underthe provisions of Chapter V (A) and V(B) of the Act, whereas SubSection (2) deals with the entitlement of a workman to receive from https://hcservices.ecourts.gov.in/hcservices/ the employer “any money" or "any benefit” which is capable of beingcomputed in terms of money.16. The difference between these two Sections is explicit. SubSection (1) covers only “any money” which is due, whereas Sub Section(2) deals with “any money as well as any benefit” which is capable ofbeing computed in terms of money. So far as Sub Section (1) isconcerned, there can be no controversy that such amount of moneyshould be due under any settlement or award or under the provisionsof Chapter V(A) or V(B) of the Act.17. After the introduction of Section 33C of the IndustrialDisputes Act, 1947, the scope of the said provision came to beconsidered by a Constitution Bench of the Honourable Supreme Court inKays Construction Co. (P) Ltd. v. State of U.P.,((1965) 2 SCR 276).The Honourable Supreme Court had occasion to deal with the differencebetween “money due” and “benefit capable of being computed". TheHonourable Supreme Court has held as follows;“The Divisional Bench has given apt examples ofbenefits which are computable in terms of money,but till so computed are not “money due”. Forinstance, loss of the benefit of free quarters isnot loss of “money due” though such loss can bereckoned in terms of money by inquiry andequation. The contrast between “money due” on theone hand and a “benefit” which is not “money due”but which can become so after the money equivalentis determined on the other, marks out the areas ofthe operation of the two sub-sections. If the word“benefit” were taken to cover a case of merearithmetical calculation of wages, the first sub-section would hardly have any play. Every case ofcalculation, however, simple, would have to gofirst before a Tribunal. In our judgment, a casesuch as the present, where the money due is backwages for the period of unemployment is covered bythe first sub-section and not the second. No doubtsome calculation enters the determination of theamount for which the certificate will eventuallyissue but this calculation is not of the typementioned in the second sub-section and cannot bemade to fit in the elaborate phrase “benefit whichis capable of being computed in terms of money”.The contrast in the two sub-sections between“money due” under the first sub-section and thenecessity of reckoning the benefit in terms ofmoney before the benefit becomes “money due” underthe second sub-section shows that merearithmetical calculations of the amount due are https://hcservices.ecourts.gov.in/hcservices/ not required to be dealt with under the elaborateprocedure of the second sub-section. The appellantno doubt conjured up a number of obstructions inthe way of this simple calculation. Theseobjections dealt with the “amount due” and theyare being investigated because the StateGovernment must first satisfy itself that theamount claimed is in fact due. But the anti-thesisbetween “money due” and a “benefit which must becomputed in terms of money” still remains, for theinquiry being made is not of the kind contemplatedby the second sub-section but is one for thesatisfaction of the State Government under thefirst sub-section. It is verification of the claimto money within the first sub-section and notdetermination in terms of money of the value of abenefit. The judgment” (emphasis supplied)18. From the above judgment it can be very safely understood thatin cases where a workman claims that he is entitled for a “benefit”which is capable of being computed in terms of money, then there hasto be an adjudication first by the competent authority as to whetherthe workman is entitled for such benefit and whether the same iscapable of being computed. If only such pre adjudication of thebenefit is made, then the question of computing the same in terms ofmoney can be undertaken by the Labour Court under Section 33 C(2) ofthe Act. 19. As held by the Honourable Supreme Court, the “benefit”becomes “money due” if only there is adjudication by the Court, butin the case on hand the workmen do not claim for any “benefit”, butthey claim for “money due”.20. A comparison of 33 C (1) and (2) of the Act would go to showthat under both the sub Sections “money" due to a workman is covered.It has been well settled by catena of decisions of the HonourableSupreme Court that to invoke sub Sections (1) and (2) of 33 C of theAct there has to be either a settlement or an award indicating the“money due” to the workman or under the provisions of Chapter V(A) orV(B) of the Act. In respect of the first category namely any moneydue under an award, since the very award itself is an adjudication itdoes not require any more adjudication. Similarly, in respect ofmoney due under a settlement, since such a settlement is the resultof the voluntary act of the parties on mutual agreement, nothing isavailable to be adjudicated upon. Similarly, in respect of amountsdue under the provisions of Chapter V(A) and V(B) of the Act alsothere need not be any pre adjudication in respect of the right of theworkman for money, since the amount becomes due by operation of law.Thus in all these categories of cases, since money had already become https://hcservices.ecourts.gov.in/hcservices/ due under any pre-existing rights, there is no requirement oroccasion for having any more adjudication so as to enable the workmanto approach the Government either under Section 33C (1) or underSection 33C(2) of the Act.21. In PUNJAB BEVERAGES PVT. LTD. v. SURESH CHAND (1978 2 SCC144) the Honurable Supreme Court has held that "a proceeding under Section 33C(2) is aproceedings in the nature of execution proceedingin which the Labour Court calculates the amount ofmoney due to a workman from the employer, or, ifthe workman is entitled to any benefit which iscapable of being computed in terms of money,proceeds to compute the benefit in terms of money.Proceedings further, this Court held that theright to the money which is sought to becalculated or to the benefit which is sought to becomputed must be an existing one, that is to say,already adjudicated upon or provided for and mustarise in the course of and in relation to therelationship between the industrial workman, andhis employer". “It is not competent to the Labour Courtexercising jurisdiction under Section 33C(2) toarrogate to itself the functions of an industrialtribunal and entertain a claim which is not basedon an existing right but which may appropriatelybe made the subject matter of an industrialdispute in a reference under Section 10 of theAct.”22. Following the above said judgment and two more judgments ofthe Honourable Supreme Court in MUNICPAL CORPORATION OF DELIHI v.GANESH RAZEK & ANOTHER ((1995) 1 SCC 235) and STATE BANK OF INDIA v.RAM CHANDRA DUBEY & OTHERS ((2001 1 SCC 73) a Full Bench of theHonourable Supreme Court in STATE OF UTTAR PRADESH v. BRIJPAL SINGH(2006 AIR SCW 66) has summed up the principles as follows; Any money or any benefit which is capable ofbeing computed in terms of money and which he isentitled to receive from his employer and isdenied of such benefit can approach Labour Courtunder Section 33 C(2) of the Act. The benefitsought to be enforced under Section 33C(2) of theAct is necessarily a pre-existing benefit or oneflowing from a pre-existing right. Thedifferenced between a pre-existing right orbenefit on one hand and the right or benefit,which is considered just and fair on the otherhand is vital. The former falls within https://hcservices.ecourts.gov.in/hcservices/ jurisdiction of Labour Court exercising powersunder Section 33C(2) of the Act while the latterdoes not. 23. Applying the above principles, if the facts of the case onhand are analysed, as rightly pointed out by the learned counsel forthe respondent, the “money due” to the workmen arise out of the pre-existing right. The said right emanates from Section 25 O of the Act.Section 25(O) of the Act falls in Chapter V(B) of the Act. Thoughthere is a specific mention made of Chapter V(A) and V(B) of the Actin Section 33C(1) of the Act and no such mention has been made inSection 33C(2) of the Act, Section 33C(2) should not be read inisolation so as to interpret that Section 33C(2) does not cover theexisting rights of the workman emanating from Chapter V(A) or V(B) ofthe Act. It is trite law that Section 33C(2) is larger in it's scopethan Section 33C(1) of the Act. Section 33C(1) empowers anadministrative authority, where there is only a limited scope for anyenquiry, whereas, Section 33C(2) of the Act empowers a judicialauthority where there is a larger scope for enquriy. If a conjointreading of Section 33C(1) and Section 33C(2) is made, there may notbe any difficulty to conclude that Section 33C(2) of the Act embracesinto its ambit the pre-existing rights of workmen emanating fromChapter V(A) or V(B) of the Act. As pointed out earlier, in theinstant case, the workmen claim that their right is a pre existingone under Section 25(O) of the Act falling in Chapter V (B) of theAct and same needs to be accepted.24.Though it is contended by the learned counsel for thepetitioners that the industrial establishment was not closed andthere was only suspension of production, as the scope of enquiryunder Section 33C(2) is larger than the scope under Section 33C(2) ofthe Act, as an incidental issue, the Labour Court while exercisingits jurisdiction under Section 33C(2) of the Act can very well go into the question whether the industrial establishment had been closedor had there been only suspension of production alone. 25. In INLAND STEAM NAVIGATION WORKERS UNION v. U.O.I (2001 I LLJ730), the Honourable Supreme Court had an occasion to consider thesaid question and in paragraph 8 of the judgment it has been held asfollows;-“8. Before us it is contended that the DivisionBench of the High Court while dealing with theappeal arising out of the company matter heldthat it was not within the scope of the scheme tofind out first whether there was a closure of thecompany within the meaning of the I.D.Act andthat claim of the workmen under the I.D. Actbased on agreement dated August 25, 1965 was not https://hcservices.ecourts.gov.in/hcservices/ within the jurisdiction and province of theapplication for sanction of the scheme and thatthe agreement will have to be enforced in aproperly constituted proceedings.”In paragraph 10 the said judgment, the Honourable Supreme Court hasconcluded as follows;“10. As rightly held by the High Court, theworkmen in question are entitled to compensationin case of closing down of an undertaking. Herethere has been no transfer of the undertakingfrom the company to the Corporation as found bythe Tribunal and upheld by the High Court becauseby order made by the Company Court the scheme ofarrangement was to close down the company andwhat was taken over by the Corporation wasseparate arrangement. Therefore, in the eye oflaw what is to be held is that the undertaking isclosed down on account of unavoidablecircumstances beyond the control of the employerand every workman who has been in service formore than ten years in that undertakingimmediately before such closure shall be entitledto notice and compensation in accordance with theprovision of Section 25-F as if the workmen hasbeen retrenched. In case where an undertaking isclosed down by reason of financial difficultiesas was the position in the present case, itcannot be deemed to have been closed down onaccount of unavoidable circumstances beyond thecontrol of the employer. Therefore, if anapplication is made by the workmen or by theunion of their behalf before a Labour Court underSection 33-C(2) of the I.D. Act it will be properfor the Labour Court to examine the claims underSection 25-FFF of the I.D. Act, of each of theseworkmen and award compensation accordingly.(emphasis supplied)26. As held by the Honourable Supreme Court in the above case,it will be very much within the jurisdiction of the Labour Courtwhile exercising its jurisdiction under Section 33C(2) of the Act toexamine the claims of the workman under Section 25(O) of the Act. Inthe case on hand, the Labour Court has rightly gone into the saidquestion and has thoroughly dealt with the evidences on record andhas held that the industrial establishment has in fact been closed.On that finding, the labour Court has calculated the amount due tothe workmen and ordered the management to pay the same. I do not find https://hcservices.ecourts.gov.in/hcservices/ anything illegal or perverse in the said factual findings warrantingany interference. 27. In the result, the writ petition fails and the same isdismissed accordingly. No costs. Consequently, the connectedmiscellaneous petitions are closed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.jikrTo1.The Presiding Officer, Labour Court, Vellore.2.The Section Officer, VR Section, High Court, Madras.+ 1 CC To Mr.S.T.Varadharajulu, Advocate SR NO.39610W.P.No.2296 of 2008RS(CO)SRA(04/08/2008)