THE MANAGEMENT TI DIAMOND CHAIN LTD. v. THE PRESIDING OFFICER PRINCIPAL LABOUR COURT CHENNAI

16 S.SUNDARAJAN17 A.JEYASEELAN18 H.K.RAMAPRASAD19 A.K.LOGANATHAN20 V.GOPINATHAN21 V.MANOHARAN22 M.RAVI23 R.MOOKIAH ... RespondentsPetition under Article 226 of the Constitution of Indiapraying to issue a writ of certiorari to call for the recordsrelating to the common award dated 31.10.2005 in IndustrialDisputes Nos.210 to 214, 216 to 219, 221, 225, 227, 229, 237,257, 258, 260, 263, 265, 266 and 267 of 97 on the file of thePrincipal Labour Court, Chennai and quash the Award dated 31stOctober 2005 in so far as the Respondent workmen are concernedand in so far as the direction of reinstatement by thispetitioner (MTH Factory). For Petitioner:Mr.Sanjay Mohan forM/s.S.Ramasubramaniam andAssociatesFor Respondents:Mr.S.Kumaraswamyfor RR 2 to 20, 22 and 23No appearance for R21ORDERThe petitioner Management is before this Court underArticle 226 of the Constitution of India, challenging the commonaward dated 31st October 2005, passed by the Principal LabourCourt, Chennai. 2. The facts leading to the filing of IDOPs before theLabour Court are as follows:-The employees, the respondents herein, joined the servicesof the petitioner on different dates between 1990 and 1996. Thepetitioner herein originally put up a factory at MTH Road,Ambattur, for the manufacture of cycle chains to cater to the https://hcservices.ecourts.gov.in/hcservices/ needs of TI Cycles of India, a Unit of Tube Investment of IndiaLtd. The company diversified its activities to manufacture ofindustrial chains and automotive chains. The factory at MTHRoad, Ambattur, engaged in the manufacture of cycle chains,started the manufacture of industrial chains and automotivechains only. The factory at MTH Road manufacturing cycle chainswas shifted to Ambattur Industrial Estate along with themachinery. The employees engaged in cycle chain manufacturingwere deployed to other Sections. The petitioner requiredtrainees for the new factory. The company recruited trainees forthe cycle chain factory. After giving necessary training, theywere confirmed. It is stated that unable to meet the stiffcompetition from North India and despite several measures taken,the petitioner could not contain the cost of manufacture ofcycle chains. Thus the steady escalation in cost of variousinputs had its telling effect on the viability of the operationsin the Cycle Chain Manufacturing Unit. It is stated that theCycle Chain Unit started incurring huge loss since 1996. On andfrom 16.12.1996, the Unit manufacturing cycle chains was closedon account of mounting loss and the stiff competition faced bythe Industry. It is stated that the workmen affected by theclosure were paid notice pay and closure compensation underSection 25FFF of the Industrial Disputes Act. Thus the servicesof the respondents herein/workmen were terminated. This led tothe filing of petitions before the Conciliation Officer. Withtalks on conciliation failing, the respondents raised a disputebefore the Labour Court. Since the issues raised by the workersare one and the same, all the petitions were tried together andcommon issues were framed, which are as follows:-(i) Whether the closure of first respondentestablishment with effect from 16.12.96 inaccordance with law?(ii) Whether the respondents have violatedthe provisions of Chapter V-B of theIndustrial Disputes Act?(iii) Whether the petitioners are entitledto reinstatement with continuity of service,backwages and all other attendant benefits?3. As regards the closure of the establishment on16.12.1996 in accordance with law, the Labour Court pointed outthat admittedly, the Cycle Chain Manufacturing Unit started itsfactory at Ambattur to cater to the requirements of TI Cycles ofIndia, which is a Unit of the Tube Investment of India Limited.The workers who were employed in the Cycle Chain ManufacturingUnit were deployed to manufacture exclusively cycle chains.Admittedly, the petitioner initially started manufacturing cyclechains; thereafter started manufacturing industrial chains and https://hcservices.ecourts.gov.in/hcservices/ automative chains. The Labour Court pointed out that it is notin dispute that the machinery connected with the manufacture ofcycle chains were shifted from MTH Road, Ambattur to B6 AmbatturIndustrial Estate for manufacturing of cycle chains exclusively.Referring to the state of affairs of the cycle industry, onaccount of stiff competitive nature, a fact which had not beendisputed by the parties herein in all the Industrial Disputes,the Labour Court pointed out that the workers of the AmbatturIndustrial Estate resorted to strike, demanding enhanced BasicSalary and Dearness Allowance. Ultimately, a settlement wasreached between the Management and the representative of theworkmen on 31.3.1996. After settlement, there was dispute amongthe Management and the workers regarding the shortage inproduction. In spite of letter dated 11.6.1996 from theManagement requesting the labourers to increase the productionto reach the normal production level, there being no furtherimprovement, the Management issued notice dated 14.12.1996 toclose down the Cycle Chain Manufacturing Unit on the ground thatthe functioning of the Unit had become totally unviable. 4. On behalf of the workmen, WW1 was examined, wherein, hepointed out that TI Diamond Chain Ltd., C.C. Division is anintegral part of TI Diamond Chain Ltd., the second respondentin the petition before the Labour Court. WW1 had specificallystated that the machinery, the property of the Cycle Chain Unit,belonged to the Industrial Chains and Automotive Chains Unit,the second respondent herein. There is no separate propertyfor the first respondent independent of the second respondent.The evidence of WW1 was not denied by MW1 or MW2 in theirevidence. M.W.1 admitted that Officers are deputed from theIndustrial Chains and Automotive Chains Unit to the Cycle ChainUnit establishment. The Tribunal pointed out that thisestablishes the stand of the employees that both the companiesare under the control of the Industrial Chains and AutomotiveChains Unit and Cycle Chain Unit was dependent on the IndustrialChains and Automotive Chains Unit not only in administrativematters, but also on the sales aspect. 5. Referring to Chapter V-B of the Industrial Disputes Act,the Tribunal considered the issue as to whether the firstrespondent is an undertaking of the second respondent or thefirst respondent was a separate legal entity. Initially, thepetitioner was manufacturing only cycle chains; later on, itstarted manufacturing industrial chains and automative chains.WW1, in his evidence, had stated that after the closure of theCycle Chain Manufacturing Unit, the machinery for themanufacture of cycle chains were shifted from AmbatturIndustrial Estate to MTH Road, Ambattur. The Labour Court https://hcservices.ecourts.gov.in/hcservices/ pointed out that in the cross-examination, the Managementwitness stated that he was not aware of the shifting ofmachinery. The Labour Court observed that it indicated that theManagement witnesses had not spoken the truth. Referring to theevidence thus let in orally, the Labour Court pointed out thatthe Cycle Chain Manufacturing Unit and the petitioner Unit areinterdependent and an Undertaking of the petitionerestablishment. The said fact had not been categorically deniedby MW1 and MW2. The Labour Court further pointed out to Exs.M4and M8, that it was evident that the petitioner Management ownedseveral other factories including Kakkalur and Hyderabad alsoand separate factory licences were obtained and E.S.I. Codenumbers were allotted to them. It was not disputed that thepetitioner company diversified the manufacture of cycle chainsto the first respondent and that there were not less than 100workmen employed on an average per day. 6. Referring to Section 25-O of the Industrial DisputesAct, the Labour Court came to the conclusion that the closure ofthe Cycle Chain Unit was the closure of an Undertaking and notthe closure of the Industrial Establishment. As far as thepermission pertaining to the closing down of the Undertaking ofan Industrial Establishment as per Section 25-O of theIndustrial Disputes Act is concerned, the Labour Court pointedout that the only test that would be applicable is whether theCycle Chain Manufacturing Unit is an Undertaking of thepetitioner Industrial Establishment or both the Units are to betreated as separate establishments. The Labour Court furtherpointed out that the raw materials to the Cycle ChainManufacturing Unit were supplied by the petitioner Unit and thefinished products were marketed through the petitioner.Referring to the decision relied on by the workers reported in1986-1-LLJ 490 in the case of S.G.CHEMICALS AND DYES TRADINGEMPLOYEES UNION v. S.G.CHEMICALS AND DYES TRADING LIMITED ANDANOTHER, the Labour Court ultimately came to the conclusion thatthe petitioner company had not taken permission from theGovernment for closing the Cycle Chain Manufacturing Unit. Theclosure of the first respondent Unit was not genuine and forbona fide reasons. Further, the petitioner failed to obtainpermission as required under Section 25-O of the IndustrialDisputes Act from the Government, which makes the closureillegal and void ab initio. However, while so holding, theTribunal pointed out that even though the Cycle ChainManufacturing Unit was closed, the workers are entitled to bereinstated with continuity of services, full back-wages and allother attendant benefits and thereby allowed the IndustrialDisputes filed by the employees/respondents herein. Aggrieved bythis order, the Management has come on a writ petition. https://hcservices.ecourts.gov.in/hcservices/

7. Learned counsel for the petitioner pointed out that thefacts available as regards the functioning of both the factoriesclearly pointed out to the total absence of functionalintegrality between the two units. The question as to whetherthe two independent units, namely, the Cycle Chain ManufacturingUnit and the Industrial and Automative Chain Unit havefunctional integrality should have been considered from thepoint of interdependency of the two units to exist, for whichthere is hardly any material for the Labour Court to holdagainst the petitioner. Even though there may be commonality ofthe Management of these Units, yet, the Labour Court has to givea finding as to whether there is a functional integrality aslaid down by the decisions reported in AIR 1960 SC 56 – THEASSOCIATED CEMENT COMPANIES LIMITED, C HAIBASSA CEMENT WORKS,JHINKPANI v. THEIR WORKMEN; 1986-1-LLJ 490 – S.G.CHEMICALS ANDDYES TRADING EMPLOYEES UNION v. S.G.CHEMICALS AND DYES TRADINGLIMITED AND ANOTHER, 2010-1-LLJ 487 Mad - ALAGHU PHARMACY (B)REP. BY ITS PROPRIETRIX J.SELVARANI v. REGIONAL PROVIDENT FUNDCOMMISSIONER AND ASSISTANT PROVIDENT FUND COMMISSIONERENFORCEMENT; AIR 1987 SC 1478 – ISHA STEEL TREATMENT, BOMBAY vASSOCIATION OF ENGINEERING WORKERS, BOMBAY AND ANR. and AIR1960 SC 1213 – MANAGEMENT OF PRATAP PRESS, NEW DELHI v.SECRETARY, DELHI PRESS WORKERS' UNION AND ITS WORKMEN. Hepointed out to the difference in the products manufactured bythe two Units employing different employment terms in the twoUnits, absence of transfer of labour from one Unit to the otherUnit, etc. Further, any settlement reached under Section 18(1)of the Act by one Unit could not have a binding effect on theother Unit. 8. Learned counsel for the petitioner pointed out thatthere were no material for the Tribunal to come to a conclusionthat there was functional integrality between these two unitsto hold that Section 25-O of the Industrial Disputes Act isattracted to the facts of the case. Given the fact that theCycle Chain Manufacturing Unit was started first and later onshifted to Ambattur, learned counsel for the petitioner pointedout that the common management of two Units, would not, per se,be called as functional integrality. In support of thecontention, learned counsel for the petitioner placed relianceon the following decisions:(i) AIR 1974 SC 1132 – WORKMEN OF THE STRAW BOARD MANUFACTURINGCO., LTD. v. STRAW BOARD MANUFACTURING CO., LTD.;(ii) AIR 1960 SC 56 – THE ASSOCIATED CEMENT COMPANIESLIMITED, C HAIBASSA CEMENT WORKS, JHINKPANI v. THEIRWORKMEN;(iii) AIR 1987 SC 1478 – ISHA STEEL TREATMENT, BOMBAY v https://hcservices.ecourts.gov.in/hcservices/ ASSOCIATION OF ENGINEERING WORKERS, BOMBAY AND ANOTHER.;(iv) 1986-1-LLJ 490 – S.G.CHEMICALS AND DYES TRADING EMPLOYEESUNION v. S.G.CHEMICALS AND DYES TRADING LIMITED ANDANOTHER;(v) AIR 1960 SC 1213 – MANAGEMENT OF PRATAP PRESS, NEW DELHI v.SECRETARY, DELHI PRESS WORKERS' UNION AND ITS WORKMEN.(vi) 2010-1-LLJ 487 (Mad) - ALAGHU PHARMACY (B) REP. BYITS PROPRIETRIX J.SELVARANI v. REGIONAL PROVIDENT FUNDCOMMISSIONER AND ASSISTANT PROVIDENT FUND COMMISSIONERENFORCEMENT and (vii) 2003-II-LLJ 810 BOM – NANDINEE TRAVELS PVT. LTD. VREGIONAL PROVIDENT FUND COMMISSIONER. In the light of the law declared in the decisions referred toabove, learned counsel for the petitioner submits that theTribunal committed serious error in holding that Section 25-O ofthe Industrial Disputes Act is attracted in this case. 9. Per contra, learned counsel for the respondents drew myattention of this Court to Section 2(k) of the IndustrialDisputes Act as regards the application of Chapter V-B, andsubmits that the decision relied on by the petitioner reportedAIR 1987 SC 1478 – ISHA STEEL TREATMENT, BOMBAY Vs. ASSOCIATIONOF ENGINEERING WORKERS, BOMBAY AND ANR., relates to the law thatstood prior to the amendment of Act 46 of 1982 and hence, thesaid decision has no relevance to the case on hand. He pointedout that Ex.M19 is not related to the petitioner herein or tothe Cycle Chain Manufacturing Unit. Ex.M20 is the letter fromthe E.S.I. Corporation to the Cycle Chain Manufacturing Unit. Inthe absence of any material to discredit the claim of therespondents herein as to the functional integrality existingbetween these two Units, the contention that there was nomaterial to substantiate the functional integrality, has tofail. 10. Learned counsel for the respondents further drew myattention to Sections 2(n) and 4 of the Factories Act andpointed out that financial management, marketing and clericalwork performed by the Ambattur Industrial Estate are dependenton the factory at MTH Road. Further, he placed reliance on thedecisions reported in:(i) 1978-II LLJ 397 – HUSSAINBHAI, CALICUT v. ALATH FACTORYTHOZHILALI UNION;(ii) AIR 1982 SC 78 – WORKMEN v. WILLIAMSON MAGOR AND CO., LTDAND ANOTHER; and(iii) (2010) 3 SCC 192 – HARJINDER SINGH v. PUNJAB STATEWAREHOUSING CORPORATION, to impress on the need for a liberal view as to the welfare of https://hcservices.ecourts.gov.in/hcservices/ the workmen and that the closure of one Unit need not, in anymanner, result in the closure of the other Unit to draw theinference of functional integrality. In the light of the factsfound by the Labour Court, the petitioner's case merits to berejected.11. Heard learned counsel appearing for both sides.12. It is an admitted fact that the manufacturing of theindustrial chains and automotive chains came as adiversification from the first Unit manufacturing cyclechains. It is also an admitted fact that both the units areunder one Management called TI Diamond Chain Ltd; that at themanagerial level, there had been inter-transfer of personnelfrom one Unit to other; that the workers engaged in one Unitwere not transferred from one Unit to the other Unit. Whateversettlement arrived at in one Unit had no impact or a bindingeffect on the other Unit. It is also not denied by therespondents that the conditions of service existing among theUnits are different and separate Standing Orders are applicablefor the workmen in each of the two Units. Even after theclosure of the Cycle Chain Manufacturing Unit from 16.12.1996,the Industrial and Automotive Chain Manufacturing Unitfunctions without any impact felt on account of the closure ofthe Cycle Chain Unit; thus, except for the commonality of themanagement, maintenance of accounts, balance sheet andmanagerial personnel, there are hardly any material tosubstantiate that functional integrality existed between the twoUnits. In this regard, the law declared by the Apex Court onthe aspect of functional integrality needs immediate reference.13. In the decision reported in AIR 1960 SC 56 – THEASSOCIATED CEMENT COMPANIES LIMITED, C HAIBASSA CEMENT WORKS,JHINKPANI v. THEIR WORKMEN, the Supreme Court pointed out to thedefinition of "Industrial Establishment" in Section 25C, 25D 25Eof the Industrial Disputes Act and to the explanation. TheSupreme Court referred to the explanation to Section 25A of theAct, defining industrial establishment and pointed out that theAct does not lay down any specific test for determining what isan establishment. It held that the question of unity or onenesspresents difficulties when the industrial establishment consistsof Parts, Units, Departments, Branches etc. The question thenarises is as to what test should be applied for determining whatconstitutes one establishment. The real purpose of this test isto find out the true relation between the Parts, Units,Departments, Branches etc. How the relation between the Unitswill be judged will depend on the facts proved. The difficultyof applying the test arises because of the complexities of https://hcservices.ecourts.gov.in/hcservices/ modern industrial organisations, where, in an industrialestablishment, some Units may be integrated in part with otherUnits coming under the same management and in part withfactories or plants which are independently owned. The SupremeCourt held that the test of functional integrality, generalunity and physical proximity should be taken into considerationin determining the ultimate question. However, no particulartest can be adopted as an absolute test in all cases and theword "establishment" is not to be given a sweeping definition asone whole organisation, of which it is capable but rather is tobe construed in the ordinary business or commercial sense. 14. In the decision reported in AIR 1960 SC 1213 –MANAGEMENT OF PRATAP PRESS, NEW DELHI v. SECRETARY, DELHI PRESSWORKERS' UNION AND ITS WORKMEN, the Apex Court once againpointed out that in all cases where there appears to be afunctional integrality, the Court has to consider with care, howfar the functional integrality, meaning thereby functionalinterdependence, existed, that one Unit cannot existconveniently and reasonably without the other and on the furtherquestion whether in matters of finance and employment, theemployer actually kept the two units distinct or integrated. 15. In the decision reported in AIR 1974 SC 1132 – WORKMENOF THE STRAW BOARD MANUFACTURING CO., LTD. v. STRAW BOARDMANUFACTURING CO., LTD. referring to the judgments referred toabove, the Supreme Court reiterated the above-said principlesonce again. Quoting from Straw Board Manufacturing Company'sdecision, the Apex Court, in the decision reported in AIR 1987SC 1478 – ISHA STEEL TREATMENT, BOMBAY v ASSOCIATION OFENGINEERING WORKERS, BOMBAY AND ANR., pointed out that the unityof ownership, supervision and control that existed in respect ofthe two mills involved in that case and the fact that theconditions of service of the workmen of the two mills weresubstantially identical, were not, by themselves, sufficient inthe eye of law to hold that there was functional integralitybetween the two Mills. The Apex Court further pointed out thatthe closure of a Unit amounted to stoppage of part of theactivity and it is an act of Management which is entirely in thediscretion of the Management, and over this direction, noIndustrial Tribunal could interfere. The Supreme Court furtherpointed out to the decision reported 1962-1-LLJ 409 (INDIANCABLE CO. LTD. Vs. ITS WORKMEN) that the common balance sheetincorporating the trading results of all branches are that theemployees of various branches were treated alike for the purposeof provident fund, gratuity, bonus and conditions of service ingeneral, could not lead to the conclusion that all branchesshould be treated as one Unit for purposes of Section 25G of theAct. https://hcservices.ecourts.gov.in/hcservices/

16. The decision reported in 1986-1-LLJ 490 SC –S.G.CHEMICALS AND DYES TRADING EMPLOYEES' UNION v. S.G.CHEMICALSAND DYES TRADING LIMITED AND ANR, reiterated the law declaredearlier on the issue of functional integrality. Dealing withthe definition of "Industrial Establishment" or "Undertaking"and to the relevancy of Section 25-O of the Industrial DisputesAct, the Supreme Court held as to what constitutes "oneestablishment". The Supreme Court held that the word"Undertaking" in the Industrial Disputes Act is to be understoodin an ordinary meaning. The word "Undertaking" of an IndustrialEstablishment occurring in Section 25-O means an Undertaking inits ordinary meaning and in the sense, as defined in the case ofHindustan Steels Ltd. Vs. The Workmen and others. 17. Since Section 25-O of the Industrial Disputes Actapplies to the closure of an undertaking of an industrialestablishment and not the closure of an industrialestablishment, it does not require that an undertaking of anindustrial establishment should be an industrial establishment.On the relevancy of the Factories Act to the dispute on closure,the Apex Court pointed out that the said Act is a regulatorystatute and merely because registration is required to be madeunder a particular statute, it did not make the business orUndertaking so registered, a separate legal entity. 18. On the aspect of functional integrality, the SupremeCourt pointed out to the meaning of functional integrality.The brief facts in the decided case are that SG Chemicals andDyes Trading Ltd. carried on business in pharmaceuticals,pigments and chemicals. The company had three Units – thePharmaceutical Unit was functioning from Worli, Bombay, theLaboratory and Dyes Division from Trombay and the Marketing andSales Division from Churchgate. The evidence showed thatChurchgate Division and Trombay Unit were functionallyintegrated as the Churchgate Unit, looked after the Marketingand Sales of the goods manufactured at Trombay. By a noticedated July 16, 1984, the company signing as SG Chemicals andDyes Trading Ltd., (Chemicals & Dyes Division), decided to closedown the Unit at Churchgate and the number of workmen showntherein was 90. The SG Chemicals and Dyes Trading Employees'Union, appellant before the Supreme Court, contended that theclosure of the Churchgate Unit was contrary to Section 25-O ofthe Industrial Disputes Act and hence, the employees continuedto be in the service of the company, notwithstanding the closurenotice. The Union also raised the plea of unfair labourpractice by the Management. Further, the number of workmenemployed in the three Divisions exceeded one hundred and having https://hcservices.ecourts.gov.in/hcservices/ regard to the functional integrality amongst all the threeUnits, Section 25-O of the Industrial Disputes Act applied, thatthe Management should have applied for prior permission 90 daysbefore the date on which such closure was to become effective.19. Applying the decision of the Supreme Court reported inAIR 1960 SC 56 – THE ASSOCIATED CEMENT COMPANIES LIMITED, CHAIBASSA CEMENT WORKS, JHINKPANI v. THEIR WORKMEN, the ApexCourt ultimately came to the conclusion that the Unit at Trombaycould not have existed and functioned without the ChurchgateDivision. It pointed out that the total number of workmenemployed at the relevant time in the Trombay factory and theChurchgate Division was one hundred and fifty and therefore, ifthe Company wanted to close down its Churchgate Division,Section 25-O of the Industrial Disputes Act applied and notSection 25 FFA of the said Act. 20. The Apex Court further pointed out to the provisions ofthe Factories Act and held that the Factories Act have norelevance for the purpose understanding the term 'industrialestablishment' as given in the Industrial Disputes Act. 21. Referring to the concept of functional integrality, theSupreme Court, as propounded in the decisions reported in AIR1960 SC 56 – THE ASSOCIATED CEMENT COMPANIES LIMITED, C HAIBASSACEMENT WORKS, JHINKPANI v. THEIR WORKMEN, and 1962-1-LLJ 223(SOUTH INDIA MILL OWNERS' ASSOCIATION AND OTHERS Vs. COIMBATOREDISTRICT TEXTILE WORKERS' UNION AND OTHERS), 1963-II-LLJ 459(WESTERN INDIA MATCH CO. LTD. Vs. THEIR WORKMEN AND WORKMEN OFSTRAW BOARD MANUFACTURING COMPANY LTD.), pointed out that thecommon balance sheet and common management are not the onlytests which, as a matter of fact, conclude the functionalintegrality. On the other hand, the functional integralityshould point out the functional interdependence between the twoUnits that closure of one Unit would result in the closure ofthe other Unit. This means, necessarily, the total strength ofthe work force have to be taken from both the units to testwhether Section 25-O of the Industrial Disputes Act stoodsatisfied by the closure of the Unit by the company.22. In the decision reported in 2010-I-LLJ 487 (Mad.)(ALAGHU PHARMACY (B) REP. BY ITS PROPRIETRIX J.SELVARANI Vs.REGIONAL PROVIDENT FUND COMMISSIONER AND ASSISTANT PROVIDENTFUND COMMISSIONER, ENFORCEMENT), this Court applied the above-said principles on functional integrality to a case fallingunder the provisions of the Employees' State Insurance Act andheld that for functional integrality to exist, theinterdependency between the Units must be such that one cannotexist without the other. https://hcservices.ecourts.gov.in/hcservices/

23. Applying the said tests to the case herein, as alreadypointed out, the Tribunal's award proceeds on the understandingthat in view of the common finance control and management,common managerial personnel and its control and recruitmentunder the same Management, one has to come to the conclusionthat Cycle Chain Manufacturing Unit got diversified to start aUnit for manufacture of industrial chains and automotive chains.However, this did not make Cycle Chain Manufacturing Unit aseparate Unit, independent of the Industrial and AutomotiveChain Manufacturing Unit. The control of finance and sale doneby the petitioner herein, who is the manufacturer of industrialchains and automotive chains on behalf of the Cycle ChainManufacturing Unit, make interdependency substantiated. I do notagree with this line of reasoning. Given the fact that evenafter the closure of Cycle Manufacturing Unit, admittedly theother Unit manufacturing industrial chains and automotive chainsexisted; that the functioning of the Cycle Chain ManufacturingUnit was not shown as dependent on the other Unit or vice versa;the mere fact of the common management alone, by itself, cannotcome to the aid of the workers to plead functional integralityto contend that Section 25-O of the Industrial Disputes Act wasnot satisfied and hence the orders had to be set aside. Theoccupier may be one and the same and the two Units may be underthe same Management; yet, that by itself, does not justify theview that there existed functional integrality. There is nomaterial to substantiate that the diversification that theCycle Chain Manufacturing Unit underwent had made either theCycle Chain Unit a part of the diversified Unit, or for thatmatter, the other Unit had become part of the original Unitfor its existence. There is no denial of the fact that thetraining imparted in these Units is not one and the same; therewas no transfer of work force from one Unit to the other Unit.It is not denied by the contesting respondents that recruitment,training, service conditions and appointment are not the sameand the settlement entered into by the Union in one Unit had nobinding effect on the Union in the other Unit. In the face ofthese facts also, it is difficult to accept the plea of therespondents that there existed functional integrality that thepetitioner is under the obligation to absorb the workers of theclosed Unit into the petitioner's Unit. Hence, by applying thelaw declared by the Apex Court, I have no hesitation in settingaside the findings of the Tribunal holding that the petitionerhad failed to comply with Section 25-O of the IndustrialDisputes Act, as the workmen in both the Units put togetherexceeded 100 and the petitioner has to get permission asrequired under Section 25-O of the Industrial Disputes Act fromthe Government; in the absence of the same, the action of the https://hcservices.ecourts.gov.in/hcservices/ petitioner is illegal and void ab initio. I accept thecontention of the petitioner that in the absence of any materialevidence let in as regards the integrality, the award has tofail in this case. It is no doubt true, as rightly pointed outby the learned counsel for the respondents, that the documentmarked as Ex.M19 related to Kaakanur Factory and Ex.M20 relatedto Cycle Chain Manufacturing Unit; that the Management had notproduced the letter pertaining to the second Unit. At the sametime, it must be pointed out that Kakanur Unit and the firstUnit having separate registration under the Employees' StateInsurance Act, are under the management of TI cycles of India;yet, are functionally independent. Learned counsel for therespondents pointed out that even though the Units may haveseparate registration, the certificate issued in Ex.M20 to theCycle Chain Manufacturing Unit may have relevance to the secondUnit, namely, the Industrial Chains and Automotive ChainsManufacturing Unit. I do not agree with this line of reasoningof the respondents. The fact that the Management had notproduced the document pertaining to the second Unit viz.,Industrial Chains and Automotive Chains Manufacturing Unit, doesnot mean that one should draw an inference on the existence offunctional integrality. Learned counsel for the petitionerbrought to my attention, the evidence of the Managementwitnesses, particularly brought out in the cross-examination. Areading of the said evidence shows that the witness who deposedon behalf of the petitioner Management was shifted to the otherUnit. To a specific question as to whether after 14.12.1996there was any work done in connection with the Cycle ChainDivision, the said witness pointed out that they had attendedonly as regards the administrative matters relating to the CycleChain Manufacturing Unit. A reading of the said evidence showsthat both the Units have different manufacturing pattern anddifferent labourers were there. The evidence of M.W.1 does not,in any manner, support the case of the respondents herein on theaspect of functional integrality. On the other hand, theevidence of WW1 pointed out that his appointment was made by theCycle Chain Manufacturing Unit and he was given specifictraining in the manufacture of cycle chains. He admitted thatcycle chains alone were manufactured in the Cycle ChainManufacturing Unit. There was a separate Union for Cycle ChainManufacturing Unit. Provident Fund and Employees State Insuranceamounts had been deducted by the Cycle Chain Manufacturing Unititself. He had no knowledge about the services and salaries ofthe employees in the other Unit. 24. The contention of the respondents was that the firstUnit and the second Unit come under the same management;consequently, the closure of the Unit was bad in law. The https://hcservices.ecourts.gov.in/hcservices/ reliance placed on the decision of the Apex Court reported in2002-I-LLJ 858 (ORISSA TEXTILE & STEEL LTD. Vs. STATE OF ORISSAAND OTHERS), does not, in any manner, advance the case of therespondents, given the fact that there exists no functionalintegrality between the two Units.25. Though normally as against the order of the LabourCourt, in matters of findings of fact, this Court does not sitas a Court of appeal under Article 226 of the Constitution ofIndia and the jurisdiction is limited, yet, when the findingsand the inference thereon rested on a wrong application of thelegal principles or the law declared by the Apex Court, theorder suffers from perversity and hence has to be set aside.Even going by the evidence available that the petitioner Unitcontinues to exist even after the closure of the Cycle ChainManufacturing Unit on 16.12.1996, tested on the face of thedocuments produced before the Court, it follows that there isno functional integrality between the two Units. Consequently,I have no hesitation in accepting the plea of the Managementherein. 26. In the result, the award passed by the Tribunal is setaside and the writ petition is allowed. No costs. 27. It may be pointed out at this juncture that, afterhearing the learned counsel for the petitioner and therespondents, this Court suggested the parties herein to work outthe possibility of settlement. However, in spite of best effortstaken by the counsel on either side in this regard, both theparties viz., Management and the labourers, have not come downfrom their respective stand and stuck to their decision. Eventhough this is a fit case for settlement, yet, for the reasonsstated above, the settlement could not take place.Consequently, the above order is passed allowing the writpetition, thus setting aside the award of the Tribunal. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar.bg/ https://hcservices.ecourts.gov.in/hcservices/ To1. THE PRESIDING OFFICERPRINCIPAL LABOUR COURT CHENNAI.2. The Section OfficerVR Section,High Court, Madras3 ccs to M/s. S. Ramasubramanian, Associates, Sr. 717091 cc to mr.K.M. Ramesh Advocate, Sr. 71319WP.No. 23614 of 2006NSM (CO)kk 19/11