Functional integrality of industrial units triggers prior closure permission and non-payment under settlement can amount to unfair labour practice.

Where separate units operate as a functionally integrated whole in the ordinary industrial sense, closure of one unit is treated as closure of the industrial establishment and attracts prior permission under section 25-O of the Industrial Disputes Act, 1947; mere separate registration does not alter that character. On the facts, the Churchgate Division and the Trombay factory were held to be one establishment, so closure without prior permission was illegal. An illegal closure left the workmen entitled to service benefits under the settlement until lawful termination, and non-payment of those benefits amounted to failure to implement the settlement, constituting an unfair labour practice under Item 9 of Schedule IV.

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Issues: (i) Whether the Churchgate Division and the Trombay factory formed one industrial establishment so that closure of the Churchgate Division required prior permission under section 25-O of the Industrial Disputes Act, 1947, and not mere notice under section 25FFA; (ii) whether the illegal closure and consequent non-payment of wages amounted to failure to implement the settlement and therefore an unfair labour practice under Item 9 of Schedule IV to the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.

Issue (i): Whether the Churchgate Division and the Trombay factory formed one industrial establishment so that closure of the Churchgate Division required prior permission under section 25-O of the Industrial Disputes Act, 1947, and not mere notice under section 25FFA.

Analysis: The relevant test was whether the different units constituted one integrated whole in the ordinary industrial sense. The evidence showed complete functional integrality between the Churchgate Division and the Trombay factory: procurement of raw materials, marketing and sale of finished products, statistical work, payroll preparation, statutory deductions, accounts, maintenance, and other supporting functions were all handled at Churchgate for the Trombay factory. The two units were interdependent and could not practically function independently. Mere registration under different regulatory statutes did not create separate legal entities or prevent the units from being treated as one establishment. The expression "undertaking of an industrial establishment" in section 25-O was not confined to a factory unit itself.

Conclusion: The Churchgate Division and the Trombay factory constituted one establishment, and closure of the Churchgate Division attracted section 25-O of the Industrial Disputes Act, 1947. The closure without prior permission was illegal.

Issue (ii): Whether the illegal closure and consequent non-payment of wages amounted to failure to implement the settlement and therefore an unfair labour practice under Item 9 of Schedule IV to the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.

Analysis: A settlement carries an implied obligation that it will be acted upon in conformity with law. Since the closure was illegal under section 25-O, the workmen were legally entitled to continue in service and to receive wages and benefits under the settlement until lawful termination. Non-payment of those amounts therefore constituted failure to implement the settlement. That failure squarely fell within Item 9 of Schedule IV.

Conclusion: The Company committed an unfair labour practice under Item 9 of Schedule IV by failing to implement the settlement.

Final Conclusion: The complaint was maintainable and succeeded on merits because the closure was unlawful, the workmen remained entitled to service benefits, and the employer's non-payment of wages under the settlement amounted to an unfair labour practice. Relief was granted with appropriate adjustment of retrenchment compensation against back wages and future salary.

Ratio Decidendi: Where separate units are functionally integrated into one establishment, closure of one unit attracts section 25-O of the Industrial Disputes Act, 1947, and an illegal closure that results in non-payment of settlement benefits amounts to failure to implement the settlement under Item 9 of Schedule IV.

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