2022 (1) TMI 1 - HC - Indian Laws

Single Judge Upholds Closure Notice Legality, Dismisses Appeal

Brooke Bond Employees Union, Versus Hindustan Unilever Limited,

The learned Single Judge upheld the legality of the closure notice, confirming the decision and dismissing the appeal and cross-objections. The parties ... Commission of unfair labour practice within the meaning of Item 9 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 - HELD THAT:- It has been found by the learned Single Judge that the settlements from 24.01.1962 to 27.07.1999 which are at Exhibits 53 to 59 were entered into between the Federation and the Management under Section 2(p) read with Section 18(1) of the Act of 1947. Under these settlements a need was expressed by the Management for restructuring and re-organization of its activities in a phased manner. Initially the sales depots were closed and the sales system was replaced by the system of acquiring and forwarding agents and re-distribution of stockists. The number of Area Sales Offices/Branch Offices were reduced to five. Nagpur Area Sales Office was also closed down and the entire accounting work was agreed to be carried out from the Regional/Branch Office at Mumbai. As a result of re-organization of Company’s activities option was given to the employees to either opt for voluntary retirement or to agree for re-deployment. There was no evidence found on record to hold that the Regional Accounts Office, Nagpur formed part and parcel of the manufacturing process undertaken by various factories. It is on this basis that it was concluded that there was no material on record to satisfy the test of functional integrality, interdependence and componential relationship between the Regional Accounts Office and the various factories. On this basis it has been held that the provisions of Section 25-O(1) of the Act of 1947 were not attracted. The closure was governed by the provisions of Section 25FFF and that course had been duly followed. Once it is found that the closure of the Regional Accounts Office at Nagpur was pursuant to the settlements between the Federation and the Management the proviso to Section 9A would stand attracted. As per the said proviso, no notice of change would be required to be given if such change is effected pursuant to any settlement or award - On the factum of closure being established there would be no occasion to hold that such closure amounted to alteration of the conditions of service. Admittedly, the provisions of Item I of Schedule IV to the Act of 1971 had not been invoked and thus the Industrial Court was competent to entertain the same. The substantive claim made in the complaint was with regard to the illegal closure of the RAO at Nagpur on the premise that it was in breach of the settlements between the parties and hence the provisions of Item 9 of Schedule IV to the Act of 1971 were rightly invoked by the Union. On a re-consideration of the material on record in the context of the findings arrived at by the learned Single Judge that the learned Single Judge was legally justified in setting aside the judgment passed by the Industrial Court. The closure of the Regional Accounts Office at Nagpur being pursuant to various settlements, the notice dated 05.01.2001 given to that effect did not result in constituting an unfair labour practice - the interim orders as passed have resulted in meeting the ends of justice especially when the Management as a policy matter has decided not to agitate this aspect. Petition allowed. Issues Involved:1. Legality of the closure notice issued by the Management.2. Functional integrality between the Regional Accounts Office and other establishments.3. Applicability of Section 25-O and Section 9A of the Industrial Disputes Act, 1947.4. Competence of the Union and its General Secretary to file the complaint.5. Jurisdiction of the Industrial Court to entertain the complaint.6. Interim payments to employees during the litigation process.Detailed Analysis:1. Legality of the Closure Notice:The appellant-Union argued that the closure notice dated 05.01.2001 was illegal as it lacked reasons for closure and was issued without following the requirements of Section 25FFF of the Industrial Disputes Act, 1947. The Union contended that the notice was void ab initio due to non-compliance with mandatory provisions. The Industrial Court initially found the closure to be in violation of Sections 25-O and 9A of the Act, deeming it illegal and directing the Management to withdraw the retrenchment notice. However, the learned Single Judge later held that the closure was governed by various settlements between the Federation and the Management, and thus, the proviso to Section 9A was applicable, negating the need for a separate closure notice.2. Functional Integrality:The Union claimed that the activities of the Regional Accounts Office (RAO) were interrelated and interdependent with other establishments, forming one industrial establishment. The Management denied this, stating there was no functional integrality. The Industrial Court initially sided with the Union, but the learned Single Judge found no evidence supporting the claim of functional integrality, concluding that the RAO was not part of the manufacturing process and thus, Section 25-O(1) was not applicable.3. Applicability of Section 25-O and Section 9A:The Union argued that Section 25-O applied as the RAO was an integral part of the entire establishment. The Management countered that the closure was in line with settlements and thus fell under Section 25FFF. The learned Single Judge agreed with the Management, stating that the closure was pursuant to settlements, invoking the proviso to Section 9A, which exempted the need for a closure notice.4. Competence of the Union and its General Secretary:The Management questioned the competence of the Union and its General Secretary to file the complaint, citing the Union's constitution. The learned Single Judge found the complaint validly filed by the registered Union through its General Secretary, dismissing the Management's objections.5. Jurisdiction of the Industrial Court:The Management argued that the Union should have approached the Labour Court, not the Industrial Court. The learned Single Judge held that the Industrial Court had jurisdiction as the complaint challenged the notice of closure on the grounds of breach of settlements, invoking Item 9 of Schedule IV to the Act of 1971.6. Interim Payments to Employees:During the litigation, interim orders ensured the nineteen employees received last drawn wages, totaling approximately Rs. 2,50,00,000. The Management decided not to contest the interim payments, which the Court noted as meeting the ends of justice.Conclusion:The learned Single Judge's judgment, setting aside the Industrial Court's decision and upholding the legality of the closure notice, was confirmed. The appeal and cross-objections were dismissed, with parties bearing their own costs. The interim payments to employees were acknowledged as just and equitable.