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2014 SCC ONLINE MAD 986 .

National Cooperative Sugar Mills v. State Of T.N.

Madras High Court (17 Apr, 2014)

CASE NO.
W.P Nos. 33280 of 2005, 8842, 11535, 13940 to 13943 of 2008 and W.P (MD) No. 10267 of
2008,M.P Nos. 1/2008 in W.P.8842/2008, 2/2008 & 1/2009 in W.P.11535/2008 & 2/2008 in
W.P.13940/2008

JUDGES

T. Raja, J.

ADVOCATES

For petitioners: Mr. A.R Suresh for Mr. J. Muthukumaran in W.P Nos. 33280/2005, 8842, 11535 and

13940 to 13943/2008

Mr. R. Muthukumarasamy, Sr. Counsel for Mr. S.P Sudalaiyandi in W.P (MD) No. 10267/2008

For respondents: Mr. A.R Suresh for Mr. J. Muthukumaran for proposed 4 respondent in W.P (MD) No.

10267/2008

Mr. R. Muthukumarasamy, Sr. Counsel for Mr. S.P Sudalaiyandi for R4 to 41 in W.P No. 8842/2008 for R5

to 42 in W.P No. 33280/2005

Mr. V. Vijayshankar for for R4 in W.P No. 33280/2005 for R3 in W.P No. 8842/2008 for R2 in W.P Nos.

11535 & 13940 to 13943/2008

Mr. S.V Duraisolaimalai, AGP for all in W.P (MD) No. 10267/2008 for R1 & 2 in W.P No. 8842/2008 and

for R1 to 3 in W.P No. 33280/2005

No Appearance for R3 to R16 in W.P Nos. 13940 & 13941/2008

R2 Tribunal - in W.P Nos. 11535 & 13940 to 13943/2008

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JUDGMENT

PRAYER IN W.P No. 33280 of 2005:

Petition has been filed under section 226 of the Constitution of India to issue an order of Writ of

Certiorarified Mandamus, calling for the records of the first respondent relating to G.O (2D) No. 38,

Industries (MIC.1) Department dated 23.08.2005, quash the same to the limited extent in (Sl. No. 18 of

the Heads of Expenditure) of payment of full salary to 48 employees of the National Co-operative Sugar

Mills Limited, B. Mettupatti, Alanganallur, Madurai District for the period from August 2003 to March 2005,

and to issue consequential directions to the respondents to pay full salary to all the permanent employees

of the mills for the above said period and pass further orders.

ORDER

W.P No. 33280 of 2005 is directed against the G.O (2D) No. 38, Industries (MIC.1) Department dated

23.08.2005, issued by first respondent, the Secretary to Government, Industries Department, Fort St.

George, Chennai, to quash the same to the limited extent in (Sl. No. 18 of the Heads of Expenditure) in

payment of full salary to 48 employees of the National Co-operative Sugar Mills Limited, B. Mettupatti,

Alanganallur, Madurai District for the period from August 2003 to March 2005, and issue consequential

directions to the respondents to pay full salary to all the permanent employees of the mills for the above

said period.

2. W.P No. 8842 of 2008 is for direction against the proceedings issued by third respondent, the Special

Officer, the National Co-operative Sugar Mills Limited, B. Mettupatti, Alanganallur, Madurai District in Ref.

No. 405/2005.FE-1 dated 31.03.2008 to quash the same with a consequential direction to the Special

Officer to desist from disbursing the balance of 50% wages to the 48 employees for the period from

August 2003 to March 2005 till the disposal of the Writ Petition No. 33280/2005.

3. W.P No. 11535 of 2008 is for a direction against the award passed by learned Industrial Tribunal,

Chennai in I.D No. 46/2003 dated 28.06.2006, to quash the same, with a further direction to grant the

relief prayed for, in the claim petition.

4. W.P No. 13940 to 13943 of 2008 is for a direction against the awards passed by learned Industrial

Tribunal, Chennai in I.D Nos. 7/2004 dated 05.05.2004, 40/2004 dated 15.4.2004, 2/2005 dated

02.08.2005 & 20/2005 dated 12.08.2005, to quash the same, with a further direction to grant the relief

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prayed for, in the claim petitions.

5. W.P No. 10267 of 2008 is filed seeking for a Writ of Mandamus, to direct the third respondent, namely,

the Special Officer, the National Co-operative Sugar Mills Limited, B. Mettupatti, Alanganallur, Madurai

District to disburse 50% of balance salary to the petitioners who were retained during the lay off period

from 29.06.2003 to 06.11.2005 within a stipulated time.

6. Mr. A.R Suresh, learned counsel for the petitioner submitted that the petitioner Union is a registered

Trade Union under the Trade Unions Act, 1926, with the sole object to espouse the cause of the workers

in the National Co-operative Sugar Mills Limited, B. Mettupatti, Alanganallur, Madurai District. Learned

counsel appearing for the petitioner would submit that the Alanganallur Sugar factory was established in

the year 1966 for the benefits of the agriculturists in the districts of Madurai, Virudhunagar and Dindigul.

The agriculturists, who are growing sugarcane in their agricultural fields are the shareholders of the mills

and the share capital of the mill is Rs. 500 lakhs. Of this amount, about Rs. 460 lakhs have been

contributed by the cane growers and other members of the mill and the Government of Tamil Nadu have

contributed only Rs. 49 lakhs towards share capital. However, the State Government exercises full control

over this mill under the Madras Sugar Factories Control Act, 1949 and the Sugar Control Order, 1966.

Initially the crushing capacity of the mill was 1000 tonnes per day and the mill utilised optimum level and

the capacity was raised to 1500 tonnes per day, in the year 1977 and the mill was also running profit. Its

production, market and fixing of the price of sugarcane are being determined by the Union Government

and State Government, under the power vested in them by the above Acts. Hence, the individual factories

or the cane growers have no role to play in these issues. Moreover, the registered cane growers are

restricted from selling the sugarcane to others, as per clause 6 of the Sugar Control Order. In fact, the

movement of the sugarcane is also prohibited outside the area and the vehicle carrying the sugarcane is

confiscated, under the above Act. This is how a Government have enforced the Act and Rules.

7. In view of the above, he stated that when the sugar mill was running in profit, under the elected Board

members of the mill, the management was taken over by the Special Officer of the Revenue and

Cooperative Department of the State Government, in the rank of District Revenue Officers. Since they are

not familiar with the mills, they were not taking interest in the development of mills. Moreover, due to

transfers and mismanagement of the Special Officers, that occurred for the reason that some of the

special officers were not conversant with the production process and marketing of the products, the mill

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incurred loss. When the mill is not utilised at its optimum level of production of 1500 tonnes of crushing,

adding fuel to fire, the Management had taken a wrong decision to purchase new machineries at the cost

of Rs. 7 crores to increase the crushing capacity to 2500 tonnes per day during 1989. Moreover, the

newly purchased machineries were not properly utilised, which lead to lock up of capital and interest

accrued thereon. When the mill can be run on profit by professionally managed hands, 50,000 workers

are engaged in agricultural operations, the lorry owners were solely depending upon the effective function

of the mills. But, the first respondent took a wrong decision to stop crushing operation from December

2002, leading to closure of the mills and thereby depriving livelihood for thousands of workers. This

decision was taken, without convening the General Body of the Cooperative Mills, which is the apex body

to take decision on such policy matters in the administration. The Management had taken such a wrong

decision, deliberately, without any orders from the Government and with an ulterior motive to help the

private sector mills, landed the mill and also the workers in problems.

8. Finally, learned counsel stated that the management issued a notice for lay-off in Form Q3 by its letter

dated 30.04.2003 and also sought permission to lay-off for 482 workmen, with effect from 29.06.2003, as

per Section 25 M of the I.D Act, on the reason of non-availability of raw materials, mainly, sugarcane,

which is contrary to truth. The second reason mentioned was financial crisis and the outstanding loan

were narrated as 33.7 crores, whereas, the mill has paid Rs. 55 crores towards State Advisory prices.

That is over and above the price fixed by the Union of India. Before going to the lay-off arrangement, no

steps for revival of the machineries was taken. In continuation, learned counsel further submitted that as

per the revenue records, the annual G-record of Madurai and Virudhunagar districts, covering the

registered area for the year 2002-2003, the production of sugarcane within the jurisdiction of the

Alanganallur Sugar Mill is 12.5 lakhs tones. But, at the same time the required quantity is only 4.3 lakh

tones. As a matter of fact, the Chief Cane Officers of the mills had sent a report stating that 3.10.000 M.T

of sugarcane was available for the crushing season of 2002-2003 and the Director of Sugars has also in

his letter dated 13.06.2002 has ordered to divert 40 tones of sugarcane to the registered area of Arignar

Anna Sugar Factory at Karungulam and that is also included in the report of the Chief Cane Officer. The

above would show that there was sufficient sugarcane in the registered area of Alanganallur Sugar

Factory. This fact was also admitted by the management that 2.22.000 M.T of sugarcane was available, in

the G.O (2D) No. 15, Industries Department dated 26.05.2003 In view of the decision taken by the mill to

resort to lay-off, the petitioners filed W.P No. 17514 of 2003 challenging the G.O (2D) No. 15, Industries

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Department dated 26.05.2003, in which an order was passed to lay-off 482 workers and staff of the mill,

who are the members of the petitioner Union. During the pendency of the Writ Petition, the Government

issued another G.O (D) No. 633 Labour and Employment Department dated 28.06.2003 granting approval

for the lay-off. Finally, by order dated 12.08.2003 this Court directed the State Government to make a

reference in terms of sub-section (7) of Section 25-M of the Industrial Disputes Act. Pursuant thereto, the

government referred the matter for adjudication to the Industrial Tribunal by G.O 2(D) No. 53 Labour and

Employment (c) Department dated 08.10.2003 The petitioners also filed Claim petitions before the

Industrial Tribunal, Chennai and the management of the mill also submitted proposals to lay-off its workers

for a period of six months and the same were also referred for adjudication to the Industrial Tribunal at

Chennai.

9. Continuing his argument, learned counsel submitted that the Industrial Tribunal passed a common

award in I.D Nos. 46/2003, 7/2004, 40/2004, 2/2005 and 20/2005, holding that the proposal for lay-off, in

all the cases is justified. Aggrieved by the said award, the present writ petitions have been filed.

10. Challenging some of the findings of the learned Tribunal, learned counsel heavily contended that there

was a patent error, as per the provisions of Chapter V-B of the Industrial Disputes Act and the same will

not apply to the workmen of National Cooperative Sugar Mills at B. Mettupatti. Hence, reference under

Section 22 M of Chapter V-B is inapplicable and cannot be accepted. Adding further, it is argued that

learned Tribunal had committed a serious error in holding that since the sugar mill is a seasonal industry,

Chapter V-B is not applicable. When these contentions were raised by the Management as an after

thought, learned Tribunal should have looked into the evidence placed before it, whether the mill has

applied for permission for lay-off. In the present case, since the sugar mill has made a proposal to the

Government seeking lay-off, it cannot be stated as contrary. Moreover, when there is a decision on the

character of the mill that it is a seasonal one, as contemplated under Section 25 (k)(2) of the Act, the

Tribunal ought not to have held that the sugar mill is having seasonal work. Hence, Chapter V-B is

inapplicable. In fact, if the sugar mill is a seasonal industry, the Government would not have referred the

matter for adjudication before the Tribunal. This crucial aspect has been over looked by the Tribunal.

During the relevant time 2002-2003, the quantity of sugarcane available in Madurai District was 8.6 lakhs

tones. The revenue records also reveal that there was about 12.5 lakhs tones of sugarcane available.

Therefore, it is absolutely unacceptable on the part of the Management to take a stand before the

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Industrial Tribunal that only due to shortage of raw materials, the lay-off was sought for. Some of the

overwhelming officers in the sugar mill, in order to accommodate the private sector mills, namely, M/s.

Sakthi Sugars, Sivaganga, M/s. Rajashri Sugars Periyakulam, M/s. Dharani Sugars and EID Parry & Co.,

have resorted to lay-off despite availability of sufficient raw materials. To support this picture, without

going through the documentary and oral evidences and while the ingredients of 2(kkk) of the Industrial

Disputes Act have not been furnished, the learned Tribunal has erred in holding that only due to

non-availability of sufficient raw materials, the sugar mill resorted to lay-off.

11. Moreover, Exh.W-20, a letter dated 01.02.2003 written by the District Revenue Officer to the

Commissioner of Sugars, stating, convening of joint meeting of association of members of National

Cooperative Sugar Mills and Madurai Sugars regarding diversion of cane to other mills has been placed

on record along with Exh.W-21, dated 11.02.2003, a tender notice calling for fire wood for commencing

crushing operation. The learned Tribunal has ignored these vital evidences. Moreover, Exh.W-44, a letter

from Panchayat Presidents and Cane growers expressing their willingness to supply sugar cane to the

mills has also been placed on record. The learned Tribunal wrongly justified the management decision to

resort to lay-off. Further, a notice dated 29.11.2005 has been marked as Exh.M-29, requesting the staff

and workers to report for duty since crushing has been intended to commence, which is supported by

Exh.M-30 wherein the Government has dropped the proceedings of lay-off. In addition, sufficient

evidences were produced to the extent that Madurai, Dindugul and Virudhunagar cane growers who have

registered under the Cooperative Sugar Mills to supply sugarcanes to the respondent mills and the

statement given by the Collector of Madurai, marked as Exh.W-43 stating that registered cane is sufficient

to meet out the need of the respondent sugar mills. It has been further supported by the tender notice

issued by the National Sugar Mills for supply of burnt limestones and another tender for supply of 500

tones of fire woods for commencing crushing. The learned Tribunal has wrongly declared for lay-off, which

is not justifiable. As a result, the entitlement of the workers to all the benefits of lay-off had been wrongly

denied. In support of his submission that financial crisis cannot be accepted as a reason for lay-off of

workmen by judgment of Madhya Pradesh High Court, in the case of Hope Textiles Ltd. v. State of

Madhya Pradesh, reported in 1993 I LLJ 603, was relied upon, wherein the High Court of Madhya

Pradesh has held that the reasons for lay-off could only be shortage of coal, power or raw material or the

accumulation of stock or the breakdown of machinery or natural calamity or other connected reasons.

Whereas the financial stringency is not a cause for which a lay-off could be given. It is further contended

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that based on the said decision, one of the reason adopted for lay-off of the workmen that the mill is facing

financial crisis, should be rejected but this crucial aspect is not considered by the learned Tribunal.

12. Mr. R. Muthukumarasamy, learned senior counsel appearing for the petitioners in W.P (MD) No.

10267/2008 and for R4 to 41 in W.P No. 8842/2008 and R5 to 42 in W.P No. 33280/2005, sought for a

direction to disburse 50% of balance salary to the petitioners who were retained during the lay off period

from 29.06.2003 to 06.11.2005, on the ground that the Management of the sugar mill has taken a decision

to lay-off 482 workmen during the relevant period, the same Management decided to give continuous

employment without any break to petitioners 1 to 38, as they were in essential services. Therefore, all the

petitioners in W.P No. 10267 of 2008 are entitled to full pay for the period during which they rendered

services to the management, when 482 workmen were laid off. However, due to paucity of funds, they

have disbursed only 50% of the salary. There is no justification at all on the part of the management, in

withholding the balance 50% of the salary, after extracting full time work from the petitioners. In fact, when

482 workmen, who were laid of, have been paid 50% of the salary, the petitioners who have continuously

worked without any break should be paid with full salary. Therefore, when representations were given for

disbursement of the balance 50% of the salary for the period from 29.06.2003 to 06.11.2005, the

respondent management, for the simple reason that the matters are pending in the Tribunal and also

before this Court, refused to disburse the balance 50% of the salary. In fact, the National Cooperative

Sugar Mill obtained permission from the Director of Sugars in his proceedings dated 30.04.2003, for

retaining 48 employees, including 18 security persons to attend to essential and the day to day works,

namely, ensuring safety and security of mill's properties, attending to cases related to the mills pending in

various courts regarding Sales Tax, Income Tax, Labour disputes, etc., statutory audit works, filing of

Income Tax returns under Section 44 AB, sale of sugar and molasses, obtaining ways and means

advance from Government, payment of salary and lay off compensation allowance, remittance of EPF

contribution amount, remittances of Sales Tax, Income Tax and Electricity bill etc. Accepting the case of

the petitioners, when the second respondent Commissioner of Sugars, passed an order in his Lr. No.

22221.SL2/2007 dated 17.01.2008, permitting the Special Officer, National Co-operative Sugar Mills to

disburse the 50% of balance salary to the retained employees. Whileso, the Staff Union has objected to

the same. As a result of the same, the third respondent by his communication dated 31.02.2008 also

informed that he is going to disburse the salary. At this crucial time, W.P No. 8842 of 2008 was filed by the

Staff Union, seeking a direction not to disburse the balance 50% of salary. However, no interim order was

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passed. Therefore, a direction should be issued to disburse 50% of the balance salary to the petitioners,

for the simple reason that during the relevant lay-off period, they were continuously in employment and

that there is no justification for the staff union for objecting the payment of the balance 50% salary. On this

basis, prayed for allowing the writ petition.

13. Learned counsel appearing for the Special Officer of the National Cooperative Sugar Mills urging this

Court to dismiss the writ petitions, on the ground that the writ petitions filed by the staff union are not

maintainable, continued his argument stating that the United Sugarcane Growers Association of National

Cooperative Sugar Mills in their letter dated 16.09.2002 informed the third respondent Mill that in the

absence of State Advised price for the canes they will not supply cane to the mills for 2002-2003 season.

Only in view of the above, supply of even the meagre quantity of registered cane available had become

doubtful. Subsequently, the United Sugarcane Growers Association stopped supply of sugarcane. As a

result, the mill was unable to get adequate stock of sugarcanes during the year 2002-2003 crushing

season. In addition thereto, the mill, every year by September used to submit an application requesting

sanction of cash credit limit for the next year and the Madurai District Central Co-operative Bank used to

sanction the cash credit in January on the basis of cane availability for crushing and also on the basis of

expected sugar production, sugar sales realisation etc. But, when the respondent mill submitted an

application in September, for cash credit renewal for the season 2002-2003, unfortunately, the bank did

not sanction the cash credit limit despite there was repeated requests. In view of the above, the mill was

not in a position to effect even the cane payment during the year 2002-2003 crushing season. In view of

the above said two reasons, the respondent mill decided to declare lay-off to all the workmen during

2002-2003 crushing season under Section 25(M) of the Industrial Disputes Act 1947. After finding the

above problems, the Deputy Secretary to Government, Industries (MIC 1) Department by letter dated

27.03.2003 requested the Commission of Sugar to pursue action as per law with Labour Department,

pending orders from the Government and the same was also communicated to the mills by the Director of

Sugars by letter dated 01.04.2003 On the basis of the said communication, this respondent mill also

sought administrative approval of the Director of Sugars to submit an application in Form Q3 for laying off

its workmen by retaining 48 employees to attend to essential works, in RC No. 405/2003.FE1 dated

28.04.2003 and the same was also sanctioned on 30.04.2003 Thereafter, the mill submitted its application

dated 30.04.2003 for permission to lay-off all the workmen for a period of six months from 29.06.2003 in

form Q3 to the Secretary to Government, Labour and Employment Department, Government of Tamil

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Nadu. Accepting the grounds raised, the Secretary to Government, Industries Department in G.O (2D)

No. 15 dated 26.05.2003 permitted the mill,

1) to suspend the crushing season for 2002-2003

2) to lay off its employees under Section 25-M of the ID Act

3) to divert the sugarcanes of National Cooperative Sugar Mills to other nearby sugar mills, and

4) to sanction Rs. 2 crores to meet the lay off expenses and to release this amount to the mills in four

quarterly instalments.

Aggrieved by the said G.O (2D) No. 15 dated 26.05.2003, W.P No. 17514 of 2003 was filed by the

petitioner Union and obtained an order of stay against the proceedings of the third respondent dated

04.06.2003 The Government also, after considering the views of the Management and the trade unions,

issued the G.O (D) No. 633 permitting for lay-off as sought by the mills. That was also challenged by the

petitioner Union in W.P No. 19758 of 2003. Finally, by its order dated 12.08.2003, direction was issued to

the Government to refer the matters to the Industrial Tribunal for adjudication. As a consequence, the

earlier W.P No. 17514 of 2003 became infructuous. By virtue of the orders passed by this Court in W.P

No. 19758 of 2003 dated 12.08.2003, G.O 2(D) No. 53 dated 08.10.2003 was passed referring the matter

for adjudication to the Industrial Tribunal and the issue was taken by the Industrial Tribunal in I.D No.

46/2003. Although, the Government in its G.O (2D) No. 15 dated 26.05.2003, permitted for sanction of

ways and means advance of Rs. 2.00 crores to National Co-operative Sugar Mills to meet the lay-off

wages, only the first instalment amount of Rs. 50.00 lakhs was drawn from Government Treasury on

11.06.2003 and the same was disbursed as salary to the employees. However, due to the pendency of

the lay-off issue before the Industrial Tribunal, the mill could not draw the balance amount of ways and

means advance of Rs. 150 lakhs to be disbursed to the employees. However, the representatives of the

employees union submitted a representation to the Director of Sugars on 08.01.2004 and expressed their

willingness to receive 50% of their salary subject to pending award of the Industrial Tribunal in I.D No.

46/2003. Based on the acceptance letter to the Union, the balance ways and means advance of Rs. 150

lakhs was released by the Director of Sugars and 50% of the salary was paid to all the employees upto

the month of December 2003.

14. Again coming back to the main issue, it is stated that learned counsel for the Special Officer submitted

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that only due to the refusal of the cane growers to supply the sugarcanes, there was nil registration, for

the subsequent two crushing season namely, for the year 2003-2004 and 2004-2005. As a result, the mill

was constrained to submit proposals in Form Q3 to the Government for continuance of lay-off, for

subsequent 6 months, only after retaining the permitted employees, namely, 48 essential employees and

lastly the government have referred 5 lay-off proposals, which has been referred to the Industrial Tribunal.

They are, from 29.06.2003 to 28.12.2003 by G.O 2(D) No. 53 Labour & Employment (C) Department

dated 08.10.2003; by another G.O (D) No. 45 Labour & Employment Department dated 21.01.2004 for the

period 24.01.2004 to 21.07.2004; another G.O (D) No. 823 Labour & Employment Department dated

16.07.2004 for the period 22.07.2004 to 17.01.2005; by another G.O (D) No. 32 Labour & Employment

Department dated 13.01.2005 for the period 18.01.2005 to 16.07.2005; and by G.O (D) No. 944 Labour &

Employment Department dated 12.07.2005 for the period 17.07.2005 to 12.01.2006 The five applications

have been referred to the Industrial Tribunal. Again, when the mill had not received any order for its 5

lay-off issues, again the 6 lay-off proposal dated 13.11.2005 was also submitted to the Government

seeking lay-off for six months from 13.01.2006 Only, thereafter, the respondent mill received a letter dated

22.11.2005 from the third respondent, informing about government's permission for commencing crushing

in the mills, for 2005-2006 crushing season and instructed the Special Officer to carry out the overhauling

works and cane plantation and registration works. Accordingly, the overhauling works and cane plantation

for commencing 2005-2006 crushing season were started from 07.11.2005 And again, after obtaining

legal opinion, the mill issued notice all unions recalling all the existing regular employees specified in the

lay-off notice, for resumption of work with retrospective effect from 07.11.2005 and subsequently, even the

50% salary for the employees covered in the lay-off notice was also paid as agreed by them. But, the 50%

of the balance salary to the 48 essential employees could not be paid because of the pendency of the

matter.

15. Continuing his submission, it is stated that due to persistent demand by the farmers to pay a higher

price, State Government as a policy announced State Advisory Price to the tune of Rs. 105 to Rs. 188.50

per MT of cane more than Statutory Minimum Price. The cane price which was Rs. 339.40 per metric

tonne, for this mill in 1990-1991 had increased to Rs. 811.50 in the year 2000-2001. It is stated that as the

cane growers did not come forward to register their cane to the mills and also due to drought, there was

no cane registration at all in 2003-2004 and 2004-2005 crushing seasons also. Subsequently, 2003-2004

and 2004-2005 crushing seasons were also suspended. However, due to the persistent demands of the

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cane growers in the mill's area, the Government have decided the crushing season to commence from

2005-2006. Therefore, the claim of the petitioner Union that only due to the mismanagement of the mill by

the Special Officer, the mill was not functioning for the relevant period and therefore they are entitled to

declare the lay-off as illegal, is incorrect. In this context, learned Industrial Tribunal has accepted the case

of the respondent mill and the 5 lay-off applications referred to the Industrial Tribunal by the Government

were justified, due to shortage of raw materials. On this basis, supported the interim award passed by the

learned Industrial Tribunal. While supporting the interim award, learned counsel appearing for the third

respondent Mill also supported the prayer made by the petitioners in W.P No. 10267 of 2008 for payment

of full salary to all the 48 employees, who were retained during the lay-off period, namely, from August

2003 to March 2005, as they were retained under various categories namely,

1. Security Personnel-18

2. Superintendents - 2 and Clerks - 4

3. Godown and Store Keeper-1

4. Accountants - 2

5. P.C to Special Officer - 1

6. Telephone Operator-1

7. Driver - 1

8. Attenders-2

9. Sweeper-1

10. Electrical Supervisor-1

11. Switch Board Attendant-2

12. Accounts Officer - 1

13. Cane Development Office-1

14. Labour Welfare Officer-1

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15. Cane Officers - 9.

Concluding his argument, it is stated that when there was a bonafide reason to resort to lay-off, it is not

open to the Petitioner Union to question the decision of the Management to retain 48 employees and the

payment of salary and allowances to them. On this basis, prayed for dismissal of the Writ Petitions filed by

the Workmen of the National Cooperative Sugar Mills and prayed for allowing the Writ Petition No. 10267

of 2008.

16. The Director of Sugars have also filed a detailed counter affidavit, supporting the impugned Award

and also the prayer made in the W.P No. 10267 of 2008.

17. Heard all the parties and perused the materials on record.

18. The National Cooperative Sugar Mills, B. Mettupatti, Alanganallur, Madurai is manufacturing sugar

from the raw materials of sugarcanes supplied by the members from 1966. The agriculturists in Madurai,

Virudhunagar and Dindigul, who are growing sugarcanes in their fields have become shareholders of the

mill and the share capital of the mill as on 30.11.2002 is Rs. 518 lakhs, out of which Rs. 469 lakhs have

been contributed by cane growers and other members of the mill and the Government of Tamil Nadu also

contributed a sum of Rs. 49 lakhs towards the share capital. Initially, the crushing capacity of the mill was

1000 tonnes per day. Subsequently, it was increased to 1500 tonnes per day, in the year 1977 and the mill

was also running on profit. However, the United Sugarcane Growers Association of National Cooperative

Sugar Mills in their letter dated 16.09.2002, asked for State Advised Price foor the canes, failing which

they will not supply cane to the mills during 2002-2003 season. The respondent sugar mill, failing to meet

the State Advised Price was unable to get adequate cane for its 2002-2003 crushing season.

Subsequently, during the relevant period, the National Cooperative Sugar mill also submitted an

application for cash credit limit for the next year 2002-2003 crushing season but the Bank did not sanction

cash credit limits, despite the mill's repeated requests. Moreover, the mill, also by letter dated 27.09.2002

made a request to arrange for sanction of Rs. 15 crores as long term loan either from bank or from any

financial institution for 2002-2003 crushing season with an alternative request to permit the mills to

declare lay-off to all the workmen during 2002-2003 crushing season under Section 25-M of the Industrial

Disputes Act, 1947. But, the bank did not sanction the cash credit limit despite the mill's repeated

requests. In view of the above two reasons, the respondent mill was constrained to declare lay-off to all

the workmen during 2002-2003 crushing season under Section 25-M of the Act. When the Sugarcane

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Growers Association refused to supply even the meagre quantity of registered cane for crushing

operation, the mill was unable to continue its crushing operation. As a result, the mill submitted a proposal

dated 30.04.2003 for permission to lay-off all the workmen by retaining only 48 essential employees for a

period of six months from 29.06.2003 in Form Q-3 to the Secretary to Government, Labour & Employment

Department, Government of Tamil Nadu. After scrutinising the proposal received, the Secretary to

Government, Industries Department in G.O (2D) No. 15 dated 26.05.2003 permitted the following:

1) to suspend 2002-2003 crushing season of National Cooperative Sugar Mills

2) to lay off its employees under I.D Act Section 25-M

3) to divert the registered cane of National Cooperative Sugar Mills to nearby sugar mills

4) to sanction Rs. 2 crores to meet the lay off expenses and to release this amount to the mills in four

quarterly instalments.

Thereafter, the Director of Sugars addressed a letter dated 04.06.2003 to the respondent sugarcane mill

to suspend its 2002-2003 crushing season and go for lay-off of all workmen, with a further direction to

divert the registered canes to the nearby sugar mills. Challenging the above action taken by the third

respondent, W.P No. 17514 of 2003 was filed by the petitioners' union. However, in the meantime after

hearing the views of the Management and the trade unions of the mills on the lay-off application dated

30.04.2003, the Government issued G.O (D) No. 633 permitting the lay-off as sought for by the mills.

Again that G.O (D) No. 633 was also challenged in W.P No. 19758 of 2003. However, by final order dated

12.08.2003, this Court by disposing the writ petition, directed the Government to refer the matters to the

Industrial Tribunal for adjudication. As a result, the W.P No. 17514/2003 became infructuous and finally

the Government referred the issue to the Industrial Tribunal in G.O.2(D) No. 53 dated 08.10.2003 While

taking up the issue, learned Industrial Tribunal has considered the following points and justified the lay-off,

resorted to by the sugar mills, on the ground that there was insufficient raw materials, to continue the

crushing operations:

In I.D No. 46/2003, whether the proposal of the management of National Cooperative Sugar Mills Limited

to lay off 482 workmen as in Annexure II for a period of six months is justified.

In I.D No. 7/2004 whether the proposal dated 25.11.2003 of the management of National Cooperative

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Sugar Mills, B. Mettupatti, Vadipatti Taluk, Madurai District to lay off its 482 workmen for a period of six

months with effect from 24.01.2004 is justified

In I.D No. 40/2004 whether the proposal dated 14.05.2004 of the management of National Cooperative

Sugar Mills B. Mettupatti, Vadipatti Taluk, Madurai District to lay off its 450 workmen for a period of six

months with effect from 22.7.2004 is justified.

In I.D No. 2/2005 whether the proposal dated 13.11.2004 of the management of National Cooperative

Sugar Mills Limited to lay off 499 workers for the period of six months w.e.f 18.01.2005 is justified.

In I.D No. 20/2005 whether the proposal dated 16.5.2005 of the management of National Cooperative

Sugar Mills, B. Mettupatti, Vadipatti Taluk, Madurai District to lay off its 433 workmen for a period of six

months with effect from 17.07.2005 is justified.

It is also further viewed that the learned Industrial Tribunal, after considering the relevant documents came

to the conclusion, that the respondent mill having taken steps to commence crushing work, to get

sugarcanes from other mills namely Arignar Anna Sugar Mills, Karungulam, who accepted to divert 40,000

metric tonnes in the area about 2180 acres but as per Exh.M-3 they have intimated that they are not in a

position to divert the agreed quantity of 40,000 metric tonnes of registered cane for the ensuing crushing

season. Although, Arignar Anna Sugar Mills, accepted to divert 40,000 M.T, subsequently, they refused to

divert the same due to drought. This has been supported by Exh.M-3 and that indicated that there was

insufficient raw materials. When the United Sugarcane Growers Association of National Cooperative

Sugar Mills in their letter dated 16.09.2002 informed the respondent mill that in the absence of paying the

State Advised Price for the cane they will not supply cane to the mill for 2002-2003 season and they did

not effect any supply of sugarcanes, as the respondent mill was unable to pay the State Advised Price. As

a result, they were unable to get adequate canes for its 2002-2003 crushing season. On this basis,

learned Tribunal has come to the conclusion that there was insufficient raw material due to drought and

inspite of the Management has taken steps to get sugarcane from other mills as per Exh.M-3, as the

Arignar Anna Sugar Mills has refused to divert 40,000 M.T of registered canes for 2002-2003 crushing

season. As a result, the Management of the sugar mill was constrained to seek permission to lay-off.

Hence, the proposal for lay-off was justified. Subsequently, accepting the proposal for lay-off permission

was also accorded by the Government.

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19. Therefore, the learned Industrial Tribunal has come to the conclusion that Exh.M-3 and Exh.M-11

have clearly proved that cane growers were not willing to supply their canes to the respondent mill.

Exh.W-43 also proves that the area and production of sugarcanes have been decreased from 1999-2000

to 2002-2003 due to drought faced by the agriculturists in their area. In view of that, the cane growers

were unable to send sufficient sugarcanes. Secondly, when the Special Officer of the sugar mill took all

steps to get adequate quantity of sugarcanes from the nearby sugar mills like Arignar Anna Sugar Mills,

inspite of the best efforts by the Special Officer for getting the raw materials, Arignar Anna Sugar Mills

although in the beginning agreed to divert 40,000 M.T of sugarcanes refused to divert the same due to

drought, the mill was unable to have adequate raw materials to commence its crushing.

20. In that view of the matter, when the learned Tribunal after analysing the entire issue has justified the

lay-off for the period from 29.06.2003 to 17.07.2005 and the lay-off compensation have also been paid to

all the workers, this Court is unable to take any contrary view. Accordingly, the W.P Nos. 33280 of 2005,

8842, 11535 and 13940 to 13943 of 2008 are dismissed. However, in view of the reasoning mentioned

above, the W.P (MD) No. 10267 of 2008 filed for payment of balance 50% salary is allowed.

Consequently, the connected M.Ps are closed. No costs.