CASE COMMENT

NATIONAL KAMGAR UNION V. KRAN RADER PVT.LTD & OTHERS

- Written By M.S.ELAMATHI1

INTRODUCTION:

The Industrial Disputes Act,1947 (hereinafter referred to as 'the Act') came into existence
in April 1947. It was enacted to make provisions for investigation and settlement of industrial
disputes and for proving certain safeguards to the workers.

The concept of workman is central to the concept of an industrial dispute as an industrial

dispute can be raised either by a "workman" or an "employer." Since the Industrial Disputes Act,
1947 is a piece of beneficial legislation, the courts have enlarged the scope and applicability of
this Act by giving wide interpretation to the term "workman."

The objective of the Industrial Disputes Act is to secure industrial peace and harmony by
providing machinery and procedure for the investigation and settlement of industrial disputes by
conciliation, arbitration and adjudication machinery which is provided under the statute. The
main and ultimate objective of this act is "Maintenance of Peaceful work culture in the Industry
in India" which is clearly provided under the Statement of Objects & Reasons of the statute.

The laws apply only to the organised sector. Chapter V talks about the most important and often
in news topic of 'Strikes and Lockouts'. It talks about the Regulation of strikes and lockouts and
the proper procedure which is to be followed to make it a Legal instrument of 'Economic
Coercion' either by the Employer or by the Workmen. Chapter V-B, introduced by an
amendment in 1976, requires firms employing 300 or more workers to obtain government
permission for layoffs, retrenchments and closures. A further amendment in 1982 (which took
effect in 1984) expanded its ambit by reducing the threshold to 100 workers.

1
HC15035. B.B.A.,LLB(Hons.), Fourth Year, 'A' Section. School of Excellence in Law, The Tamil Nadu
Dr.Ambedkar Law University.
 The Act also lays down:

1. The provision for payment of compensation to the workman on account of closure or lay off or
retrenchment.
2. The procedure for prior permission of appropriate Government for laying off or retrenching the
workers or closing down industrial establishments

3. Unfair labour practices on part of an employer or a trade union or workers.

JURISDICTION

The Appellants (National Kamgar Union) has approached the Hon'ble Supreme Court
under Article 136 of the Constitution of India. The Special Level was granted by the Hon'ble
Supreme Court.

BENCH:

Justice Abhay Manohar Sapre and Justice R.K. Agrawal

DATE OF JUDGMENT:

January 5, 2018

APPLICABLE STATUTORY LAW IN THE PRESENT CASE:

Act: Industrial Disputes Act,1947

Provisions:

 Section 2(s) - Definition of "workman"

 Section 25FFA - Sixty days notice to be given of intention to close down any undertaking
 Section 25K - Application of Chapter VB
LEGAL BACKGROUND OF THE CASE:

The definition of workman has a wide coverage. Section 2(s)2 of the Act defines
workman as any person (including an apprentice) employed in any industry to do any manual,
unskilled, skilled, technical, operational, clerical or supervisory work, for hire or reward, whether
terms of employment be express or implied, and for the purposes of any proceeding under this
Act in relation to an industrial dispute, includes any such person who has been dismissed,
discharged or retrenched in connection with, or as a consequence of, that dispute, or whose
dismissal, discharge or retrenchment has led to that dispute, but does not include any such
person-

(i)who is subject to the Air Force Act, 1950 (45 of 1950 ), or the Army Act, 1950 (46 of 1950 ),
or the Navy Act, 1957 (62 of 1957 ); or
(ii)who is employed in the police service or as an officer or other employee of a prison; or
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who, being employed in a supervisory capacity, draws wages exceeding [ten thousand]3
rupees per mensem or exercises, either by the nature of the duties attached to the office or by
reason of the powers vested in him, functions mainly of a managerial nature.

Section 25FFA4 of the Act reads as follows:

(1) An employer who intends to close down an undertaking shall serve, at least sixty days before
the date on which the intended closure is to become effective, a notice, in the prescribed manner,
on the appropriate Government stating clearly the reasons for the intended closure of the
undertaking: Provided that nothing in this section shall apply to--
(a) an undertaking in which--
(i) less than fifty workmen are employed, or
(ii) less than fifty workmen were employed on an average per working day in the
preceding twelve months,

2
Substituted by the Industrial Disputes (Amendment) Act, 1982, w.e.f.21-08-1984. Earlier, clause (s) was
substituted by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 w.e.f.29-0801956.
3
Substituted for "one thousand six hundred" by the Industrial Disputes (Amendment) Act, 2010, w.e.f.15-09-2010.
4
Inserted by the Industrial Disputes (Amendment) Act, 1972. w.e.f.14-06-1972.
(b) an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for
other construction work or project.

(2) Notwithstanding anything contained in sub- section (1), the appropriate Government may, if
it is satisfied that owing to such exceptional circumstances as accident in the undertaking or
death of the employer or the like it is necessary so to do, by order, direct that provisions of sub-
section (1) shall not apply in relation to such undertaking for such period as may be specified in
the order.]

Section 25K of the Act reads as follows-

(1) The provisions of this Chapter shall apply to an industrial establishment (not being an
establishment of a seasonal character or in which work is performed only intermittently) in
which not less than [one hundred]5 workmen were employed on an average per working day for
the preceding twelve months.
(2) If a question arises whether an industrial establishment is of a seasonal character or whether
work is performed therein only intermittently, the decision of the appropriate Government
thereon shall be final.

FACTS OF THE CASE:

1. The appellant is the Trade Union registered under the Trade Union Act, 1926 having several
members working in Factories. Respondent No.1 owned a factory (manufacturing unit) at Pune.
This Unit was originally owned by respondent Nos. 2 and 3 who, in turn, sold it to respondent
No.4 in 1991 and then it was owned by respondent No.1. The Unit was engaged in the
manufacture of several components like Traction Gears for supply to Railways, forging for oil
industries and other manufacturing units etc. The members of the appellant-Union were working
in respondent No.1’s factory at all relevant time.

5
Substituted for "three hundred" by the Industrial Disputes (Amendment) Act, 1982, w.e.f.21-08-1984.
2. In 1990, respondent No.1 suffered business loss in running the said manufacturing unit and,
therefore, decided to close down the said unit permanently. With that end in view, respondent
No.1 served a notice of closure to the State Government (Maharashtra) under Section 25 FFA of
the Industrial Disputes Act, 1947 (in short, “the Act”) on 29.08.1990 with a copy to the
appellant-Union expressing therein their intention to close the operation of the Unit on expiry of
60 days with effect from 29.10.1990.

3. The appellant-Union, felt aggrieved of the closure notice issued by respondent No.1, filed
complaint against respondent No.1 under Section 28 read with Items 9 and 10 of the Schedule IV
of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act,
1971 (hereinafter referred to as “the Act”) in the Industrial Court at Pune in October 1990 being
Complaint(ULP) No.544/1990.

4. In substance, the grievance of the appellant in their complaint was that since respondent No.1
had employed more than 100 workers on an average per working day for preceding 12 months in
their manufacturing unit, the provisions of Chapter VB (Section 25K) of the Act and, in turn, all
the relevant provisions contained therein were applicable to respondent No.1. It was alleged that
due to this reason, it was obligatory upon respondent No.1 to have ensured compliance of all the
relevant provisions applicable for closure of the Unit. It was alleged that since admittedly the
relevant provisions applicable to closure were not complied with by respondent No.1, a case was
made out under the Industrial Dispute Act read with the Act to seek a declaration that the
intended closure declared by respondent No.1, vide their notice dated 29.08.1990, is illegal under
the Industrial Dispute Act read with the Act with a further grant of all consequential reliefs to
each worker arising out of grant of such declaration sought by the appellant in the Complaint in
their favour.

5. Respondent No.1 (employer) filed a reply and denied therein the allegations made by the
appellant-Union in their complaint. According to Respondent No.1 they never employed more
than 100 workers in their Unit so as to attract the rigor of Chapter VB and other related
provisions of the Industrial Dispute Act to give effect to the closure. In other words, according to
respondent No.1, the strength of workers working in their Unit was always less than 100 in
number, therefore, the provisions of Chapter VB and the related provisions of the Industrial
Dispute Act had no application to respondent No.1. It was, therefore, contended that the
decision taken by respondent No.1 to close the Unit with effect from 29.10.1990 was legal,
proper and in accordance with law and hence could not be faulted with.

6. The parties adduced evidence (documentary/oral) in support of their respective contentions.

The Industrial Court, by its award dated 08.04.2003, allowed the appellant's complaint. It was
held that respondent No.1 had employed 115 workers at all relevant time in their Unit, therefore,
the provisions of Chapter VB of the Industrial Dispute Act were required to be followed while
effecting the closure of the Unit. It was held that since the relevant provisions were not complied
with by respondent No.1, the closure in question was bad in law entitling the members of the
appellant-Union to claim all consequential benefits arising there from as if there was no closure
of the Unit.

7. Respondent No.1 felt aggrieved and filed a writ petition before the Bombay High Court. By
impugned judgment, the Single Judge allowed the writ petition and while setting aside of the
award of the Industrial Court dismissed the appellant's complaint. The High Court held that the
total strength of the workers working at all relevant time in respondent No.1’s Unit was 99 and
not 115 as held by the Industrial Court. It was held that due to this reason, it was not necessary
for respondent No.1 to ensure compliance of the provisions of Chapter VB of the ID Act while
declaring the closure of their Unit.

8. The appellant-Union felt aggrieved and filed the appeal by way of special leave in Supreme
Court.

ISSUES BEFORE THE COURT OF LAW:

1. whether the provisions of Section 25-K of Chapter VB of the ID Act were applicable to
respondent No. 1-Unit at the relevant time?

2. How much compensation and under which heads the workers are entitled to receive from
respondent No.1 (Company)?
 3. Whether the Bombay High Court exceeded its jurisdictional limits given under Article
227 of the Indian Constitution when it revised the number of “workers” working at the
unit?

RATIO OF THE COURT:

No, not all the 36 men, apart from the 79 workers, working at Kran Raders Pvt. Ltd. can be
termed as “workers”. The number of workers employed by the firm is a question of fact as well
as a question of law. As held in the case Lloyds Bank Ltd., New Delhi vs Panna Lal Gupta And
Ors.6, Supreme Court would not interfere with conclusions of Tribunals unless it is satisfied that
the conclusion is erroneous. Yet, in this case Supreme Court looked through all evidence and
agreed with High Court’s finding that Kran Raders Pvt. Ltd. employed only 99 “workers”, i.e.,
only 20 out of the 36 men were workers. As National Kamgar Union did not give any substantial
evidence to prove that the rest 16 men were also “workers”, their claim was not admitted.

Though National Kamgar Union contended that the Industrial Court was more plausible, the
Trade Union could not produce any cogent evidence and hence, lost.

Taking into consideration the background facts and circumstances of the case, the court
considered it just and proper to award in lump sum a compensation of Rs.2,50,000/- (Rs.Two
Lakhs and Fifty Thousand) to each worker who did not accept the compensation previously
when the offer was made. The court also held the Rs.2,50,000/- (Rs.Two Lakhs and Fifty
Thousand) be paid to each such worker after making proper verification. If any worker
is not available for any reason, the amount payable to such worker be paid to his legal
representatives or nearest relatives, as the case may be, after making proper verification.

With regards to the question involving exercise of jurisdictional powers by the High Court, it has
been well observed time and again that the High Court is duty-bound to see that subordinate
Court has exercised its powers in accordance with law and did not commit any errors. In this
case, when High Court found that the subordinate Court failed to take into consideration all
evidence, it exercised its supervisory jurisdiction as given under Article 227 of the Indian

6
AIR 1967 SC 428. (para 5)
Constitution and interfered. Thus Bombay High Court did not oust its jurisdictional powers in
any way.

DECISION HELD:

The Industrial Court had erroneously given a conclusion and so it was correct of the Bombay
High Court in re-examining the evidence and giving the right judgement. The Supreme Court
affirmed the Bombay High Court’s decision and held that Kran Raders Pvt. Ltd. had employed
only 99 workers and thus complied with all the necessary legal provisions.

That is the strength of workers was below 100, it was not necessary for respondent No.1 to
ensure compliance of Chapter VB. In other words, in such circumstances, the provisions
of Section 25-K had no application to respondent No.1.

The Court also held that just and proper compensation of Rs.2,50,000 to be given to the workers
who filed the suit and did not accept the compensation as first offered by Kran Raders Pvt. Ltd.

ANALYSIS:

In Delta Jute & Industries Ltd. Staff Association and Ors. v. State of West Bengal and Ors it was
held that Even if a person is designated as supervisor, the employer has to prove that his work
and his duties were in nature of a supervisor.7

In Reserve Bank of India v. Waman Baburao Shinde and others8 it was held that it is inescapable
that supervisor is not a workman.

It has been held that the question whether a person was performing supervisory or managerial
work was the question of fact to be decided bearing in mind the principle as to what was the
main work of the workman which must be found out from the main duties.9

7
2015(145)FLR105
8
1995 (70) FLR 10, (1998) IIILLJ 275 Bom
9
National Engineering Industries Ltd. v. Shri Kishan Bhageria and Ors., A.I.R. 1988 S.C. 329
CONCLUSION:

The grant of monetary compensation of Rs,2,50,000/- which it deems fit and proper in the
present case. Thus by upholding the decision of the Bombay High Court, the Supreme Court has
rendered justice to both parties in a way which is most befitting for the existing factual matrix of
the case.