Workmen Straw Board Co. v. Straw Board Co.

A 703 , WORKMEN OF THE STRAW BOARD MANUFACTURING COMP ANY LIMITED _v._ M/S. STRAW BOARD MA:f{UFACTURING COMPANY LIMITED _March_ 21, 1974. B [P. JAGANMOHAN REDDY; S. N. Pw1vE!i1 AND P. K. Go;WA)ll, JJ.] ,:;.,, _U.P._ _I11dustriaf._ _Disputh.,A.ct, Si._ _2N_ _and_ _6'N'-l11dl{.S_trial_ _Djsputes Act_ (J.f of 1947) ~·. _·2SFFF-Iw!> units o/ a·_ _business-tests_ _for determining_ _if_ _tl1ey_ _are._ independent~Principles _of_ _res ;udicdta-Applicability to industrial_ _adjudi-_ _cation-Scope_ _of_ _s._ 25 _FFF_ _of_ _the Central_ _A.ct._ ##### c D E F The respondent-company owned'•two units--S.-milt and R-mill. They werein !Cpartte premises, but in close. ·proximity. . The raw-materials used in the two mills were-different and were obtainCd from different sonrc1.'S. lhey also manufactured different products. Electricity was obtained by the two mills from different Sdurces. The sale Of:- products manufactured iµ the ·respective-- units. was effected from their respective . offices and the members of the staff of the' _·t.10_ unib; were separate, andJ.Wa~s were paid separately. The accounts of the two mills we.re maintained lt:~arately although finally they were --a.malgamated into one account. The Fire Insurance of the\ mills was don~ sej)aratcly; the local manager of the Employees State Irisurance Corporation bad allotted different numbers of provident fund lo the two mills; the assessment of the sales-tax for the sales of the product of the two units was done separately; and as the products. we,r,e di,fferent, different . rates of sales-tax were applied. The res1'ondent closed the:' S-rnill on the groupd of non-availability of ce_rtalO_~ ra:w-niaterial for it"' product and termir\ated the services of the workmen of ih8.t Will by stagefl between Mav 7 and July 28, 1967, 'Jhe first batch consisted of 98 workmen and_ they raised a dispute which was_ referred for a'djudi~ation b_v the tribunal under s. 4-K of th~ U.P. Industrial .Disputes Act. On the qu_estions (1) '\Yhether'-stoppage of work. tly the employers and theC3nsequent non-employment of the·- workmen amounted to a lay-off, retrenchn1ent, Jock-out, oc whether it was a legitimate closure; and (2) to what relief~ if any, t~ workmen concerned were entitled to, the tribunal held that the closure was legitimate; that it was not a case of lay·off, retrench1nent or lockout; that, since it was legitimate closure, the question of cvmccnsation could not Oe determined by it; and that the workmen were not entitled to any relief. In apoCal to his Court, HELD :._(l)Ift the circumstances of the case the S mill-which was .an in~ dependent unit and a separate line of business, bad been closed in fact· and therefore, it wa., not a case of l~y .. off or lock-out or retrenchment. [713'G-H· #### 1~m · · # t (a) Several factors are relevant in deciding the question wh~th~r industrial establishments owned by the same management constitute sepuralc units or one cstatJlishment, atld the significance or importance of th':!se relevant-factors, woutd G not be the same in each case but depends On the facts of each ca~e. The•c i3 bound to be a shift of emphasis in the application cf the various test-; from one case to another. But among these tests functional intt!.i!ralitv, n1·•:1nin!'.! thereby such functional interdepend~nce that one .unit c31!no~ exist c~nvenient1Y CIT reasonably without the other, will assume an added s1gnt11cnnc·: 1n the casl! of a closure of a branch or a unit. In the present case. R·tnHI is a diffcren~ line of business and'the closure of the S·mill.has nothing to do with the functioning of the R-mill. This is a most important aspect in thls ~a1°ticu!ar c~ase though there are certain common features as between the tw.o u111ts. 1 he ! act of the ff unity of ownership. ~uper\'ision and control. and ·the ext-stance of certain ~?mmon features do not jushfv a contrarv conclusion. That most Jf lh~ cond1ttons o( tervke of the two n1ills were substantially identical can be- !asi1y explained by lhc fact that being owned by the same employer i.lnd the two units b~ing 2-L!4Sup.Cl/75 704 SUPREME COURT REPORTS [1974] 1 &.C,R, E;ituate in close p~oximity it will not be in the interest of the management and pence and .well-be1n~ of. ~e C?Jllpanr tc;> treaf the employees differently. ·creating heart burning and d1scnm1natton. - Similarly. no particular significance could be nttached to the fact that the standing orders of the . company were applied to the employees of R·mill. It is _true:_ that there were some-case or transfer from one mill to the other but they were all done with the consent. of the -eJ:Dployoes. In fact, the standing orders did not provide !for transfer from one· unit to the o.the_r: The tri~unal has n~t committed _any,, manifest .error of law _by_ - · any s1gntficant om1ss1on to consider relevant materials in thlS c~ Therefore, it was a clear case of closure of an indel)endcnt unit of the company and not· a closure of a part of an establishment. - SUch-' closure l"Cannot be treated as· lay!ofr or lock-out under the Act. The S-mill was intended· to be closej and was in fact closed and therefore. the question of lay-off. u@r s. 2-N of the Act does not arise; Similarly. it is also not a Case of lock-Ofi,t within. the meaning· of s. 2.:.0. Jn both lay Off -and lock-out the unit is nOt clOsed completely ·and there is also no intention of the etnployer to close -the·-l:OncCm. It is also not a case of retrenchment as it i~ ordinarily understood nor even within the meaning of s .. 2(s) of the Act which is substantially >identical with s. 2(00). of the Industrial Disputes Act 1947, as interpreted by this Court. · (713A-714H; 718C-DJ _Associated_ _Ce1nent_ _ConJ;,nnies._ _Litnited,_ _CluiibµssO_ _Cement_ _Works_ _Jhitik'"'nl_ v. _Their-Workmen,_ [1960] 1 S.C.R. 709/716, _Indian_ _Cable_ _Co.,_ _ttd._ v. _[1$_ _WoTk·_ _men,_ [1%2] I L,L.J. 409/419, _Pakshiraja_ _Studio•_ v: _Its workmtn,_ [1961] II L.L.T. 330/382, _Pratap_ _Press,_ _etc._ v. _T/ieir Workmtn,_ !1960] I L.L.J .• 497 q1itted in 1961 (Il) L.LJ . .308/382; _Sol(th India_ Milfo~ners'. _Association_ _and others_ v. _-Coimba.:._ _tore District '(extile WQrkers'_ Union~an4,otliers, [1962] 1_ L.L.J. 223/230 and _Managemtnt of_ _We11ger_ & _Co._ v. _Their Workmen,_ [1963] Suppl, 2 S,C.R. 862/ 871. referred to_., ~r, (b) The emPtoyer waSjustified in deciding to close Jiown the unit by [1] stages It is not alwavs. pQssible. to immediately shut down a mill or a concern even •hough .a decision to close it may have ~~n irrevocably taken. ·:nere is nothing wrong in the responden~ company arrana;Lng closure of the S·mill in such a way as to guard against unnecessary inconvenience to bOth the management and the labour and against possible avdidable wastage or loss to the concern. It would be necessary to go on with the unqsed stock.of .raw, matl!rial'i for oome time for which a lesser number of workers 1 [would. ] [be ] [necess:lry, ] some of whom would constitute the next batch to go. Hence t11e lennination · of th~ services of the 98 workmen as the first batch selected to go on account of closure. in the circumstances of the case, cannot. be held to be unjustified. [715C-F] ( c) The timing of the termiriation of the 98 workmen which was about three months earlier to the actual closure is not at all relevant in the context of the present case which is one of a closure of an independent unit with different processes of work for its end product. It could,not be oontended that there was no closure·on 7th May since the S-Mill had been functioning till 28th July and· that therefore the first batch of 98 workmen must be held to have b!en retrenched, on 7th May with a right to compensation as on retrenchment under s, 6N of the U.P. Act. [715F-HJ (d) (i). The principles of _res judicata_ under s. 11 C.P.C. are applicabl~,to industrial adjudication, In the application of the principle in industrial adju(l1ca. tion the extremely technical considerations usually jnvoked in civil "J)rOCC!'dinp may not be allowed to outweigh substantial justice to ~e parties. This . is so since multiplicity of litigation and agitation and re-agitation of the same dispute at issue between the same employer -and his employees will not be conducive to industrial peace which is the princioal object of'. all labour legislation bearing on industrial adjudication. But, whether a matter in dispute in a subsequent case had already been directly and substantially in issue between the same parties and the same bad been heard and finally decid~ by the tribun~l w~I bC of pertinent consideration and will have to be determined before boldtn.i; Jn a particular case that the principles of _res_ _judicate_ are attracted. [717CFJ (ii) Rule 18 of the U.P. ln<iu¥;tria1 Tribunal ~nd Labour Courf;S Rules Procedure. t 967, enables the tribunal to frame any issue that may anse from the A B ##### c D E F G H A B ##### c D E F G H WORKMEN STRAW BOARD co. _v._ STRAW BOARD co. _(Ga.iwami,_ _J.)_ 7P5 P!eadings but. th~ decision on such issue would not automatically attract the prin~ c1ple of. _res_ 1ud1~ate. The heart of the matter always will be what was the S\l~'t!lntial _question that c.ame up. for decision in Pie earlier proceedin,gs_. Some a?d1honal is~ues. may be .fram~d 1n order to assist the tribOnal to better appre~ c1ate th~ case of t~e I?art!es with reference to the princi{'~l issue which has been referred to for -ad1ud1cat1on. The reasons for the dec1s1on in connection with the adjudication of the principal issue cannot be considered as the decision -itself to attract the plea of _res judicate._ The earlier question at issue must be r'elevant and _germane in determining the question of _res_ _judicata_ in thC subsequeni,, proceedings. The real character of the controversy between the parties, -is the determining factor and in· the con1plex and manifold human relations between labour and· capital no ·-cast-iron rule can be laid down. [717F-718A] Ci.ii) In. the present case, there were earlier awards but in nolle of them was the question whether R-MiU and S-J\1ill were one establisbment substantially in issue. (717 A..Cj 2(a) Since the U.P. Act does not make any provision for compensation in the case of closure and the Central Act has supplied the lacuna there is no repugnancy between the U.P. Act and the Central Act and the beneficent provisions of the latter Act can be availed of bY l'lbour even in their absence in the U.P. Act. Any doubt in the matter is cleared,. by s. 25J of the Central Act. Therefore, on the finding that the S- ~lill was cloSed as ·an independent unit it will fall for consideration whether the employees of the said mill are entitled to compensation under s. 25F which is a counter part of _s._ 6N of U.P. :Act. by virtue of the provisions of s. 25FFF (i) of the Central Act. The Tribunal was, therefore, not correct in holding that s, 25FFF did not apply to the emplorees concerned. [718D-719D] (b) It is no longer open to the employer to pfead that there could be no indtistrial dispute with regard to eligibility of workn1en to compe,ns.ation, or to its quantum, on closure of an establishment. Forti.er, the reference has not bee_n challenged as incomoetent either befpre the tribut\al or in this Court., On the other_ hand the explicit terms of the· reference show' that the subject matter referred to is an jndlistrial dispute. Once it is found that ·there is a closure the question of applicability.-df s .. -25FFF(i) or thecproviso theretq.will automatically arise for consideration in determip.ing the quantum of compensation. The scheme of Chapter V-A -Or even. th'Ctlanguage, of s. 25FFF does·not indicate that the claim under the section can b& made only llnder s. 33C. pf the Central Act. It was therefore incumbent upon. tbe tribun.al 'to adjudic_ate u):)on the second issue of reference for granting appfoptiate relief as a necessary cOrollary to the result of the first issue, and the m·atter must be remitted to the tribunal. .The tribunal should determine the amount of-COmpensation after givin2 an adeauate opportunity to the parties to establish their respective pleas. [719H-720H] (c) The word undertaking as used in s. 25Fff. is not' intended to cover the entire industry or business of the employer and therefore, even closure or stopoage of a part of the business or activities of the employer would be covered. by the sub-section. [719E-G] ~ _Jifanagement_ _of_ _Hihduitan Steel Ltd._ v. _The_ _Work111en_ _and_ _others,_ A.I.R. 1973 S.C .. 878/882, followed. CIVIL APPELLATE JURISDICTION: Ci~il AppeaHilo. 52 of 1969. Appeal bv special leave from the Award dated the 30th April, 1968 of the Industrial Tribunal (Ill Lucknow in Ad.i Case No. 110 of 1967. _S._ C. _Agrawal,_ _Shanti_ _Swarup_ _Bhatnagar_ and _V._ _I._ _Francis,_ for the appellants. _V._ _S._ _Chitalev,_ _1._ _N._ _Shrofl_ _and_ _R._ _P._ _Kapur,_ fotthe respondent. SUPREME COURT REPORTS [!974] 3 S.C.R. 706 The Judgment of the Court was delivereji by. GoSWAMI, **J** .-This appeal by special leave at the instance of the workmen of the Straw Board Manufacturing Company Limited, is dir~.:ted against the award of the Industrial Tribunal llll at Lucknow (briefly the Tribunal) dated 30th April, 1968. The facts ###### briefly are a• follows : The Straw lJoard Manufacturing Company, the respondent hereinafter to be. referred to as the Company) is _a public Limited company and owns two units shown as the Straw Board Mill and the Regmal Mill (hereinafter described as S. Mill and R. Mill respectively). Straw Board was manufactured in S. Mill and abrassive paper/cloth described as regmai was prepariid in R. Mill. Thes~ two Mills are situ.ated close to each other with only a railway line intervening Each ha; a factory registereH separately under the Factories Act, but one balanc'! sheet and one profit anil loss account are prepared for the Comoanv as a whole consolidating the accounts of both units. S. Mill was stated some time in 1932 and R. Mill was established some lime iu 194()-41. S. Mill had more than 200 workmen whereas R. i\1111 had about 50 workmen. The Company dosed the ·s. Mill on the ground of non"availability of Bagase which is the raw material for the manufacture of strawboard and terminated the services of the workmen of this Mill bv stages between May 7 and July 28. J %7. The first batch consistili of 98 workmen whose dispute wns the subject matter of the reference before the Tribunal. On a discu!c being raised by the workmen over their termination of services and. on failure ol conciliation, the State Government under section 4 K of the U.P. Industrial Disputes Act (briefly the U. P. Act) referred the following two issues for adjudication bv the Tribunnl : ;, '• (I) Whether the stoppa~e· of work bv the employers and the consequent non-employment by them of the workmen, detailed in the Annevure, in stages as frnm May 7, 1967, amounts to a lay-off/retrenchment/lock-out or whether it should be treated as a legitimate clos11rc'? (2) To what relief. if any, are the workmen concerned entitled on the basis of.,the findings on issue No., I above? Borl1, the parties submitted. their written statement; and re-joinders. In aci:ordancc with the usual procedure followed by the Tribunal, th: following fresh issues were framed on the pleadin.gs : A **B** ##### c **D** E F **Ii)** **Whether the present reference is bad** **in** **law** **by** **reasori** **G** **of** **withdrawal** **or the previous reference?** ! ii) Whether this Tribunal is not competent to oo into the **question** **whether** **the** **closure** **was** **for** **unavoidUble** **rc:-1sons** beyond the control of the employers? (iiil Whether this Tribunal is not competent to determine the question of compensation· in this reference? **H** (iv) Whether the emoloyers could vali'lly close only the Straw Board Mill without closing the Re,gmal Mill? WORKMEN STRAW BOARD co. v,"STRAW BOARD co. _(Go.111>ami,_ _J.)_ 707 A **B** ##### c **D** E F G On ADril 30. 1968. the Tribunal made the award by recording the following order : "30.4.68 While writing the awprd I found it •possible to determine the matters of \:lispute finally on the findings on the issues at which I. have arrived. It js not, therefore, necessary to call upon the parties _to adtiuce evidence on the question oE co111pensation and any other related question. I do not con sider it necessary to go into the question of compensation in **1bis** ~ase. Award made. Let it be sent to the State Government." (v) (vi) Whether the awards in Adj. Cases Nos. 53 of 1965 and 93 of 1965 of Labour Courts, Allahaball and Meerut, respectively and in Adj. Case No. 10 of 1967 of Indus .. trial Tribunal (ll, Allahabad or any of them operate as _res judicata_ between the parties? Whether this Strawboard Mill and Regmal Mill form part of one and the same establishment, and whether this matter "llas been finally determined by the award of fndllstrial Tribunal (!) in Case No. 65 of 1963 and does the award operate,}s _res judicata?_ Issue No.(il was not pressed before the Tribunal. Numerous documents were exhibited by both the parties b~fore the Tribu~al, most of these on admission. Th~ workmen examined only one witness while the Company examined three .witnesses, including its director. After hearing arguments in the case on April 24, 1968, the Tribunal recorded· the following order :"24.4.68 ........ Arguments have been heard on all the issues. Tf it aµpears to me that the reference can be answered on fittdings on the issues fram~U by me, I will prooeed to give mv award and it will not be necessary to call upon the parties to adduce evidence on the question of quantum of com-_ oeusation, In case I am of the view that the question of compensation is required to be determined in this case **and** **thi&** **Tribunal** **is** **competent** **to** **determine** **it,** **parties** **shall** be called upon to adduce evidenc~ on the question of com pensatio'1' ·and the related question of availability or l!_navoidability of reasons of closure of the factory and in .that case the reference will be disposed of only after evidence on this pqint also has been recorded and the parties have been heard . further." . - . H The Tribuna\ came to the following conclusions : 11) S. Mill and R. Mill do not form parts of one and the sam~ esta.blishment. 708 SUPREME COURT REPORTS [1974] 3 s.c.P. (2) It is a case of col)lplete closure of an i A 1 [ndependent in-] dustria! unit. ( 3) There is no _res_ _judicata_ on account of the previous awards as claimed by the workmen. ( 4 l The employers coilld validly close the S. Mill without closing R. Mill. B The Tribunal, therefore, answered .the first issue in the reference in favour of the Company ·and held that the• closure was legitimate and it was not a case of lay-off, retrenchment or lock-out. The Tribunal further held that since it was a legitimate closure, the question of compensation could not be determined by it and the workmen were not entitled to any relief. Hence this appeal by the workmen. C Mr. Agirarwal, learned counsel ap.pearing ou behalf of the appel##### lants. submits as follows : ( 1 l The action of the Company is not a closure, far less, lecitimate or _bona fide_ closure, It was a lock-out. (2l Even if it is accepted that suspension of production in D S. Mill was due to shortage of raw materials, the Com nanv should have resorted only to lay-off in accordance with the provi5_ions of section 6-K ot'ihe U.P. Act. _i_ 3 l In anv event, termination of the services of 98 workmen ~onstituted retrenchment and was made in violation of sections· 6-N and 6-P of the U.P. Act and is, E therefore, invalid iµ law. r 4) Alternatively, if the action of the Company even amounts . to . closure, tile workmen are entitled to compensation under sub-section (1 l of section 25FFF of the Industrial Disputes Act (briefly the Central Aci) and the proviso of that su)>-section is not attracted. F On behalf of the respondent the principal submissions of Mr ##### Chitalev are as follows : ( 1) If a distinct business activity is closed then the provision of section 25FFF is satisfied. The section uses tile word 'undertak~'_ in _i_ general and popular sense: the accent not being on linanc1al or other unity but on separate line G H of business. Tlie test of functi<;mal integralitv is not relevant. (2) Since the test for functional integrality would depend" upon the nature of the dispute raised and the test would be different for section 25FFF, there cannot be any question of _res_ _judicata;_ the matters directly and substantially in issue in the present award and the earlier awards being different. WORKMEN STRAW BOARD co. _v._ STRAW BOARD co. _(Goswami,_ _l.)_ 709 A B ##### c D E F G H (3) Oosure need not be instant. It can be, and very often, in the nature of things, has to be in stages. All that sec-. lion 25FFF requires is that there should be a _bona_ _fide_ closure in the sense that it should not be a mere pretence of 'rlosure. Tie Tribunal has held that section 25FFF is not appHcable on accouri, of a· similar provision being absent in the U. P. Act. Although Mr. Chitaley als() had anirst submitted in the same vein but finally did not choose to take that position before us. We wiil, therefore, briefly give our own reasons at the appropriate place. It may be noted here that the workmen were paid by the Company three month's wages. as, compensation under the proviso to section 25FFF althoqgh there is no like. provision in the U. P. Act and the workmen also accepted the payment without prejudice. to their rights to agitate against the same. )lven ·so, the Company, however, had successfully raised the non-applicability of section 25FFF before the Tribunal as an answer to tlie. workmen's claim on the score of noncompliance with section 25F under sub-section ( 1) of section 25FFF of the Act. Wit:1 regard to the first submission. the appellants counsel took considerable pains, in the forefront of his argument, to demonstrate that there was n0 closure as ~uch of the Company at all since only a part of a single establishment was sought to be shut down. It is also ·pointe<l out that there s;~s in fact no closure of even the S. Mill on May 7, 19.67 and that the same continued functioning until it was finally declared ·closed on July ~8. 1967. Hence, it is submitted that 98 workmen concerned in this \lppeal should be held to be retrenched on May 7. 1967 and since the pre-conditions laid down under section 6-N and the provisions of section 6-P of the U. P. Act have not been complied with bv the Company, the so described retrenchment should be held as invalild. - In order to assess the correctness of the above submis<ions of the patties. it is necessary first to find if ihe S. Mill and 1he R. Mill were parts of one single establishm~nt. "Several tests were referred to in the course of ar~µ­ ments bofore us, such as, geographical p1'00<imity, unity The U. P. Act follows the Jiattern of the Central Act, namely, the Industrial Disputes· Act and the defi!'itions of lay-off, lock:out _and retrenchment and the provisions relatrng thereto are almost 1denttcal. The decision of this Court_ dealing with the problems arising out of the. aoolication of the provisions of Chapter V-A of the Central Act relating to Jay-off and retrenchment are, therefore, relied upon by both the parties. ###### 'lbe learned counsel for the appellants drew,,ur attention to a number of decisions of this Court with regard _to the tests of determining what is 'one establishment'. In the _Associated_ _Ceme11t_ _Com-_ _panies_ _Limited,_ _Chaibassa_ _Cement_ _Works,_ _Jhinkrmi._ v. _Their_ _Work-_ ##### men, (') the Court observed as follows : (l) [1960j l S. C.R. 703/716. SUPREME COURT REPORTS [1974] 3 s.c.tt. ol ownership, management and control, unity of empioy1n011t and conditions of service, functional integrality, gene·· ral unity of purpose etc .... _fl_ _is,_ _perhaps_ i111p:>~sibti! _r,J_ _lav down anv_ _on11_ _test_ _as_ _an_ _absolute_ _and_ _inrariab/e_ _lest_ _for_ _all_ _cases._ The real purpme of these tem is to lirlJ 0ut Lh~ true relation between the parts, branches. unit!i, etc. If in their true relation they constitute one integrated whole, we say, that the establishments is one; if on 1hc conlrarv they do not constitute one integrated v.:ho!c. ca('.h unit is then a separate unit. How the ret1tion i::~-· l1>ccn the units will be judged' must depend on the facts prov,d, having regard to the scheme ·and object of the statute which,cives the right of unemployment compensa tion -<1nd aisn prescribes disqualification therefor; ·rhus. in one case the unity of ownership, mdnagc111cnt ~1nJ co1Jtrol 1nav be the in1portant test. in another case func. tional integrality or general unity may be th.e important test; and in still another case, the important test may be th~ unitv of emplovment. In1jeed~ in a Jargc number of ca~e-s- ~evcral tests mav fall for consideration at the same time". (emphasis added). Jn _Indian Cable_ _Co .._ _Ltd._ v. _Its Workmen,_ ( [1] ) this Court while approvi.r.~ of the principles laid down _in_ _Associated._ _Ce1n.'?11t_ _Co111-_ _panies_ case (supra) at page 419 entered a significant observation as- follov. [1] s : A B ##### c D E F G H "In _Associated_ _Cen1ent_ _Con1pa11ies_ _case_ (supra) it wos held that all the tests referred to in the judgment were satisfied and therefore the question o'f .the comparative i.vcight to bl.! attached to the several tests dfj not arise for consideration". In _Pakshiraja Studios_ v. _Its Workme.1',(')_ this Court referring to its earlier decision in _Pratap Press,_ _etc._ v. _Their Workmen,(Z)_ reite· rated the following principle : the Court has to consider with care how far there is functionai integrality meaning thereby such !'tmctior:al inter-dependence· that one unit cannot ~xist conv~ni· cntiv and reasonahly without the other and tho further question whether in .matters of finance anld employment the employer has actually kept the two units distinct or integrated". Jn _South India Mil/owners' Association_ _0•1d_ _others_ v. _Cni111ba-_ _tore District Textile Workers' Union and others,(')_ this Court on ###### the san:;c topic observed as follows : "rn dealing with the problem. several fitctors ::trC' r~!.:!·­ vant and it must be remembered that _the_ _significance_ _n_f_ _tlze_ _sereral relePant factors_ _would_ _1int_ _be_ _the_ _sa111e_ _in_ _each_ _case._ (I) [1962) IL. L. J. 409/4t9. (2) fl96tj Tl L. L J. J8Q/382. (3) [19601 IL. L. J. 497 quoted in [t9611 Tl L. L. J. J80/J82. (4) [19621 I L. L. J. 223/230. WORK;:EN STRAW BOARD co. _v._ STRAW BOARD co. _(Goswami,_ J.) 711 A **B** ##### c **D** E F G **H** (emphasis added). In _Management_ _of_ _Wenger_ & _Co._ v. _Their Workmen,(_ 1), this Court w!1ile referrinit to almost all the. earlier decisions on the subject emoha.iscd the following aspect in these terms : "Several factors are relevant in deciding this question , (whether industrial establishments owned by the same management constitute separate units or one establishment). But it is important to bear in mind that the significance or importance of these relevant factors would not be the same in each case; whether or not the two units constitute one establishment or are really·. two separate and .independent units, must be decided on the facts of each case". Bearing in' mind the not too rigid principles laid down by this Court, as ·.noticed above, we have to consider jf the two units, the S. Mill and the R. Mill can be held, on the materials established in this case. to be functionally one. single establishment. Broadly the common feafures of the two units emphasised before us by the app~llants are unity of ownership; ultimate control and. supervision; **unity** **of** **fin·ance;** **similarity** **of** **service** **conditions** **in** **general,** **similarity** of general wage structure; proximity of the units; some work (viz., preparation of Water proof Masala) for the R. Mill being {'erformed in the S, Miii; 'Common boiler located in the S. Mill supplymg steam to. R. lvlill; location of, the processing. furnace of the R. Mill in the S. Mill; identical bonus scl\eme for both the units except for one year; intertransferability of employees fron'r' one unit to the other; identical workin.e: ccnditions; maintenance of one balance sheet and profit and loss account and one consolidated account for the COnlpan'( including both tJ::e units; depreciation fund; same occupier, namely, the Directc nor their importance. Unity of ownership and management and control wou'd be· relevant factors. So would be general unity of the two concerns; the unity of finance may not be irTelevant and geographical location may,,\so be of some relevance; functional integrality can also be a relevant and important factor in some cases. It is also possible that in some cases, the test would be whether one concern forms an inteitral part of another so that the two together constitute one concern, and in dealing with this question _the_ _nexus ·of_ _integration in the form of some_ _**essential**_ _**dependence**_ _**of**_ _**the**_ _**on·e**_ _**on**_ _**the**_ _**other_**_ _**1nay**_ _**assun1e**_ _relevanee._ Unity of purpose or design, or even p;irallel or c0-0rdinate activity in~nded to achieve a common ob ject for the purpose of carryipg .out. the business oLthc one or the other can also assume relevance and importance .... In the complex and complicated forms which modern industrial enterprise assumes, it would be unreasonable to suggest that any one of the relevant tests is decisive; the importance and significance of the tests would vary according to the facts in each case and so, the ·qt!estion must always be determined bearing in mind all the relevant tests and co relating them to the nature of the enterprise with which the **Court** **is** **concerned".'** fifll963J Supp. 2 s. c. R. 862/871. 712 SUPREME COURT REPORTS (1974] 3 5.C.R. {.E.W. 1), for both the Mills and above all treatment by the Company of both the units as on~ in certain matters, such as opening of Bank accounts ~xcept in the State Bank where it was in the nan1e of the Company, Regmal section, and the products of both the units bearing the name of the Company. The submission is songht to be reinforced by reference to some earlier awards of Tribunals in certain adjudications where it is pointed out that the Tribunal had held that the standiitg orders of the Company were applicable to the R. Mill and the workmen's terms of conditions of service were the same in both the units. On the other hand the circumstances pointed out in favour of the respondent are "that the two units are separate. Both factories are registered Beparately under the Factories Act· and they are in separate premises. The raw materials used in the two factories are different and it is obtained from different sources. Electricity is ·obtained by the two factories from different sourq:s, the sale of products manufactured in the· respective units is effected from their respective office, the staff of the two mills is separate and wages are paid separately. The accounts of the two mills are maintained separately, although finally they are amalgamated into one account of the Company. Fire insurance of the two factories is done separately, the local manager of the Employees State Insurance Corporation has allotted different numbers of provident fund to the two factories, the assessment of sales-tax for the sales cf pr.oducts of the two mills is done separately which is obviously due to the fact that the products are different and different rates of sales tax apply to them". There is no provision in the standing orders of the Company regarding transfer of workmen from one unit to ll1e other. We haYe got to consider the appellants' submission in the backdrop of the present dispute before the Tribunal. The dispute centres round closure of S. Mill. By raising an industrial dispute the closure is sought to be characterised by the workmen as either a lay-off or lock-out N retrenchment. The controversy between the parties with ·regard to the oneness of the establishment has to be. viewed mainly fronr' the point of view of compensation for deemed retrenchment of the employees on closure since it is absolutely clear that the -S. Mill was ultimately closed on July 28, 1967 and remained so till the date of the award. It is, .however, pointed out by the appellants antl not countered by the respondent that the Strawboard section has again been restarted with about 58 workmen from October 1972 during the pendency of this appeal. It is, therefore, clear that the S. Mill was not.functioning at all between _July_ 1967 and October 1972. We will, therefore, have to consider the matter in controversy in the above. context and' circumstances of this particular case. Adverting to tlle common features emphasised by the appellants, although ·most of these are present. it is not correct that there was mutual transfer of labour from one unit to the other without the consent of the employees. Again too much significance cannot be given in this ease for application of the provisions of the standi.ng orders. The fact that in the earlier award, on a dispute being raised by .the workmen of the R. Mill the standing orders were he)d 'to be applicable to them, would not assist tl1e appellants for the purpose of this case to enable an unerring conclusion on that ground alone that the two units are one. Similarly A B ##### c D E F G H A B ##### c D E F G H WORKMEN STRAW BOARD co. _v._ STRAW BOARD co. _(G<!swami,_ J.) 113 that some masala for the R. Mill is prepared in the S. Mill or that the steam in the R. Mill is supplied from the boiler located in the S. Mill are not decisive tests in this case when even for the purpose of economy a common employer may arrange his matters in such a way tlJat there is certain operational cooperation between units, not necessarily wholly interdependent one upon the other. The most important aspect in this particular case relating to closure, in our opinion, is whether one unit has such componental relatioµ that closing of one must lead to ttie closing of the other or the one cannot reasonably exist without the other. Functional integrality will assume an added significance in a case of closure of a b91nch or unit. That the R. Jl.lill is capable of fut1.ctioning in isolation is of very materiaUmport in tk case of closure. There is bound to be a shift of emphasis in application of various tests from one case to another. In other words, whether independent functioning of the R. Mill can at all be said to be affected by the closing of the S. Mill. At the time we are hearing this appeal we should have thought ti)at the answer i,s easy since the R. Miil admittedly has been functioning in the absence of the S. Mill for a little over five ~·ears. But we have to consider the correctness of the conclusion of the Tribunal on the date it passed the award when the closure was only for a)fout ten months. .That, however, will, in our view, make no difference in principle. The reason for closure of the S. Mill is non-availability of Bagasse, which is the raw material needed for kee.Ping it going. It is clear from the finding of the Tribunal that there 1s no other oblique reason at all established in the evidence i:l respect of the closure; The workmen cannot question the motive of the closure once closure has taken place in fact. The matter may be different if under the guise of closure the establishment is being carried on iO: some shape or form or at a different place and the closure is only a ruse or .pretence. Once the Court comes to the conclusion that there is closure of an undertaking, the motive of the employer ordinarily ceases to be relevant. No employer can be compelled to carry on his business if he chooses to close it in truth and reality for reasons of his own. It is because of this that section 25FFF has been inserted by an amendment_ of the Industrial Disputes Act by Act 18 of· 1957 and it is not necessary for us to trace the history of the insertion of Chapter V-A in the.Central.Act by Amendment Act 47 of 1953 and later on of section 25FFF with other provisions. We may only note in passing that the legislature had to introduce these beneficial provisions in the interest of labour on account of the interpretation by this Comt of the earlier relevant provisions of the Central Act on the subject. After giving due consideration to all the aspects pointed out by the learned counsel for the appellants, we are unable to bold that R. Mill is not an independently functioning upit and that there is any functional inte~rality as such between the R. Mill and the S. Mill. The fact of the unity of ownership, supervision and control and some other common. features. which we have noticed above, do not justify a contrary conclusion on this aspect in the present case. There is considerable force in the submission of Mr. Chitaley that the R. Mill is a different line of business and the closure of the S. Mill has nothing to do with the functioning oE the R. Mill. The matter may be absolutely different when 714 SUPREME_ COURT REPORTS [1974] 3 S.C.R. **in** **an** ~thefwise **going** c~Ilcerll **.or** **a functioning unit** **some_** \vork~en's services are terminated as being redundant or surplus to requirements. That most of tbe conditions of service of the two Mills were substantially identical can be easily explained by the fact that, being owned by the same employer and the two units being situated in close proximity, it will not be in the ipterest of the management and peace and wellbeing of the Company to treat the employees differently creating heart burning and discrimination. For the same reason, there is no particular significance in this case even in the application of the standing orders of the Company to the employees of the R. Mill which, because of the non-requisite number of employees employed in the latter, is not **even required under** **the** **law to have separate standing** **order3.** **It is, in** our opinion, a clear case of closure of an independent unit of a Com' pany and not a closure of a part of an establishment. Even so, tbis kind of closure cannot be treated as lay-off or lock-out under the U.P. Act. The S. Mill was intended to be closed and was in fact closed and, therefore, the question of lay-off under section 2-N of the · U.P. Act does not arise. Similarly it is also not a cas-~ of lock·out within the meaning of section 2-0 of the U.P. Act. In both lay-off and lockout the unit is not closed completely and there is also no intention of the employer to close the concern. The learned counsel drew our attention to the fact that the Tribunal did not consider the effect of certain awards and of some material evidence. We have examine\i au the materials which according to the counsel, were not taken note of by the Tribunal. We are, however, not impressed by the argument that the Tribunal committed any manifest error of law by any significant omission to consider relevant materials in this case. To cite one or two instances, the appellants drew .our attention to Exhibit E-69 which is a letter to the Chief Controller of Imports and Exports with an application dated 4th June, 1962, addressed by the Manager of the Company. We have gone through this document. We find that against item A, while giving particulars of the applicant under column 1, the name of the applicant. "the Straw Board Manufacturing Company Ltd. (Abrasives Department) Saharanpur" is mentioned. Again, against item B there" in, regarding particulars of the industrial unit, the name of the industry has been i:iven as "Coated Abrasives Industry". Against item D, under column 1 in the said form viz., Date of establishment of business in India. what is mentioned is "Abrasives Department started production in the vear 1940". It is trne that the application has been put in for and on behali of the Company but that, by itself, does not at all assist the appellants and this document would not help in coming to a contrary conclusion that the R. Mill is not an independent unit. Similarly, the learned counsel was referring to mis-reading of the evidence of the only witness, Raja Ram, on behalf of the workmen, with regard to the inter-transferability of the employees between the two units. Qear. evidence has been given by the Director (B.W. I) that the four cases of transfer within the .last eleven years were "done with their consent". Besides, as noted earlier, even the standing cirders relied upon by the appellants do not provide for transfer from one unit to the other. There is, therefore, rio merit in the submission of the appellants. A B ##### c D E F G H ### i,. • • WORKMP!'< STRAW BOARD co. _v._ STRAW BOARD co. _(Goswami,!.)_ _715_ We may now consider whether the employer after he had decided to close down a particular unit is entitled to close the same by stages. We have seen in this case that a decision to close the S. Mill was taken by the Company some time in March, 1967 and the Secretary to Government of U.P. Industries De11artment was informed about it on 7th March, 1967. Even the Union had been informed about it earlier on 21st February, 1967. Communication of the decision was also made to various authorities of the Government and other concerned. Finally on 5th April, 1967, notice of closure of the factory was published stating that the first batch of.98 'workmen will be discharged on 7th May, 1967. Notices of termination of service were also served on these workmen individually. on.the same day. In pursuance of this notice, services of these workmen were terminated, with effect from 7th May, 1967. A B ##### c D E It may not always be possible to. immediately shut down a mill or a concern even though a decision to dose the same may at any rate at the time have irrevocably been taken. There is, therefore, nothing wrong in the employer arranging closure of the S. Mill in such a way as to guard against unnecessary inconvenience to both the management as well as to the labour and against possible avoidable wastage or loss to the concern, say, for not being able to complete some processes which have ultimately to be finished. Having decided to close down a unit on account of non-availability of raw materials the supply of which had stopped, it was necessary to go on with the unused stock of raw materials for some time for which a lesser number Of workers would be necessary who would then naturally constitute the next batch or batches to go. We do not see anything wrong in law _in_ electing a step or mode in finally closing a unit or a concern. ft may be in the nature of a business to take recourse to such a mode which cannot ordinarily and _per se_ be considered as unfair or illegitimate. In the circumstances of this case we are unable to hold that the termination of the servkes of the 98 workmen, on account of closure, as held by us, is unjustified having been the first batch selected to go while others F were retained until the final closure of the S. Mill on 28th July, 1967. The counsel for the appellants very strenuously submits that there was no closure ori 7th May. 1967, since the Mill had been functioning till 28.th July, 1967 and, therefore, contends that the first batch of workmen must be held to have been retrenched on 7th May, 1967 and paid compensation as on retrenchment under section 6-N of the U.P. Act. We are unable to accede to this submission. The timing of the ter mination oi the 98 workmen which was about three months earlier is G not at all relevant in the context of the present case which is one of closure of an independent unit with different processes of work for its end-product. What compensation they will get under the circumstances is of course a different matter to which we will refer hereafter. .We will now take up the submission Of the learned counsel for the appellants with regard to _res judicata._ It is contended by him that in H previous awards between the same parties the Tribunals ·have held both R. Mill and S. Mill to be one establishment and, therefore, the principles of _res judicata_ will apply and the employer is not entitled to reagitate the same question here in this case. Counsel has referred to . : 1,716 SUPREME COURT REPORTS [1974] 3 S.C.R. ~ward cEit.,E-105t which is_~~' a~ard of ihe.Regional c~~cili~tion Officer, Meerut, in_ case No._8 Adj. of 1957 dated July 12,.1957. The **refefenC0** **in _** _th_is-'..c~se **\;Vas** **\Vith** **regard** **to** **\Vhether** **a** **worker_** **named** **Sri** Sanioo "be made a permanent sweeper?':. · In considering this question the Union claimed that although Santoo was employed in-the R. Mill, he was entitled, to b~ made a permanent sweeper under the standing orders_ of the Company •. It is true that the Adjudicator held in favour of the . workman repelling t_he contention. of the management that he was only employed ·:in a· temporary capacity in· part-time work and he was not a suitable worker to be absorbed as a permanent \rnrkffian. The Adjudicator, of course, observed that the management "further added that the Regmal'Mill·is entirely a separate factory than (sic) the Straw Board factory and as such the standing orders of tb Straw Board factory would not apply in this concern". This decision on the facts 'of the particular case where incidentally the Company's standing orders were also·.taken·note of-by the Adjudicator, cannot be considered to be. _res. -jud/cata_ in this case for the particular purpose for which that doctrine is invoked here. -' - . - · · - . · _A_ B ##### c **_J.r-..** ##### • \ ' ### • ## • The next award lo which reference has been made by the appellants is the award in Adjudication Case. No. 65 of 1963 dated . 2nd ### November, 1964 '(Ex.W-11). The issue in that case was m the D following terms :- · - . ., ' . . "Should the employers be required to introduce the Prm-ident Fund Scheme for the workmen employed in their Regmal Mills .•.. ?" 'The dispute in. that case WaS between the Company . and the workmen of the R. Mill as such and not. that of the S. Mill. The Tribunal, guardedly enough, framed an additional issue (Issue No. 4) in these terms : "Has ihe Regmal Mills to be considered _/;r the purposes_ _of_ _the present_ _claim_ to be· an independent · and separate unit ..,.?" _(emphasis added). E F . The Tribunal finally allow~d the provident fund facility to the -workenr of the Regmal Milt The decision again cannot be invoked as _res iudicata_ for the purpose of dealing with the case 'Of closure of one of the units of the_ Company. The nature of the subject matter of the Industrial dispute and the purpose of an .,nquiry in sui:h an adjudication are always material in considering the question of _res_ G _judicata_ in a later proceeding between the same parties._ _ · . The ne~t award to which reference has been made by the appellants is in Adjudication Case No. 53 of 1965 dated October 23, 1965 (Ex. W-2). The subjecfmattter of the dispute in that case was "whether the employers have retired the workmen, Shri Punnu. Ram, son of Ganga Ram, peon, Regmal Mills, with effect from the March 1, 1964, 11 legally and/or justifiably .... .'I" Here again on the pleadings one of the issues framed by the Labour Court was "whether the certified standing orders are 'or are not applicable to the employees of the WORKM'.EN STl\AW BOARD co. _v._ STRAW BOARD co. _(Goswami,/.)_ 717 Regmal .Mills?". The Labour Court in. its award gave the .bencJit of the S\lperannuation age of 61. years provided under the standu1:g orders to this workman. This agam cannot be cons_1dered as helping the submission. on the score of _res_ _judicata_ made in this case in respect of the particular dispute which is involved between the parties here. Another ~ward relied upon by the appellants is in Adjudication Case No. 10 of 1967 dated 22nd August, 1967 (Ex. W-4). The issue in this case was "should the employers be required to grant 12 days' casual leave witll wages in a year to the workmen employed in Regmal section ... ?" The Tribunal in that case allowed 12 days' casual leave to the employees of the Regmal unit. This case also cannot be considered as _res iudica:a_ for the purpose of the present con troversy between the parties in this appeal. Ids the matter directly and substantially in issue in each case which is of material relevance in det,ermining the question of _res_ _iudicata_ in an industrial matter. A **B** ##### c **D** E F G H It is now well established that, although the entire Civil Procedure Code is not applicable to industrial adjudication, the principles of _res_ _judicata_ laid down under section 11 of the Code of Civil Procedur<, however, are applicable, wherever possible, for very good reasons. This is so since multiplicity of litigation and agitation and re-agitation of the ·same dispute at issue between the same employer and his employees will not .be conducive to industrial peace which is the principal object of all labour legislation bearing on industrial adjudication. But whether a matter in dispute in a subsequent case had earlier been directly and substantially in issue between the same parEes and. the same had been heard and finally decided by the Tribunal will be of pertinent consideration and will have to be determined before hol<!ing in a particular case that the principles of _res_ _jmlicata_ are attracted.. The learned counsel faced with the problem drew our attention to rule 18 of the U.P. Industrial Tribunal and Labour Courts Rules of Procedure, 1967, which provides that after the written statements and rejoinders, if any, of both the parties are filed and after examination of parties, if any, the Industrial Tribunal or Labour Court may frame such other issues, if any, as may arise from the pleadings. It is clear that these issues are framed by the Tribwial to assist in adjudication. While it cannot be absolutely ruled out that in a given ~ase such an additional isme mav sometimes attract th.e principle of _res_ _judicata,_ the heart of the matter will alw~ys be : What was the substan. tial question that came up for decision in the earlier proceedings ? Some additional issues may be framed in order to .Ssist the Tribunal to better appreciate the case of the parties with reference to the principal issue which has been referred to for adjudication and on the basis of which, for example, .as to whether it is an industrial dispute or not, the jurisdiction of the Tribunal will have to be determined. Tho reasons for the decision in connection with the adjudication of the principal **issue** **w'1ich** **has** **been** **rPferred** **to** **for** **adiuciicatinn** **and** **on** **thP.** **hq.,.1s** **of** _res_ _judicata._ The earlier question at issue must be relevant aml germane in determining the question of _res_ _judicata_ in the subsequent proceedings. The real character of the controversy between the parties 718 SUPREME COURT REPORTS [1974] 3 s.c.R. is the determining factor and in complex and manifold human relations **A** between labour and capital giving rise to diverse kinds of ruptures of varying nuances no castiron rule can be laid down. Some distinction, of whatever shade or magnitude, may have to be borne in mind in application of the principles of _res_ _judicata_ in industrial adjudication in contra-distinction to civil P.roceeding. Eitremely technical considerations, usually invoked in civil proceedings, may not **B** be allowed to outweigh substantial justice to the parties in an industrial adjudication. We have already held on t.he facts established in this case that the S. Mill, which was an independent unit .and a separate line of business, had been closed in fact and, therefore, it was not a case of lay-of! or lock-out. It is also not a case of retrenchment, as it is ordinarily understood, and even within the meaning of section 2(s) of the U.P. Act which is substantially identical with section 200 of the Central Act as interpreted by this Court. The Tribunal _is,_ therefore, right in answering the first issue in the reference in favour of the respondent. ##### c The next crucial question that will then arise for consideration is whether the concerned employees are entitled to relief under section 25FFF of the Central Act since there is no similar provision in the **D** U.P. Act. Mr. Chital~y. as stated earlier, at 'first disputed that the employees can invoke the provisions of section 25FFF, although, finally· abandoned that position. Since the U.P. Act does not make any provision for compensation in the case of closure and the Central Act has supplied the lacuna, there is no repugnancy between the U.P. Act and the Central Act and the beneficent provisions of the latter Act can be availed cf by labour even in their absence in tlie U.P. Act. The Cen- E tral Act applies to the whole of India, including U.P. Even if there moy be the slightest doubt in the matter, section 25J of the Central Act advisedly leaves no scope for controversy in the matter. We will, therefore, read pection 25FFF of the Central Act which clearly applies in the present ~ase : f-" 25FFF (I) : "Where an undertaking is clo5ed down for r.ny reason whatsoever, every workman who has been in continnous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of section 25F, **as** **if** **the** **\vorkn1an** **had** **been** **retrenched** : Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under clause (b) of section 25F shall not exceed his average pay for three months. _Exp/anation.-An_ undertaking which is closed down by reason merely of(i) financial difficulties (including financial losses); or (ii) accumulation of undisposed of stocks; or F G **H** A B ##### c D E F G H WORKMEN STRAW BOARD co. _v._ STRAW BOARD co. _(Goswami,_ I.) _119_ (iii) the ¢xpiry of the period of the lease or licence grantod to it; or (iv) in a case where the undertaking is engaged in mining operations, exbauStion of the minerals in the area in which such operations are earned cill; shall not be deemed to be closed down on account of un· avoidable circumstances beyond the control of the etriployer within the meaning of the proviso of this sub-section". Section 6-N of the U.P. Act is identical with section 25F of the .::entral Act except for some consequential additions in section 2SF(c) in view of the scheme of the latter Act, which are not material for Oll1' purpose. It is, therefore, clear that on the finding that the S. Mill was closed as an independent unit it will fall for consideration whether the employees of the said Mill are entitled to compensation under section 25F which is the counterpart of section 6-N of the U.P. Act. by virtue of the provisions of section 25FFF ( 1) of the Central AcL The Tn"bunal was, therefore, hot correct in holding that section 25FFF did not apply to the employees concerned. Indeed the management bas paid, as already noted, compensation to their employees under section 25FFF(l) of the Act. Some controversy was raised at the bar with regard to the meaning of the word 'undertaking' in section 25FFF. Without going inti> the question in detail we may only refer to a decision of this Court in _Managemem_ _of Hindustan Steel Ltd._ v. _The Workmen_ _and_ _Others(!),_ where the following observation appears : "The word undertaking as used in s. 25FFF seems to us to have been used in its ordinary sense connoting thereby any work, enterprise, project or business undertaking. It is not intended to cover the entire industry or business of the employer as was suggested on behalf of,the respondents. Even closure or stoppage of a part of the business or activities of the employer would seem in law to be covered by this sub**section".** We may now deal with another su6mission of Mr. (;bitaley~ According to the learned counsel, the question of compensation cannot be gone into by the Tribunal on account of closure of the Mill as found by the Tribunal. We are not impressed by this argument; In the course of gradual development of the industrial law the legislature, by engrafting a provision like section 25FFF in the ·central Act, has sought to wipe out the deleterious distinction· in the consequential effect on labour upon retrenchment and upon cl<isure except that in the latter case a restricted compensation under very specified circumstances is provided for under the proviso to section 25FFF(l) itself. It is no Jon2er onen to the employer to plead that there can be no industrial dispute with regard to the eligibility of workmen to compensation or to its quantum on closure of an establishment although the factum of a (1) AIR 1973 S.C'. 878/881. J-L84Sup.C.T./75 **720** SUPIU!MB COllt.T IU!PORTS (1974] 3 S.C.ll. **real** **and** .puinc or. legitimate closure, .admitted or proved, is . oUISide **the** **p111e·** _ot_ industrial adjud!cation not partaking of or fulfilling the content of **an** industrial dispute within .the meaning of section 2(k) of the Central Act. Jf, howi:ver, the closure is a masquerade, the matter will SWMh>il **a** dilfcrentfootlng. '. That is n<it the case before us here. **Besides.** the reference has not been challenged as incompetent either bctore the Tribunal or in tb!s appeal. Indeed on the explicit terms of the reference, it is not possible to contend that the subject matter refCried to is not an industrial dispute. Apart froin that there is no legal bar to refer to the Tribunal to determine the compensation on dosure of an undertaking. The scheme of Chapter V-A or even the language of section 25 FFF, does not necessarily mdicate that claim under the said section can be made only under section 33-C of the Central Act and that lhe Industrial Tribunal, in a reference, has no jurisdiction to grant appropriate relief ln that behalf, as urged by the learned counsel. The submission of the learned counsel is devoid of substance. The ~in!, however, of the respondent-company before us is that the proviso to section 25FFF ( 1) is attracted in this case and the employees are not entitled to any compensation exceeding their average pay for three months as provided therein. The Tribunal, however, did not address itself to this aspect of the matter as according to it "since - it was a legitimate closure the question of compensation could not be determined by it". The· matter, therefore, was not at all considered by the Tribunal ari.d the parties were ail!O not allowed to adduce any evidence with regard to the applicability or otherwise of the said proviso before the Tribunal. Even after decision of the first issue in the reference holding that the closure of the S. Mill was legitimate, it was incumbent upon the Tribunal to adjudicate upon the second issue of the reference for granting appropriate· relief as a necessary corollary to the result of the first issue. The Tribunal committed a clear error of jurisdiction in not undertaking that enquiry. Once it is found, as in this case, that there is a closure, the question of applicability of subsection ( l) of section 25FFF or the proviso thereto will automatically arise _b:_ consideration in determining the quantum of compensation. The proviso to section 2.~FFF(l) which limits the quantum of compensation under the conditions specified therein, will .have to be carefully considered in order to arrive at a conclusion whether the onus in that behalf _ta_ justify .a lesser amount of compensation has been discharged by the employer or not. A decision against the employer after.considering_ all aspects of the matter in relation to the said proviso read with. the Explanation will lead to granting of a higher compensatiol) under sub-section ( 1) of section 25FFF by reason cf the lctal fiction contained therein for payment in accordance with section 25F of the Central Act. It will now, therefore, be the duty of the Tribunal to afford adequate opportunity to the parties to establish their respectiYe pleas cc the point which appertains to the domain of the second issue in the reference. - In the result the appeal is partly allowed and that ~..rt of the Award of the Tribunal with regard to the non-applicability of section A B ##### c D E F G H A _B_ WOl\KMEN STRAW BOARD Co. _v._ STRAW BOARD co. _(Goswami,_ I.) 721 25FFF is set aside. The reference stands restored to the file of the Tribunal for adjudicating only the question ·of applicability or nonapplicability of the provisO to section 25FFF ( 1) of the Central Act. - It will be open to the parties to adduce oral and docww:ntary evidence before the Tribunal with respect to this limited epquiry. In the circumstances of the case tl1e parties will bear their own costs. V.P.S. _Appeq( allowed_ _in_ _P.llft •._