Case Note & Summary
The dispute arose between a metal processing firm and its workmen regarding the closure of one of its units. The appellant, Isha Steel Treatment, operated two independent units established in 1963 and 1975, respectively. The I Unit was closed on 15.2.1982 due to indiscipline among its workers, despite the offer of closure compensation. The workmen, through their union, contested the closure, claiming that both units were functionally integrated and that the closure was retaliatory against their union activities, violating Section 25G of the Industrial Disputes Act. The Tribunal found the closure valid, leading to a petition in the High Court, which reversed the Tribunal's decision, asserting functional integrality and remanding the case for reconsideration under Section 25G. The Division Bench upheld the Single Judge's findings, prompting the appellant to appeal to the Supreme Court. The Supreme Court ruled that the closure was bona fide and independent, emphasizing that the principle of 'last come, first go' did not apply as the II Unit continued to operate unaffected. The court restored the Tribunal's award, concluding that the closure did not constitute retrenchment and directed compensation for the affected workmen. The management was ordered to pay an additional ex gratia amount to the workmen who had not received their due compensation.
Headnote
A) Industrial Disputes - Closure of Unit - Validity of Closure - Industrial Disputes Act, 1947, Section 25G - The closure of the I Unit was determined to be a bona fide closure of an independent unit, not subject to the principles of retrenchment under Section 25G. The court held that the existence of ownership and control alone does not establish functional integrality between the units (Paras 415-425).
Issue of Consideration
Whether the closure of the I Unit was valid under the Industrial Disputes Act and whether the principle of 'last come, first go' applied.
Final Decision
The Supreme Court allowed the appeal, restoring the Tribunal's award and validating the closure of the I Unit as bona fide. The court directed the management to pay compensation to the affected workmen, including an ex gratia amount of Rs. 10,000 each to those who had not received compensation under Section 25FFF.
Law Points
- Closure of business
- functional integrality
- retrenchment
- Industrial Disputes Act
- bona fide closure
- last come first go principle
