Employer Who Resorts To Illegal Closure Of Establishment Cannot Urge That Workmen Must Prove They Were Not Gainfully Employed: Bombay HC

The Bombay High Court has stressed that an employer cannot be permitted to urge that, notwithstanding the illegal closure, the workmen must establish that he was not gainfully employed to be entitled to claim the benefits which are available under the law.

In that context, the Bench of Justice NJ Jamadar observed that, "A special mechanism is provided for authorizing closure of the establishment. If an employer resorts to the closure of the establishment in flagrant violation of statutory provisions, in my considered view, such employer deserves to be visited with the consequences which emanate from mandatory statutory provisions. In such a case, the employer cannot be permitted to urge that notwithstanding the illegal closure the workmen must establish that he was not gainfully employed to be entitled to claim the benefits which are available under the law."

Senior Advocate Sudhir Talsania appeared for the petitioner, while Senior Advocate Sanjay Singhvi appeared for the respondent.

The petitioner, a registered partnership firm involved in manufacturing toothpaste, suspended operations in August 2009 due to a lack of work orders from Hindustan Unilever. Subsequently, on September 12, 2009, the petitioner issued a notice of closure, terminating the services of all workmen effective October 12, 2009. Although most workmen settled their claims, 34 employees raised an industrial dispute, alleging closure without following statutory provisions.

The Labour Commissioner referred the dispute to the Industrial Tribunal. In 2013, the petitioner resumed manufacturing activities and offered employment to terminated employees. In response, the respondent sought a corrigendum to the reference. The Labour Commissioner, through a corrigendum in October 2019, added a dispute concerning the restart of manufacturing activities.

The Industrial Tribunal, in its award, found the closure non-compliant with legal provisions and mandated preference for re-employment opportunities. The petitioner challenged the award, arguing that the Tribunal exceeded its jurisdiction in travelling beyond the terms of Reference and granting relief to those workmen who had already settled their claims with the petitioner and in respect of whom no Reference was made.

The High Court observed that once a declaration was made that the closure was illegal, all the workmen who were on the roll of the employer on the closure date were entitled to the benefits emanating from the statutory provisions. In light of the same, it was held that the Industrial Tribunal was not justified in returning a finding that notwithstanding the industrial dispute having been referred concerning 34 workmen, the declaration that the closure was illegal entailed the result that all the employees who were on the roll of the petitioner were entitled to the benefits under the award.

It was further observed that, "If an employer resorts to the closure of the establishment in flagrant violation of statutory provisions, in my considered view, such employer deserves to be visited with the consequences which emanate from mandatory statutory provisions."

In light of the same, the petition was partly allowed.

Cause Title: Global Health Care Products vs Krantikari Kamgar Union

Click here to read/download the Judgment