BEFORE THE HON’BLE INDUSTRIAL TRIBUNAL

RANCHI

IN THE MATTER OF:

WORKER’S UNION. ………………….PETITIONER

Vs.

HMT PUBLIC COMPANY…………………………………….. RESPONDENT

PETITION NOS. ______/2017

ON SUBMISSION TO THE HON’BLE INDUSTRIAL TRIBUNAL

PETITION UNDER SECTION 7(4) OF THE INDUSTRIAL DISPUTES ACT

,1947

WRITTEN SUBMISSIONS ON BEHALF OF THE RESPONDENT

COUNSEL APPEARING ON BEHALF OF THE RESPONDENT

1
 TABLE OF CONTENTS

SINO CONTENTS PAGE NUMBER

1
LIST OF ABBREVIATION

2
INDEX OF AUTHORITIES

3
STATEMENT OF JURISDICTION

4
STATEMENT OF FACTS

5
ISSUES INVOLVED

6
SUMMARY OF ARGUMENTS

7
ARGUMENTS ADVANCED

8
PRAYER AND CONCLUSION

2
 List of Abbreviations

SINO Abbreviations
1 & And
2 AC Appeal Cases
3 AIR All India Reporter
4 A.P Andhra Pradesh
5 All Allahabad
6 All ER All England reporter
7 Anr Another
8 Art Article
9 AWC Allahabad weekly cases
10 A.P Andhra Pradesh
11 Cr.P.C Criminal Procedure Code
12 Cal Calcutta
13 CB Constitutional bench
14 Ch Chapter
15 Civ civil
16 Cl Clause
17 Co. Company
18 Comr commissioner
19 Corpn Corporation
20 Edn. Edition
21 GLR Gujarath law reporter
22 HP Himachal Pradesh
23 http Hyper text transfer protocol
24 ILR Indian Law Reports
25 Ltd. Limited
26 No. Number

3
27 KarLJ Karnataka law journal
28 Ker Kerala
29 KB Kings bench
30 ILJ International law journal
31 ILR Indian law reporter
32 Lt Lieutenant
33 Ltd Limited
34 Mp Madhya Pradesh
35 Mad Madras
36 Mfg Manufacturing
37 MLJ Madras law journal
38 Ors Others
39 p. Page
40 pp. Pages
41 Pvt. Private
42 Pat Patna
43 QB Queens beach
44 r/w Read with
45 Refd Referred
46 S Section
47 SB Special branch
48 SC Supreme Court
49 SCC Supreme Court Cases
50 SCH Schedule
51 SCR Supreme court reporter
52 SS Sections
53 SUB-SS Sub sections
54 Supp. Supplement

4
55 U.P Uttar Pradesh
56 UN United nations
57 US United states
58 V. Versus
59 Vol. Volume
60 W.B West Bengal
61 WLR Weekly law reports
62 WWW World wide web
63
64

5
 Index of Authorities

STATUES

 THE INDUSTRIAL DISPUTES ACT ,1947

 Payment of bonus act 1965
 Constitution of India, 1950

BOOKS, ARTICLES & JOURNALS

 Dr. Avatar Singh, THE INDUSTRIAL DISPUTES ACT ,1947, 4th Edn., Central
Law Publications, (2015)
 Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal
Law Publications, (2011)
 Ratanlal Dhirajlal, dispute resolution in a company., 3rd edition, (2002)
 R.K. Kelkar, Payment of bonus act , Eastern Book Company (2014)
 JUSTICE B L HANSARIA’S, Payment of bonus act 1965 (3 ed. 2015)
 M.P. JAIN, INDIANCONSTITUTIONAL LAW 1002 (2003)
 NS BINDRA'S Payment of bonus act 1965 (1st Ed. 2011)
 Durga Das Basu, Commentary on the Constitution of India (8th ed. 2007).
 H.M. Seervai, Constitutional law of India (4th ed. 2008).
 Dr. L.M. Singhvi, THE INDUSTRIAL DISPUTES ACT (1st ed. 2007)
 Dr. L.M. Singvi, Jagadish Swarup Constitution of India (3d ed. 2013)
 Arvind P. Datar, Commentary on the Constitution of India (2d ed. 2007).
 M.P. Singh, THE INDUSTRIAL DISPUTES ACT (11th ed. 2009).

6
  M. Hidyatullah, Constitutional Law of India (1st ed. 1984).
 M.V. Pylee, Constitutions of the World (4th ed. 2012).

WEBSITES

 Manupatra Online Resources, http://www.manupatra.com.

 Lexis Nexis Academica, http://www.lexisnexis.com/academica.
 Lexis Nexis Legal, http://www.lexisnexis.com/in/legal.
 SCC Online, http://www.scconline.co.in.
 Oxford Dictionary, http://www.oxforddictionaries.com.
 https://www.lawctopus.com
 https://indiankanoon.org

7
 CASE LAWS

CASES

SINO CASE CITATION

1. Anwar Khan Mehboob Co. v. CST, (1970) 2 SCC 294

2. Ayyasamy v. A. Paramasivam & others (2016) 10 S.C.C. 386
3. Assn. of India v. State of Karnataka, (1993) 1 SCC 409 15
4. B. Gangadhar v. B.G. Rajalingam, (1995) 5 SCC 780
5. BSNL v. UOI & Ors., (2006) 3 SCC 1
6. CIT v. Mysodet (P.) Ltd., [1999] 103 Taxman 336 (SC)
7. Executive Engineer & Anr. v. Shri Seetaram Rice Mills, 2011 Indlaw SC 822,
8. Gunwantlal v. State of M.P., AIR 1972 SC 1756
9. Haryana Telecom ltd. v. Sterlite Industries (India) ltd.,(1999) 5 S.C.C. 688
10. IBA Health (I) (P.) Ltd. v. Info-drive systems SDN BHD [2010] 10 S.C.C. 553
11. Imperial Chit Fund (P.) Ltd. v. ITO, (1996)8 SCL 1517
12. Iyanahalli Bakkappa and Sons v. State of Mysore, (1972) 4 SCC 523 15
13. M.S.D.C Radharamanan v. M.S.D Chandrasekara Raja & Anr. (2008) 6
S.C.C.750
14. Shamrao Vithal Coop. Bank Ltd. v. Kasargode Panduranga Maliya,(1972) 4
S.C.C. 600
15. State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling Corpn, (1995) 2
S.C.C. 19
16. State of Himachal Pradesh v. Kailash Chand Mahajan, AIR 1992 S.C. 1277 8 29
State of Karnataka v. Ranganatha Reddy, (1977) 4 SCC 471
17. State of Orissa v. Binapani Dei, A.I.R. 1967 S.C. 1269
18. State of Tamil Nadu v. M.K. Kandaswami, [1975] 4 SCC 745

8
19. S.V. Kandoskar, Official Liquidator & Liquidator of the Colaba Land & Mills Co.
Ltd. v. V.M. Deshpande, Income Tax Officer, [1972] 83 ITR 685
20. Tata Consultancy Services v. State of A.P., (2005) 1 S.C.C. 308
21. Transmission Corpn. Of A.P. Ltd. v. CIT, [1999] 105 Taxman 742 (SC)
22. Union of India v. Elphinstone Spinning and Weaving Co. Ltd. A.I.R. 2001 S.C.
724.
23. Asstt. CIT v. Hindustan Urban Infrastructure Ltd., [2015] 53 taxmann.com 331
24. Asstt. CIT v. Bhaumik Colour (P.) Ltd., [2009] 118 ITD 1 (Mum)
25. Asstt. CIT v. Pravin C. Pandya, [2013] 38 taxmann.com 408
26. Asstt. CIT v. Y.V. Rajashekhara Babu, [2011] 13 taxmann.com 232 (Visp.).
27. CIT v. M/s Kingfisher Airlines Ltd., 2014 SCC Online Kar 7700
28. CIT v. K Srinivasan, [1963] 50 ITR 788 (Mad.)
29. CIT v. Mahesh Chandra Mantri, [2015] 234 Taxman 158 (Cal.)
30. CIT v. National Travel Services, [2011] 14 taxmann.com 14 (Del.)
31. CIT v. Raj Kumar, [2009] 181 Taxman 155 (Del.)
32. CIT v. Standipack, [2012] 20 taxmann.com 19 (Del.).
33. Corporate Ispat Alloys ltd. v. Jayaswal Neco Industries ltd. 2016 S.C.C. OnLine
Bom.
34. 55 CPI India Real Estate Venture Ltd. v. Perpetual Infracon (P.) Ltd. [2014] 49
taxmann 25 (CLB - New Delhi)
35. Daulat Makanmal Luthria v. Solitaire Hotels (P.) Ltd. [1993] 76 Comp. Cas. 215
(Bom.)
36. Dep. CIT v. Encore Technologies Pvt. Ltd., 2016 SCC OnLine ITAT 143
37. Dep. CIT v. Atul Engg. Udyog, [2011] 133 ITD 1(Agra)
38. Dilip Kumar Swain v. Executive Officer, Cuttack Municipal Corporation 1996
S.C.C. OnLine Ori 236
39. Hegde & Golay Ltd. v. S.B.I. 1985 S.C.C. OnLine Kar. 428
40. Imperial Corporate and Services (P) Ltd. v. Aruna Sugars and Enterprises Ltd.,
2002 S.C.C. OnLine Mad. 659

9
41. In Re: Sahara India Real Estate Corporation Limited and Sahara Housing
Investment Corporation Limited, MANU/SB/0045/2011 8
42. Indian Associates v. Shivendra Bahadur Singh, A.I.R. 2003 Del. 292
43. Integrated Broadcasting Co. (P.) Ltd. v. Nettlinx Ltd. [2012] 23 taxmann.com 371
(AP)
44. ITO v. Kalyan Gupta, [2007] 11 SOT 530 (Mum)
45. Joti Prasad Bala Prasad v. A.C.T. Developers, 1989 S.C.C. OnLine Del. 234
46. K.P Chackochan v. The Federal Bank & ors. 1989 S.C.C. OnLine Ker. 108
47. Kamadenu Enterprises v. Vivek Textile Mills P. Ltd. (1984) 55 Comp. Cas. 68
(Kar.)

10
 STATEMENT OF JURISDICTION

THE PETITIONER HAVE THE HONOUR TO SUBMIT BEFORE THE HON’BLE tribunal
, UNDER SECTION 7(4) OF THE INDUSTRIAL DISPUTES ACT ,1947

Section 7 in The Industrial Disputes Act, 1947

7. 1 Labour Courts.-

(1) The appropriate Government may, by notification in the Official Gazette, constitute
one or more Labour Courts for the adjudication of industrial disputes relating to any
matter specified in the Second Schedule and for performing such other functions as
may be assigned to them under this Act.

(2) A Labour Court shall consist of one person only to be appointed by the appropriate
Government.

(3) A person shall not be qualified for appointment as the presiding officer of a Labour
Court, unless--

(a) 2 he is, or has been, a Judge of a High Court; or

(b) he has, for a period of not less than three years, been a District Judge or an
Additional District Judge; or 3

(d) 4 ] he has held any judicial office in India for not less than seven years; or

(e) 4 ] he has been the presiding officer of a Labour Court constituted under any
Provincial Act or State Act for not less than five years.

11
 STATEMENT OF FACTS

-- I –
The HMT is a public Company having its registered office in the district of Ranchi. It
maintains some branch offices at Calcutta and Patna. It carried on the business
primarily of manufacturing and selling iron pipes and poles and has been employing a
large number of workmen, their number being 1000 on the relevant date. According to
balance sheet of the company, which have not been questioned it is a prosperous
company and between the years 2007 and 2012 the appellant paid its employees bonus
equivalent to four months' wages every year except in 2010-11. for the subsequent
three years bonus was paid at the rate of four per cent under the Payment of Bonus Act,
1965 (Act XXI of 1965). The workmen were not satisfied with the payment at the rate of
four per cent and raised a dispute. On August 22, 2013, they made a demand for bonus
at the rate of 20 per cent of their annual salary or wages for the accounting year 2014-
15.

--II—
Certain correspondence started between the Assistant Labour Commissioner, the
Management and the General Secretary of the Union (Dhurba Tubes Mazdoor Sangh).
On September 21, 2015, the Manager (Administration) notified that bonus at the rate of
4 per cent for the year 2014-15 had been sanctioned by the Management. The General
Secretary of the Union asked the Manager to review the above notice and to send a
copy of the balance sheet for the accounting year in question. On September 25, 2015,
the District Labour Officer informed the Manager that he had fixed October 2, 2015, (11
A. M.) for discussion in the matter of the payment of bonus.

12
 --III—
The Manager sent a copy of the balance sheet to the General Secretary of the Union on
October 1, 2015. On that day the General Secretary asked the Assistant Labour
Commissioner to examine the profit and loss account for the year 2014-15 and to apply
the requisite formula under the Payment of Bonus Act. On October 1, 2015 about 150
workmen assembled after 2 P. M. at the gates of the Administrative Building in which
about 40-47 members of the staff were present. They were not allowed to leave the
Building till 5 A. M. next day.

--IV—

Meanwhile the Officer-in-charge Ranchi Police Station and the Assistant Labour
Commissioner went to the place where all this was happening. The factory remained
closed on October 2, 2015 on account of Gandhi Jayanti. On the morning of October 3,
2015 the Management issued a notice declaring a closure of the factory. It is common
ground that up till now the factory has remained closed. The Management offered to
pay wages for one month in lieu of notice and reduced compensation under the proviso
to sub-section (1) of Section 25- FFF of the Industrial Disputes Act, 1947. It has not
been disputed that out of 1000 workers, 113 workers accepted compensation under the
aforesaid provision. The remaining workmen, however, neither agreed to nor accepted
any compensation. The reference under the Act was made on October 29, 2015 by the
Government of Orissa primarily for adjudicating whether the appellant had declared a
lock out by means of the notice dated October 3, 2015 or whether it was a closure.

--V—

The notice which was issued by the Management on the morning of October 3, 2015 is
as follows: "The Management hereby notified that as a direct consequence of the
continued and sustained illegal activities of the workmen and their pre concerted and
pre-meditated acts since 1st October 2015 by illegally keeping confined and forcibly
resisting the exit of the staff and some of the officers of the Company in the

13
Administrative Office building. from about 2 P. M. of the 1st October 2015 till they were
forcibly rescued by the Police authorities at about 5 A. M. on the morning of 2nd
October 2015 and thereafter continuing with their illegal trespass into the premises of
the Company in the aforesaid Administrative Office, and refusal to allow entry of any of
the staff and officers of the Company into the said building; and the consequent refusal
by the officers and supervisory staff of the Company to carry on their normal work and
discharge their functions being reasonably apprehensive of their safety, it has become
impossible to continue to run the factory and its subsidiary Sections and Departments
any further.

--V I --

The Company hereby notifies that there will be a complete closure of the Factory on
and with effect from 6 A. M. of the 3rd October 2015." Frame the issue and argue on
behalf of union ( as petitioner) and company (as respondent)

14
 ISSUES INVOLVED

 Whether the payment of bonus at the rate of 4%is legal under the

payment of bonus act 1965?

 Whether the act of the company comes under the purview of c

losure?

 Whether the closure of the one production unit amounts to the

closure of the entire undertaking?

15
 ARGUMENTS ADVANCED

1. The payment of bonus at the rate of 4% is legal under the payment of

bonus act 1965

Bonus is a reward that is paid to an employee for his good work towards the
organisation1. The basic objective to give bonus is to share the profit earned by the
organisation amongst the employees and staff members. In India there is a principle law
relating to this procedure of payment of bonus to the employees and that principle law is
named as Payment of Bonus Act, 1965.The Payment of Bonus Act applies to every
factory and establishment employing not less than 20 persons on any day during the
accounting year. The establishments covered under the Act shall continue to pay bonus
even if the number of employees fall below 20 subsequently 2 : Every employee not
drawing salary/wages beyond Rs. 10,000 3per month who has worked for not less than
30 days in an accounting year, shall be eligible for bonus for minimum of 8.33% of the
salary/wages even if there is loss in the establishment whereas a maximum of 20% of
the employee’s salary/wages is payable as bonus in an accounting year. However, in
case of the employees whose salary/wages range between Rs. 3500 to Rs. 10,000 per
month for the purpose of payment of bonus, their salaries/wages would be deemed to
be Rs. 3500.4

There are provisions and benefits for newly formed establishments as well. As per these
provisions/benefits, the first five accounting years following the accounting year in which

1
Dr. Avatar Singh, THE INDUSTRIAL DISPUTES ACT ,1947, 4th Edn., Central Law Publications, (2015)
2
Imperial Chit Fund (P.) Ltd. v. ITO, (1996)8 SCL 1517
3
M.P. Singh, THE INDUSTRIAL DISPUTES ACT (11th ed. 2009)
4
Assn. of India v. State of Karnataka, (1993) 1 SCC 409 15

16
the employer sells goods/renders services, 5 bonus is payable only in respect of the
accounting year, in which profits are made but the provisions of set on and set off would
not apply.6

Applicability: The Act is applicable in whole of India where 10 or more workers are
working, or were working on any day of the preceding 12 months with the aid of power.
Or whereon 20 or more workers are working or were working on any day of preceding
12 months without the aid of power.Calculation of bonus: Salary/wages and dearness
allowance (DA) are included while calculating bonus. However, other allowances such
as over-time, house rent, incentive or commission are not included.Forfeiture of
Bonus: An employee who is dismissed from service on the grounds of fraud, riotous or
violent behaviour at the premises of the establishment or for the theft, misappropriation
or sabotage of any of the property of the establishment as mentioned in the Act. This
shall not only disqualify him from receiving the bonus for the accounting year in which
he was dismissed but also for the past years which were remained unpaid to him. 7

Time limit for payment of bonus: It is mentioned in the Act that all amounts payable to
an employee by the way of bonus are to be paid in cash. It is also mentioned that within
8 months from the close of the accounting year the bonus should be paid to the
employees. In exception to where there is dispute regarding payment of bonus pending
before an authority (Under Industrial Disputes Act) within 1 month from the date on
which the award 8becomes enforceable or settlement comes into operation, in respect
of such dispute.The Payment of Bonus Act, 1965 provides a statutory right to
employees of an establishment to share the profits of his/her employer. As per this

5
M.P. Singh, THE INDUSTRIAL DISPUTES ACT (11th ed. 2009)
6
Dep. CIT v. Atul Engg. Udyog, [2011] 133 ITD 1(Agra
7
State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling Corpn, (1995) 2 S.C.C. 19
8
M.P. Singh, THE INDUSTRIAL DISPUTES ACT (11th ed. 2009)

17
Central Act, any employee who was drawing a salary or wage not exceeding ten
thousand rupees per month was eligible to be paid a bonus.9

Section 2 (13)10 of the Act states that, “employee” means any person (other than an
apprentice) employed on a salary or wage not exceeding ten thousand rupees per
mensem in any industry to do any skilled or unskilled manual, supervisory, managerial,
administrative, technical or clerical work for hire or reward, whether the terms of
employment be express or implied.As per Section 1211 of the Principal Act which lays
down the ‘Calculation of bonus with respect to certain employees’– Where the salary or
wage of an employee exceeds three thousand and five hundred rupees per mensem,
the bonus payable to such employee under section 10 or, as the case may be, under
section 11, shall be calculated as if his salary or wage were three thousand and five
hundred rupees per mensem.12

For the purposes of calculation of the bonus to be paid to an employee under the
Principal Act, INR 3,500 (Indian Rupees Three Thousand Five Hundred) per month was
the maximum amount taken even if an employee was drawing up to INR 10,000 (Indian
Rupees Ten Thousand Only) per month.

Amendments To The Principal Act

As per the Amendment, the words “ten thousand rupees” in Section 2 (13) have been
substituted for the words “twenty one thousand rupees”.Further, in Section 12 of the
Principal Act, for the words ”three thousand and five hundred rupees” at both the places
where they occur, the words ”seven thousand rupees or the minimum wage for the
scheduled employment, as fixed by the appropriate Government, whichever is

9
State of Orissa v. Binapani Dei, A.I.R. 1967 S.C. 1269
10
Haryana Telecom ltd. v. Sterlite Industries (India) ltd.,(1999) 5 S.C.C. 688
11
Asstt. CIT v. Bhaumik Colour (P.) Ltd., [2009] 118 ITD 1 (Mum)
12
M.P. Singh, THE INDUSTRIAL DISPUTES ACT (11th ed. 2009)

18
higher” has been substituted.The following Explanation was inserted at the end,
namely:- ‘Explanation.13

For the purposes of this section, the expression ”scheduled employment” shall have the
same meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act,
1948 (11 of 1948).’14

Payment of Bonus (Amendment) Bill, 2015 to enhance the monthly bonus calculation
ceiling to Rs 7,000 per month from existing Rs. 3,500 was approved by Union Cabinet
here,” a source said after the Cabinet meeting. The amendment bill will be made
effective from April 1, 2015. Now the bill will be tabled in Parliament for approval.

The bill also seeks to enhance the eligibility limit for payment of bonus from the salary or
wage of an employee from Rs. 10,000 per month to Rs. 21,000. The Payment of Bonus
Act 1965 is applicable to every factory and other establishment in which 20 or more
persons are employed on any day during an accounting year. The bill also provides for
a new proviso in Section 12 which empowers the central government to vary the basis
of computing bonus.

At present, under Section 12, where the salary or wage of an employee exceeds Rs.
3,500 per month, the minimum or maximum bonus payable to employees are calculated
as if his salary or wage were Rs. 3,500 per month. The last amendment to both the
eligibility limit and the calculation ceilings under the said Act was carried out in 2007 and
was made effective from April 1, 200615.

This amendment in the Act to increase wage ceiling and bonus calculation ceiling was
one of assurances given by the Centre after 10 central trade unions went on one-day
strike on September 2.16

13
Dr. Avatar Singh, THE INDUSTRIAL DISPUTES ACT ,1947, 4th Edn., Central Law Publications, (2015)
14
Anwar Khan Mehboob Co. v. CST, (1970) 2 SCC 294
15
Gunwantlal v. State of M.P., AIR 1972 SC 1756
16
M.P. Singh, THE INDUSTRIAL DISPUTES ACT (11th ed. 2009)

19
The government had hinted at meeting workers’ aspirations on nine out of 12 demands
submitted by the unions.The Amendment has sought to make more employees eligible
for bonus by raising the ceiling limit of the monthly wages. The Amendment also
increases the amount of bonus that would be received by the eligible employee as
against the Principal Act which provided that the bonus payable to an employee will be
in proportion to his or her salary or wage. However, if an employee’s salary is more than
INR 3,500 per month, for the purposes of calculation of bonus, the salary will be
assumed to be INR 3,500 per month. After the Amendment, this limit has been
enhanced to INR 7,000 per month or the minimum wage for the scheduled employment
(whichever is higher).17

Although the Amendment received the assent of the President of India on 31

December, 2015, the Amendment shall be deemed to have come into force on the 1st
day of April, 2014. Hence, it has a retrospective effect. This would mean that the
employees who have already been paid a bonus for the financial year 2014-15,18 would
now become eligible for arrears. The employees who draw a salary between INR
10,000 and INR 20, 999 per month would be eligible for bonus starting from the financial
year 2014- 2015 due to the retrospective nature of the Amendment. The labor intensive
industries would have a significant impact as the differential/balance amount for the
financial year 2014-105 would have to be provided in the current financial year to the
employees. However, no specific date for the payment has been provided for in the
Amendment.19

Registers

Every employer is required to maintain the following registers in the prescribed form:

17
State of Tamil Nadu v. M.K. Kandaswami, [1975] 4 SCC 745
18
CIT v. K Srinivasan, [1963] 50 ITR 788 (Mad.)
19
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011

20
1.Register showing the computation of allocable surplus (Form A)20

2.Register showing the set-on and set-off of the allocable surplus (Form B)

3.Register showing the details of the amount of bonus payable to each of employees,
the amount of deductions if any, and the amount actually paid. (Form C)

Returns

The employer is also required to send an annual return to the Inspector appointed under
the Act within 30 days from the expiry of time limit specified in Section 19 for payment of
bonus. (Form D)21

Case Law: Shashikant Janardan Pimpalpure Vs Development Corpn. Of Vidarbha On

20 February, 199522

The respondent No. 1 23 Corporation filed reply to the application and contested the
claim of the petitioner. The respondent set up the defense that the petitioner was not
employee of the respondent Corporation, but was appointed in Carpet Weaving Center
only and is on the rolls of that establishment only. According to the respondent
Corporation, Carpet Weaving Center was totally separate and distinct from the
Corporation and had no resemblance to the terms of employment of the employees of
the respondent Corporation. The Corporation set up the plea that since the Carpet
Weaving Center was a training center and an educational institution and has no profit
motive, bonus was not payable under the Payment of Bonus Act. The Corporation also
set up the defence that the said Training Center has not completed five years of service

20
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
21
Integrated Broadcasting Co. (P.) Ltd. v. Nettlinx Ltd. [2012] 23 taxmann.com 371 (AP
22
ibid
23
CIT v. M/s Kingfisher Airlines Ltd., 2014 SCC Online Kar 7700

21
and on that ground under Section 16 of the Payment of Bonus Act, the employee is not
entitled to the payment of bonus.24

The first and foremost question which requires consideration is, whether an application
under Section 33-C(2) of the Act of 1947 is maintainable seeking payment of
minimum bonus under the Payment of Bonus Act. Admittedly, the petitioners are only
seeking minimum payment ofbonus under the Payment of Bonus Act. It is also admitted
that before filing of the application under Section 33-C(2)25 of the Act of 1947, there was
no order for payment of bonus to the present petitioner underthe Payment of Bonus Act.
Scope of Section 33-C(2)26 of the Act of 1947 is now well settled and does not require
any debate. The right to the benefit which is sought to be computed under Section 33-
C(2) must be an existing one and that is to say, already adjudicated upon or provided
for and must arise in the course of and in relation to the relationship between the
industrial workmen and his employer.

2. The act of the company comes under the purview of closure

In any Industrial endeavour co-operation of labour and capital is quite essential for its
success, although they have interests contrary to each other. They have different
strategies and weapons to ventilate their grievances and safeguard their interests.
These democratic weapons often used by them are strikes and lock-outs. Just as strike
is a weapon available to employees for enforcing their Industrial demands, a lock-out is
a weapon available to the employer to persuade by a coercive process to see his point
of view and to accept his demands. In the struggle between capital and labour, as the
weapon of strike is available to labour and is often used by it, so is the weapon of lock-
out available to the employer and can be used by him.27

24
Indian Associates v. Shivendra Bahadur Singh, A.I.R. 2003 Del. 292
25
M.S.D.C Radharamanan v. M.S.D Chandrasekara Raja & Anr. (2008) 6 S.C.C.750
26
Dr. Avatar Singh, THE INDUSTRIAL DISPUTES ACT ,1947, 4th Edn., Central Law Publications, (2015)
27
Imperial Corporate and Services (P) Ltd. v. Aruna Sugars and Enterprises Ltd., 2002 S.C.C. OnLine
Mad. 659

22
Strike is one of the oldest and the most effective weapons of labour in its struggle with
capital for securing economic justice. The basic strength of a strike lies in the labour’s
28 privilege to quit work and thus brings a forced readjustment of conditions of
employment[5]. It owes its origin to old English words ‘Striken to go’. In common
parlance it means hit, impress, occur to, to quit work on a trade dispute. The latter
meaning is traceable to 1768. Later on it varied to ‘strike of work’. The composite idea of
quitting work or withdrawal of work as a coercive act could be gathered in the use of
word as a verb as well as adjective. The definition and use of the word ‘strike’ has been
undergoing constant transformation around the basic concept of stoppage of work or
putting of work by employees in their economic struggle with capital The term ‘strike’
has been defined in a wide variety of branches of human knowledge, viz. etymology,
sociology, political economy, law and political science

Strike has been defined in Section 2 (q) of the Industrial Disputes Act as under—
“Strike means a cessation of work by a body of persons employed in any industry acting
in combination, or a concerted refusal, or a refusal under a common understanding, of
any number of persons who are or have been so employed to continue to work or to
accept employment.”The analysis of the definition would show that there are the
following essential requirements for the existence of a strike:

(1) There must be cessation of work.

(2) The cessation of work must be by a body of persons employed in any industry;

(3) The strikers must have been acting in combination;

(4) The strikers must be working in any establishment which can be called industry
within the meaning of Section 2(j); or29

28
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
29
S.V. Kandoskar, Official Liquidator & Liquidator of the Colaba Land & Mills Co. Ltd. v. V.M. Deshpande,
Income Tax Officer, [1972] 83 ITR 685

23
(5) There must be a concerted refusal; or

(6) Refusal under a common understanding of any number of persons who are or have
been so employed to continue to work or to accept employment;

(7) They must stop work for some demands relating to employment, non-employment or
the terms of employment or the conditions of labour of the workmen.

Ingredients of Strike

Cessation of Work:-This is most significant characteristic of the concept of strike. It has

been variedly expressed as ’abandonment’, stoppage’, ‘omission of performance of
duties of their posts’, ‘hampering or reducing normal works’, ‘hindrance to the working or
suspension of work, discontinuing the employment or breaking their contract of service
or refusing or failing to return to or resume employment or refusing or failing to accept
engagement for any work which they are usually employed for30. Thus what required for
strike is that there must be stoppage of work or there must be refusal to continue to
work or to accept employment by any number of persons employed for the work but the
refusal must be concerted or under a common understanding.The cessation of work
may take any form. It must, however, be temporary and not for ever and it must be
voluntary. No duration can be fixed for this. If the cessation of work is as a result of
renunciation of work or relinquishment of the strikers’ status or relationship, it is not
strike. Permanent cessation of work would result in termination of the contract of work
which is alien to the underlying sanction of strike retaining contractual relationship
during the strike periods. Cessation of work is not a cessation of contract of
employment31

Concerted action Another important ingredient of the strike is a concerted action. The
workers must act under a common understanding. The cessation of work by a body of

30
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
31
Tata Consultancy Services v. State of A.P., (2005) 1 S.C.C. 308

24
persons employed in any industry in combination is a strike. Thus in a strike it must be
proved that there was cessation of work or stoppage of work under a common
understanding or it was a concerted action of the workers or there was cessation of
work by workers acting in combination. 32Stoppage of work by workers individually does
not amount to strike. the concerted refusal or refusal under a common understanding to
continue to work or to accept employment or to resume work by any number of persons
is a strike. One thing must be kept in mind that the refusal of work means refusal to
perform duties which the workers are required to perform. If the workers are at liberty to
do a particular work or not to do a work their refusal to work does not amount to strike.
For example, over-time work, if it is the duty or workers to do overtime work necessarily
because it is the practice of that establishment to take overtime work from the workers
in that case refusal to work overtime would amount to strike otherwise not. Thus the test
to determine whether refusal to do overtime work constitutes a strike or not would
depend upon whether overtime was habitually worked in that industry.33

The strike is illegal

1. if it is in breach of Contract of Employment.

2. if it is in Public Utility Services34.

3. if Notice under Section 22(1) is not given.

4. if commenced during Award or settlement period.

5. if commenced During or within 7 days of completion of Conciliation Proceedings.

6. if commenced During or within Two months of completion of Adjudication

Proceedings.35

32
Dilip Kumar Swain v. Executive Officer, Cuttack Municipal Corporation 1996 S.C.C. OnLine Ori 236
Hegde & Golay Ltd. v. S.B.I. 1985 S.C.C. OnLine Kar. 428
33
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
34
Shamrao Vithal Coop. Bank Ltd. v. Kasargode Panduranga Maliya,(1972) 4 S.C.C. 600

25
Lockouts

The use of the term “lock-out” to describe employer's instruments of economic coercion
dates back to 1860[9] and is younger[10] than its counterparts in the hands of workers,
strike by one hundred years. Formerly the instrument of lock-out was resorted to by an
employer or group of employers to ban union membership: the employers refused
employment to workers who did not sign a pledge not to belong to trade union. later the
lock-out was declared generally by a body of employers against a strike at a particular
work by closing all factories until strikers returned to work India witnessed lock-out
twenty-five years after the "lock-out" was known and used in the arena of labour
management relations in industrially advanced countries. Karnik reports that the first.

known lock-out was declared in 1895 in Budge Budge Jute Mill. Section 2(1) defines the
term Lock-out. However, the present definition is only a mutilated one. The term was
originally and correctly defined in the Trade Dispute Act, 1929. From the definition given
in the Trade Dispute Act, the present Act has taken the present definition but has
omitted the words “when such closing, suspension or refusal occurs in consequences of
a dispute and is intended for the purpose of compelling those persons or of aid in
another Employer in compelling persons employed by him to accept terms or condition
of, or affecting employment”.

With the omission of these words, the present definition fails to convey the very concept
of Lock-out. In Sri Ramchandra Spinning Mills v/s State of Madras[13], the Madras High
Court read the deleted portion in the definition to interpret the term lock-out. According
to the Court, a flood may have swept away the factory, a fire may have gutted the
premises; a convulsion of nature may have sucked the whole place under ground; still if
the place of employment is closed or the work is Suspended or the Employer refuses to
continue to employ his previous workers, there would be a lock out and the Employer

35
IBA Health (I) (P.) Ltd. v. Info-drive systems SDN BHD [2010] 10 S.C.C. 553

26
would find himself exposed to the penalties laid down in the Act. Obviously, it shows
that the present definition does not convey the concept of the term lock out.

Lock-out, When Legal36

The Act treats strikes and lock-out on the same basis; it treats one as the counter part
of the other. (Mohammed Sumsuddin), the circumstances under which the legislature
has banned strike, it has also at the Same time banned the lock-out. Thus what holds
good-bad; legal-illegal, justified unjustified for strikes, holds the same for the lock-out.
As such, the provisions of the Act 37which prohibit the strike also prohibits the lock-out.
The object and reasons for which the Lock-out are banned 38or prohibited are the same
for which strikes are banned or prohibited. It is because the Employer and the
Employees are not discriminated in their respective rights in the field of industrial
relationship between the two. As such, lock-out if not in conflict with Section 22 39and 23
may be said to be legal or not legal. Sections 24(1) (iii), 10(3) and 10A (4A) similarly
controls the lock-out. A lock-out in consequence of illegal strike is not deemed to be
illegal. But if lock-out is illegal, Section 26(2), 27 and 28 will come in operation to deal
with the situation. The Act does not lay down any guidelines to settle the claims arising
out of illegal lock-out. The courts, therefore, have adopted the technique of apportioning
the blame between the Employer and40 employees. This once again brings to the fore
the concept of justifiability of lock-out.

The Statutory Definition41

36
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
37
Ayyasamy v. A. Paramasivam & others (2016) 10 S.C.C. 386
38
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
39
State of Himachal Pradesh v. Kailash Chand Mahajan, AIR 1992 S.C. 1277 8 29 State of Karnataka v.
Ranganatha Reddy, (1977) 4 SCC 471
40
Executive Engineer & Anr. v. Shri Seetaram Rice Mills, 2011 Indlaw SC 822,
41
supra

27
Section 2(1) of the Industrial Disputes Act, 1947 defines “Lock-out” to mean: The
temporary closing of employment or the suspension of work, or the refusal by an
employer to continue to employ any number of persons employed by him. A delineation
of the nature of this weapon of industrial warfare requires description of: (i) the acts
which constitute it; (ii) the party who uses it; (iii) the party against whom it is directed;
and (iv) the motive which prompts resort to it.42

Prohibition of Lockout

In the similar circumstances the lockout has been prohibited in the public utility service.
Section 22 (2) of the Act provides that no employer carrying on any public utility service
shall lock out any of his workmen:

1.Without giving them notice of lockout as hereinafter provided, within six weeks before
locking out; or

2.Within 14 days of giving notice; or43

3.Before the expiry of the day of lockout specified in any such notice as aforesaid; or

4.During the pendency of any conciliation proceedings before a Conciliation Officer and
seven days after the conclusion of such proceedings.44

It makes clear that the employer has to comply with the same conditions before he
declares lockout in his industrial establishment which the workmen are required to
comply with before they go on strike. The conditions for both the parties are same.

India in the present context of economic development programmes45 cannot afford the
unqualified right to the workers to strike or to the employer to lock-out. Compulsory
arbitration as an alternative of collective bargaining has come to stay. The adoption of

42
B. Gangadhar v. B.G. Rajalingam, (1995) 5 SCC 780
43
ITO v. Kalyan Gupta, [2007] 11 SOT 530 (Mum)
44
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
45
Dep. CIT v. Encore Technologies Pvt. Ltd., 2016 SCC OnLine ITAT 143

28
compulsory arbitration does not, however, necessarily mean denial of the right to strike
or stifling of trade union movement. If the benefits of legislation, settlements and awards
are to reach the individual worker, not only the trade union movement has to be
encouraged and its outlook broadened but the laws have also be suitably tailored. The
existing legislation and Judicial pronouncements lack breadth of vision. Indeed, the
statutory definitions of “strike” 46and “lock-out” 47have been rendered worse by a system
of interpretation which is devoid of policy-oriented approach and which lays undue
stress on semantics. 48

The discussion of the concepts and definition of strike has sought to establish that
legalistic consideration has frequently weighed with the court in interpreting and
expounding the said statutory definition: We believe that emphasis on literal
interpretation resulted in ignoring the ordinarily understood connotation of the term
“strike” and in encouraging undesirable activity. We now pass on to acts which
constitute strike. Unlike the Industrial Relations Bill, 1978 the three phrases used in the
definition of "strike" in IDA are not qualified by the expression “total” or “partial”. Further,
they do not specifically take into account go-slow. The Courts have accordingly
excluded go-slow from the purview of “strike”. However, the exclusion of go-slow from
the ambit of "strike" throws them open to the third party suits for damages. 49

Lock-Out means the temporary closing of a place of employer, whereas Closure means
the permanent closing down of a place of employment. 50

In the case of Lock-Out, the employer closes the place of business, whereas in the case
of Closure the employer closes the business itself.

46
In Re: Sahara India Real Estate Corporation Limited and Sahara Housing Investment Corporation
Limited, MANU/SB/0045/2011 8
47
Transmission Corpn. Of A.P. Ltd. v. CIT, [1999] 105 Taxman 742 (SC)
48
Dr. Avatar Singh, THE INDUSTRIAL DISPUTES ACT ,1947, 4th Edn., Central Law Publications, (2015)
49
Corporate Ispat Alloys ltd. v. Jayaswal Neco Industries ltd. 2016 S.C.C. OnLine Bom.
50
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011

29
Further, in the case of Lock-Out there is suspension of work, whereas in the case of a
Closure there is discontinuation of the business.

Now, after explaining what is meaning of “Lock-Out" and "Closure", there is one more
question usually comes in mind of individuals "if the employer shift the manufacture of
one of its products from one place to another, does it amount to closure? To answer this
we can take reference one of the decided case of Bombay High Court that shifting the
manufacture of one of several products from one unit to another does not amount to
closure of part of a place of employment.

Lock-Out:

Section 2 (I) defines ‘Lock-out’.51

Lock-out means the temporary closing of a place of employment.It is a weapon in-the

hands of employer against his employees. He uses it as a threat.A bona fide lock-out
can be illegal, if it is violated the provisions of Sec. 24.Lock-out signifies the closure of
the place of business, and not the closure of business.In the lock-out the relationship of
employer and employees does not come to an end.The causes for the lock-out in an
industry are temporary and can be cured.Generally, the causes of lock-out arise from
political, disturbances with trade union leaders, rigid policies of the State, and
particularly the economic factors too, etc.A lock-out may turn into closure of an
industry.Generally lock-out is declared as answer to a Strike.52

Closure:53

Section 2 (cc) defines ‘Closure’.Closure means the permanent closing down of a place
of employment or part thereof.Closure is not a weapon in the hands of employer. It
equally effects on both the employer and employees.But a bona fide closure can never

51
Joti Prasad Bala Prasad v. A.C.T. Developers, 1989 S.C.C. OnLine Del. 234
52
supra
53
55 CPI India Real Estate Venture Ltd. v. Perpetual Infracon (P.) Ltd. [2014] 49 taxmann 25 (CLB - New
Delhi)

30
be illegal.Closure signifies the final and irrevocable termination of the business itself.In
the Closure, the relationship between them comes to an end.The causes for the Closure
of an industry are permanent or lasting and cannot be cured.Generally, the cause of
closure is economical, poor quality of maintenance, poor management, nonavailability
of raw material, Government policies, etc.A closure cannot be turned into a lock-
out.Closure of an industry is a last resort. It may be due to economic reasons

3. The closure of the one production unit Doesn’t amounts to the closure of
the entire undertaking

According to Section 2(cc) 54 of the Industrial Disputes Act, Closure of an industry

means the permanent closing down of a place of employment or part thereof. The term
closure was used in the Act even prior to the insertion of this definition clause but was
not defined as such. This led to divergence in judicial view as to when the closing down
of a part of an establishment constituted closure and when it was an act of
retrenchment. This controversy is resolved by the express terms of the definition clause
itself. It is now made clear that closure arises even if a part of the place of employment
is permanently closed down.55

No industrialist will like to close down an earning industry, unless there are compelling
circumstances to do so. Various kinds of situations, such as labour trouble of
unprecedented nature, recurring loss, paucity of adequate number of suitable persons
for the purpose of management, non-availability of raw-materials, insurmountable
difficulty in the replacement of damaged or worn-out machinery may arise in any
industry, ultimately forcing its closure. Prior to the amendment in 1982, section 25(0) of
the Act provided an elaborate procedure for closing down of an industry. The Supreme
Court in Excel Wear v. Union 56 has struck down of section 25(0) as unconstitutional.

54
Inserted by Industrial Disputes (Amendment) Act of 1982, (w.e.f. 21-8-1984)
55
CIT v. Mahesh Chandra Mantri, [2015] 234 Taxman 158 (Cal.)
56
AIR 1979 SC 25.

31
The Court held that the right to close down a business is an integral part of the right to
carry on the business guaranteed under Article 19(1 )(g) of the Constitution. Section
25(0) imposed restrictions on the said fundamental right which were highly
unreasonable, excessive and arbitrary. These restrictions, in fact, amounted to
destruction or negation of the right. The restrictions imposed were held to be manifestly
beyond the permissible bounds of clause (6) of Article 19 of the Constitution. Taking into
consideration the observations of the Supreme Court in the Excel Wear case, the
provisions of section 25(0) were recast by the Amending Act 46 of 1982.

Section 25-0 was inserted by the industrial Disputes (Amendment) Act, 1976, with effect
from March 5, 1976. It was replaced by the present new section 25-0 by the Industrial
Disputes (Amendment) Act, 1982. The old sec. 25-0 read as follows57

1. An employer who intends to close down an undertaking of an industrial establishment

to which this Chapter applies shall serve for previous approval at least ninety 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 noting in this section shall apply to an
undertaking set up for the construction of buildings, bridges, roads, canals, dams or for
other construction work.58

2. On receipt of a notice under sub-section (1) the appropriate government may, if it is

satisfied that the reasons for the intended closure of the undertaking are not adequate
and sufficient or such closure is prejudicial to the public interest, by order, direct the
employer not to close down such undertaking.59

3. Where a notice has been served on the appropriate government by an employer

under sub-section (1) of section 25FFA and the period of notice has not expired at the

57
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
58
K.P Chackochan v. The Federal Bank & ors. 1989 S.C.C. OnLine Ker. 108
59
Daulat Makanmal Luthria v. Solitaire Hotels (P.) Ltd. [1993] 76 Comp. Cas. 215 (Bom.)

32
commencement of the Industrial Disputes (Amendment) Act, 1976 (32 of 1976), such
employer shall not close down the undertaking but shall, within a period of fifteen days
from such commencement, apply to the appropriate government for permission to close
down the undertaking.60

4. Where an application for permission has been made under sub-section (3) and the
appropriate government does not oommunicate the permission or the refusal to grant
the permission to the employer within a period of two months-from the date on which
the application is made, the permission applied for shall be deemed to have been
granted on the expiration of the said period of two months.

5. Where no application for permission under sub-section (1) is made, or where no

application for permission under sub-section (3) is made within the period specified
therein or where the permission for closure has been refused, the closure of the
undertaking shall be deemed to be illegal from the date of closure and the workman
shall be entitled to all the benefits under any law for the time being in force as if no
notice had been given to him.61

6. Notwithstanding anything contained in sub-section (1) and sub-section (3), the

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

7. Where an undertaking is approved or permitted to be closed down under sub-section

(1) or sub-section (4), every workman in the said undertaking who has been in
continuous service for not less than one year in that undertaking immediately before the
date of application for permission under this section shall be entitled to notice and

60
ibid
61
Union of India v. Elphinstone Spinning and Weaving Co. Ltd. A.I.R. 2001 S.C. 724.

33
compensation as specified in section 25N if the-said workman had been retrenched
under that section."62

This section was subject to constitutional validity before the Supreme Court in Excel
Wear v. Union of India, 63 wherein Court held that the whole of the provision as
unconstitutional for violating the fundamental right that is guaranteed under Article 19(1
)(g) of the Constitution. The highlights of the decision are summarized below:

(i) An employer has a right to close down his business and such a right cannot but be a
fundamental right embedded in the right to carry on business guaranteed under Art.
19(1)(g) of the Constitution. In one sense such a right does appertain to property. But,
such a faint overlapping of the right to property engrafted in Art. I9 (1)(g) or Art. 31 must
not be allowed to cast any shade on the simple nature of the right. However, as no right
is absolute in its scope, so is the nature of this right. It can certainly be restricted,
regulated or controlled by law in the interest of the general public.64

(ii) Public interest and social justice do require the protection of labour. But, it is not
reasonable to give them protection against all unemployment by affecting the interests
of so many persons interested and connected with the management, apart from the
employers.

(iii) Gradually the net has been cast too wide and the freedom of the employer tightened
to such an extent by the introduction of sec. 25-0 that it has come to a breaking point,
from the point of view of the employers.65

(iv) A situation may arise both from the point of view of law and order and the financial
aspect that the employer may find it impossible to carry on the business any longer. He
must not be allowed to be whimsical or capricious in the matter ignoring the interest of

62
Kishor Prasad Advocate, Problems and solutions on industrial dispute, Universal Law Publications,
(2011
63
AIR 1979 SC 25.
64
Dr. Avatar Singh, THE INDUSTRIAL DISPUTES ACT ,1947, 4th Edn., Central Law Publications, (2015)
65
Asstt. CIT v. Y.V. Rajashekhara Babu, [2011] 13 taxmann.com 232 (Visp.).

34
the labour. But, that can probably be remedied by awarding different slabs of
compensation in different situations. It is not quite correct that because compensation is
not a substitute for the remedy of prevention of unemployment, the latter remedy must
be the only one. If it were so, then in no case closure can be, or should be, allowed. 66

(v) Sec. 25-0 (2) does not require the giving of reasons in the order. Simply to say that
the "reasons are not adequate and sufficient (although they may be correct), or that the
intended closure is prejudicial to public interest, is to beg the question. The latter reason
will be universal in all cases of closure. The former demonstrates to what extent the
order can be unreasonable. If the reasons given by the employer in great detail are
correct, it is preposterous to say that they are not adequate and sufficient for a closure.
Such an unreasonable order is possible to be passed because of the unreasonableness
of the law. Whimsically and capriciously the authority can refuse permission to close
down, in which case the employer will have no other alternative but to face ruination in
the matter of personal safety and on the economic front, If he violates the order, apart
from the civil liability which will be of a recurring nature, he incurs the penal liability not
only under Sec. 25R of the Act but under many other statutes.

(vi) Intrinsically, no provision in Chapter VB of the Act suggests that the object of
carrying on the production can be achieved by the refusal to grant permission. In any
case it would be highly unreasonable to achieve that object by compelling the employer
not to close down in public interest for maintaining production. 67

(vii) The order passed by the authority is not subject to any scrutiny by any higher
authority or tribunal either in appeal or revision. The order cannot be reviewed either.

(viii) Nobody has got a right to carry on a business if he cannot pay even the minimum
wages. But, to tell him to pay and not to retire from business even if he cannot pay, is
pushing the matter to an extreme.

66
Asstt. CIT v. Hindustan Urban Infrastructure Ltd., [2015] 53 taxmann.com 331
67
CIT v. National Travel Services, [2011] 14 taxmann.com 14 (Del.)

35
(ix) It is true that Chapter VB deals with certain comparatively bigger undertakings and
of a few types only. It may be a reasonable classification for saving the law from
violation of Art. 14 but certainly it does not make the restriction reasonable within the
meaning of Article 19(6).

(x) Section 25-0 is not hit by Article 31C of the Constitution.

In C.R. Garu & Others v. State ofMaharastra and others,68 the writ petition filed by the
employee for obtaining a declaration that the closure of M/s. Kirlsokar Pneumatic
Company Ltd., at Nasik as illegal for noncompliance with the provisions of section 25-0
read with section 25-K (1) was dismissed. A perusal of the facts involving in the case
clearly lead to show that there was a violation of section 25-0 by the employer. The
contention of the workers that the factory had 659 employees preceding twelve months
before the date of closure was rejected by the High Court. In Maharastra General
Kamagar Union v. Vazir Glass Works Ltd., & others, 69 wherein the High Court
elaborately discussed the financial and other factual aspects that led to closure and
came to the conclusion that although it is true that merely because of the employer has
not managed the undertaking properly it cannot be a ground for refusing the permission
to close down the undertaking. This is another tactic employed by the employer with
malafide intention to close down the undertaking. In Engineering Metals & General
Works Union v. M. Jeevanlal Ltd., and others,70 was a case wherein the company has
failed to produce the products in accordance with I.S.I. standards and in accordance
with the requirements of Essential Commodities Act, 1955, which resulted in the
company going for lay-off and subsequently served a closure notice and closed down
the industry in accordance with section 25-0 of the Act71. Though it was a malafide
closure, yet the Court refused to interfere in the matter. An apparent reading of the
amended regime of section 25-0 clearly provides an impression that this section is

68
. 1997 II LL.J. 1072.
69
1998 LL.J. (Supp) III 231 (Bom).
70
1981 ILLJ.31 (Bom).
71
CIT v. Raj Kumar, [2009] 181 Taxman 155 (Del.)

36
violative of Article 19(1)(g), But the safeguards included in the section classify it as
reasonable restriction as required Article 19(6) of the Constitution.

The employers lobby argue that section 25-0 is a restriction on the fundamental right to
carry on the trade or business. Closure as such has now become a matter of serious
concern to trade unions and a subject of intense debate. The spate of closures during
the last one and half decades has created a calamitous situation rendering lacks of
workers jobless. An analysis of closures during the last one and half decades indicate
that majority of closures are being effected without following due process of law. The
owners have been adopting a modus operandi whereby they have been indulging in de-
facto closures by making units defunct.

The factory operation is brought to standstill through non provision of raw-materials,

non-payment of statutory dues or by provoking a prolonged labour unrest through non-
payment of wages, bonus etc. The strategy is to divert the attention of workers from the
main issue of closure and make them run helter-skelter for payment of wages and other
dues.72 The owners revel the moment the dispute is referred to Court. But, the workers
in frustration in many cases give up the flight half-way. Even in cases where Courts
have ordered payment of dues, the orders are not implemented and that too in spite of
intervention of State Government authorities. Thousands of workers of such defunct
companies and mills are struggling for years for payment of their legitimate dues. The
workers have been made jobless and homeless too. Those affected by closures are
middle aged without any scope of alternate employment. During the period of long
struggle, many workers died due to starvation and lack of medication. Some of them
including their family members committed suicides in desperation.73

72
M.P. Singh, THE INDUSTRIAL DISPUTES ACT (11th ed. 2009)
73
. R.S. Desai, “Industrial Closures, The Law and Practice", 2006: published by Manibenkara Institute, Mumbai, at
69. Dr. Avatar Singh, THE INDUSTRIAL DISPUTES ACT ,1947, 4th Edn., Central Law Publications,
(2015)

37
However, the workers and Trade Unions are not in a position to prove the hidden and
real reasons of closure either before conciliation or in Courts74. The time consuming and
costly litigations, which is beyond the capacity of the workers, is another reason which
discourages the workers/trade unions, to raise the dispute for stalling the impending
closure. Over and above, the recent attitude of State Government machinery helpful to
employers for closures has emboldened them resulting in the increased number of
closures. The net effect is that the workers are made helpless and they reluctantly
consent to downsizing/VRS thus making closure a smooth sailing.75

74
Kamadenu Enterprises v. Vivek Textile Mills P. Ltd. (1984) 55 Comp. Cas. 68 (Kar.)
75
Ibid

38
 PRAYER OF RELIEF

In the light of issues raised, arguments advanced and authorities cited, the counsel on
behalf of the Respondent humbly submits that this Honorable TRIBUNAL may be
pleased to adjudge and declare that:

4. The payment of bonus at the rate of 4% is legal under the payment of bonus act
1965
5. The act of the company comes under the purview of closure
6. The closure of the one production unit Doesn’t amounts to the closure of the
entire undertaking
7. Pass any other order, which the Court may deem fit in light of justice, equity and
good conscience.

And for this act of kindness, the petitioner as duty bound, shall forever pray.

Respectfully Submitted

Sd/-

Counsel for the Respondent

39