YESHWANT G CHIKHALKAR Vs. KILLICK NIXON LTD

JUDGEMENT

(1.) APPELLANTS, who are the original Complainants-employees had filed Complaints of Unfair Labour Practice under Section 28 read with Items 5, 9 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971. (For convenience sake they would be referred hereinafter as the "employees" ). They sought a declaration from the Industrial Court, Maharashtra at Mumbai that the notice dated July 2, 1998 giving lay-off to them from July 3, 1998 was an unfair labour practice. The nub of their complaints was that the lay-off given to them was not in accordance with the provisions of law as the employer-company had violated the mandatory provisions of Chapter V-B of the Industrial Disputes Act, 1947 (for short "the I. D. Act") as it had failed to obtain required permission from the Government and that it had also violated the law in respect of seniority prescribed under Section 25-G and Rule 81 of the I. D. Act. The employees had also complained that the action of lay-off was contrary to the settlement which was in subsistence. On all these counts the employees sought the relief of declaration of an unfair labour practice and restraining orders as against the employer-company. The company resisted the complaints filed by the employees and denied that it had engaged in any unfair labour practice. It replied point-wise all the contentions raised by the employees. The company had specifically averred that the lay-off was confined only to its Shipping Division and that it had strictly complied with the rules of seniority of the said Shipping Division and that it had also not violated any provisions of the subsisting Settlement and that there was no unfair labour practice of any nature engaged by the company as alleged by the employees. It was further pleaded by the Company that the provisions of Chapter V-B of the I. D. Act was not applicable to the Shipping Division of the Company and, therefore, there was no question of seeking permission from the Government before the lay-off was effected. In the Shipping Division the number of employees employed was less than 100. It also pleaded that the law in respect of the seniority and in respect of payment of lay-off compensation was strictly adhered to. The main plank of the company was that the Shipping Division is a separate undertaking of the Company and it has distinct and separate business employing 36 employees and it has no connection with the other undertakings or divisions owned by the company viz.- (i) Snowcem Sales Division, (ii) Construction Equipment Division (iii) Clearing and Forwarding Division (iv) Agencies and Marketing Division and (v) Stationery Division. It refuted the claim of the employees that there is functional integrality of the Shipping Division with the aforesaid divisions owned by the company. Therefore, according to the Company, a seniority list was not prepared of all the employees employed by the company in all these Divisions. It also strongly refuted the plea of the employees that under the provisions of Chapter V-B of the I. D. Act, the total number of employees employed by the company as a whole should be considered and not only those employees who are in the Shipping Division. The Company therefore prayed for dismissal of the complaint on all these grounds.

(2.) THE Industrial Court by its Order dated December 24, 1998 dismissed the Complaint. It must be noted here that the Industrial Court has squarely dealt with all the points raised by the parties and has recorded its reasons on every point. In his thorough order the learned Member of the Industrial Court has rightly held that there is no functional integrality of the different divisions of the company with the Shipping Division wherein the concerned employees were employed. The main contention of the employees was that as the employees were transferable from one division to another and that there was unity of ownership and management, the entire company should be taken as one unit ignoring the separate divisions/undertakings/ establishments. The learned member has not accepted this contention and according to us rightly. The true test of two units being functionally integrated is laid down by the Supreme Court in various Judgments. It is a well established position and therefore we need not cite those judgments. This point has often arisen in the cases under the Employees' Provident Funds Act, whereunder clubbing of two divisions or undertakings was questioned by the employers. It is now very well established that if one unit which is totally independent and which will not be closed or affected by the closure or stoppage of another unit owned by the same employer in that case these two units would be independent and not interdependent and, therefore, there cannot be any functional integrality between these units. If, however, one unit is adversely affected or is closed down because of the closure of the other unit and it cannot survive unless the other unit also functions in such a situation two units would be interdependent mutually. One would not survive unless the other continues to function. This concept of integrality between the two units is totally absent in the present case. The Shipping Division of the Company is altogether different and has no connection or relation with the activities of the other units. Merely because some employees are transferable or were transferred there being a unity of ownership and management it cannot be said that there is a functional integrality between the Shipping Division and the other divisions. According to us, the Industrial Court has rightly come to the conclusion that there is no functional integrality in existence between the Shipping Division and the other Divisions of the employer company and the natural consequences would be that the Chapter V-B of the I. D. Act will not be attracted and therefore there was no necessity of seeking permission from the Government under Section 25-M of the Act and even the seniority of the shipping division alone was to be considered.

(3.) THE learned single Judge has dismissed the writ petition filed by the employees against the Order of the Industrial Court.