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2006 (12) TMI 513 - SC - Indian LawsIndustrial dispute - Validity of retrenchment order - Non-compliance of the conditions contained in section 25N - Applicability of provisions of Section 25N of the Industrial Disputes Act - whether the Forest Corporation is an Industrial establishment within the definition of Section 25L or not - Forest Corporation carries the activity of cutting removal disposal and sale of trees - expression manufacturing process - non-maintainability of the writ petition - HELD THAT - Clause 7 of Section 25-N statutorily provides that where no application for permission under sub-section (1) is made or where the permission for any retrenchment has been refused such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workman 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 . The submission made in this behalf by learned counsel for the respondents merit acceptance. Thus the retrenchment notices mentioned above being illegal from the date of the said notices and the workmen being entitled to all the benefits in the present case all the concerned workmen are entitled to be reinstated with full back-wages and continuity of service. In the instant case the workmen have not made out any exceptional circumstances to knock the door of the High Court straightaway without availing the effective alternative remedy available under the Industrial Disputes Act. But the dispute relates to enforcement of a right or obligation under the statute and a specific remedy is therefore provided under the statute the High Court should not deviate from the general view and interfere under Article 226 of the Constitution except when a very strong case is made out for making a departure. There are several decisions to the same effect. The respondents have not made out any strong case for making a departure. Accordingly the conclusion is inevitable that the High Court was not justified in entertaining the writ petition. We are therefore of the opinion that the writ petitioners (respondents herein) who have not invoked the jurisdiction of the Tribunal are not entitled to any relief in the writ petitions. They are not entitled for any benefits of reinstatement back-wages and continuity of service. On the other hand the respondents in civil appeals arising out of special leave petitions as detailed infra who approached the Tribunal and the High Court are entitled for the relief of reinstatement back-wages and continuity of service in view of our finding that the appellant-Corporation is an Industrial Establishment and that provisions of Section 25N of the Industrial Disputes Act are attracted. Thus we hold that the provisions of Section 25-N of the Industrial Disputes Act 1947 are attracted and non-compliance of the said section makes retrenchment order illegal and non est. We also hold that the appellant-Corporation is an industrial establishment within the definition of Section 25L of Chapter V-B of the Industrial Disputes Act. The appeals of the Corporation were partly allowed
The core legal questions considered in the judgment include:
(1) Whether the appellant Corporation qualifies as an "industrial establishment" under Section 25-L of the Industrial Disputes Act, 1947, specifically whether it is a "factory" as defined in Section 2(m) of the Factories Act, 1948; (2) Whether the activities carried out by the Corporation-cutting of trees and converting them into logs-amount to a "manufacturing process" under Section 2(k) of the Factories Act; (3) Whether the provisions of Section 25-N of the Industrial Disputes Act, which require prior permission for retrenchment and notice to workmen, are applicable to the appellant Corporation and if non-compliance renders the retrenchment illegal; (4) Whether the writ petitions filed by the retrenched employees directly in the High Court were maintainable, considering the availability of alternative remedies under the Industrial Disputes Act; (5) Whether the writ petitions were barred by delay and laches, given the long gap between retrenchment and filing of petitions; (6) The legal consequences of non-compliance with Section 25-N of the Industrial Disputes Act. Issue-wise Detailed Analysis: 1. Applicability of the Definition of 'Industrial Establishment' and 'Factory' The legal framework centers on Section 25-L of the Industrial Disputes Act, which defines "industrial establishment" to include a "factory" as per Section 2(m) of the Factories Act, 1948. Section 2(m) defines "factory" as any premises where a manufacturing process is carried on by twenty or more workers without aid of power, or with aid of power, etc. The term "manufacturing process" is defined broadly in Section 2(k) of the Factories Act, including making, altering, repairing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery, or disposal. Precedents such as Ardeshir H. Bhiwandiwala v. State of Bombay (1961) were relied upon to interpret "premises" as including open land and not limited to buildings alone. The Court also referred to the decision in Lal Mohammad and Ors. v. Indian Railway Construction Co. Ltd., which held that a construction project spread over 54 kilometers could be considered a factory if manufacturing processes are carried out on fixed sites within the project. The appellant argued that the Corporation's activities do not amount to manufacturing since cutting trees into logs does not transform the raw material into a commercially different article; logs are still raw material. They contended that the Corporation does not operate on fixed premises surrounded by boundaries and thus cannot be a factory. The Court, however, held that the activities of cutting trees and converting them into logs fall within the definition of manufacturing process. The process of cutting and shaping logs constitutes "making," "altering," and "adapting" an article as per Section 2(k). The logs are articles or substances adapted for sale, transport, and disposal. The area where these activities occur, including open forest land, qualifies as "premises" under the Factories Act, following the interpretation in Ardeshir H. Bhiwandiwala. Therefore, the Corporation is an industrial establishment under Section 25-L, attracting the provisions of Chapter V-B including Section 25-N of the Industrial Disputes Act. 2. Whether the Activities Constitute a Manufacturing Process The Court examined the definition of manufacturing process in Section 2(k) of the Factories Act and relevant case law:
Applying these principles, the Court found that cutting trees and shaping them into logs constitutes a manufacturing process because it involves "making," "altering," and "adapting" the article with a view to its sale and disposal. The logs are distinct from the standing trees in form and commercial use. This meets the test of transformation required for manufacturing. 3. Applicability and Non-Compliance of Section 25-N of the Industrial Disputes Act Section 25-N requires prior government permission for retrenchment of workmen in industrial establishments employing 100 or more workers, along with a three-month notice or wages in lieu thereof. Non-compliance renders the retrenchment illegal and void, entitling workmen to reinstatement and back wages. The appellant conceded that Section 25-N applies to the State of Uttaranchal by virtue of the Industrial Disputes (Uttar Pradesh) Rules, 1976. The retrenchment notices issued by the Corporation did not comply with Section 25-N requirements: no prior permission was sought nor was proper notice given. The Labour Court had earlier held retrenchment valid under Section 6-N of the U.P. Industrial Disputes Act but found Section 25-N inapplicable as the Corporation was not an industrial establishment. The High Court reversed this, holding Section 25-N applicable and retrenchment illegal for non-compliance. The Supreme Court upheld the High Court's conclusion that the Corporation is an industrial establishment and Section 25-N applies. Non-compliance with Section 25-N renders retrenchment illegal and non-est, entitling workmen to reinstatement with back wages and continuity of service. 4. Maintainability of Writ Petitions and Availability of Alternative Remedy The appellant contended that writ petitions filed directly in the High Court by retrenched employees were not maintainable because the Industrial Disputes Act provides an alternative, efficacious remedy through Labour Courts and Tribunals. The Court reiterated the settled legal position that writ jurisdiction under Article 226 should not be exercised when a specific statutory remedy exists unless exceptional circumstances are shown. Reliance was placed on decisions such as U.P. State Spinning Co. Ltd. v. R.S. Pandey and Ors., which emphasize that industrial disputes should be resolved through the statutory machinery to ensure speedy and effective disposal. The Court found that many writ petitions were filed after significant delay (8-10 years) without approaching the Tribunal, and no exceptional circumstances were demonstrated to justify bypassing the statutory remedy. Hence, such writ petitions were not maintainable. However, for cases where the respondents had approached the Labour Court and High Court, relief of reinstatement, back wages, and continuity of service was upheld. 5. Delay and Laches in Filing Writ Petitions The Court considered the delay of nearly a decade between retrenchment and filing of writ petitions. It held that delay and laches are relevant factors and can bar relief, especially where the workmen did not avail the statutory remedy promptly. Reliance was placed on Haryana State Coop. Land Development Bank v. Neelam and other decisions affirming that procedural doctrines like estoppel, waiver, and acquiescence apply in industrial disputes. The Court held that the High Court was not justified in entertaining delayed writ petitions and should have dismissed them on grounds of laches. 6. Treatment of Competing Arguments The appellant's argument that cutting trees is not manufacturing was rejected based on the broad and purposive construction of the definition of manufacturing process. The Court emphasized that the legislative intent behind Chapter V-B of the Industrial Disputes Act is to protect workmen from arbitrary retrenchment. The respondents argued for a wide interpretation favoring workers' welfare and cited purposive construction principles. The Court accepted this, holding that the activity of cutting and converting trees into logs is a manufacturing process within the meaning of the Factories Act and thus the Corporation is an industrial establishment. Regarding maintainability and delay, the Court sided with the appellant, underscoring the importance of exhausting statutory remedies and timely filing. Significant Holdings: "The process of cutting by axe and changing the shape by saw both squarely fall within the definition of the first part of the manufacturing process as cutting would be included in the processes of 'making' and 'breaking up' included in the said definition. Further, the changing of shape by saw would be included in the processes of 'altering' and 'adapting' of the trees." "The area over which the said work is being conducted would fall within the term 'premises' as understood and explained by a Constitution Bench of this Court in the decision reported in the case of Ardeshir H. Bhiwandiwala v. State of Bombay." "The provisions of Section 25-N of the Industrial Disputes Act, 1947 are attracted and non-compliance of the said section makes retrenchment order illegal and non est." "Writ petitions filed directly in the High Court without availing the statutory remedy under the Industrial Disputes Act are not maintainable unless exceptional circumstances are made out." "Delay and laches in approaching the Court for relief in industrial disputes are relevant and can bar relief." The Court concluded that the appellant Corporation is an industrial establishment within the meaning of Section 25-L of the Industrial Disputes Act and that the retrenchment of workmen without compliance with Section 25-N is illegal. Workmen who approached the Labour Court and High Court are entitled to reinstatement with back wages and continuity of service, whereas those who filed delayed writ petitions without exhausting statutory remedies are not entitled to relief.
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