TMI Blog2007 (6) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... he impugned order, the award of the Industrial Tribunal dated 21st February, 2004 granting and/or confirming the grant of permission to close down two undertakings of the appellant-Mill came to be set aside with direction to grant compensation, in lieu of reinstatement, to the workmen, who did not opt for voluntary retirement until 1st March, 2004 with other reliefs referred to in the operative part of the judgment and order together with gratuity in accordance with the provisions of the Payment of Gratuity Act. Factual Matrix: 2. The factual matrix, not in dispute, taken from the impugned judgment are as under: 3. The appellant-Mill is a business house of some antiquity belonging to the Thackersey family. The business activities were initially commenced in 1805 as a trader and were then expanded to cover the manufacture of cotton fabrics. The Mill was incorporated in 1882 or thereabouts as a Limited Company. The Crown Spinning and Manufacturing Company Ltd., which had also been incorporated in 1880, was amalgamated with the appellant-Mill with effect from 1st April 1975 by an order passed by this Court on 23rd July 1976 in the exercise of its Company jurisdiction. After a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the event that the Company was unable to raise funds as visualized therein, due to unavoidable circumstances, after relieving the employees, the Company in consultation with RMMS would inform both RMMS and the employees individually, not to deposit the cheques in their Bank Accounts. In such cases, the employees would be paid interest at a rate 1% higher than what is payable by nationalized Banks for fixed deposits, on the delayed part of payment. The employees, it was provided, will not take recourse to any legal proceedings. Clause 4(k) of VRS Agreement is material for the present purposes, for it provided that employees who will not opt for voluntary retirement, would be redeployed by the Company, if necessary, by re-organizing and restructuring manufacturing activities in any of the Industrial Units of the Company. Clause 4(k), inter alia, provided as follows: The remaining employees who will not opt for voluntary retirement under the Scheme will be redeployed and assigned work in any section, department or units of the Company without adversely affecting their service conditions. The employees and RMMS shall fully co- operate with the Company in the implementation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that in the event that all the workmen at the Crown Mills Unit and the Process House Division did not opt for VRS, it would not be possible to properly reorganize or restructure the working of any unit in Mumbai with the small group of workers who may not opt for VRS and it would be impossible to run such operations except at heavy cash losses. Therefore, opined the Chairman, the Company would have no alternative but to exercise an option of closure of all units in Mumbai i.e. A/B Units at Mahalaxmi, C Unit at Dadar and Process House at Prabhadevi. The Board thereupon passed a resolution authorising the making of an application for closure of the Mumbai Units under the Industrial Disputes Act, 1947. 6. On 10th April 2003, the Company moved applications under Section 25O of the Industrial Disputes Act, 1947 each in respect of the Crown Mills and the Process House Units before the Commissioner of Labour, Mumbai, which were treated as one application dated 2nd May, 2003 by consent of parties. The annexure annexed thereto gave full particulars and details of the first appellant and the process house and Crown Division Unit as per requirement of law. These particulars included, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 crore in 2000- 01 and as of 30th September 2002, the cumulative losses were stated to be ₹ 185 crore. The Company, it was stated, had to make a reference to the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 since as of 31st March 2001 its net worth stood eroded. The BIFR had declared the Company as a Sick Industrial Undertaking on 4th December 2002. In support of its proposal to close down the undertakings, the Company claimed that many composite mills at Mumbai including the appellant-Mill had become sick and had closed down or were proposing closure due to the following reasons: (a) Government policies: The Company claimed that the decentralized sector has been a recipient of several concessions and exemptions in fiscal, trade and labour policies. The excise duty structure and quota policy were alleged to be biased towards the small scale and decentralized sectors; (b) Attempts to rectify anomalies in Government policies were alleged not to have borne fruit. As a result, the share of fabric production of the composite mill sector was reduced to less than 4% in 2001. (c) Fiscal policies of the State Government and the Municipal Corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 25-O. The Industrial Tribunal, directed that the closure compensation shall be paid within a period of 30 days and that workmen would be granted the closure compensation or payment due under the VRS agreement dated 29th December 2002, whichever was more beneficial. The Industrial Tribunal also directed that VRS payments due to employees, who were still to be paid, should similarly be discharged and paid within a period of 30 days. 15. Not satisfied with the aforesaid award of the Industrial Tribunal, both appellant-Mill as well as Union filed writ petitions in this Court referred to in the opening part of the judgment. The learned single Judge, vide his judgment and order dated 21st February, 2005, was pleased to set aside the award of the Industrial Tribunal and the petitions came to be disposed of in terms of para- 43 of the said judgment. 16. Being aggrieved by the aforesaid judgment and order of the learned single Judge, the appellant-Mill filed two appeals being Appeal Nos.364/2005 and 458/2005 setting up various legal and factual challenges dealt with hereinafter, whereas respondent-Union also filed an appeal bearing No. 441/2005 to claim higher financial relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporated; and the lands of the two units in Mumbai have, in fact, been transferred to the SPV. He further submitted that in this context, the learned single Judge has noted that it is impossible to visualize a situation where the manufacturing operations in the Mumbai Mill can commence since the plant and machinery have all been sold. 20. Mr.Dada also tried to encash the finding recorded by the learned single Judge in the impugned judgment; wherein he has recorded that AAIFR has proceeded on the basis that the unavailability of the two Mumbai units was established and that a sanctioned scheme for rehabilitation exits, which is based on the closure of the two Mumbai units. It is, in this context, that the learned single Judge has noted that restarting operations of the Mumbai units have been rendered impossible s a result of the sale of the plant and machinery. Having regard to the above findings, Mr.Dada submitted that on learned Judge's own findings, the test of impossibility stands satisfied. 21. Mr.Dada further urged that the learned single Judge has taken cognizance of the fact that the sanctioned scheme exists. The scheme sanctioned by the B.I.F.R. And upheld by AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e last three years; (vii) Percentage of wages of workmen to the total cost of production; (viii) Administrative, general and selling costs; (ix) Inventory position, item-wise and value- wise; (x) Annual Sales figures for the last 3 years; (xi) Reasons for proposed closure; and (xii) Attempts made by the Appellant to avoid closure. 25. Mr.Dada further submits that in support of each of the fact the appellant-Mill led oral evidence of Mr.Ghaisas, Vice-President of the Mill. Mr.Dada took us through the evidence of Mr.Ghaisas in support of his submissions. 26. Mr.Dada while proceeding with his submission also urged that the learned single Judge had no jurisdiction or power to award any VRS compensation to the workmen who had not opted for VRS. In his submission, the quantum awarded is abnormally high. 27. Mr.Dada also relied upon the subsequent decision of the Division Bench of this Court in Writ Petition No. 462/2005 filed by the respondent- Union challenging the decision of the AAIFR; wherein the contentions of the Union were that the scheme as framed permitting the closure of the undertakings in Mumbai were only viable undertakings in as much as B.I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Industrial Tribunal misunderstood Section 25-O(2) (5) of the I.D.Act. That the Mill-management could not prove any of the allegations made in the applications including the comparative cost of production of the appellant- Mill vis-a-vis other mills in organized and unorganized sectors in Mumbai and elsewhere. That the appellant-Mill could not establish the unavailability of the units proposed to be closed. 31. In the submission of Mr.Ganguli, the documents submitted cannot be accepted as evidence by mere production thereof. They were required to be proved, subject to cross-examination. In his submission, Mr.Ghaisas, who was examined, was not the author of the documents which were referred to by him in his evidence. According to Mr.Ganguli, Mr.Tidke's evidence by no means support the case of the management for closure. 32. Mr.Ganguli submits that the appellant-Mill did not produce BTRA report before any of the Court or Tribunal. According to him, the closure of Mumbai units of the Mill was a calculated attempt to commercially exploit the real estate. That the gradual reduction in the production of the Mumbai units was intentional, deliberate and calculated. 33. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of the order. In his submission, the liability on this account is capable of being met by the Mill with soaring prices of the real estate. 38. Mr.Ganguli submits that there will be no question of any discrimination between the workers affected by closure and the workers who had opted for VRS under the agreement dated 29th December, 2002, since they have opted for VRS with their eyes open knowing fully well the consequences of the agreement and receipt paltry sums thereunder. He submits that the said workers have not only received the VRS amount but also interest thereon on account of delayed payment and ₹ 25,000/- additional by way of ex-gratia payment (Bakshis). He, thus, submits that the appeals filed by the Mill deserve to be dismissed, whereas appeal filed by the Union deserves to be allowed with costs. Contours of Writ Jurisdiction: 39. Before proceeding to consider the aforesaid issues in light of the rival contentions, it would be profitable and relevant to consider the contours of writ jurisdiction. Writ of Certiorari with which we are essentially concerned is an extraordinary common law remedy of ancient origin. It is not a writ of right but one of discr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid principles are well-settled and well recognised in catena of cases viz; Parry Co. v. Commercial Employees Association (1952)ILLJ769SC , Veerappa Pillai v. Raman and Raman Ltd. [1952]1SCR583 , Ebrahim Aboobakar v. Custodian General of Evacuee Property [1952]1SCR696 , Hari Vishnu Kamath v. Ahmed Ishaque: [1955]1SCR1104 ,: [1958]1SCR1240 and Custodian, E.P. v. Abdul Shukoor [1961]3SCR855 consistently followed in all subsequent judgments of the Supreme Court till date. 45. In short, Judicial review is directed not against the decision, but is confined to the examination of the decision making process. When the issue raised in judicial review is whether a decision is vitiated by taking into account irrelevant, or neglecting to take into account of relevant factors or is so manifestly unreasonable that no reasonable authority entrusted with the power in question could reasonably have made such decision. The judicial services of the decision making process includes examination, as a matter of law, of the relevance of the factors as held by the Supreme Court in the case of State of U.P. v. Maharani Rajlaxmi Kumari Devi A.I.R. 1989 S.C. 1010. 46. The grounds on which the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (5) of the I.D.Act. The requirement of Section 25-O(2) is in the nature of a restriction imposed upon the right of the employer to close down the business. The present Section 25-O of the I.D.Act is denuded of the infirmities found in its predecessor. The provisions of Section 25-O of the I.D.Act, as it now stand require the Government to give reasons for its order; the factors to be considered by the appropriate government are stated in Section 25-O(2); an objective approach in arriving at the decision by the Government, is now imperative; the factors stated in Section 25-O(2) which are to be considered are to be understood in the light of the decision in Excelwear (supra); the appropriate Government has to strive to strike a balance between the various interest involved, in the background of a particular situation; any unreasonable order can be corrected by judicial review; the Government itself may review its order or refer the matter for decision by a Tribunal for adjudication; the application of the employer has to be considered by the appropriate Government and the order to be communicated within sixty days from the date on which the application is made, failing which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form XXIV-C under Section 25(0-1) of the Industrial Disputes Act, both dated 10-4-2003; subsequently treated as having been made on 2nd May, 2003; seeking permission to close two subject undertakings of the Company, namely; (1) Crown Mill at Gokhale Road (South) Prabhadevi, Mumbai and (2) Process House at Yadav Patil Lane, Veer Savarkar Marg, Prabhadevi, Mumbai. The Commissioner of Labour by common order dated 30th June, 2003 was pleased to grant permission for closure of the said two units for the reasons recorded therein. 54. The appellant-Mill while placing reliance on the contents of the aforesaid two applications produced some additional documents and pleaded that when the applications for permission in the prescribed form were made the financial position was showing loss of ₹ 185 crore which was further deteriorated resulting in further carry forward losses in the sum ₹ 237 crore for the quarter ending 30th June, 2003. 55. It was also pleaded that none of the two units could work economically. Both units were in the non-working condition on the date of filing of the statement of the claim. An anxiety was expressed in the pleadings by the appellant-Mill that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that on many occasions the aforesaid lapses on the part of the Mill- management were brought to their notice but in reality management never took any steps to ensure proper supply of spare parts and proper mixing of cotton and polyester since promoters were adverse to accept any suggestions of the respondent-union. 59. The similar allegations are to be found in the written statement with respect of Crown Mill; that the quality of the finished cloth was not maintained by the Mill. The orders placed with the Mill were abruptly cancelled by the parties for want of quality product. In export trade, the goods supplied by the Company were rejected by the foreign buyers as they were not satisfied with the quality of the product. The appellant, ultimately, lost heavily in the export market during the period 1st April, 1999 to December, 1999. The earning in foreign exchange on account of export of goods for the period April to December, 1999 started showing reverse trend. This fall in export earning was falsely covered up by the Directors of the Mill in their annual report by attributing adverse trading conditions; which, in fact, was due to deteriorating quality of the products. Here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62. It was further alleged in the written statement that in the month of March, 2002 with the active support and co-operation of the recognised union, namely; R.M.M.S., the company managed to obtain resignations of 1,528 employees working in Unit-B. The operation in Unit-B was carried on up to October, 2002 with the help of the workers who had already resigned but agreed to work on payment of 70% of the normal wages paid on cash basis. It was thus, admitted that VRS was floated and majority of the workers opted for the same. The stoppage of production of Unit-B was also admitted by the Union in its written statement. 63. It was further alleged that various Departments and/or Sections were closed in the Crown Mill and Process House from June, 2001 and payment of monthly wages to staff and workers were deliberately delayed by the Mill. In the written statement reference to B.I.F.R. was admitted but it was sought to be contended that the applications for closure was based on vague and general allegations without any supporting cogent evidence. 64. So far as the recognized Union, namely; R.M.M.S., is concerned they completely supported the applications moved by the appellant-M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven in the written statement filed in the very case. 68. Now, let us examine the concept of burden of proof. Under Section 101 of the evidence Act, whoever desires any Court to give judgment as to any legal right or liability dependent on existence of facts, which he asserts, must prove that those facts exist. When person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. In other words, the burden of proof lies on the party who substantially asserts the affirmative of the issue and not upon the party who denies it. The party on whom onus of proof lies must, in order to succeed, establish a prima facie case. He cannot, on failure to do so, take advantage of the weakness of his adversary's case. 69. With the above settled legal position of law, now let us examine whether any attempt was made by the respondent-Union to prove their stand or defence taken by them in the written statement. The burden of proof was on the respondent-Union since their case was that the heavy losses were incurred by the Mill because of substandard quality of finished product and that the adverse market conditions were the direct result of the mis- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also Balance-sheet of 1997-98, I cannot read the balance-sheet and the figures mentioned in it i.e. The Balance-sheets of the years 1989-90 and 1998-99. He further deposed as under: I do not possess any documentary evidence to show that second hand machinery installed in Karad plant. I do not possess any documentary evidence about the unrealistic planning referred in my W.S. I cannot specify from which unit which machinery has been repurchased. He do not possess any evidence regarding the exorbitant price, referred in the written statement. I do not possess any evidence of major financial misappropriation made by the company. No evidence offered by me in respects of contents of para 12 of written statement. (Note para 12 or allegations are made in respect of reduction of cloth and certain method of profit) He further deposed in paras-32 and 33 of his evidence reading as under: I say that if permission for closure of mill is granted then full life of 398 workers of Crown Mill shall destroy and such devastation of life of workers shall not be deplorable in interest of society. I say that for consideration of BIFR board IDBI society has prepared the rehabilitation Scheme wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coming unemployment to the workers. Such type of request is being done by Workers and Union. Mr. Shinde in his cross-examination stated as under: I cannot understand from the balance sheet regarding the content of para-10 of my affidavit. However I say so as per the advise given to me. ... Personally I do not know about the valuation of the assets of the company. We have not filed any evidence before this Tribunal regarding the financial soundness of the process house. I have not personally checked the application moved by the company for permission of closure. ... I have not checked all the contents of the application of closure, and about its correctness. ... I cannot say anything about the balance sheet figures.... I do not possess any evidence to show that purchasing of spare parts stopped for the Process House from the year 1990 onwards. ₹ 100 Crores expenses for karad Unit mentioned by me on the basis of the balance sheet .I cannot locate that figure in the balance. I do not possess any documentary evidence to show that second hand machinery brought from the various companies in the first party at the exorbitant price. I do not know th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial position as given in the application was showing loss of ₹ 185 crore which was further deteriorated resulting in further carry forward losses of ₹ 237 crores for the period ending 30.6.2003. He further stated that in the application; various reasons given were the causes for the losses incurred by the Company, which had adversely affected the working of the two units resulting in heavy losses. He further deposed that the reasons given in the applications were true and correct. That the attempts were made to overcome the financial crisis but the Mill-Management found it difficult to overcome the adverse situation. All attempts made proved futile. He deposed that the detailed facts given in the applications were true and correct. That the B.I.F.R. has declared the company as sick company on 4.12.2002. 81. Mr Tidke deposed in support of detailed reasons given in two applications dated 10.4.2003, and stated on oath that it had become impossible for the company to run two units i.e. Crown Mills and Process House. The manufacturing process in the said two units, due to financial crisis, was required to be discontinued. 82. Mr Tidke further stated that being a Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.E.G. Carapiet v. A.Y.Derderian AIR 1961 Cal 539; Sarwansing v. State of Punjab 1995CriLJ3630 ). 85. It was also expected rather necessary on the part of the respondent-Union to extensively cross-examine Mr.Tidke and to challenge each and every statement made by him on oath to demonstrate its falsify and to confront him with their defence. But the respondent-Union miserably failed to challenge Mr.Tidke's evidence. It could not succeed in demolishing the case of the appellant- Mill. It could not establish its defence. Even no suggestions of their defence were given to Mr.Tidke. With the result, the evidence of Mr. Tidke practically went unchallenged. As a matter of fact, in the cross-examination, adverse material is brought on record by the Union which advanced the case of the appellant-Mill rather than that of the respondent-Union. 86. With the aforementioned evidence on record, one has to give due weightage to the evidence of Mr.Madhav Ghaisas (CW 2), who deposed in support of the audited Balance-Sheet and Profit and Loss Accounts for the accounting periods ranging from April 1999 to December, 1999; January, 2000 to March, 2001; and April, 2001 to September, 2002. He ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as proved. Similar is the situation in case at hand vis-a-vis balance sheets, profit and loss accounts, and other financial statements are concerned. Each of them were shown and used in the cross-examination by the Union. It is, thus, not open to the respondent-Union to complain lack of proof of those documents. All those documents were rightly read by the Industrial Tribunal in evidence. 89. The case sought to be made out in the written statement which throws entire blame on the Mill-Management for creating adverse situation was never put to these witnesses, when they were under cross-examination as already stated hereinabove. 90. The legal position is well settled. A person who says house is benami must satisfy the Court of this fact. Where a person claims right of way, he must prove that he acquired that right and it is not for the other side to show that he does not have such right. The respondent-Union alleged and desired to prove mismanagement, reckless borrowings, substandard production affecting the health of the Mill with deliberate intention to exploit real estate of the Mill but could not prove the same by cogent evidence. The burden of proof to prove these facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refusing the permission. The reasons given, in totality favoured grant of permission. (vii) The figures of profit and losses given in the chart and the Balance Sheets and the Annual Statements of the appellant were required to be appreciated, it being the figures of the account maintained in the due course of business and there being nothing on record to disbelieve the same, as such the same could not be ignored; (viii) Having given an opportunity of hearing to the appellant, the workmen and the persons interested, the genuineness and adequacy of the reasons of the closure could not be doubted; (ix) Respondent-Union could not offer any evidence pertaining to the profits gained by both the units; (x) The evidence of respondent-Union could not contradict the reasons offered by the Appellant for closure of the Units; (xi) Respondent-Union failed to prove that the closure was a pretense to determine their services and to fetch more profits from the real estate business; (xii) Respondent-Union was relying upon the figures of the profits and loss account right from 1990 onwards and, therefore, it would not be proper to accept the submission of the Respondent- Unio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it R. Kamant v. R.R.Kamani (1989)ILLJ47SC ) explicitly explained the object of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA)legislation in the following words: The legislation had been enacted with the end in view to: 1. Afford Maximum protection of employment; 2. Optimize the use of the funds etc; 3. Salvaging the production assets; 4. Realising the amounts due to the banks, etc., and 5. To replace the existing time- consuming and inadequate machinery by efficient machinery for expeditious determination by the body of experts. 96. The Legislative intent of the Act is amply reiterated by the Supreme Court in SRF Limited v. Garware Plastics and Polyesters Ltd. [1995]214ITR678(SC) as follows: The legislative intent, which, therefore, becomes clear is that a sick or potentially sick industry should be detected timely. Proceedings for revival and rehabilitation of the sick or potentially sick company should expeditiously be completed within the time frame and if delay is unavoidable, it should be done within a reasonable time thereafter, say, six months. The proceedings are not to be allowed to be used as dilatory tactics to prevent reha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be said to be the same as that of Section 15 of the Act of 1985. As the two provisions of these two Acts do not operate in the same field, there is no question of any conflict or Section 15 of the Act of 1985 having overriding effect on Section 25-O of the Industrial Disputes Act. There is no doubt that in case of any conflict in the field of operation of the Act of 1985,provisions of the Act of 1985 have the overriding effect. 99. From perusal of the order of the B.I.F.R. It is clear that the appellant Company was declared as a sick company under B.I.F.R., vide order dated 1.4.2004; whereunder the Rehabilitation Scheme of the appellant-Mill was sanctioned. 100. The Scheme framed by B.I.F.R. has spelt out the following aspects: (i) The accumulated losses of the Appellant which were ₹ 108 crore as on 31st March, 2001 increased to ₹ 185 crore as on 30th September, 2002 and stood at ₹ 237 crore as on 30th June, 2003; (ii) That the debt burden of the Appellant towards Banks and Financial Institutions alone stood at about ₹ 202 crore as on 30th September,2002; (iii) That the workers dues and statutory dues as on 30th September, 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April 2004 and the Scheme framed thereunder. These declaration-cum-affidavits were filed before the BIFR. That is how the B.I.F.R. Scheme was given effect to. 105. At the meeting of the Monitoring Committee the Respondent-Union specifically informed the Monitoring Committee that these workers have no objection for going on with the process of satisfying the dues of the workers who have taken VRS, from the sale proceeds that will be received from the development of the Mahalaxmi Unit. 106. At the second thought, in the meeting of the Monitoring Committee, the Respondent-Union while reversing their earlier stand, objected to the Monitoring Committee proceeding further with regard to the development of the Mahalaxmi property of the Appellant. This was despite the fact that none of the workers of the Mahalaxmi Unit of the Appellant are represented by the Respondent-Union. 107. The Monitoring Committee clarified that unless the Respondent-Union obtained an order from the Court/Authority, the Monitoring Committee could not accede to the request of the Respondent -Union. The Monitoring Committee, however, adjourned the matter to 18th August 2004 to enable the Respondent- Union to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sanctioned Scheme would help the revival of the viable unit at Karad through the process of rationalization of work force and financial reconstruction and refurbishment of the tools and machinery; (ix) The sanctioned Scheme had the full support of the operating Agency all the secured creditors as well as Respondent No. 3. SUBSEQUENT EVENT: 110. Writ Petition No. 462 of 2005 filed by Respondent-Union before Division Bench of this Court challenging the Order of A.A.I.F.R. dated 23rd December, 2004 confirming the order dated 1st April, 2004 sanctioning the rehabilitation scheme by the BIFR, which came to be dismissed by an order dated 1st August, 2006; i.e., subsequent to the impugned judgment of the learned Single Judge; wherein learned Division Bench, inter-alia, noted that the steps taken by the Appellant pursuant to the said Rehabilitation Scheme, including the fact that the Appellant had made full payments to the workers of Units A B and substantial amounts to the workers of units C and D including the member workers of Respondent-Union pursuant to the said Scheme. The payment of ₹ 59.52 crore to the workmen was also taken note of together with the payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is clear from the following observations made in the judgment and order: 39. The subsequent events have, in a sense, over take the course of events. It is common ground that some part of the machinery has been redeployed from the Crown Mills to the Karad Unit (reference may be made in this connection to the 122nd Annual Report of the Company for the year 2002-03). The rest of the machinery and equipment, the Court has been informed, has been sold. There is in the facts of this case, a closure in fact and what remains is a shell of what was a textile mill. The BIFR and the AAIFR which are duly constituted adjudicatory bodies under the Sick Industrial Companies' (Special Provisions) Act, 1985 have sanctioned the scheme for rehabilitation which contemplates that upon the grant of closure permission, the Mill land at Mumbai would be sold to three special purpose vehicles and the funds that would be generated would be applied towards the repayment of the dues of the secured lenders viz., Banks and financial institutions, the dues of the workers and other statutory dues. 40. At this stage and particularly in the light of the fact that the draft scheme for rehabilitatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision under Section 25-O. In paragraphs 2, 3 and 4 of the said report, the Apex Court observed thus: 2. Allwyn Auto Ltd. was not a sick company taken to BIFR. The Company which had become sick was Hyderabad Allwyn Ltd. Under the Scheme framed by BIFR, the Auto Division of Allwyn was to be transferred to Allwyn Auto Ltd. To implement the Scheme Allwyn Auto Ltd. Was brought into existence in 1993. It was a State Government Undertaking. Under the Scheme a certain amount of fund was to be made available to this Company by the Government and the transferee-company namely, Voltas Ltd was to allow it to continue to occupy the premises available to it under a lease, for a period of 5 years from 1993. It was expected of Allwyn Auto that it will make some profit towards the end of five years and become a viable unit. However, the hopes turned out to be false because in spite of the Government pumping in about ₹ 13 crores, the Company went on incurring losses and the total loss by the year 1997 was about ₹ 12 crores. The lease was also expiring in 1998 and there was no possibility of getting it extended any further. The company and the Government found it difficult to get any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 crore as on 30th September, 2002; which was beyond sustainable capacity of manufacturing operations. (vi) The workers' dues with statutory dues as on 30th September, 2002 were to the tune of ₹ 111.82 crore and ₹ 4.97 crore respectively; (vii) The unsecured loans/ creditors as on 30th September, 2002 were aggregated to ₹ 45.4 crore. (viii) The appellant-Mill's net worth as on 30th March, 2001 was fully eroded due to accumulated losses; (ix) The appellant-Mill has been declared a sick company as per the provisions as per the provisions of Sick Industrial Companies (Special Provisions) Act, 1985; (x) The textile operations in the units at Mumbai had become unviable; (xi) The Bombay Textile Research Association, a Government recognised textile research association, had carried out a detailed techno-economic study and evolved a suitable business plan for textile operations keeping in view the constraints on availability of resources and recommended shifting and concentration of operation at Karad (xii) Out of total 2,206 workers of the subject Units, 1609 workers have accepted VRS, leaving behind 597 workers i.e. Members of the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is found as a matter of fact that the situation requiring closure has been brought about deliberately and malafide, poor management or mismanagement of the undertaking can hardly be regarded as a good ground for refusal of permission to close down an undertaking. 121. Apart from the above, so far as public interest is concerned, one cannot overlook heavy debts incurred by the appellant-Mill which made the company sick. The implementation of scheme resulting in closure of subject units will result in generating liquidity which can be used to satisfy debts of the Mill and dues of workers and residue can be used to pump money in the Karad Unit which, after expansion, is bound to generate more employment and give more production to contribute to the national wealth. 122. The implementation of B.I.F.R. Scheme will pull out the company from its sickness and make it a viable company. It is, no doubt, true that some of the workers, who were working in subject units at Mumbai, may face problem of unemployment; which they are already facing as on date; but at the same time Karad Unit on generation of more employment will provide more employment opportunities to the society at larg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of this judgment and after receipt of such unconditional acceptance, the appellant-Mill shall make payment within 30 days thereafter. Failure on the part of the workers to exercise their option to accept the proposal given by the Mill-Management, their right to claim benefits as offered shall stand withdrawn and then they shall only be entitled to claim closure compensation (only) in terms of Section 25-O of the I.D.Act. The affidavits filed and conditional proposal given in this behalf by the appellant-Mill is taken on record. Hence the following order: ORDER The impugned order dated 21st February, 2005 passed by the learned single Judge in Writ Petition Nos.1097/2004 and 1160/2004 is set aside and Appeal Nos.364/2005 and 458/2005 are allowed. Order of the Industrial Tribunal dated 21st February, 2004 is restored, subject to the condition that the appellant-Mill shall pay to the members of the respondent-Union or to the workers, who did not opt for VRS, by way of closure compensation (as offered by them) to be calculated in the following manner. (i) 36 days salary for each year of service based on last drawn salary as on 31st March, 2004, subtracting amount already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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