MANAGING DIRECTOR, KARNATAKA FOREST DEVELOPMENT CORPORATION LTD. versus WORKMEN OF KARNATAK.A PULPWOOD LTD. AND ORS,

Citation: [2007] 10 S.C.R. 1151 · Decided: 11-10-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

t-
MANAGING DIRECTOR, KARNATAKA FOREST 
DEVELOPMENT CORPORATION LTD. 
v. 
WORKMEN OF KARNA TAK.A PULPWOOD LTD. AND ORS, 
OCTOBER 11, 2007 
[S.B. SINHA AND H.S. BEDI, JJ.) 
Industrial Di::iputes Act, 1947: 
s.25-0-Subsidiary of Appellant-corporation running at loss-
Order of State Government for its closure-Writ petition by workmen 
of subsidiary-Writ Court directed their absorption in Appellant-
corporation-Correctness of-Held: Not correct-Workmen were only 
entitled to receive compensation. 
Respondents worked in a joint sector company- a subsidiary 
of Appellant-corporation. The joint sector company was running at 
A 
B 
c 
D 
a loss. State Government accorded permission for closure of the 
company under Section 25-0 of the Industrial Disputes Act, 1947. · 
Respondents filed writ petition seeking absorption in Appellant- E 
corporation. The prayer was granted by the High Court. Hence the 
present appeals. 
Allowing the appeals, the Court 
HELD: 1.1.The relationship between the company and the F -
respondents being employer and workmen is governed by the 
provisions of the Industrial Disputes Act, 1947. The Management 
of an industrial undertaking is entitled to take recourse to closure 
of its undertaking in terms of the provisions of the said Act itself. 
Section 25-0 of the said Act lays down the procedure for closing G 
down an undertaking. Once the permission had been given by the 
State Government, all consequences would ensue. In terms of sub-
section (8) of Section 25-0, all the workmen would be entitled to 
receive compensation which shall be equivalent to 15 days' average 
1151 
H 
1152 
SUPREME COURT REPORTS 
[2007] 10 S.C.R. 
A pay for every completed year of continuous service or any part 
thereof in excess of six months. Indisputably in the event an 
undertaking is closed down, the only right which accrues in favour 
of the workmen is to obtain compensation as provided for. 
[Para 16] [1160-G-H; 1161-A-C] 
B 
1.2. Before the Division Bench of the High Court, the order of 
the State Governm~nt directing prior permission for effecting closure 
of the industrial undertaking has not been questioned. In fact, even 
the Single Judge had made observations to the effect that the closure 
may be effected. Having regard to the fact that rights of the workmen 
C flow from the provisions of the Industrial Disputes Act, a writ court 
could not have issued any other direction. [Para 17] [1161-D-E] 
1.3. The right of the workmen, therefore, was only to receive 
the amount of compensation. If the State is not in a position to take 
D upon itself the financial burden of the appellant-Corporation for 
appointing the concerned workmen, direction to continue their 
services coul~ not be iss~ed. If the workmen, therefore, think that 
any other or further right has accrued tO them iii terms of the 
purported assurance given by the State, it may take recourse thereto 
E 
before an.appr~priate forum but a writ petitiqn was not maintainable. 
· 
[Para 18] [1162-A-C] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4800 of 
2007. 
p 
From the Judgment and final Order dated 22.06.2005 of the High 
Comi of Kamataka at Bangalore in Writ Appeal No: 2216/2005. 
WITR 
C.A. No. 4802 of 2007. 
G 
Kailash Vasudev, GirishAnanthanmrthy, Vaijayanthi Girishand G.S. 
Kaimur (for P.P. Singh) for the Appellant. 
Naveen R. Nath, Sanjay R. Hegde, Amit Kr. Chawla and Raine~h 
Jadhav for the Respondents. 
· 
. 
H 
The Judgment of the Court was delivered by 
,( 
MANAG.DIR.,KARNATAKAFORESTDEVE.CORPN.LTD. 1153 
v.WORKMENOFKARNATAKAPULPWOODLTD. [SINHA,J.] 
S.H. SINHA, J. 1. Leave granted. 
2. These appeals are directed against judgments and orders dated 
22.6.20005 and 19.07.2006 passed by a Division Bench of the 
Karnataka High Court whereby and whereunder the judgment and order 
A 
· dated 7.2.2005 passed by a learned Single Judge of the said High Court 
dismissing writ Petition Nos. 1651-1685 of 2005 filed by the respondents B 
herein claiming their absorption in the appellant-Corporation. 
3. Indisputably the private-respondents herein were the workmen 
of Karnataka Pulpwood Ltd. (the company). It was a Government 
company. It was running at a loss. Karnataka Pulpwood Ltd. is a joint C 
sector company ofKarntaka Forest Development Corporation Ltd. and 
Karnataka Harihar Polyfibres Ltd., the share capital was fixed in the ratio 
of 51:49. 
4. The Government stood as a guarantor in respect of the loans to 
be raised by the joint sector company from
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