S.G. CHEMICAL AND DYES TRADING EMPLOYEES' UNION versus S.G. CHEMICALS AND DYES TRADING LIMITED AND ANOTHER

Citation: [1986] 2 S.C.R. 126 · Decided: 03-04-1986 · Supreme Court of India · Bench: O. CHINNAPPA REDDY · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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B 
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D 
126 
S.G. CHEMICAL AND DYES TRADitlG EMPLOYEES' UNION 
v. 
S.G. omuCALS AND DYES TRADilC LIMITED AND ANOTHER 
APRIL 3, 1986 
(0. CHINNAPPA REDDY AND D.P. MADON, JJ.] 
Industrial Disputes Act, .1947 : Section 25--0 : 
"An undertaking of an industrial establishment"-
Inter-
pretation of. 
Closure of such an "undertaking" - When illegal. 
Maharashtra Recognition of Trade Unions and Prevention 
of Unfair Labour Practices Act, 1971 : Section 28 and Item 9, 
Schedule IV : Settlement - Termination of Services of Workmen 
in contravention thereof - Whether unlawful. 
Constitution of India, Article 136 - Resort to - \;!tether 
permissible where equally efficacious remedy available. 
Sub-s'. (1) of s. 25--0 of the Industrial Disputes Act, 
E 
1947 ·obligates an e.,Ployer, who intends to close down an 
undertaking of an industrial establishment, to which Chapter 
V-B applies, to submit an application for prior permission at 
', . least ninety days before the date on which the intended 
·'closure is to become effective, to the appropriate Government. 
Sub.:.S •. (6) of s. 25--0 provides that where no application under T 
. F 
sub-s. (1) is made within, the specified period or where 
permission has been refused, the . closure of the undertaking 
shall be illegal from the date rof closure, and the workm?n 
shall be entitled to all the benefits under any law for the 
time being in force, as if the undertaking had not been closed 
down. Section 25-K specifies the industrial establishments to 
G 
which Chapter V-B. applies as those in which not less than one * 
hundred workm?n were employed on an average per working day 
for the preceding twelve months. 
H 
Item 9 of Schedule IV to the Maharashtra Recognition of 
Trade Unions and Prevention of Unfair Labour Practices Act, 
S,G, CHEMICAL EMP. UNION v. S.G, CHEMICALS 
127 
~ 1971 lists failure to implement an award, settlement or 
agreement as one of the general unfair labour practices on the 
part of the employers. 
The respondent-company, a wholly owned subsidiary, was 
operating in Bombay in three Divisions, at three different 
places, the Pharmaceutical Division at Worli having 110 
~employees, the Laboratory and Dyes Division at Trombay having 
60 employees, and the Marketing and Sales Division at its 
Registered Office at Churchgate having 90 employees. The 
.., 
holding company had a chemicals and dyes factory in the State 
of Gujarat which was sold out in 1984. Since the buyer company 
.J. proposed to handle the sales through their own distribution 
channels and the services of the staff working at the 
~Registered Office 
were 
no 
longer 
required, 
the 
respondent-company by its notice dated July 16, 1984 intimated 
the Government of Maharashtra that in accordance with the 
provisions of 
sub-s. (1) of s. 25-FFA of the Industrial 
Disputes Act (which applies to undertakings employing fifty or 
more workmen) it intended to close down the undertaking/ 
establishment/office st its Registered Office. In the said 
notice, the number of workmen on the rolls was stated to be 
· ,;. ninety. The company thereafter closed down the said Division 
terminating the services of 84 employees, while retaining the 
remaining six to attend to the work upon such closure. 
-
The Employees' Union thereupon filed a complaint before 
the Industrial Court under s. 28 of the Maharashtra Act, resd 
·,(with Item 9 of Schedule IV thereto, contending that the 
~ 
closure of the Marketing and Sales Division was contrary to 
--\ s. 25--0 of the Industrial Disputes Act, and, therefore, the 
'--
. 
employees continued to be in service, notwithstanding the 
notice of closure, and were entitled to full wages and 
allowances, in terms of the settlement dated February 1, 1979 
entered into with the company, and as these were not paid the 
company had c011111itted an unfair labour practice under Item 9 
of Schedule IV to the Maharashtra Act. Their case was that 
..-. 
there was 
functional integrality amongst all the three 
--{ Divisions of the respondent-company, and as the aggregate 
number of employees in those Divisions exceeded one hundred 
the company was bound tc apply to the appropriate Government 
for permission under s. 25--0(1). The failure of the company to 
do so had rendered the closure illegal under s. 25--0(6). 
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B 
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G 
H 
A 
B 
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E 
128 
SUPREME COURT REPORTS 
[1986) 2 s.c.R. 
The Industrial Court dismissed the complaint holding (i) ~ 
that s. 25--0 of the Industrial 

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