Holding

Each construction project undertaken by a government construction company constitutes a distinct establishment; thus the Hyderabad unit was not part of a single undertaking and the retrenched workers were not entitled to absorption in other units.

Summary

Hindustan Steel Works Construction Ltd., a wholly government‑owned construction company, completed a project at Hyderabad employing 230 workmen. After the project ended, 130 workers were transferred to its Visakhapatnam unit while 100 were retrenched. The Industrial Tribunal held that the Hyderabad unit was part of a single undertaking and ordered reinstatement with back wages. The Andhra Pradesh High Court disagreed, treating Hyderabad as a separate establishment and quashing the award except for three workers transferred from Bokaro. On appeal, the Supreme Court examined whether the Hyderabad works constituted a distinct establishment and whether functional integrality applied. It held that each construction project is a separate establishment; therefore the workers had no right to demand absorption in other units. Consequently, the Court allowed the appeals, restoring the Tribunal’s award for all but the three workers, and dismissed the management’s appeal.

Issues considered

Whether the construction work at Hyderabad had come to an end.
Whether the Hyderabad unit is a separate establishment or part of a single establishment of Hindustan Steel Works Construction Ltd.
Whether retrenchment of the 100 workmen was lawful under Section 25‑F and 25‑G of the Industrial Disputes Act.
Whether the Industrial Tribunal’s award of reinstatement should be set aside.

Legislation cited

Constitution of Indias. Article 136
Industrial Disputes Act, 1947s. 10, s. 25-F, s. 25-G, s. 2-F, s. 2SFFF(2)

Subjects

Industrial disputeRetrenchmentEstablishmentFunctional integralityAbsorption of workmenSection 25-GConstruction undertakingGovernment companySeniorities

Judgment

A HINDUSTAN STEEL WORKS CONSTRUCTION LTD. ETC.
v.
HINDUSTAN STEEL WORKS CONSTRUCTION LTD.
EMPLOYEES UNION, HYDERABAD AND ANR. ETC.

FEBRUARY 10, 1995
B
[B.P. JEEVAN REDDY, N.P. SINGH AND S.C. SEN, JJ.).

Labour Law-Industrial Disputes Act, 1947-Section 2-F, 2SFFF(2)
and 25--G---Undertaking-Construction work of non-pennanent nature 'at dif-
C ferent sites by Government Company-Whether part of an establishment.'

Wordf & Phrase~"Functional Integrity''-Meaning of

Labour Law-Industrial Disputes Act, 1947-Retrenchmen~elief
7
I

Reinstatement or compensation.
D Constitution of India-Special Leave Petition-Art. 136-Supreme
. Court substituting its opinion for that of TribunaH'ower of

The appellant, Hindustan Steel Works Construction Limited, a com·
pany wholly owned and controlled by the Government of India, had taken
E up construction of industrial and engineering plants both within the
country and abroad. For its project at Hyderabad the company had
engaged 230 workmen. Upon conclusion of the project 100 workers were
retrenched and 130 workers were transferred to Vishakhapatnam where
another project had been undertaken. The retrenched workers appealed
the High Court which dismissed the same due to the availability of alter·
F native remedy of reference to the Industrial Tribunal. Re-instatement of
the 100 workers with full back wages and other consequential benefits was
ordered by the Tribunal upon reference.

The appellant question the award in a writ petition. The High Court
G holding Hyderabad projeC:t to be a separate establishment quashed the
award except with respect to three workers who had been transferred from
a project at Bokaro.

Two appeals were filed, one by the appellant against reten~on of the
three workers and the other by the respondent against retrenchment of the
H 97 workers. The Division Bench restored the award of the Industrial
10
HINDUSTAN STEEL WORKS LTD. v. EMPLOYEES UNION 11

Tri_bunal in full holding that there was no closure of the appellant's A
establishment, there was functional integrality between the workmen at the
Vizag unit and the unit at Hyderabad, the two units were not separate
establishments but components of one single establishment and as such it
was incumbent upon the appellant to absorb the surplus workers of
Hyderabad at Vishakhapatnam.
B
The questions before this Court were : (1) Whether the work at
Hyderabad had come to an end? (2) Whether the units at Hyderabad were
independent establishments or were they parts of the larger establishment
of the appellant?

Allowing the appeals, this Court
c
- --c
HELD : 1.1. All the test evolved in several decisions of the Supreme
Court to answer the second question need not be satisfied in every case.
One has to look to the nature and character of the undertaking while
deciding the question. The tests evolved were to serve as guidelines. [18-G] D
1.2. In the instant case, the appellant was a government company
wholly owned and controlled by the Government of India. Its job was to
undertake construction works both in India and abroad. As soon as -
construction work was over, the establishment came to an end at that
place. Each of the works or construction projects undertaken by the
E
appellant represented distinct establishments and did not constitute units
of a single establishment. The fact that the Management reserved to itself
the liberty of transferring employees did not mean that all the units of the
appellant constituted one single establishment. Mere unity of ownership,
management and control were not of much significance in such cases. The F
conclusion was inevitable that the units at Hyderabad were distinct estab-
lishments. Once that was so, workmen of the said units had no right to
, demand absorption in other units. [18-H, 19-A, C, E-G]
-..I....
Management of Hindus!an Steel v. Workmen, [1973) 3 SCR 303;
Workmen of the Straw Board Manufacturing Co. Ltd. v. M/s. Straw Board
G
_,,.,
Manufacturing Co. Ltd., [1974) 3 SCR 703 and lsha Steel Treatment, Bom-
bay v.Association of Engineering Workers, Bombay and Ors., [1987) 2 SCR
414, relied on.

2. In the tagged appeal, as the Corporation was found groani!}g under H
/ ;/
;---

12 SUPREME COURT REPORTS [1995) 2 S.C.R.

A the weight of surplus and excessive man power, the Industrial Tribunal was
I~
helientitled to take note of the fact and mould the relief to suit the justice
of the case. In exercise of power under Article 136 of the Constitution the
Supreme Court did not substitute its own opinion for that of the Tribunal.
It found no reason to interfere unless the Tribunal's reasons were factually
B incorrect or irrelevant or impermissible in law. [23·B~CJ

Workmen of National Radio and Electronics Co. v. Presiding Officer,
Labour Court, WP No. 6334 of 1974; Industrial Chemicals Ltd. v. Labour
Court, Madras, '(1977) II LLJ 137 and Workmen of Coimbatore Pioneer 'B'
Mills Ltd. v. Labour Court and Ors., (1980) 1 LW 503, referred to.
c CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4079-80
OF 1985 etc. etc.

From the Judgment and Order dated 18.6.85 of the Andhra Pi:adesh.
High Court in WA. No. 1 & 1529 of 1984.
D
Tapash Ray, Jitendra Sharma, Narayan B. Shetye, P.P. Singh, Ms.
Gunwant Dara, P. Gaur, K.S; Subrahmanya, K.R. Nagaraja, B. Rajeshwar
Rao, Mrs. Chandan Ramamurthi, Vimal Dave, W.C. Chopra, Ambrish
Kumar and R. Vaigai (N.P.) for the appearing parties.

E The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. Civil Appeal Nos. 4079-80 of 1985:

These two appeals are preferred against the judgment of a Division
-Bench of the Andhra Pradesh High Court allowing Writ Appeal No. 1529
F of 1984 filed by the respondent-Union and dismissing Writ Appeal No.
1528 of 1984 preferred by the appellant-Management. The matter &rises
under the Industrial Di_sputes Act.

The appellant-Hindustan Steel Works Construction Limited is a
company wholly owned and controlled by the Government of India. It is
G engaged in the construction of industrial and engineering plants both within
the countrf and abroad Among other works, it had undertaken the con-
struction of a steel plant at Bokaro in the State of Bihar, construction of a
super-alloy project and a nuclear fuel complex at Hyderabad. It-has also
undertaken some works at Visakhapatnam. For its Hyderabad projects, it
H engaged about 230 workmen. These works were completed. by January,
HINDUSTAN STEEL WORKS LTD. v. EMPLOYEES UNION (JEEVAN REDDY J.[

l980 except for some very minor works. -· A
Apprehending that the workers may be retrenched on the completion
of the works at Hyderabad, the respondent-Union had a meeting with the
Management of the appellant-Corporation on September 5, 1979. The
minutes of the meeting read as follows:
B
"The Union mentioned that there are 230 workers in Hyderabad
Unit of HSCL. Even though the work is coming to an end at
Hyderabad, they stated that since the company is getting work in
Vizag, it would be possible for the Management to transfer all the
230 workers from Hyderabad to Vizag, including those belonging C
to non-transferable categories. The Union felt that there should
not be any difficulty for the Management to agree to this beacuse
both Hyderabad and Vizag are in the same State and the number
-( of workers involved is not much.

It was pointed out from the Management's side that to the extent D
of requirement that will arise immediately at Vizag in the trans-
ferable categories, transfer from Hyderabad will be done. How-
ever, in case of non-transferable categories, they may have to be
retrenched at Hyderabad and re-employed at Vizag if require-
ments arise there later.
E
The management offered that from the non-transfereable
categories, if anyone is suitable for skilled job, selection could be
made out of them for the immediate requirement of skilled
categories at Vizag in place of recruiting from outside."
F
Accordingly, 130 workers were transferred to Visakhapatnam but the
remaining 100 could not be absorbed at any other place. It is not clear from
the record - nor does it appear to have been gone into at any stage -
whether these 100 workers belong to transferable categories or to non-
transferable categories.
G
On March 28, 1981, the appellant issued a notice of retrenchment
stating that inasmuch as the construction works undertaken at Hyderabad
have come to an end, the workmen as per the annexure to the notice have
become surplus and are being retrenched. On the same day, individual
notices for retrenchmen~ were issued in accordance with Section 25-F of H
14 SUPREME COURT REPORTS (1995] 2 S.C.R.

A the Act making available the retrenchment compensation and one month's
pay in lieu of notice.
,....._
Four writ petitions were filed in the High Court of Andhra Pradesh
challenging the said retrenchment. They were dismissed in view of the
alternative remedy of reference provided by the statute. By G.O.M.S. No.
· B 276 dated April 27, 1982, the Government of Andhra Pradesh referred the
following two questions for the adjudication of the Industrial Tribunal,
Hyderabad:

"(1) Whether the demand of Hindustan Steel Works Construction
Limited Employees Union, Hyderabad, for the absorption of the
c hundred workmen, retrenched on 28.3.1981, at Visakhapatnam and
other works in the country is justified? If so, to what relief, the
workmen are entitled?

{2) Whether the action of the management in transferring and
D continuing junior workmen in other works, while retrenching
senior workers recruited for the construction works at Hyderabad,
is justified? If not, to what relief, the workmen are entitled? -

Both the parties led evidence before the Tribunal, after considering ·
w~ch the Tribunal recorded the following findings:
E
(1) that the appellant is a single undertaking. The several units of the
appellant really constitute parts of the same undertaking;

(2) retrenchment of the workmen, even before the completion of
F works at Hyderabad is unlawful. They should be absorbed in other units;
(3) it also appears that juniors to the retrenched workers were being
continued. It is a violation of Section 25-G.

On the above finding, the Tribunal directed reinstatement of the said
G workers (the 100 workers who were before the Tribunal) with full back
wages, continuity of service and other consequential benefits.

The appellant questioned the award by way of a writ petition in the
Andhra Pradesh High Court. It was allowed by a learned Single Judge who
found that the establishment at Hyderabad is a separate establishment. The
H learned Judge held that the fact that ~ome of the workers were transferred
-"\

HINDUSTAN STEEL WORKS LTD. v. EMPLOYEES UNION(JEEVAN REDDY J.) 15

from Bokaro to Hyderabad or from Hyderabad to Visakhapatnam does A
not militate against the Hyderabad unit being a separate undertaking. The
Management's right to transfer an employee is distinct from the right of
the worker to claim transfer -0r absorption in another unit, held the learned
Judge. He held further that out ofthe 100 employees, three employees who
were transferred from Bakaro stand on a different footing while the
remaining ninety seven who were recruited at Hyderabad cannot claim
B
parity with the aforesaid three workers. The writ petition was accordingly
allowed and the award of the Industrial Tribunal quashed except to the
extent of the aforesaid three workers. Two writ appeals were preferred
~\
against the said judgment, one by the appellant insofar as it upheld the
award with respect to three workers aforesaid and the other by the Union c
insofar as the judgment set aside the award with respect to the remaining
ninety seven workmen. In view of the contentions urged before it, the
Division Bench held that three question arose for consideration. The three
\ questions, as set out in the impugned judgment, are :

"(1) Whether any Industrial dispute under Section 10 of the In- D
dustrial Disputes Act can be raised out of closure of the Estab-
lishment? If so, ~hether the reference is bad?

(2) When once it is held that there is a closure of the establishment
whether the question of absorption does arise?
E
(3) Whether the establishment at Hyderabad is a separate one? If
so, whether the retrenchment on closure of such establishment is
proper or not?

· The Division Bench found that (1) "there is no closure of company's F
establishment and, therefore, the management cannot successfully assail
the validity of reference on the ground that it does not raise industrial
dispute". The Bench observed, "nowhere the word closure has been used
denoting thereby ~hat the establishment at Hyderabad is closed. The word

""''"'
- "surplus" used in the notices is the very anti-thesis to closure". The Bench
also held, on the basis of Exs. D-23 to 27 and W-57, that works at G
Hyderabad were not over by the date of notices of retrenchment.

(2) In view of the finding on the first question, the second question
does not arise and that "it is incumbent on the part of the oompany to
absorb workmen sought to be retrenched"; and H
16 SUPREME COURT REPORTS [1995] 2 S.C.R.

A (3) "there is functional integrality between the workmen at Vizag
unit and the units at Hyderabad. The service conditions of the workmen in
all the units are uniform. There is unity of employment, control, administra-
tion and ownership and so there is functional integrality, which makes the
Company a single undertaking. If· that be so, the conclusion which is
B irresistible, is that the units at Hyderabad are not separate establishments,
but they are all components of one single establishment. If that be so, the
inevitable conclusion is that the proVisions enacted in section 25-G of the
Act which ordains that, whenever there is a retrenchment in any estab-
lishment, the rule of seniority must prevail and govern the situation. The
company in our undoubted view has been ~aintaining zonal seniority list
C and zone being the base for the inter transfers and promotions of the
workmen working in the Southern zone, brought in from out of the said
zone, they will have to yield by way of preference to the workmen belonging
to the southern zone."

D Accordingly, the Division J3ench set aside the judgment, of the
learned Single Judge and restored the award of the Industrial Tribunal in
full. It is, however, necessary to notice an important distinction between
the finding of the Tribunal and the finding of the Division Bench. While
the Tribunal held that since all the units of the appellant constitute one
single establishment, the retrenched workmen are entitled to be absorbed
E at Visakhapatnam or at other places, as the case may be, the Division
Bench held that since seniority is maintained zone-wise, these retrenched
workmen are entitled to be absorbed at Visakhapatnam in preference to
the workmen brought from outside the southern zone. It is true that the
Tribunal too refers to zonal seniority but it does not restrict the right of
F absorption to th~ southern zone.

The first question that must be answered is, whether the works at
'Hyderabad had come to an end? We have been taken through the relevant
material. It clearly discloses that both the works had come to a close; only
certain very minor works remained to be done which were assigned to
G private contractors'. Indeed, both the workmen and Management were
acting on the assumption that the works had come to an end. The retrench-
ment notices say so; the questions referred to the Tribunal are based upon
the said assumption. If the works at Hyderabad were not completed,
question. of absorption of these workmen elsewhere would. not have arisen.
H We, therefore, agree with the Management-appellant that the works at
HINDUSTAN STEEL WORKS LTD. v. EMPLOYEES UNION (JEEVAN REDDY 1.) 17
Hyderabad had indeed come to a close.. A
The next and important question in this case is whether the units at
Hyderabad are independent establishments or are they parts of the larger
establishment of the appellant. This question cannot be treated as a pure
question of fact. The Induustrial Tribunal has taken one view which has
been set aside by the learned Single Judge, whose view in turn has been B
upset by the Division Bench. It is in these circumstances that we are obliged
to go into the said question. The tests relevant in this behalf have been laid
down by this Court in a number of decisions. Though it is not necessary to
refer to all of them, a brief reference to a few of them would be in order.

In Management Hindustan Steel v. Workmen, [1973) 3 S.C.R. 303, this
c
Court made the following observations in the context of Section 25FFF
(sub-section (2) whereof contains a special provision applicable to under-
takings set up for construction of buildings and other construction works):

"The word undertaking as used in s. 25FFF seems to us to have D
been used in its ordinary sense connoting thereby any work,
enterprise, project or business undertaking. It is not intended to
cover the entire industry or business of the employer as was
suggested on behalf of the respondent. Even closure or stoppage
of a part of the business or activities· of the employ¢r would seem E
in law to be covered by this sub-section. The question has indeed
to be. decided on the facts of each case. In the present case the
Ranchi Housing Project was clearly a distinct venture undertaken
by the appellant and it had a distinct beginning and an end.
Separate office was apparently set up for this venture and on the
completion of the project or enterprise that undertaking was closed F
down. The Tribunal has actually so found. Its conclusion has not
been shown to be wrong and we have no hesitation in agre·eing
with its view."

In the Workmen of the Straw Board Manufacturing Co. Ltd. v. Mis
Straw-Board Manufacturing Company Ltd., [1974) 3 S.C.ll. 703, this Court G
held:

''The most important aspect in this particular case relating to
closure, in our opinion, is whether one unit lias such componental
relation that closing of one must lead to the closing of the other H
18 SUPREME COURT REPORTS [1995] 2 S.C.R.

A or the·one cannot reasonably exist without the other. Functional
integrality will assume an added significance in a case of closure
of a branch or unit. That the R. Mill is capable of functioning in
isolation is of very mate.rial import ·in the case of closure. There is
bound to be a shift of emphasis in application of various tests from
one case to another. In other words, whether independent
B functioning of the R. Mill can at all be said to be affected by the
closing of the S. Mill ........... The fact of the unity of ownership,
supervision and control and some other common features; which
__ we h_ay_e _noticed above, do not justify a cont~ary conclusion on this
aspect in the present case. There is considerable force in the
c submission of Mr. Chitaley that the R. Mill is a different line of
business and the closure of the S. Mill has nothing to do with the
functioning, of the R. Mill. The matter may be absolutely different
when in an otherwise going concern or a functioning unit some
workmen's services are terminated as being re_dundant or surplus
to requirements. That most of the conditions of service of the two
D Mills were substantially identical can be easily explained by the
fact that, being owned by the same employer and the two units
being situated in close proximity, it will not be in the interest of
the management and peace and well being of the Company to treat
the employees differently creating heart burning the discrimina-
E· tion. For the same reason, there is no particular significance in this
case even in the application of the standing orders of the Company
to the employees of the R. Mill which, because of the non-requisite
number of employees employed in the latter, is not even required
under the law to have separate standing order. It is, in our opinion,
a clear case of closure of an independent unit of a company and
F
not a closure of a part of an establishment."

This decision was followed in Isha Steel Treatment, Bombay v. As-
sociation of Engi,neering Workers, Bombay & Anr., (1987) 2 S.C.R. 414.

G It has been held repeatedly that all the tests evolved in the several
decisions of this Court need not all be satisfied in every case. One has also
to look to the nature and character of the undertaking while deciding the
question. The tests evolved are merely to f,erve as guidelines. Now, let us
look at the appellant-Company. It is a government company wholly owned
H and controlled by the Government of India. Its job is to undertake ·COB·
HINDUSfAN STEEL WORKS LTD. v. EMPLOYEES UNION (JEEVAN REDDY 1.1 19
struction works both in India and abroad. The construction works are not A
permanent works in the sense that as soon as the construction work is over,
the establishment comes to an end at that place. In such a case, functional
integrality assumes significance. The nature of the construction work may
also differ from work to work or place to place, as the case may be. It is
not even suggested by the respondent-Union that there is any functional
B
integrality between the several units or several construction works under-
taken by the appellant. It is not suggested that closure of one leads to the
closure of others. There is no proximity between the several units/works
undertaken by the appellant; they are spread all over India, indeed all over
the world. It would thus appear that each of the works or construction
projects undertaken by the appellant represent distinct establishments and C
did not constitute units of a single establishment. The Division Bench,
however, was influenced by the fact that (i) when the workers are trans-
ferred from one unit to other unit they carried their seniority with them;
( (ii) the orders of appointment say that the employees are liable to be
transferred to one place to other; that indeed, forty three out of hundred · D
workers concerned herein were brought to Hyderabad on transfer from
other places and (iii) initially, Hyderabad and Visakhapatnam were under
the same administrative control and that when they were separated the
workers were not asked to exercise their option to remain in one or the
other unit. In our opinion, however, the fact that the Management reserved
to itself the liberty of transferring the employees from one place to another E
did not mean that all the units of the appellant constituted one single
establishment. In the case of a construction company like the appellant
which undertakes construction works wherever awarded, does that work
and winds up its establishment there and particularly where a number of
local persons have to be and are appointed for the purpose of a particular
F
work, mere unity of ownership, management and control are not of much
significance. Having regard to the facts and circumstances of this case and
the material on record, the conclusion is inevitable that the units at
Hyderabad were distinct establishments. Once this is so, workmen of the
said unit had no right to demand absorption in other units on the
Hyderabad units completing their job. G

Counsel for the parties raised certain questions of law before us with
reference to certain provisions in Chapters V-A and V-B of the Act, but
in the particular facts and circumstances of this case, we are not mclined
to allow ~e parties t.o raise contentions not urged before the High Court. H
20 SUPREME COURT REPORTS [1995) 2 s.c.R.

A We have confined our attention only to those issues which ~ere urged
before and dealt by the High Court.

We are told that by \virtue of the Tribunal's award, all the hundred
workers are being paid wages over the last more than ten years even though
there is no work for them to do. The situation is undoubtedly one which
B calls for rectification.

For the above reasons, the appeals are allowed except with respect
to three workers concerned in Writ Appeal No. 1528 of 1984 on the file of
the Higli Court of Andhra Pradesh. No costs.
c CWIL APPEAL NOS. 789-90 AND 791-92 OF 1987:

These appeals ate preferred directly against an award of the Addi-
tional Industrial Tribunal, Bangalore in A.l.D. No. 48 of 1991 and A.l.D.
No. 25 of 1983. The special leave petitions were evidently entertained and
D leave granted in view of the pendency of C.A. Nos. 4079-80 of 1985 and
C.A. No. 4115 of 1984, as would be evident from this court's order dated
March 23, 1987. The first two appeals, C.A. Nos. 789-90 of 1987 are
preferred by the employees while the other two appeals, C.A. Nos. 791-92
of 1987 are preferred by the Management. We shall refer to the workmen
E as the respondents and the Management as the appellant in these appeals.
In the year 1977, the respondents-workmen were working at Bokaro
Steel City unit of the appellant-corporation. In view of the exigencies of
the work at Bokaro, about four hundred workers including 104 respondents
were proposed to be transferred to Kudremukh unit in Karnataka and
F Bhilai unit in Madhya Pradesh. The workers proposed to be transferred
were apprehensive that after their transfer to Kudremukh and Bhilai, they
may be retrenched. This apprehension was allayed by a circular issued by
the Management on November 9, 1977 saying that the "rumours that the
workets would be retrenched on transfer to Bhilai and Kudremukh...... .is
G baseless".

In the year 1980-81, about two hundred workers including the
respondents herein were transferred to Kudremukh unit. On March 27,
1981, 175 workers including the respondents were retrenched on the
ground that they were surplus. On a dispute being raised by the appellants,
..
H .the Government of Karnataka referred the following question to the Ad-
HINDUS!'AN STEEL WORKS LID. v. EMPLOYEES UNION (JEEVAN REDDY J.) 21
ditional Industrial Tribunal, Bangalore for adjudication : "Is the Manage- A
ment of Hindustan Steel Works Construction Limited, Kudremukh Mal-
leshwara, Chickmaglur - District justified in retrenching 101 workmen with
effect from 27.3.1981 ?"

Pending disposal of the said dispute, the respondents applied for B
interim relief. The Tribunal granted the same at the rate of sixty per cent
of their wages with effect from November 1, 1982. That order was chal-
lenged by the Management before the High Court of Karnata:ka, A learned
Single Judge, by his order dated April 22, 1983, modified the order of the
Tribunal and directed that the Management shall pay interim relief at the
rate of one-third of their wages for a period of three months from the C
month of April, 1983. The order of the learned Single Judge was left
undisturbed by the Division Bench.

While the dispute was pending before the Tribuna:l at Banga:lore, the
Industria:l Tribuna:l, Hyderabad made its award in l.D. No. 21 of 1982 D
(subject matter of Civil Appea:l Nos. 4079-80 of 1985). The allowing of a
writ petition filed by the Management against the award of the Hyderabad
Tribuna:l and the setting aside of the judgment of the learned Single Judge
by the Division Bench of the Andhra Pradesh High Court (referred to in
our order in ·civil Appea:l Nos. 4079-80 of 1985) all took place during the
pendency of the present dispute before the Banga:lore Tribuna:l. The E
workmen filed the copies of the judgment of the Division Bench of the
Andhra Pradesh High Court before the Tnbuna:l and asked for a similar
relief. The workmen a:lso brought to the notice of the Tribuna:l the interim
orders passed by this court in the aforesaid appea:ls. By its award dated
July 31, 1986, the Tribuna:l held that though the retrenchment of 104 p
workmen by the Management was unjustified, the workmen are not entitled
to an order of reinstatement in view of the facts and circumstances of the
case but only to compensation equal to three months' wages in addition to
the retrenchment compensation already paid to them. Paras 35 and 36 of
the Tribunal's award, relevant on this apect, read thus:.
G
"The last point for consideration would be regarding the nature of
the relief that should be granted to the workmen. Normally, if
retrenchment is held as invalid, they are entitled to reinstatement
with consequential benefits. But, when we analjrse the facts of these
references, it will be clear that the management will be placed in H_
22 SUPREME COURT REPORTS [1995) 2 S.C.R.

A a predicament and great harship will be caused if the rule of
reinstatement is adhered to. The management has to work up the
seniority of all these workmen and their fitment in an appropriate
scale at this distance of time. If the different units are facing the
burden of excess manpower the reinstantement of these workmen
will be an additional burden which should not be normally im-
B posed. Apart from that, it would cause a considerable confusion
and unret amongst all the concerned defeating the very object of
Section 25G of the Industrial Disputes Act. In similar circumstan-
ces in the Workmen of National Radio and Electronics Company
v. Presiding Officer, Labour Court, Writ Petition No. 6334 of 1974,
c the Karnataka High Court has awarded compensation to the
workmen as redressal of their grievances. In the Industrial Chemi-
cals Ltd. v. Labour Court, Madras, (1977) II LLJ- 137, it has been
held as follows :-

"It is settled position of law that once it is found that
D retrenchment is unjustified and improper it is for the Labour
Court to consider what relief the retrenched worker is en- .
titled to. It is open to the Labour Court, in exercise of its
jurisdiction, to take note note of the circumstances, in the
particular case and decide not to grant the relief of reinstate-
E ment, but grant instead of relief by way of compensation to
the workmen."

It follows therefore that, whenever the retrenchment is held to be
unreasonable and improper and if their reinstatement works great
hardship on the management, then the Court may grant compen-
F
sation to them. Hence, the wo:r:kers in these references are entitled
to Compensation.

36. For the reaons foregoing, in my opinion, the management has
not justified the reasonableness or proprietory of the retrenchment
G of these workmen. The retrenched workmen should be awarded a
compensation of three months wages each in addition to the
retrenchment compensation which is already paid to them."

It is this award which is questioned by the workmen 'as well as the
H management in these appeals.
HINDUSfANSTEEL WORKS LTD. v. EMPLOYEES UNION (JEEVAN REDDY J.) 23

The appellants have not been able to satisfy us that the several
reasons given by the Tribunal for not directing reinstatement of the appel-
lants-workmen are incorrect as a fact or that they are irrelevant or imper-
missible in law. That the respondent-Corporation is groaning under the
weight of surplus and excessive man-power is not denied as a fact; indeed,
it is an indeniable fact. The Industrial Tribunal is entitled to take note of B
the said fact and to mould the relief to suit the justice of the case: In
exercise of this court's power under Article 136 of the Constitution, it is
not op~n to us to substitute our opinion for that of the Industrial Tribunal
unless we find that the reasons given by it in the paras aforesaid are eihter
incorrect factually or irrelevant or impermissible in law. Since we are not
able to say so, these appeals are dismissed. The appeals filed by the C
Management also fail and are dismissed. No costs.

CWIL APPEAL NO. 4115 OF 1984:

This appeal by workmen is preferred against the award of the Labour
Court, Mysore dated November 11, 1982. There are as many as 239 D
appellants in this appeal. They were recruited locally by the respondent-
corporation at Kudremukh and for the putpose of Kudremukh unit. They
were retrenched on September 24, 1980. On an industrial dispute being
raised by the appellants, the Government of Karnataka referred the follow-
ing two questions to the Labour Court : "{l) Whether 239 retrenched E
workmen as stated in the Annexure are justified in demanding reinstate-
ment with back wages and continuity of service? {2) If not, to what other
relief the above said workmen are entitled to?"

On a consideration of the material placed before it, the Tribunal held
that the retrenchment was not legal but having regard to the facts and F
circumstances of the case, it did not think it appropriate to order reinstate-
ment and other incidental benefits. In lieu_ thereof, it granted compensation
equal to the wages of two months in addition to wages of one month
already paid exclusive of the retrenchment compensation. Para 44 of the
award brings out the reasons for no~ granting the relief of retrenchment, G
back wages and continliity of service. It reads :

"44. The workmen have contended that seniors have been
retrenched, though many juniors have been retained. Not a single
indident has.been shown as to who was the said junior retained at
Kudremukh even after 24-9-1980. If some of the persons who had H
24 SUPREME COURT REPORTS (1995] 2 S.C.R.

A been already transferred were juniors to these persons, it has been
already held that as on 15-9-1980, they were no longer in the service
of the II-Party establishment of Kudremukh and it can not be said
that they were still the juniors of these workmen. However, the
facts and circumstances of the case make it clear that on 2 points
the management is not on· a firm ground. The first of them is that
B the management has not proved that only the seniors were trans-
ferred irrespective of the unit seniority or otherwise, though they
had professed to do so in their various meetings with the unions.
Secondly, the retrenchment compensation and wages in lieu of one
months notice have not been paid either earlier to or at the very
c momeiit of the time of retrenchments. The learned counsel for the
management referred to the case of Workmen of Coimbatore
Pioneer "B" Mills Ltd. v. Labour Court and others, (1980) 1 LU 503
and c0ntended that in every case, there need not be any order of
reinstatement and that even if it is found that there is some lacuna,
~ _the Tribunal may not order for reinstatelllent and especially in view
D of th~ fact that the fl-Party management is labourting under a
. heavy load of surplus labour force. The fact of the reported case
disclose that the Labour Court has held that the retrenchment was
bonafide, but that there was non-compliance of clause (b) of
Section 25F. In that context, the Hon'ble High Court had enhanced
E the compensation to two months wages and the Hon'ble Supreme
Court of India added a sum of Rs. 750 to each worker in ~ of
reinstatement. In my view, for such infirmity as discussed above,
the workman of the present case should be paid a fair and
reasonable compensation of wages of two months, in addition to
the wages of one month a:Iready paid (exclusive of the retrench-
F'
ment compensation)."
\
The reason once again is the "heavy load of surplus labour force" with
the Management. It is not shown that the said reason is either incorrect as ')...-
a fact or irrelevant or impermissible in law.
G
Foi the above reasons, this appeal also fails and is accordingly
dismissed. No costs.

AG. Appel\15 allowed.