National Kamgar Union v. Kran Rader Pvt. Ltd. & Ors.
Background
A Pune factory decided to permanently close its manufacturing unit in 1990 and issued a closure notice under Section 25-FFA of the Industrial Disputes Act. The workers' trade union challenged the closure, arguing the factory employed more than 100 workers, which would trigger the stricter closure-compliance requirements of Chapter V-B of the Act. The Industrial Court initially agreed, finding 115 workers and declaring the closure illegal, but the Bombay High Court reversed this on a writ petition, finding only 99 workers (because 16 disputed employees' "worker" status was not adequately proved), meaning Chapter V-B's stricter requirements did not apply.
Decision Breakdown
The Supreme Court held that whether a unit employed more or fewer than 100 workers is essentially a question of fact (or a mixed question of law and fact), and such findings are ordinarily binding on the Court in an appeal unless shown to be perverse or legally unsustainable. After examining the evidence itself, the Court agreed with the High Court that the union had failed to produce cogent evidence proving that 16 disputed employees qualified as "workers," so the total count of 99, below the 100-worker threshold for Chapter V-B, was correct, and the closure did not require compliance with that chapter. However, exercising its discretion for fairness, the Court directed that each of the roughly 16 remaining workers who had not yet accepted any compensation be paid a lump-sum amount of Rs. 2,50,000, to be deposited with the Industrial Court and disbursed after verification, while making clear this benefit did not extend to workers who had already accepted compensation.
Lesson Learnt
The stronger statutory protections for workers in a factory closure (requiring government permission and specific compliance) apply only once the workforce crosses the 100-employee threshold, and disputes over which employees count as "workers" versus supervisors can be decisive: parties must bring solid evidence on headcount, as courts will not readily second-guess a High Court's factual findings on this point.