The court must keep in view all the relevant circumstances at the time of closure in order to determine whether the closure is bonafide or if it was done to terminate the services of workmen. The duration of the closure and restart date of the undertaking doesn’t determine the bonafide nature. The judgment was passed by the Bombay High Court in the case of Meltron Engineering Industries vs. Pune Labour Union & Anr. [WP/6940/2003] by Single Bench consisting of Hon’ble Shri Justice S.C. Gupte.

The writ petition was filed by the petitioner to challenge the award passed by the Labour Court at Pune under Section 12(5) of the Industrial disputes act, 1947. The facts of the case are that the respondent’s labour union demanded reinstatement and continuity of services and full back wages to the ten workmen represented under it. The petitioner opposed the same since after the close down and with negotiations with the union, closure compensation was paid to all of them. The labour court did not accept the argument that the workmen no longer fell under section 2(s) of the Act. The same was held because the petitioner failed to support the same with documents and witnesses. The labour court held that the workmen had the right to reemployment under section 25H of the Act as the undertaking of the petitioners had reopened. Since the petitioner failed to produce any document in support of a bonafide closed down of its undertaking, the labour court held the same was only valid up to the date of restarting of the factory by the petitioners.

The Hon’ble High Court of Bombay interpreted section 25H of the Act to be one that provides a preference for re-trenched workmen who offer themselves for re-employment over other persons. It stated that the Labour Court confused the retrenchment of workmen with closure. As per the facts only these 10 workmen were not called after the undertaking reopened after the Close down. The statement of the secretary of the respondent’s union depicts the same. It was held by the Hon’ble Bombay High Court that there stands no case of treating the cessation of employment of workmen due to closure as retrenchment and enjoy the benefit under section 25H of the Act. Furthermore, the Labour Court had also misdirected itself to understand the closure as not a bonafide one. The Labour Court invoked section 25H of the Act and referred to the closure as retrenchment.

It was not the case of the respondent’s union as to whether the closure was bonafide. It was held by the High Court that the workmen absolved their right to re-employment after the closure when they had accepted the closure compensation from the petitioner and the closure had been duly affected. The Court relied on the case of General Labour Union (Red Flag), Bombay vs. B.V. Chavan [1985 AIR SC page 297] to reiterate that the test that should be conducted is “whether the closure was a device of pretence to terminate the services of workmen or whether it was bonafide and for reasons beyond the control of the employer at the time of closure.”

The Bombay High Court held that the words of the labour court, “Valid up to the date of restarting of the factory of the first party” was fallacious and had no basis of law to it whatsoever. The court held, ”the petition is allowed by quashing and setting aside the impugned award.”

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