Calcutta High Court (Appellete Side)
Himalaya Wellness Company vs Kunal Lodh & Anr on 27 July, 2026
2026:CHC-AS:1129
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
APPELLATE SIDE
Present:
The Hon‟ble Justice Shampa Dutt (Paul)
WPA 28269 of 2025
Himalaya Wellness Company
Vs
Kunal Lodh & Anr.
with
WPA 28272 of 2025
Himalaya Wellness Company
Vs
Khokan Ghosh & Anr.
with
WPA 28274 of 2025
Himalaya Wellness Company
Vs
Arindam Barua & Anr.
with
WPA 28280 of 2025
Himalaya Wellness Company
Vs
Mukesh Patra & Anr.
For the Petitioner : Mr. Soumya Majumder, ld. Sr. Adv.
Mr. S.K. Singh,
Mr. Sujit Sharma,
Mr. R.K. Dubey,
Mr. S.R. Singh.
For the respondent No. 1 : Mr. Anindya Lahiri,
Mr. Bikash Chakraborty.
For the State : Mr. Kaustav Seal,
Mr. Saikat Koley.
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Judgment reserved on : 02.07.2026
Judgment delivered on : 27.07.2026
Shampa Dutt (Paul), J.:
1. The writ application has been preferred challenging awards dated
03.10.2024 passed by the learned Second Industrial Tribunal at
Kolkata, in Case No. 18/2021, Case No. 19/2021, Case No. 20/2021
and Case No. 21/2021 and the order dated 18.08.2025 passed in review
in these cases by the learned 5th Industrial Tribunal at Kolkata (while
in-Charge of 2nd Industrial Tribunal, West Bengal at Kolkata) against
the review applications filed by the petitioners.
2. It appears that vide the impugned awards the learned Tribunal declared
the termination of the private respondents as illegal and unjustified and
further directed their reinstatement as permanent Medical
Representative and also directed payment of all back wages.
3. Being aggrieved with the said order, the writ application has been
preferred by the respondent/establishment.
4. Mr. Majumder, learned senior counsel appearing for the petitioner
submits that the petitioner herein vide its service closure letter dated
12th January, 2021, as part of restructuring the company decided
to temporarily reduce its workforce and it was due to such decision
of the company, the services of the private respondents herein
were terminated on and from 30.01.2021.
5. It is the contention of the petitioner herein that the termination of the
private respondents was only for the sole reason to temporarily
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reduce its workforce and, as such, there being no complaints
against the private respondents, no disciplinary proceeding was
initiated.
6. It is brought to the notice of this Court that the learned Tribunal in its
award at page 4 paragraph 2 held as follows:-
“The service closure letter mentions that for the purpose of
restructuring of Hospital Strategic Business Unit of the
OP company was compelled to temporarily reduce the
workforce for development of the OP company. So it means
that the petitioner was not permanently or conclusively
terminated from his service. On the other hand, he was
temporarily terminated from his service for the
principle of restructuring followed by the OP company.”
7. It is submitted that the learned Tribunal completely misunderstood
the terminology “to temporarily reduce its workforce” with the
word “temporarily terminated”.
8. Considering the said fact and on the basis of evidence, the Court
directed the reinstatement of the private respondents as a permanent
medical representatives.
9. On the other hand, Mr. Lahiri, the learned counsel for the private
respondents submits that subsequently some of the persons who had
been terminated during the said „temporary reduction‟ of its
workforce, were reinstated, but the private respondents in these
case were not reinstated and as such, the private respondents also
claim the benefit of Section 25H of the Industrial Disputes Act.
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10. The petitioner‟s case in the writ applications is that the private
respondents filed applications under Section 2A (2) of the Industrial
Disputes Act, 1947 (hereinafter referred to as the „said Act‟) before the
learned Second Industrial Tribunal, West Bengal, at Kolkata, registered
as Case No. 20/2021/2A(2) alleging their termination and/or
retrenchment to be illegal and that in order to terminate the workmen,
the company has taken false plea of restructuring. It was further alleged
that the company also did not comply with the provisions of law under
the Act for such retrenchment of the workman.
11. On completion of hearing the learned Tribunal by its awards dated
03.10.2024 declared that the orders of termination dated 30.01.2021
issued by the company was illegal and directed for reinstatement with
full back wages with consequential benefits with compound interest of
10% per annum. Cost of Rs.3,00,000/- was also imposed upon the
petitioner.
12. The petitioner herein has also raised the point of territorial jurisdiction
in the present case, in view of the fact that the concerned employee used
to work in the capacity of Business Development Officer and his nature
of duty was to tour to various states of the company in order to
supervise the sale of the products of the company and had been
reporting to Bangalore office.
13. The address of the opposite party as mentioned in the cause title
i.e. Himalaya Wellness Company C/o. Sinha Coal Storage, Alampur,
National Highway 6, near Indian Oil Pump, Howarh-711302 is the
company‟s CFA (Carrying and Forwarding Agents) address and not a
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Himalaya office address. All the employees used to report to the
Bangalore office. The CFA address has been set up as a meeting point in
order to conduct any meets/conferences with the employees by the
managers. As mentioned, the office of Himalaya is Bangalore. All the
employees report to the Bangalore office. The appointment letters,
termination, promotion, or any other official communication to the
employees are from the employees are from the Bangalore Office. It
is also evident from the Service Rules Book that is issued to every
employee at the time of appointment are aware that the jurisdiction is
in Bangalore and the employees are aware that the H.O. is
Bangalore. Therefore, the appropriate Government for the purpose
of the jurisdiction was State of Karnataka.
14. It is the further case of the petitioners that it was forced to restructure
its Zeus strategic Business unit as a part of the business
organization by reducing its work force. Hence, the company had to
discontinue with the service of some of the employees which includes
the applicants as well. But the company had provided adequate
compensation to the people working for the organization who had to be
terminated due to unforeseen and unfortunate situation. The company
had partnered with placement agency to support through this transition
period and provided assistance to the terminated employees to find a
suitable job opportunity and requested for authority to get in touch with
the other employer on behalf of the terminated employees to find a
suitable placement in this transition stage. The company has settled
all legal dues of the applicants with two months additional pay with
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the one-month notice. The said amount was duly received by the
applicant without demur of any protest. But the learned Tribunal has
considered the same as a case of “retrenchment” and “unfair labour
practice” which is erroneous and thus liable to be reviewed.
15. It is further stated that while accepting the employment with the
petitioners vide letter of appointment the respondent no.1 had
accepted clause 9 therein, which provides that in case of any
dispute between the parties the same would be referred to sole
arbitrator for arbitration to be held at Bangalore, Karnataka.
16. The petitioners have challenged the impugned award on the
grounds that:-
(i) The 2nd Industrial Tribunal did not have territorial jurisdiction,
in view of the fact that clause 9 in the letter of appointment
was duly accepted by the respondents. The matter is subject
to arbitration to be held in Bangalore, Karnatana.
(ii) The learned Tribunal wrongly held that the termination of the
respondents was bad and illegal on the ground that the
retrenchment benefits were not provided. The tribunal then
completely overlooked the fact, that the dues of final
settlement was duly accepted by the respondents.
(iii) The learned Tribunal also wrongly interfered with the
discretion of a company in the matter of closing down some of
its units, even if such closer do not amount to closer of
business.
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(iv) The tribunal has traveled beyond the order of
reference/issues, framed adjudication and the impugned
order was passed without proper application of mind and the
same is thus to be set aside.
17. Supplementary affidavit has been filed by the petitioners, enclosing
copies of evidence as recorded before the Tribunal. Parties herein have
filed their respective written notes along with the judgments relied upon.
18. On filing written notes, Mr. Majumder, argues that the respondent no.1
claiming himself to be a Medical Representative/Sales Promotion
Employee within the meaning of the Sales Promotion Employees
(Conditions of Service) Act, 1976 had invoked jurisdiction under section
2A(2) of the I.D. Act, 1947 claiming that his termination from service on
account of restructurization of ZEUS Strategic Business Unit of the
Company was unjustified, and he ought to be absorbed in some other
Divisions/Units of the Company and re-employed thereat.
19. The respondent No.1 had rendered service in the Company from April
18, 2012 till January 30, 2021 i.e. for a period of 8.8 years.
20. It is further stated that vide a termination notice dated January 12,
2021, the respondent no.1 was paid compensation of 6 months plus
one month’s notice pay i.e. for 7 months instead of the mandatory
requirement of compensation and notice pay of 6 months in his
case under the provisions of section 25F of the I.D. Act, 1947. Even
without mentioning retrenchment compensation, if an ex-gratia payment
fulfils the requirement of compensation to be paid; then the same is
reckoned as sufficient compliance of Section 25F.
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21. In support of the said contention the petitioner relies upon a judgment
reported in 1996 (1) LLN 106 (Cal-DB) GKW Limited -vs- 5th I.T.,
West Bengal & Ors.
22. Mr. Majumder also relies upon the following judgments in support of his
contention:-
(i) (2005) 5 SCC 91 (para 18) – Haryana State Cooperative Land
Development Bank vs. Neelam;
(ii) (2004) 1 SCC 68 (para 9, 10) – Pondichery Khadi and Village
Industries Board vs. P. Kulothangan & Anr.
23. It is stated that the respondent refused to take the credited amount of
compensation as he wanted to re-employed by the company which
reveals that he did not face any financial hardship caused by such
termination.
24. The respondent has admitted in evidence that he had received all his
dues from the company fully and finally.
25. The respondent no.1 himself applied for gratuity on January 31,
2021 and received the same.
26. It is further argued by Mr. Majumder, that the requirement of sending
notice to the authorities of the Government under section 25F(c) of the
I.D. Act, 1947 has been held to be a directory provision and hence non-
compliance thereof does not invalidate a retrenchment. In any event,
this had not been the case of the respondents before the Industrial
Tribunal.
27. The decision in the case of Manju Saxena -Vs- Union of India & Anr.
reported in (2019) 2 SCC 628 (para 6.9) is also relied upon. Mr.
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Majumder submits that when the company had closed down the
business unit, it had endeavoured to procure employment for all the
terminated employees without any discrimination through application to
be made to the Placement Agency identified by the Company. In
response to the same, the respondents had refused to offer themselves
for a possible employment elsewhere, thus exhibiting total reluctance to
work, or to mitigate their hardship due to termination from service.
28. It is further stated that the respondents had themselves exhibited their
unwillingness to procure employment elsewhere and thus in the matter
of awarding relief, their conduct is hit by Explanation to section 73 of
the Indian Contract Act.
29. It is further argued that the respondents through their cases as made
out before the Learned Tribunal have admitted that the Business Unit
was closed. They have not been able to make out any case of
discrimination as regards retention of any other employee of the
business unit where they were working. Their only case was that they
ought to be posted in some other division, where the company had
subsequently recruited other persons.
30. It is further stated that Section 25G of the I.D. Act, 1947 will have no
manner of application, since all employees of the Division/ Business
Unit had been terminated.
31. It is further argued that the justifiability of closure of the Unit has
not been challenged, nor could it have been a subject-matter of an
adjudicatory process; since the reality of closure can only be referred
to the Tribunal at the behest of a trade union or a substantial
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number of workmen. A closure issue is not an individual dispute
referable to a Tribunal, at the instance of an individual workman.
32. In fact, the dispute of closure is pending at the behest of a trade
union before an Industrial Tribunal in Case No. VIII-28/2024/10.
33. Regarding the issue of the respondents claiming absorption or posting in
some other division of the company, when all employees in the business
unit where they had been working have been terminated, is addressed
by Mr. Majumder as follows:-
(i) It is stated that this closure is not of a premises of the
Company. It is a business decision to close a particular
type of business in the process of restructurization, the
grounds whereof had been explained by the Management
Witness in his deposition before the Industrial Tribunal.
(ii) Argument on behalf of the Respondents, that they have a
right of re-employment in terms of section 25H of the I.D.
(West Bengal Amendment) Act, 1947 is mutually
inconsistent to their case. Section 25H operates only
when a Unit is closed. The said provision only confers a
right upon a workman to offer himself for re-employment.
The language of section 25H is thus a mere right of
workman to offer himself for re-employment, and
nothing beyond that.
Thus, breach of condition or dispute in relation to
Section, 25H is once again not an individual dispute as
understood within the meaning of section 2A of the I.D.
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Act, 1947, which is capable of being raised by an
individual workman. A dispute with regard to re-
employment has to be necessarily raised by a trade
union or substantial number of workmen of the
industry. It has not been the case of the Respondent
no.1 that on his termination from service, some other
workmen had been appointed in his place. In any event,
the provision of section 25H cannot apply in this case
since the closed Unit is not being reopened or has not
been reopened by the company.
34. It is further submitted that the learned Tribunal erroneously held
that the respondents were not permanently or conclusively
terminated from service. In respect of the findings of the learned
Tribunal which records that four persons were appointed by the
company in other divisions without offering to the respondent no.1 in
those divisions and this has been held to be an Unfair Labour Practice in
terms of Section 25T of the I.D. Act, 1947. The Tribunal made a finding
of victimization under the Vth Schedule to the Act and awarded
compensation of Rs.3 lacs on such account. The Tribunal held that
Company should have re-appointed the Respondent no.1 in any of its
other divisions.
35. It is thus stated that the said findings are perverse for the following
reasons:-
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(i) The respondents prayed for reinstatement in the said status
and not re-appointment and re-employment in some other
division. It was thus a relief granted beyond prayer.
(ii) The Tribunal had accepted the closure of the business unit at
many places in the Award, but contradicted its own finding by
holding that the said Unit is still in existence. Conversely, the
Tribunal granted the relief of reinstatement in the closed
Business Unit “or any other Divisions under the Company”.
(iii) Unfair Labour Practice under section 25T was not an issue
to be adjudicated.
The finding to that effect is beyond the terms of reference.
(iv) Even if there be a finding of Unfair Labour Practice, the Award
of compensation amount of Rs. 3 Lakhs is without any
evidence and beyond jurisdiction since Section 25T itself
prescribes punishment for that purpose. Industrial Tribunal
does not have wherewithal to assess compensation or loss by
way of torts or civil damages.
36. Hence, the petitioners have prayed for setting aside of the said award.
37. Written notes have been filed on behalf of the respondents and on filing
the said notes, Mr. Lahiri appearing for the respondents has argued
that there was no justification to throw the respondents out of
employment in the name of restructuring and the Petitioner could
have transferred them to any other business unit temporarily till
completion of the process of restructuring but the petitioner has
simply retrenched the respondents illegally from service and the
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Petitioner published advertisement for filling up vacancies but did not
ask the respondent to join in any such vacant post and the Petitioner
did not pay any notice pay and compensation for such retrenchment
and the said Zeus Strategic Business Unit has not been legally closed
and after 30.01.2021 the respondents never worked in any place for his
earning.
38. Mr. Lahiri, further argued that the service closure letter mentions that
for the purpose of restructuring of Hospital Strategic Business Unit of
the Petitioner was compelled to temporarily reduce the workforce
for development of the Petitioner. So it means that the respondent was
not permanently or conclusively terminated from his service. On
the other hand, he was temporarily terminated from his service for the
principle of restructuring followed by the petitioner. So it is clear that
though the service closure letter mentions about temporary
termination of the respondent from his service, actually the respondent
has been terminated forever by the petitioner for the said issue of
restructuring. So such type of termination comes under the purview of
retrenchment ring, according to Section 2 Clause (oo) of The Industrial
Disputes Act, 1947.
39. It is further argued that there has been non-compliance of Section 25(F)
of the Industrial Disputes Act. The respondents relies upon the following
judgments:-
(i) Narottam Chopra Vs. Presiding Officer as reported in
1988(36) 636;
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reported in Indian Kanoon in case no. Appeal (Civil
4157) of 2000;
(iii) Anoop Sharma Vs. Executive Engineer, Public
Health, Division No. 01, Panipath (Haryana)
reported in (2010) 5 Supreme Court 497);
(iv) Raj Kumar vs. Director of Education and Ors. in
Civil Appeal No. 1020 of 2011.
40. It is further argued by Mr. Lahiri that the petitioner after retrenchment
of their services of the respondents, appointed some other persons in
different divisions of the petitioner and the petitioner did not given
any offer to the petitioner to join in those divisions of the petitioner after
his termination.
41. It is further submitted that the petitioner after retrenching the
respondents has given appointment to 9(nine) new candidates in its
other divisions. The respondent like Zenith Strategic Business Unit,
Zeal Pure Herbs Strategic Business Unit & Zandra Strategic Business
Unit of the petitioner. Therefore, the conduct of the petitioner invariably
goes to show the blatant violation of Section 25H of the Industrial
Dispute Act, 1947.
42. Mr. Lahiri further argues that the termination of the respondents is
retrenchment as per Section 2(OO) of the Industrial Disputes Act, in
view of the fact that the retrenchment turn out to be an “illegal
retrenchment” because the conditions precedent to retrenchment of
workmen as featured in Section 25F of the Industrial Disputes Act,
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1947, has been blatantly violated of the petitioner while retrenching the
respondent no. 1 from the service.
43. Mr. Lahiri further submits that the impugned award is in accordance
with law and requires no interference.
44. The respondents have filed their additional written notes and the learned
counsel for the respondents has argued on filing the same, that as the
termination letter was served upon the respondents within the
State of West Bengal, the Tribunal had territorial jurisdiction.
45. Mr. Lahiri, relies upon the judgment of the Full Bench of Chhattisgarh
in Surit Ram vs. State of Chhattisgarh & Anr. reported in 2025
(187) FLR 285, wherein it is submitted that the Full Bench has clearly
explained as to the relief to which a terminated employee is entitled:-
Relief Parameters
Full Back Wages Illegal termination +
permanent/long service + no
misconduct + prompt challenge +
no gainful employment
Partial Back Wages Delay in dispute + short tenure +
possible gainful employment +
financial hardship of employer
No Back Wages Long unexplained delay + gainful
employment elsewhere +
misconduct by workman + bona
fide but technically defective
termination
46. Regarding the respondents‟ company that compliance of Section 25(f) of
the Industrial Disputes Act is directory and not mandatory in nature, he
has relied upon the following judgments:-
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(i) Armed Forces Ex Officers Multi Services Co-operative Society
Ltd. vs Rashtriya Mazdoor Sangh (INTUC) reported in 2022
(175) FLR 544;
(ii) Jeetubha Khansangji Jadeja vs Kutchh District Panchayat
reported in 2022 (175) FLR 625.
47. Jurisdiction
Regarding the point of jurisdiction raised by the respondent/company it
appears that though the company is Headquarter in Bengaluru,
Karnataka, India with primary registered corporate fall with the legal
jurisdiction of Karnataka, the petitioners were appointed with their
Headquarter at Kolkata.
48. But clause 9 of the appointment letter is as follows:-
“Clause 9. Any dispute or differences which may arise
between you and the Company shall be subject to the
jurisdiction of Bangalore Courts only.”
49. The rules were duly accepted by the petitioner as per clause 10 of the
said appointment letter.
50. As such as per the terms and conditions in the appointment letter, the
dispute was to be raised within Bangalore, State Karnataka.
51. But the company/respondent had not raised the said issue before the
tribunal, which proceeded to decide the case.
52. In the present case, the issue of maintainability does not solely depend
on pure questions of law, considering that herein it is on the point of
territorial jurisdiction and as the matter was adjudicated by the tribunal
on merit, and also the fact that the petitioner‟s on being appointed were
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posted in the Headquarters of the company at Kolkata, the
impugned award is taken up for consideration as to whether the same is
subject to review by this Court.
53. Closure
By a letter dated 12th January, 2021, the petitioner was served with a
service closure letter where in it was stated:-
“……….As part of having a sustainable business, we at
Himalaya too have been constrained to review our current
business model. Under the given circumstances, we are
restructuring Zeus, Strategic Business Unit of The Himalaya
Drug Company. As part of the restructuring, it has become
necessary for the company to temporarily reduce its
workforce. In view of this development, your services are no
longer required in the Company. Consequently, your services
are hereby terminated with effect from closing hours of
30.01.2021. You would be relieved from service with effect
from the closing hours of 30.01.2021.
To help you through this transition stage, as a special
gesture, considering your number of years of service with the
Company, we will be paying you 6 months additional pay, as
compensation apart from one month notice pay. You are
hereby requested to return the Company belongings and
submit the ‘No Dues Certificate’ from reporting manager at
the earliest, in order to process your full and final settlement.
We want you to know this termination is not a
statement about your work for Himalaya. You have been a
dedicated, contributing employee for 8.8 years.
We will extend career assistance for placement
opportunities with potential employers. We have partnered
with placement agency to support you through this transition
stage and assist you in finding a suitable job opportunity. If
you wish us to speak on your behalf to potential employers,
please reach us out. It gives us your permission to discuss
your employment with potential employers. You will receive
separate communication on career assistance program
shortly………”
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54. Yes, a company can reduce its workforce during restructuring, but
it must follow strict legal rules. This type of job cut is often called a
reduction in force, downsizing, or retrenchment. Companies do this to
cut costs, combine roles, or fix overlapping duties after a merger.
55. It is clear from the language used in the letter that the company
informed that it was necessary to “temporarily reduce its workforce”.
56. As such it is clear that the tribunal wrongly interpreted the same to
means “that the petitioner was not permanently or conclusively
terminated from his service. On the other hand, he was
temporarily terminated from his service for the principle of
restructuring followed by the OP company.”
57. The term “temporarily terminated” is solely the interpretation of the
tribunal, which is clearly erroneous and total wrong interpretation of the
phrase “temporarily reduce its workforce”.
58. The term “temporarily terminated” constitutes two words totally
contradictory to each other.
1) Temporary-meaning-lasting for a short time. Not
permanent.
2) Terminated-meaning-the act of bringing something to an
end or the State of being finished. The final end.
59. As such the tribunal putting the words together, has come to an
completely erroneous finding.
60. Section 25F of the I.D. Act, lays down:-
“25F. Conditions precedent to retrenchment of
workmen.- No workman employed in any industry who has
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been in continuous service for not less than one year under
an employer shall be retrenched by that employer until-
(a)the workman has been given one month ‘s notice in writing
indicating the reasons for retrenchment and the period of
notice has expired, or the workman has been paid in lieu of
such notice, wages for the period of the notice;[* * *]
(b)the workman has been paid, at the time of retrenchment,
compensation which shall be equivalent to fifteen days
‘average pay [for every completed year of continuous
service] or any part thereof in excess of six months; and
(c)notice in the prescribed manner is served on the
appropriate Government [or such authority as may be
specified by the appropriate Government by notification in
the Official Gazette.]”
61. On being terminated, the respondents were paid compensation and
notice pay.
62. As such the provision of Section 25F of the Industrial Dispute Act was
duly complied with. The following judgments support the case of the
petitioner herein:-
i) The Supreme Court in District Red Cross Society vs Babita
Arora & Ors. AIR 2007 SC 2879, decided on 14 August, 2007,
the Court held:-
“8. The question which arises for consideration is whether
the respondent is entitled to protection of Section
25F and 25G of the Act if the establishment in which she
was working itself has been closed down though certain
other wings or units of the appellant District Red Cross
Society, Karnal, have not been closed down and are still
functioning. Section 25F of the Industrial Disputes Act
lays down the conditions precedent to retrenchment of
workmen and it reads as under:
25F. Conditions precedent to retrenchment of workmen.-
No workman employed in any industry who has been in
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continuous service for not less than one year under an
employer shall be retrenched by that employer until–
(a) the workman has been given one month’s notice in
writing indicating the reasons for retrenchment and the
period of notice has expired, or the workman has been
paid in lieu of such notice, wages for the period of the
notice:
(b) the workman has been paid, at the time of
retrenchment, compensation which shall be equivalent to
fifteen days’ average pay [for every completed year of
continuous service] or any part thereof in excess of six
months; and
(c) notice in the prescribed manner is served on the
appropriate Government [or such authority as may be
specified by the appropriate Government by notification in
the Official Gazette].
Section 25FFF deals with compensation to workmen in
case of closing down of undertakings. The relevant part of
Sub-section (1) of Section 25FFF (omitting the proviso)
reads as under :
25FFF. Compensation to workmen in case of closing down
of undertakings.- (1) Where an undertaking is closed down
for any reason whatsoever, every workman who has been
in continuous service for not less than one year in that
undertaking immediately before such closure shall, subject
to the provisions of sub-section (2), be entitled to notice and
compensation in accordance with the provisions of section
25F, as if the workman had been retrenched:
Provided ……………………….
Therefore, the legislature has treated closing down of
undertakings which automatically result in termination of
services of all workmen working therein differently from a
retrenchment simplicitor as defined in Section 25F of the
Act. In Workmen of the Indian Leaf Tobacco Development
Co. Ltd., Guntur v. The Management of Indian Leaf
Tobacco Development Co. Ltd., Guntur AIR 1970 SC 860, it
was held as under : “No Industrial Tribunal, even in a
reference under Section 10(1)(d) can interfere with
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discretion exercised by a company in the matter of closing
down some of its branches or depots. Even if such closure
may not amount to closure of business of the Company,
the Tribunal has no power to issue orders directing a
Company to reopen a closed depot or branch, if the
Company, in fact, closes it down and that closure is
genuine and real. The closure may be treated as stoppage
of part of the activity or business of the Company. Such
stoppage of part of a business is an act of management
which is entirely in the discretion of the Company carrying
on the business. ………………..”
In Management of Hindustan Steel Ltd. v. The Workmen &
Ors. 1973 Labour & Industrial Cases 461, it was held by
this Court as under in para 10 of the reports :
“10. The word undertaking as used in S.25FFF seems to
us to have 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 respondents. Even closure or stoppage of a part of the
business or activities of the employer would seem in law to
be covered by this sub-section. The question has indeed to
be decided on the facts of each case. …………………….”
In workmen of the Straw Board Manufacturing Company
Limited v. M/s Straw Board Manufacturing Company
Limited (1974) 1 LLJ 499, this Court laid down the test of
closure of a unit by observing that the most important
aspect in a case relating to closure is whether one unit has
such componental relation that the closing of one must
lead to the closing of the other or the one cannot
reasonably exist without the other. Functional integrity
will assume an added significance in the case of
closure.
9. It appears that after the aforesaid decisions of the
Supreme Court, the legislature by an amendment made in
the year 1982 to the Industrial Disputes Act defined the
word “closure” by adding Section 2(cc). Section 2(cc) of the
Act reads as under :
2(cc). “closure” means the permanent closing down of a
place of employment or part thereof.
22
2026:CHC-AS:1129
It is, therefore, clear that in order to attract Section
25FFF it is not necessary that the entire establishment of
an employer should be closed. If a unit or part of an
undertaking which has no functional integrity with other
units is closed, it will amount to closure within the
meaning of Section 25FFF of the Act. In J.K. Synthetics v.
Rajasthan Trade Union Kendra & Ors. (2001) 2 SCC 87, it
has been observed that the closure need not be of the
entire plant. A closure can also be of a part of the
plant. In Maruti Udyog Ltd. v. Ram Lal & Ors. (2005) 2
SCC 638, it was held as under in para 21 of the report :
“21. How far and to what extent the provisions of Section
25F of the 1947 Act would apply in case of transfer of
undertaking or closure thereof is the question involved in
this appeal. A plain reading of the provisions contained in
Section 25FF and Section 25FFF of the 1947 Act leaves no
manner of doubt that Section 25F thereof is to apply only
for the purpose of computation of compensation and for no
other. The expression “as if” used in Section 25FF
and Section 25FFF of the 1947 Act is of great significance.
The said term merely envisages computation of
compensation in terms of Section 25F of the 1947 Act and
not the other consequences flowing therefrom. Both Section
25FF and Section 25FFF provide for payment of
compensation only, in case of transfer or closure of the
undertaking. Once a valid transfer or a valid closure comes
into effect, the relationship of employer and employee does
not survive and ceases to exist. Compensation is required
to be paid to the workman as a consequence thereof and
for no other purpose.”
The position in law is, therefore, well settled that if
the entire establishment of the employer is not
closed down but only a unit or undertaking is closed
down which has no functional integrity with other
units or undertaking, the provisions of Section
25FFF of the Act will get attracted and the workmen
are only entitled to compensation as provided
in Section 25FFF of the Act which has to be
calculated in accordance with Section 25F of the
Act. The Tribunal and also the High Court clearly erred in
holding that as other units of the appellant Red Cross
Society like Drug De-Addiction-cum-Rehabilitation Centre,
Family Planning Centre and Viklang Kendra were
23
2026:CHC-AS:1129
functioning, the termination of services of the respondent
would amount to retrenchment. The Maternity Hospital
was functioning as a distinct entity. It was not receiving
any grant from the Government and was being run entirely
on charitable basis from donations received from public.
Due to financial stringency, the Maternity Hospital had to
be closed down. The other three units, viz., Drug De-
Addiction- cum-Rehabilitation Centre, Family Planning
Centre and Viklang Kendra are receiving grants from
government and are functioning as separate entities and
the mere fact that they have not been closed down,
cannot lead to the inference that the termination of
services of the respondent was by way of
retrenchment which was illegal on account of non-
compliance of the provisions of Section 25F of the
Act.
10. In view of the findings recorded above, the
respondent would be entitled to compensation only
in accordance with Section 25FFF of the Act and the
award for reinstatement in service with back wages
passed by the Tribunal which was affirmed by the
High Court cannot be sustained and must be set
aside.”
63. In the present case, the respondents were duly paid compensation in
accordance with Section 25FFF of the Act and also one month notice
pay/compensation under Section 25F of the Act.
64. In the present case also one unit had admittedly closed down, which has
no functional integrity with other units and as such the respondents are
entitled to compensation (paid) and not reinstatement as directed by
the tribunal.
65. The Andhra Pradesh High Court in G. Ram Babu vs The State of
Andhra Pradesh Rep by its Secretary, Labour, Employment,
Training & Factories (Labour-II) Department, Secretariat,
Hyderabad & Ors., in Writ Petition No. 5020 of 2016, the Court held:-
24
2026:CHC-AS:1129
“23. The core issue fell for consideration in the
instant lis is, whether the 3rd respondent
Corporation is entitled to take shelter under Section
25F and 25G of the Industrial Disputes Act. If the
3rd respondent Corporation, in which the petitioner
worked is closed, whether the petitioner is entitled
for absorption in other units of the 3rd respondent
Corporation situated in far places which are not
closed and still functioning.
MRK,J
24. In order to answer the above point, it is
appropriate to note the relevant section, i.e., Section
25F of the Industrial Disputes Act, 1947, which
enunciated specific conditions precedent to
retrenchment of workmen, is extracted hereunder:-
“……25F. Conditions precedent to retrenchment of
workmen.– No workman employed in any industry
who has been in continuous service for not less than
one year under an employer shall be retrenched by
that employer until-
(a) the workman has been given one month’s notice
in writing indicating the reasons for retrenchment
and the period of notice has expired, or the workman
has been paid in lieu of such notice, wages for the
period of the notice;
1[*]
(b) the workman has been paid, at the time of
retrenchment, compensation which shall be
equivalent to fifteen days average pay [for every
completed year of continuous service] or any part
thereof in excess of six months; and
(c) notice in the prescribed manner is served on the
appropriate Government [or such authority as may
be specified by the appropriate Government by
notification in the Official Gazette]……”
25. The above provision governs the conditions
precedent to retrenchment of workmen by an
employer. The said provision lays down the
mandatory requirements that an employer must fulfil
before effecting retrenchment, failing which such
25
2026:CHC-AS:1129
retrenchment would be deemed illegal and invalid
under the law.
26. It is apposite to refer Section 25 FFF relating to
the compensation of the workmen in the event of
closing down of said
MRK,J establishments/undertakings. For the sake
of comprehensive view, the relevant portion of Sub-
section (1) of Section 25 FFF of the Industrial
Disputes Act., is reproduced hereunder:-
“……225FFF. Compensation to workmen in case of
closing down of undertakings.-(1) Where an
undertaking is closed down for any
reasonwhatsoever, every workman who has been in
continuous service for not less than one year in that
undertaking immediately before such closure shall,
subject to the provisions of sub-section (2), be
entitled to notice and compensation in accordance
with the provisions of section 25F, as if the
workman had been Provided that where the
undertaking is closed down on account of
unavoidable circumstances beyond the control of the
employer, the compensation to be paid to the
workman under clause (b) of section 25F, shall not
exceed his average pay for three months.
‘[Explanation.–An undertaking which is closed down
by reason merely of-
(i) financial difficulties (including financial losses); or
(ii) accumulation of undisposed stocks; or
(iii) the expiry of the period of the lease or licence
granted to it; or
(iv) in case where the undertaking is engaged in
mining operations, exhaustion of the minerals in the
area in which such operations are carried on, shall
not be deemed to be closed down on account of
unavoidable circumstances beyond the control of the
employer within the meaning of the proviso to this
sub-section.] 2[(1A) Notwithstanding anything
contained in sub-section (1), where an undertaking
engaged in mining operations is closed down by
262026:CHC-AS:1129
reason merely of exhaustion of the minerals in the
area in which such operations are carried on, no
workman referred to in that sub-section shall be
entitled to any notice or compensation in accordance
with the provisions of section 25F, if-
(a) the employer provides the workman with
alternative employment – with effect from the date of
closure at the same remuneration as he was entitled
to receive, and on the same terms and conditions of
service as were applicable to him, immediately
before the closure;
MRK,J
(b) the service of the workman has not been
interrupted by suchalternative employment; and
(c) the employer is, under the terms of such
alternative employment or otherwise, legally liable to
pay to the workman, in the event of his
retrenchment, compensation on the basis that his
service has been continuous and has not been
interrupted by such alternative employment.]…….”
27. The legislature by an amendment i.e., Act 46 of
1982 w.e.f. 21.08.1984 has officially defined the
term „closure‟ by inserting Section 2(CC) in the year
1982 to the Industrial Disputes Act, 1947. The
complete text of Section 2(CC) is reproduced below:-
“….2. (cc) ‘closure’ means the permanent closing
down of a place of employment or part thereof;”
28. The above provision crystal clears that if the
establishment falls within the ambit of Section
25FFF of the Industrial Disputes Act, 1947, it is not
necessary that the entire establishment of the
employer be closed; rather, the closure of a unit or
part of the undertaking that has functional integrity
with other units amounts to closure within the
meaning of Section 25FFF of the Industrial Disputes
Act. In other words, if the entire establishment is not
shut down but only a specific unit or an undertaking
is closed, provided, such unit has no operational
stability with other units or undertakings, the
provisions of Section 25FFF of the „Act‟ come into
operation. Thus, in view of peculiar facts and
27
2026:CHC-AS:1129
circumstances involved in the instant case, the
petitioner is entitled only for compensation as
enunciated under Section 25FFF of the Industrial
Disputes Act, 1947.
MRK,J
29. In this backdrop, it is relevant to note the case
of Maruti Udyog Ltd. Vs. Ram Lal 1 , wherein, the
Hon‟ble Supreme Court had held as under:-
“……21. How far and to what extent the provisions
of Section 25-F of the 1947 Act would apply in case
of transfer of undertaking or closure thereof is the
question involved in this appeal. A plain reading of
the provisions contained in Section 25-FF
and Section 25-FFF of the 1947 Act leaves no
manner of doubt that Section 25-F thereof is to apply
only for the purpose of computation of compensation
and for no other. The expression ‘as if’ used in
Section 25-FF and Section 25-FFF of the 1947 Act is
of great significance. The said term merely
envisages computation of compensation in terms
of Section 25-F of the 1947 Act and not the other
consequences flowing therefrom. Both Section 25-FF
and Section 25-FFF provide for payment of
compensation only, in case of transfer or closure of
the undertaking. Once a valid transfer or a valid
closure comes into effect, the relationship of
employer and employee does not survive and ceases
to exist. Compensation is required to be paid to the
workman as a consequence thereof and for no other
purpose……”
66. The petitioner/company relies upon the judgment in Guest keen
Williams, Ltd. Vs Fifth Industrial Tribunal, West Bengal & Ors.,
1996 1 L.L.N. 106, decided on 8th February, 1995, wherein the
Calcutta High Court held:-
“25. If those 32 employees are workmen within the
meaning of the Act, then if their services are terminated
amounting to retrenchment within the meaning of S. 25-
282026:CHC-AS:1129
F of the Act, then they would be entitled to notice or one
month’s pay in lieu of notice and compensation, on the
computation as indicated in S. 25-F of the Act. If their
case is taken as retrenchment within the meaning of S.
25-F, then all the mandatory conditions are fulfilled by
the management, namely, notice or one month’s pay in
lieu of notice and the compensation.
26. In the facts of the case we, therefore, hold that on
the interpretation of S. 25-F of the Act that before
terminating the services of those 32 employees all the
mandatory conditions as contemplated by S. 25-F of the
Act, were complied with namely, the notice or one
month’s pay in lieu of notice and the compensation.
27. It appears from the award that the Tribunal by its
award held that the retrenchment was invalid as the
mandatory conditions were not fulfilled. The Tribunal,
however, held that the concerned workmen should not
be entitled to reinstatement which would jeopardise the
administration of the company, but they should be
entitled to back-wages on the terms as indicated in the
award. We have set out above, the operative portion of
the impugned award. As we have found on
interpretation of S. 25-F of the Act and on the facts of
the case that the mandatory conditions of S. 25-F of the
Act have been complied with by the management and,
as such, the termination of services of those 32
workmen amounting retrenchment within the meaning
of the Act was valid, the said 32 employees, the
respondent workmen in this appeal are not entitled to
any further sum as has been directed by the Tribunal
by its impugned award.
28. During the pendency of the proceedings, both
before the Trial Court as also before this Appeal Court,
it has been brought to the notice of the Court that some
employees have died in the meantime, some employees
had taken employment elsewhere and considering the
said fact, the Tribunal had directed the management to
pay the back-wages in the manner as indicated in the
award.
29. Considering the facts of the case, we direct that
whatever payment has been made by the management
in terms of the award and also in terms of the interim
292026:CHC-AS:1129
order passed by the Trial Court from time to time, the
company should not realise or recover the amount
already paid in terms of the award or in term of the
interim order passed by the Appeal Court from time to
time. As it appears to us that the retrenchment
compensation as contemplated by S. 25-F of the Act,
has been paid by the management to the said 32
employees, at the time of termination of their services,
may be it is under the description of ex gratia payment,
there would be no further entitlement of compensation
by those 32 employees or their heirs and legal
representatives. The learned trial Judge, however,
refused to interfere with the award on the ground that
the Writ Court was not sitting in appeal over the
findings of the Tribunal by the impugned award, but
we feel that since the very decision-making process
was made by the Tribunal on the basis of interpretation
of S. 25-F of the Act, the Tribunal took some pedantic
view not commensurate with the object for which the
said S. 25-F of the Act was introduced. We, therefore,
feel that some interference is called for and on the
reasoning as indicated above, we feel inclined to
interfere with the impugned award and set aside the
award as we hereby do.”
67. Respondent/workmen rely upon the following judgments:-
1) Anoop Sharma vs Executive Engineer, Public Health
Division No. 1, Panipat (Haryana), (2010) 5 SCC 497.
2) Pramod Jha & Ors. Vs State of Bihar & Ors., AIR 2003
SC 1872, decided on 3rd March, 2003.
3) Armed Forces Ex Officers Multi Services Co-operative
Society Ltd. Vs Rashtriya Mazdoor Sangh (INTUC), 2022
(175) FLR 544, decided on August 11, 2022.
30
2026:CHC-AS:1129
4) Jeetubha Khansangji Jadeja vs Kutchh District
Panchayat, 2022 (175) FLR 625, decided on September
23, 2022.
68. The said judgments do not help in the present case, as there is due
compliance of the relevant provisions by the petitioner in this case.
69. The judgment in Deepali Gundu Surwase vs Kranti Junior
Adhyapak & Ors. in Civil Appeal No. 6767 of 2013 (arising out of
SLP (C) No. 6778 of 2012) decided on 12 August, 2013, relates to
reinstatement, which again is not applicable in this case as the
respondents are not entitled to reinstatement/reemployment in respect
of a closure of unit. (District Red Cross Society (Supra) and G. Ram
Babu (Supra)).
70. Regarding compliance of Section 25(F)(c) of the act being directory or
mandatory, the petitioner relies upon the judgment of the Supreme
Court in Manju Saxena vs Union of India & Anr., (2019) 2 SCC 628,
decided on December 3, 2018, the wherein Court held:-
“6.9. However, no notice was sent to the appropriate
Government or authority notified, in compliance with
Section 25-F(c) of the ID Act. A three-Judge Bench of this
Court in Gurmail Singh v. State of Punjab [Gurmail
Singh v. State of Punjab, (1991) 1 SCC 189 : 1991 SCC
(L&S) 147] held that the requirement of clause (c) of
Section 25-F can be treated only as directory and not
mandatory. This was followed in Pramod Jha v. State of
Bihar [Pramod Jha v. State of Bihar, (2003) 4 SCC 619 :
2003 SCC (L&S) 545] wherein it was held that
compliance with Section 25-F(c) is not mandatory.”
71. The judgment of 2019 shows that the Supreme Court was clearly of
the view that the compliance of Section 25F(c) of the Act was only
31
2026:CHC-AS:1129
directory and not mandatory as claimed by the respondent/workers.
The Court also relied upon judgments of the Court in 1991 and 2003.
72. On the other hand, the respondent/workers, have relied upon the
judgment of 2016 in Raj Kumar vs Director of Education &
Ors.(Supra) to support their case that the provisions of 25F(c) of the Act
was not complied with even though the same is mandatory.
73. The Court in the said judgment of 2016 relied upon a judgment of the
year 1963.
74. Thus the judgment in Manju Saxena (Supra) being later in time shall
prevail.
75. The documents at page 42, 43-44, show that the respondent/workman
applied for gratuity and also received the same. The other document
relate to the final settlement calculation cum pre-receipt of the
compensation paid to these employees.
76. Documents at page 55-56 are the petitioner‟s letter extending assistance
for placement of the respondent/workman, which was refused in this
case.
77. Documents at 57 shows that the respondents refused to accept the
compensation and dues credited to their accounts by refusing to use the
same.
78. As such the petitioner has taken the stand that this itself shows that the
respondents did not require any financial assistance and this does not
justify back wages.
79. The closure of the unit is admitted.
32
2026:CHC-AS:1129
80. Admittedly none of the persons terminated to reduce work force due to
closure for restructuring, were reemployed in other units.
81. The recruitment in other units were independently done and had no
connection with the unit closed.
82. The respondents do not have any right to be automatically absorbed in
other units of the company in such cases (District Red Cross Society
(Supra) and G. Ram Babu (Supra)).
83. Regarding the scope of judicial review in writ jurisdiction, the parties
have relied upon judgments which lays down the law:-
a) In M/s. Bharti Airtel Limited vs A.S. Raghavendra, in
Civil Appeal No. 5187 of 2023, decided on 2nd April,
2024, the Supreme Court held:-
“26. As regards the power of the High Court to
reappraise the facts, it cannot be said that the same
is completely impermissible under Articles
226 and 227 of the Constitution. However, there
must be a level of infirmity greater than ordinary in
a tribunal’s order, which is facing judicial scrutiny
before the High Court, to justify
interference…………………”
b) West Bengal Central School Service Commission and
Ors. Vs Abdul Halim & Ors. (2019) 18 SCC 39, Para
29,30,31,32,33.
“29. The High Court in exercise of its power to
issue writs, directions or orders to any person or
authority to correct quasi-judicial or even
administrative decisions for enforcement of a
fundamental or legal right is obliged to prevent
332026:CHC-AS:1129
abuse of power and neglect of duty by public
authorities.
30. In exercise of its power of judicial review, the
Court is to see whether the decision impugned is
vitiated by an apparent error of law. The test to
determine whether a decision is vitiated by error
apparent on the face of the record is whether the
error is self-evident on the face of the record or
whether the error requires examination or
argument to establish it. If an error has to be
established by a process of reasoning, on points
where there may reasonably be two opinions, it
cannot be said to be an error on the face of the
record, as held by this Court in Satyanarayan
Laxminarayan Hegde v. Millikarjun Bhavanappa
Tirumale [Satyanarayan Laxminarayan
Hegde v. Millikarjun Bhavanappa Tirumale, AIR
1960 SC 137] . If the provision of a statutory rule
is reasonably capable of two or more
constructions and one construction has been
adopted, the decision would not be open to
interference by the writ court. It is only an obvious
misinterpretation of a relevant statutory provision,
or ignorance or disregard thereof, or a decision
founded on reasons which are clearly wrong in
law, which can be corrected by the writ court by
issuance of writ of certiorari.
31. The sweep of power under Article 226 may be
wide enough to quash unreasonable orders. If a
decision is so arbitrary and capricious that no
reasonable person could have ever arrived at it,
the same is liable to be struck down by a writ
court. If the decision cannot rationally be
supported by the materials on record, the same
may be regarded as perverse.
32. However, the power of the Court to examine
the reasonableness of an order of the authorities
342026:CHC-AS:1129
does not enable the Court to look into the
sufficiency of the grounds in support of a decision
to examine the merits of the decision, sitting as if
in appeal over the decision. The test is not what
the Court considers reasonable or unreasonable
but a decision which the Court thinks that no
reasonable person could have taken, which has
led to manifest injustice. The writ court does not
interfere, because a decision is not perfect.
33. In entertaining and allowing the writ petition,
the High Court has lost sight of the limits of its
extraordinary power of judicial review and has in
fact sat in appeal over the decision of Respondent
2.”
c) Satyanarayan Laxminarayan Hegde and Ors. Vs
Millikarjun Bhavanappa Tirumale, 1959 SCC OnLine
SC10.
84. Thus the impugned award suffers from inherent errors in the findings
of the tribunal, as already discussed. Points as summarised are:-
a) The tribunal has clearly misinterpreted the term “temporarily
reduce it‟s workforce” with the term “temporarily terminated”,
more so in the present case, when admittedly the unit which was
to be restructured, was closed down permanently.
b) In such circumstances, the question of reinstatement/or
automatic reemployment in other units/divisions of the company
does not arise and thus also there is no question of granting back
wages (District Red Cross Society (Supra) and G. Ram Babu
(Supra)).
35
2026:CHC-AS:1129
c) The provision of Sections 25F, 25FFF and 25F(C) of the Act have
been duly complied with.
d) The finding of the tribunal as to “unfair labour practice” is also
completely without any basis.
85. Thus the impugned award(s) dated 03.10.2024 passed by the 2nd
Industrial Tribunal, Kolkata in Case No. 18/2021, Case No.
19/2021, Case No. 20/2021 and Case No. 21/2021 being based on
no evidence, wrong interpretation and findings are set aside, being not
in accordance with law, and thus an abuse of the process of law.
86. Consequently the order in review dated 18.08.2025, in all the cases
herein also are quashed and set aside.
87. WPA 28269 of 2025 with WPA 28272 of 2025 with WPA 28274 of
2025 with WPA 28280 of 2025 are allowed.
88. Applications, if any, connected thereto stand disposed of consequently.
89. Interim order, if any, stands vacated.
90. Photostat certified copy of this Judgment, if applied for, be given to the
parties on priority basis upon compliance of all formalities.
(Shampa Dutt (Paul), J.)
