Avon Services v. Industrial Tribunal

Core point: The Government can send an industrial dispute to a Tribunal at any time, even after first saying “no”. The case also explains that closing a tiny part of a factory (like a painting corner) is not a separate closure. It is retrenchment, so Section 25F must be followed.

Result: Retrenchment was invalid; workers got reinstatement with full back wages. The employer’s appeal failed with costs.

1. Could the Government, after refusing once, later refer the dispute under Section 10(1)?
2. Was the termination a retrenchment under Section 25F or a closure under Section 25FFF?
3. Was the painting section an independent undertaking under Section 25FFF?
4. Was the retrenchment valid despite non-compliance with Section 25F?

• Section 10(1): Govt may refer a dispute “at any time”. Earlier refusal does not end this power.
• Administrative opinion: Forming the reference opinion is administrative; courts do not sit in appeal over it.
• Undertaking (25FFF): Must be a distinct business unit, not a small step in a big process.
• Retrenchment vs Closure: Shutting a minor function is not closure; Section 25F protections apply.
• No bypass: Employers cannot relabel internal changes as “closure” to dodge 25F.

• Govt reference power: Valid even after earlier refusal. Section 10(1) uses the words “at any time”.
• Undertaking test: Painting section was not a separate undertaking; it was a small part of the main activity.
• Retrenchment, not closure: Employer could not use 25FFF to avoid 25F. Mandatory notice and compensation were required.
• Relief: Reinstatement with full back wages upheld. Appeal dismissed with ₹2,000 costs.

Section 10(1): Govt may refer at any time; prior refusal does not exhaust power. The opinion is administrative.

Section 25F vs 25FFF: Minor functional shutdown inside a running factory is not “closure”. It is retrenchment; 25F safeguards are mandatory.

• Prevents misuse of “closure” labels to dodge 25F.
• Protects industrial peace by keeping Govt reference power flexible.
• Sets a clear test for what counts as an undertaking.

• “At any time” means what it says—Govt can refer later.
• Painting corner ≠ undertaking: It was part of the main unit.
• 25F is mandatory when jobs are cut; labels won’t save non-compliance.
• Relief: Reinstatement with full back wages sustained.

Mnemonic: “ANY TIME — NOT A UNIT — PAY 25F”

1. Any Time: Govt may refer under 10(1) later.
2. Not a Unit: Painting was not an independent undertaking.
3. Pay 25F: Follow notice + compensation rules.

Issue: Can Govt refer after refusal? Is the termination closure or retrenchment? Is painting a separate undertaking?

Rule: 10(1) “at any time”; undertaking = distinct unit; minor shutdown ≠ closure; 25F applies.

Application: Govt’s later reference valid; painting was a small step in the process; employer skipped 25F.

Conclusion: Retrenchment invalid; reinstatement with full back wages; appeal dismissed with costs.

Section 10(1)

Govt power to refer industrial disputes for adjudication—at any time.

Retrenchment (25F)

Cutting jobs requires notice, compensation, and other safeguards.

Closure (25FFF)

Shutting a distinct undertaking; different rules. Not every internal stop is a closure.

Undertaking

A separate business unit—not a minor step inside a larger process.