Page 229 - DMGT306_MERCANTILE_LAWS_II

Mercantile Laws – II

Notes to set up an integrated consumer electronics facility having common manufacturing
technology as well as supplier’s base. Director Ramachandran stated that the company
had plans to depend on outsourcing rather than having its own manufacturing base in the
future. The company selected Pune as its manufacturing base and decided to get the Salt
Lake factory off its hands.
In tune with this decision, the employees were appraised and severance packages were
declared. Out of 750 workers in the Salt Lake division, 391 workers opted for VRS. PIL then
appointed Hong Kong and Shanghai Banking Corporation (HSBC) to scout for buyers for
the factory. Videocon was one of the companies approached.

Though initially Videocon seemed to be interested, it expressed reservations about buying
an over staffed and underutilized plant. To make it an attractive buy, PIL reduced the
workforce and modernised the unit, spending 7.1 crore in the process.
In September 1998, Videocon agreed to buy the factory through its nominee, Kitchen
Appliances India Ltd. The total value of the plant was ascertained to be 28 crore and
Videocon agreed to pay 9 crore in addition to taking up the liability of 21 crore.
Videocon agreed to take over the plant along with the employees as a going concern
along with the liabilities of VRS, provident fund etc. The factory was to continue as a
manufacturing center securing a fair value to its shareholders and employees.

In December 2000, the Supreme Court finally passed judgement on the controversial
Philips case. It was in favour of the PIL. The judgement dismissed the review petition filed
by the workers as a last ditch effort. The judge said that though the workers can demand
for their rights, they had no say in any of the policy decisions of the company, if their
interests were not adversely affected.
Question
Critically analyse the above case

Source:http://www.icmrindia.org/casestudies/catalogue/Human%20Resource%20and%20
Organization%20Behavior/Philips%20India-Labor%20Problems-Salt%20Lake-HROB%20Case%
20Study.htm

11.5 Summary

 Trade union is an indispensable part of industrial sector in India.
 In fact trade unions act as an effective platform for the workers class to enjoy their due
rights without being exploited. To strengthen the fundamental rights of voiceless working
class trade unions are originated.
 Gradually trade union got recognition from the authority and became a legally approved
representation of labor mass.

 In India various trade union related Acts and regulations are enacted to empower the
working classes.

 Indian Trade Unions Act, 1926 is a principal act that provides adequate safeguards to the
rights of labor masses.
 The Trade Unions Act, 1926 is a fountain head Act in India that provides varied rules and
regulation related to trade unions.
 It has underlined wide range of provisions for the benefit of labour mass. This Act states
all modalities related to trade union registration to trade dispute resolution.

224 LOVELY PROFESSIONAL UNIVERSITY