Why 99 Isn't Always Less Than 100: The Bombay High Court Exposes Strategic Misclassification and the Legal Consequences of Withholding Evidence in Industrial Closures.
In the intricate landscape of Indian labor law, the number 100 carries a weight far beyond its mathematical value. It is the threshold that separates a relatively simple closure process from a rigorous, state-monitored regulatory hurdle. A recent judgment by the Bombay High Court (Aurangabad Bench) in the case of Siemens Ltd. v. Shendra Siemens Kamgar Sanghatana offers a masterclass in how courts look behind the curtain of corporate headcount to ensure statutory compliance.
The Strategic Allure of the Number 99Under the Industrial Disputes Act, 1947, establishments with fewer than 100 workmen can effect a closure by simply providing a 60-day notice under Section 25-FFA. However, once that 100-workman mark is hit, Chapter V-B kicks in, requiring prior permission from the government—a much higher bar. In this case, the petitioner claimed to employ exactly 99 workmen. This "near-miss" figure is often a red flag for tribunals, suggesting a calculated attempt to bypass the more stringent protections afforded to labor in larger industrial units.
Labels Do Not Determine Legal StatusOne of the most impactful takeaways from this judgment is the court's refusal to accept the employer's designation of "administrative staff" at face value. The company argued that several employees were not "workmen" but belonged to the administrative category. However, the cross-examination revealed that individuals with titles like "Lezor cutting operator" or "Store Keeper" were being excluded from the workman tally. The court reaffirmed that the nature of duties, not the designation on an appointment letter, determines whether an individual is a "workman" under Section 2(s).
The Fatal Consequence of Withholding EvidencePerhaps the most critical legal turning point was the company's failure to produce its Wages Register. In industrial adjudication, the employer is considered the custodian of the "best evidence". When the Industrial Tribunal ordered the production of these records and the company failed to comply, the court invoked the principle of adverse inference.
"In industrial adjudication, where the employer is the custodian of the best evidence regarding employment records, the non-production of such vital documents despite a court order warrants the drawing of an adverse inference."By withholding the primary documents, the company essentially allowed the court to assume that the Union's claims of a higher headcount were true. Shifting the Burden of Proof
The judgment clarifies a common misconception regarding the burden of proof. While the party asserting a fact (the Union) must initially prove it, this burden is not static. The Union discharged its initial burden by providing a granular, month-wise breakdown of the workforce. Once this was done, the "onus of proof" shifted to the employer to rebut these claims with documentary evidence. Because the company relied on a "negative" (that they did not have 100 workers) but refused to show the books that would prove it, they lost the benefit of the doubt.
The "Void Ab Initio" RealityThe finality of the court's decision serves as a stern warning to industries. Because the company failed to seek prior government permission under Section 25-O (required for establishments with 100+ workers), the entire closure was declared "void ab initio"—meaning it was legally invalid from the very beginning. This leaves the employer liable for back wages and continuity of service, proving that the shortcut of misclassification often leads to the longest and most expensive legal road.
This judgment reinforces the judiciary's role as a gatekeeper against "colorable exercises of power". It reminds us that in the eyes of the law, transparency is not just a corporate virtue but a statutory necessity when the livelihoods of workmen are at stake.
Case: SIEMENS LTD THROUGH ITS MANAGER HR v. SHENDRA SIEMENS KAMGAR / KARMACHARI SANGHATANA THROUGH SECRETARY
Law: Industrial Disputes Act, Indian Evidence Act.
Citation: 2026:BHC-AUG:21102
Decision Date: 06-05-2026