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Smart Summary

Summary of Legal Opinion

Factual and Procedural Background

The petitioner, Sree Behariji Mills Ltd., a company under the Indian Companies Act, owns and operates flour, oil, rice and dal mills in Patna City. Opposite parties 5 to 12 were employed by the petitioner but, on account of old age and ill-health, became unfit for work. The petitioner issued notices informing those workmen that they would retire with effect from 1 March 1955, with one month's salary in lieu of notice and gratuity according to a settlement with the workmen's union (opposite party No. 4, Patna City Mazdoor Union).

The Union contended that the retirements were unauthorised and in truth constituted retrenchment, entitling the workmen to compensation under Section 25-F of the Industrial Disputes Act. An enquiry by the Assistant Labour Commissioner did not produce a settlement.

On 18 January 1956 the Secretary to the Government of Bihar, Labour Department, filed a certificate of public demand for Rs. 7,242 (and odd) against the petitioner before the Certificate Officer of Patna. The petitioner challenged the legal validity of that certificate proceeding as ultra vires and without jurisdiction by filing an application under Article 226 of the Constitution seeking certiorari to quash the certificate and subsequent proceedings. Cause was shown for the Union, the individual workmen (opp. parties 5–12), and by the Government Pleader for opposite parties 1–3.

Legal Issues Presented

  1. Whether the State Government had the authority under Section 25-1 of the Industrial Disputes Act (as it stood before amendment by Act XXXVI of 1956) to issue a certificate for recovery of sums asserted to be due to workmen when there was a dispute between employer and workmen about liability to pay compensation under Section 25-F.
  2. Whether Section 25-1 can be interpreted to permit the appropriate Government to investigate and determine (a) whether a particular case was retrenchment or retirement and (b) the quantum of compensation payable under Section 25-F where those matters were in dispute between employer and workmen.

Arguments of the Parties

Petitioner's Arguments

  • The State Government has no authority to investigate the dispute between employer and workmen or to determine whether a case is retrenchment or retirement, or to determine the quantum of compensation under Section 25-F.
  • Section 25-1 applies only where liability is admitted by the employer; it does not extend to cases where liability to pay retrenchment compensation is disputed.
  • Reference was made to Section 25-1 (pre-amendment) and Section 25-F of the Industrial Disputes Act to support the contention that the certificate proceeding was ultra vires.

Opposite Parties' / Workmen's Arguments

  • The Patna City Mazdoor Union asserted that the retirements were unauthorised and amounted to retrenchment, making the workmen entitled to compensation under Section 25-F.
  • Opposite parties 5–12 contended that Section 25-1 should be interpreted to include an implied power for the Government to investigate disputes between employer and workmen and to ascertain whether liability to pay compensation existed and, if so, its quantum.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
C.B.R Ratnam & Co. v. Ekambaram. 1957-1 Mad LJ 175 (A). Supports the view that Section 25-1 (as then worded) does not authorize the State Government to make an enquiry into liability to pay compensation under Section 25-F when such liability is disputed. The court relied on this decision as corroboration of its interpretation that the State Government lacked authority to issue the impugned certificate under the pre-amendment law.

Court's Reasoning and Analysis

The court analysed the language of Section 25-1 (as it stood before amendment by Act XXXVI of 1956), which provided that any money due from an employer under the provisions of that Chapter could be recovered by the appropriate Government in the same manner as an arrear of land revenue or public demand. The court held that this language contemplates a pre-determined or ascertained liability: the Government's right to order recovery arises only when liability has already been ascertained by a competent authority.

The court rejected the workmen's contention that Section 25-1 implies a power for the Government to investigate disputes about retrenchment and compensation. It reasoned that the text of Section 25-1 does not warrant reading into it a power to determine disputed questions of liability or quantum under Section 25-F. The court noted that the Act provided no machinery for adjudication of disputed compensation claims under Section 25-F, acknowledging this as an obvious lacuna in the legislation, but held that it was not the court's function to remedy legislative omissions by extending the statute's meaning.

The court observed that the workmen were not wholly without remedy: they could sue in a civil court (the statutory right under Section 25-F being a civil right within the meaning of Section 9 of the Civil Procedure Code) or seek a reference to a tribunal under Section 10 of the Industrial Disputes Act. The court further noted that the subsequent amendment by Act XXXVI of 1956 (inserting Section 33-C(1)) expressly empowered the appropriate Government to enquire into legal liability under Chapter V-A and, if satisfied, issue a certificate to the Collector for recovery as an arrear of land revenue — but emphasised that the present case had to be decided under the law as it stood before that amendment.

Having interpreted Section 25-1 to require an antecedent ascertainment of liability, and relying in part on the cited Madras High Court decision, the court concluded that the State Government had no authority, under the pre-amendment statute, to issue the certificate for recovery against the petitioner when liability for compensation was disputed.

Holding and Implications

Holding: The application was allowed. The court directed that a writ in the nature of certiorari be issued to quash the order of the State Government dated 18 January 1956 issuing a certificate of public demand and all subsequent proceedings of the Certificate Officer in Certificate Case No. 102 M.C of 1955-1956. There was no order for costs.

Implications: The direct effect is that the certificate of public demand for Rs. 7,242 (and odd) and the certificate proceedings in Certificate Case No. 102 M.C of 1955-1956 were quashed and set aside. The opinion explains that under the pre-amendment law the appropriate Government could not, by itself, investigate and determine disputed liability under Section 25-F; the amendment by Act XXXVI of 1956 later supplied explicit statutory authority to that effect. The opinion does not discuss broader policy consequences or state that it is establishing any new, separate precedent beyond its application to the facts and statutory interpretation in this case.

    Sree Behariji Mills Ltd. v. State Of Bihar And Others Opposite Parties.

    1. This is an application made on behalf of the petitioner, Sree Behariji Mills Ltd., for grant of a writ under Article 226 of the Constitution for calling up and quashing the certificate proceeding started against the petitioner in case No. 102 M.C of 1955/56 pending in the Court of the Certificate Officer of Patna.

    2. The petitioner is a Company incorporated under the Indian Companies Act and owns and runs Flour, Oil, Rice and Dal Mills in Mahalla Bharatpur Simri of Patna City. Opposite parties 5 to 12 were employed by the petitioner in the working of the Mills, but on account of old age and ill-health they became unfit for work.

    3. The case of the petitioner is that a notice was given to opposite parties 5 to 12 saying that they would retire with effect from the 1st March 1955, on payment of one month's salary in lieu of notice and gratuity according to the terms of settlement arrived at between the management and the workmen's Union. Opposite party No. 4 is Patna City Mazdoor Union and its case is that the retirement of opposite parties 5 to 12 was unauthorised and it was really a case of retrenchment and under Section 25-F of the Industrial Disputes Act the workmen were entitled to compensation. It appears that there was an enquiry by the Assistant Labour Commissioner in the matter and no settlement could be arrived at between the parties.

    4. It is alleged on behalf of the petitioner that on the 18th January 1956, the Secretary to the Government of Bihar, Labour Department, filed a certificate of public demand for a sum of Rs. 7,242 and odd agaiinst the petitioner before the Certificate Officer of Patna. The legal validity of this certificate proceeding was challenged by the petitioner on the ground that the certificate proceeding was ultra vires and without jurisdiction.

    5. Cause has been shown in this case on behalf of Patna City Mazdoor Union, opposite party No. 4, and also on behalf of opposite parties 5 to 12, the workmen concerned, in the dispute. Cause has also been shown by learned Government Pleader on behalf of opposite parties 1 to 3.

    6. The main question presented for determination in this case is whether the certificate proceeding taken against the petitioner is ultra vires and beyond the jurisdiction of the State Government. On behalf of the petitioner reference is made to Section 25-1 of the Industrial Disputes Act (Act XIV of 1947) as it stood before the amendment made by amending Act XXXVI of 1956. Section 25-1 as it stood before the amendment is in the following terms:

    “Any money due from an employer under the provisions of this Chapter, whether by way of compensation or by way of wages, may without prejudice to any other mode of recovery, be recovered in the same manner as an arrear of land revenue or as a public demand by the appropriate Government on an application made to it by the person entitled to the money.”

    7. In this connection learned counsel on behalf of the petitioner also referred to S. 25-F which runs thus:

    “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 notice:

    Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for the termination of service;

    (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 service or any part thereof in excess of six months; and

    (c) notice in the prescribed manner is served on the appropriate Government.”

    8. It is contended on behalf of the petitioner that the State Government has no authority to make investigation into the dispute between the workmen and the employer or to determine whether it is a case of retrenchment or of retirement or to determine the quantum of compensation payable under S. 25F of the Act. It is argued that S. 25-1 only applies to a case where the liability is admitted by the employer and not to a case where there is a dispute that retrenchment compensation is not payable under S. 25-F of the Act.

    9. The contention put forward on behalf of opposite parties 5 to 12, on the other hand, is that upon a proper interpretation of S. 25-1 of the Act there is an implied power granted to the Government to make investigation of the dispute between the parties & to ascertain whether there was liability on the part of the employer to pay compensation and also the quantum of compensation which was payable. In our opinion the contention put forward on behalf of opposite parties 5 to 12 is not correct. In our opinion the language of S. 25-1 must be interpreted to mean that there is pre-determined or ascertained liability and on the basis of this pre-determined or ascertained liability the State Government has a right to initiate proceedings for recovery of the amount in the same manner as an arrear of land revenue or as a public demand.

    10. In other words, the right of the Government to order recovery springs into existence only when there is an ascertainment of the liability of the employer by a competent authority. It is true that there is no machinery provided in the Act for the adjudication of the matter of compensation under S. 1 25-F in the event of a dispute. There is an obvious lacuna in the Act. But it is not the function of a Court of law to go on a voyage of discovery and to fill up the obvious omission or lacuna made by the Legislature. It is a well-recognised principle that a Court has power only to interpret and not to add to or amend the law.

    11. It was argued on behalf of opposite parties 5 to 12 that if such an interpretation of S. 25-F was adopted the purpose of S. 25-1 would be rendered nugatory. The argument is not quite correct because the workman is not wholly without remedy, for he can bring the matter before an ordinary civil Court because the statutory right created by S. 25-F is a civil right within the meaning of Section 9 of the CPC. It is also possible, in the case of such a dispute between the employer and the workman, to bring the matter to the notice of the Government and to pray for a reference of the dispute to a tribunal under Section 10 of the Industrial Disputes Act.

    12. It is, therefore, clear that the workman is not wholly without remedy, though recourse to the civil Court would entail hardship upon the workman. The matter has been, however, clarified as a result of the amendment made by Act XXXVI of 1956. The newly-inserted S. 33-C (1) expressly grants power to the appropriate Government to make an enquiry about the legal liability of the employer to pay compensation under any provisions of Ch. V-A.

    13. After the Government is so satisfied it is empowered to issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue. Section 33-C(1) of the Act as amended by Act XXXVI of 1956 is in the following terms:

    “Where any money is due to a workman from an employer under a settlement or an award or under the provisions of Ch. V-A, the workman may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue”

    14. But we are concerned in the present case with the law as it stood before the amendment made by Act XXXVI of 1956. As we have already said, the language of S. 25-1 dees not warrant the interpretation that the State Government has the power to make an enquiry ino the liability to pay compensation under S. 25-F if there was a dispute between the employer and the workman whether there was retrenchment or not. This view is borne out by a decision of the Madras High Court in C.B.R Ratnam & Co. v. Ekambaram. 1957-1 Mad LJ 175 (A).

    15. For these reasons we hold that the State Government has no authority to issue a certificate for recovery of a sum of Rs. 7,242 and odd against the petitioner in Certificate Case No. 102 M.C of 1955/56. We, therefore, direct that a writ in the nature of certiorari should be issued to quash the order of the State Government dated the 18th January 1956, issuing a certificate of public demand and all the proceedings of the Certificate Officer taken thereafter in Certificate Case No. 102 M.C of 1955-1956. We accordingly allow this application.

    16. There will be no order for costs.

    H.G.P

    17. Application allowed.

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    Sree Behariji Mills Ltd. v. State Of Bihar And Others Opposite Parties.
    (Apr 18, 1957)