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Cawnpore Tannery Ltd., Kanpur v. S. Guha And Others
Factual and Procedural Background
The dispute originated when the appellant, Cawnpore Tannery Ltd., terminated the services of Mr. S. Guha, an Assistant Store Keeper earning Rs. 140 per month, on 1 May 1951. The employees’ union claimed the discharge was wrongful, but an Industrial Tribunal initially upheld the employer’s explanation that the retrenchment was part of an economy measure following the amalgamation of two stores. An appeal by the workmen against that award failed.
Subsequently, the employer hired three clerks—Mr. Zaidi on 16 August 1951, Mr. Joseph in July 1952, and another clerk in April 1953. On 10 January 1953, the union filed a fresh complaint alleging that Mr. Guha’s retrenchment was not bona fide and that juniors had been retained. A second Industrial Tribunal held that the company had wrongfully kept Mr. Guha out of employment at least since 16 August 1951 and ordered his re-employment and back pay at the highest consolidated rate paid to the three new clerks. The Labour Appellate Tribunal affirmed that decision. The company then appealed to the Supreme Court by special leave.
Legal Issues Presented
- Whether an industrial dispute could still exist regarding Mr. Guha after his retrenchment in May 1951, given that he was no longer in the company’s service.
- Whether, in the absence of Section 25-H of the Industrial Disputes Act at the relevant time, the Tribunals erred in applying the principle that a retrenched workman must be offered re-employment when vacancies arise.
- Whether the order directing the company to re-employ Mr. Guha in a clerical position, and to pay him at the highest consolidated rate of the subsequently hired clerks, was justified.
Arguments of the Parties
Appellant's Arguments
- After his retrenchment, Mr. Guha ceased to be a “workman,” so no industrial dispute could exist concerning him.
- Applying the principle of preferential re-employment retrospectively was improper because Section 25-H was not yet part of the statute.
- Even if such a principle applied, it could only oblige re-employment in the same category as the former post; the clerical posts filled later did not fall within Mr. Guha’s category.
- An additional, newly raised point suggested other discharged employees might have priority over Mr. Guha for re-employment.
Respondents' Arguments
The opinion does not contain a detailed account of the respondents’ legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Shri Vishuddananda Saraswathi Hospital v. Employees (1949 LLJ III) | Industrial adjudication recognises a right of retrenched employees to be offered re-employment when vacancies occur. | Cited to show that the principle pre-dated the insertion of Section 25-H and was already part of industrial law. |
| Kilburn & Co. and MacNeill & Co. v. Employees (1950 LLJ 125) | Same principle of preferential re-employment of retrenched workers. | Reinforced the Tribunal’s view that the principle existed independently of statute. |
| Sri Annapurna Mills v. Certain Workmen (1953 I LLJ 43) | When an employer re-opens a closed business, former employees should be given first opportunity for re-employment. | Used analogically to support the broader principle that surplus-based retrenchment triggers a future right to re-employment. |
Court's Reasoning and Analysis
1. The Court rejected the appellant’s contention that no industrial dispute could subsist after Mr. Guha’s retrenchment. It noted that even under the pre-1956 definition, “workman” included a person whose services had been terminated, and that the broad definition of “industrial dispute” allowed the union to contest the propriety of both the retrenchment and the failure to re-employ.
2. Addressing the retrospective application argument, the Court held that long before Section 25-H was enacted, industrial adjudication had already required employers to offer re-employment to retrenched workers when vacancies arose. The decisions in Vishuddananda, Kilburn & Co., and Annapurna Mills were invoked to demonstrate that this principle was grounded in “fairplay and justice,” not merely in statute.
3. On the category-of-employment point, the Court observed that factual findings of the Tribunals showed Mr. Guha had performed substantial clerical duties; consequently, the clerical posts filled after his retrenchment fell within the same category. Therefore, ordering his re-employment in that cadre was consistent with established industrial principles.
4. The Court refused to entertain the newly introduced argument about other discharged employees’ priority because it was neither pleaded nor argued before the lower Tribunals.
Holding and Implications
Appeal Dismissed with Costs.
The Supreme Court upheld the Labour Appellate Tribunal’s order directing Cawnpore Tannery Ltd. to re-employ Mr. Guha and pay him at the highest consolidated rate applicable to subsequently hired clerks. The ruling affirms that, even prior to statutory codification, industrial adjudication recognised a right of retrenched employees to preferential re-employment. No new legal precedent was set, but the judgment reinforces the continuity of that principle in Indian labour jurisprudence.
The Judgment of the Court was delivered by
P.B Gajendragadkar, J.— This is an appeal by special leave and it arises from an industrial dispute between the appellant, the Cawnpore Tannery Ltd. and its employees. This dispute was in regard to the discharge of one of the employees of the appellant, Mr S. Guha. It appears that Mr Guha was appointed as Assistant Store Keeper in Boot Factory Stores owned by the appellant on a salary of Rs 140 p.m Subsequently his services were terminated on May 1, 1951. This gave rise to a dispute between the appellant and its employees and the dispute was adjudicated upon by the Tribunal. The employees alleged that the termination of Mr Guha's services was wrongful whereas the appellant urged that the discharge of Mr Guha became necessary partly because measures of economy had to be adopted after the appellant's Boot Factory Stores and General Stores were amalgamated. The plea raised by the appellant was upheld by the Tribunal and it was held that Mr Guha's discharge was not wrongful. The workmen made an appeal against the said decision, but the appeal failed and the award made by the Tribunal was upheld.
2. Meanwhile the appellant had employed two clerks, Mr Zaidi on August 16, 1951 and Mr Joseph in July, 1952. Subsequently, another clerk was also employed in April 1953. On January 10, 1953, a complaint was filed in which it was alleged that the retrenchment of Mr Guha was not bona fide and that persons junior to Mr Guha had been retained while he was discharged. This complaint has given rise to the present industrial proceedings. When it was referred for adjudication, the issue framed was ‘whether the management of the appellant have wrongfully and/or unjustifiably kept Mr Guha out of employment from the time when there was scope for his re-employment? If so, to what relief is he entitled?' This complaint was tried as an industrial dispute by the Tribunal. After considering the evidence adduced before it the Tribunal has held that the appellant had kept Mr Guha wrongfully and unjustifiably unemployed at least since August 16, 1951, when it employed Zaidi as a clerk and so it has directed the appellant to re-employ Mr Guha with effect from the date on which the award would become enforceable, according to law. The appellant has also been directed to pay Mr Guha the highest consolidated pay which was then being paid to the three clerks subsequently employed. The appellant challenged the correctness and propriety of this award by preferring an appeal before the Labour Appellate Tribunal. This appeal, however, failed, because the Appellate Tribunal agreed with the findings recorded by the original Tribunal. It is this decision of the Labour Appellate Tribunal which has given rise to the present appeal by special leave.
3. Mr Sen for the appellant has urged before us three points. He contends that there was and could be no industrial dispute between the appellant and the respondents in regard to the retrenchment of Mr Guha, because Mr Guha had been retrenched as long ago as May 1951, and had ceased to be the workman of the appellant. In our opinion, there is no substance in this contention. Even after Mr Guha was retrenched, it would have been open to the Union of which Mr Guha was a member to raise a dispute about his non-employment. The definition of the term “workman” even prior to its amendment in 1956 would have included a person like Mr Guha whose services were terminated. This position is now made perfectly clear by the present definition of “workman” which includes a person who has been dismissed, discharged or retrenched. Besides, the definition of the term “industrial dispute” is wide enough to justify the Union of which Mr Guha is a member to raise a dispute about the propriety of the retrenchment of Mr Guha as well as the propriety of the appellant's conduct in not giving him an opportunity to be re-employed when an occasion for the employment of an additional clerk arose. That is the view taken by the Labour Appellate Tribunal and we are not satisfied that the said conclusion is erroneous in law so as to justify our interference.
4. Then Mr Sen argues that though under Section 25-H of the Industrial Disputes Act the principle has now been statutorily recognised that a retrenched workman must be given an opportunity of re-employment when the employer has to employ an additional hand, at the relevant time this provision was not in the statute book and it was erroneous in law to have virtually given effect to the said statutory provision retrospectively. In our opinion, this argument is misconceived. Even before 25-H was added to the Act, industrial adjudication generally recognised the principle that if an employer retrenched the services of an employee on the ground that the employee in question had become surplus, it was necessary that whenever the employer had occasion to employ another hand the retrenched workman should be given an opportunity to join service. This principle was regarded as of general application in industrial adjudication on the ground that it was based on considerations of fairplay and justice vide Shri Vishuddananda Saraswathi Hospital v. Employees (1949) LLJ III; Kilburn & Co. and MacNeill & Co. v. Employees (1950) LLJ 125 and Sri Annapurna Mills v. Certain Workmen (1953) I LLJ 43. It is true that in the case of Annapurna Mills the discharge of the workmen was the result of the fact that the employer had closed his business and it was held that with improvement in circumstances if the employer re-opened his business it was necessary that he should take back in his employment his old employees. It would be noticed that the principle which was applied to the case of an employer who reopened his business which had been closed by him is substantially the same principle which requires the employer to give an opportunity to his retrenched workman when he has occasion to engage another servant. That is why the Labour Appellate Tribunal has observed that the principle now statutorily recognised by Section 25-H was, before the Act was amended, recognised by industrial adjudicators in dealing with such questions. Therefore, we do not think that Mr Sen is justified in contending that the order passed in the present proceedings against the appellant is contrary to industrial law.
5. It is then urged that the principle of industrial adjudication on which the respondents rely cannot require the appellant to offer to Mr Guha a job unless the said job belongs to the same category to which Mr Guha belonged. On principle, Mr Sen may be right in assuming that the offer would be conditioned by the consideration of the category to which the retrenched employee belonged. But in the present case on the findings of the Tribunals below, there is no room for contending that Mr Guha has been asked to be taken in a category other than the one to which he originally belonged. It is true that under his earlier assignment Mr Guha was described as an Assistant Store Keeper, but it has been found by the Tribunals below that he was doing a substantial amount of clerical work and subsequent appointments made by the employer were made in the clerical cadre. Therefore, all that the Tribunals have required the appellant to do is to re-employ Mr Guha in the clerical cadre. We do not think that this order can be challenged on the ground that it is not justified by the principle of industrial adjudication in regard to retrenched workmen.
6. Mr Sen then attempted to contend that the Tribunals might have held that the appointment of the three clerks subsequently introduced by the appellant in his establishment may be wrong, but he contends that it was not right that the Tribunals should have made an order directing the appellant to re-employ Mr Guha. He points out that the record shows that there are some other persons whom the appellant had discharged and considerations may arise as to which of the discharged persons should be given the first opportunity of re-employment. We do not think it is open to Mr Sen to raise this contention for the first time before this Court. This contention is based on certain facts none of which was pointedly brought to the notice of the Tribunals below, and Mr Sen has fairly conceded that this aspect of the matter was not argued before them either.
7. In the result, we see no reason to interfere with the order passed by the Labour Appellate Tribunal. The appeal fails and is dismissed with costs.
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