Hidayatullah, J.— By Notification No. 9869 (TD)/XXXVI-2-24 (TD)/58 dated 27-1-1962 the Government of Uttar Pradesh referred the following matter of dispute to the Industrial Tribunal (No. 1) U.P at Lucknow and it was registered as Reference No. 12 of 1962:
“1. Have the services of Sri R.K Sharma, s/o Sri Nathoo Lal, Head Clerk (General) been wrongfully and/or unjustifiably terminated with effect from the 29th March, 1957?
2. If the Issue 1 is decided in the affirmative, to what relief is Sri Sharma entitled and from which of the employers?”
By its order dated October 26, 1962, the Tribunal decided the matter of dispute partly in favour of the employee R.K Sharma. The present appeal is by the Upper Ganges Bijli Karamchari Sangh, Moradabad, and Sharma with the special leave of this Court contending that the second issue was wrongly decided and he was entitled to more compensation than was awarded to him. R.K Sharma joined the service of the Upper Ganges Valley Electricity Supply Co. Ltd., Moradabad in September 1940. The Company was being managed by Messrs. Martin Burn Ltd., Calcutta. On June 28, 1956 there was a riot at the premises of the Company and one B.S Sexana, a dismissed employee of the company, received injuries in the course of the riot and lost his life. A criminal prosecution was started against many persons including Sharma. On March 21, 1957 the sessions Judge, Moradabad convicted Sharma and sentenced him to four year's rigorous imprisonment under certain sections of the Indian Penal Code which it is not necessary to mention here, Sharma appealed on March 25, 1957 to the High Court of Allahabad and obtained bail the same day. On March 29, 1957 the Resident Engineer of the Company served a notice upon Sharma terminating his services with immediate effect under Standing Order No. 18(32). He was paid one month's salary in lieu of notice. His salary then was basic Rs 200, Cost of Living Allowance Rs 38.26 per month, and Personal Pay Rs 14.50 per month — Total Rs 252.76 per month. Sharma was then working as the head clerk of the Company. Sharma then asked for reinstatement pending the disposal of his appeal but this was refused by the Company. He applied to the Regional Conciliation Officer asking for reinstatement on the ground that there was no charge-sheet and no enquiry as required by the Standing Orders and no permission was obtained from the Regional Conciliation Officer even though an industrial dispute was then pending. The Company resisted this application on the ground that it was an individual dispute and not an industrial dispute and succeeded on this plea in getting the application dismissed. The Company also as a matter of caution applied under Section 6-E of the U.P Industrial Disputes Act to the State Industrial Tribunal for the approval of the action taken against Sharma. This application also failed because the Act came into force from April 1957 and could not apply to the order terminating Sharma's service in March, 1957. Matters remained thus till the Upper Ganges Bijli Karamchari Sangh took up the cause of Sharma and the present reference was made but more of that later. Meanwhile on May 13, 1958 the High Court accepted Sharma's appeal and acquitted him. Although Sharma was acquitted he was not reinstated. On May 5, 1959 the U.P State Electricity Board taking advantage of the expiry of the Company's licence in May, 1959 purchased the Electrical Undertaking on and from May 5, 1959 under Section 6 read, with Section 71, Indian Electricity Act, 1910. The Electrical Undertaking has thereafter been run and managed by the Board and the Company went, soon after its business was taken over, into voluntary liquidation. The Board took over the staff of the Company subject to certain conditions. These conditions are contained in Ex. E3/1 which is described as “Schedule of Procedure for handing over the Company's Undertaking”. Para 4 of this Schedule reads:
“All Staff, except those specified by the Company or who wish to resign or who in the opinion of the Electricity Board are not suitable, will be transferred to the Electricity Board and will continue to be paid the same scales of salary including Dear Food Allowance etc., as hitherto and the same shall not be less favourable than those on which they are at present employed.”
As Sharma had not been reinstated despite his acquittal the Company did not show him in the list of the staff taken over from the Company by the Board on May 4/5, 1959. As a matter of fact one R. S. Bhatnagar was shown as the head clerk of the Company. In other words, the Board did not take Sharma on its staff and Sharma remained in the same position as he was before. Subsequently, as already stated, the Upper Ganges Bijli Karamchari Sangh took up the cause. It is not necessary to describe all the steps that the Sangh took. Finally in a writ petition filed in the Allahabad High Court the Uttar Pradesh Government was asked to decide whether a reference should be made or not under the Industrial Disputes Act and the Government then made the present reference.
2. A number of questions arose in the reference. The Company and the Managing Agents tried to shift the responsibility on to the Board and the Board in its turn tried to shift it back to the Company and its Managing Agents. That part of the dispute is no longer alive. It was decided by the Tribunal that the responsibility, if any, must fall upon the Company in liquidation because Sharma was not an employee of the Managing Agents and had never been accepted by the Board. A faint attempt was made in this appeal by Mr J.P Goyal who contended on the basis of para 4, quoted above, that all staff of the Company automatically stood transferred to the Board, except those specified by the Company or who resigned or who were not accepted by the Board. He submitted that Sharma was not within any of the exceptions and, therefore, his services must be taken to have been transferred to the Board. The language of the paragraph is not very happy. The words “All staff” are cut down by the exceptions and really mean that such of the staff as do not fall within the exceptions we are transferred from the Company to the Board. Sharma was not in the list prepared by the Company and accepted by the Board and, therefore, he could not be said to have been automatically transferred because he would be hit either by the first exception or by the second or both. The Tribunal has taken the same view of the matter and in our opinion rightly. The Tribunal was therefore right in holding that the Company in voluntary liquidation is the party which must answer Sharma's claim.
3. The Tribunal held that the dismissal of Sharma was improper not only for the reason that the procedure contemplated by the Standing Orders was not valid but also for the reason that after his acquittal there was no valid reason for not re-employing him. The Tribunal also held that after Sharma appealed and was released on bail he ought to have been allowed to work pending the disposal of his appeal. These findings of the Tribunal were not questioned by the respondents in this appeal and we need not, therefore, traverse the grounds on which the findings were based except to indicate that we agree with those grounds. The first matter in dispute must, therefore, be taken to be rightly decided by the Tribunal in favour of Sharma.
4. On the second matter the Tribunal is in error in calculating the wages and compensation due to Sharma. The Tribunal has ordered payment of half basic wage, Cost of Living Allowance and Personal Pay from March 29, 1957 to May 13, 1958 and has ordered payment of basic wage plus C.L.A plus P.P at full rate from May 14, 1958 to May 5, 1959 less salary drawn by him from the Hydel Department where he was employed between December 15, 1958 and May 5, 1959. The Tribunal has also granted compensation equal to three months' emoluments under the proviso to sub-section (1) of Section 25-FFF. In this way a total sum of Rs 5091.30 is determined as payable to Sharma.
5. In awarding half emoluments upto his acquittal the Tribunal apparently thinks that a disability attached to Sharma and that there was justification. for reducing the amount In our judgment the Tribunal is in error in so thinking. The termination of Sharma's service, in the events that happened, was proved to be entirely wrong. After his appeal was admitted and bail was granted to him there was no final judgment against him. The Company had only two courses open to it. Either Sharma should have been allowed to continue in his post or his service could have been terminated after proper charge and enquiry. By not following either course and resisting his efforts to get reinstatement the termination of Sharma's service became illegal from the beginning. Sharma is, therefore, entitled to receive his full emoluments from March 29, 1957 right upto May 5, 1959, on which date he was not taken over by the Board on the transfer of the undertaking. Of course, a deduction will be made equal to the salary drawn by Sharma from the Hydel Department. Sharma is thus entitled to an additional sum of Rs 1777.47 on this head.
6. Next is the question of the compensation which ought to have been awarded to him. The Tribunal treats the matter as falling within the proviso to Section 25-FFF(1). Sharma, on the other hand, claims under Section 25-F(b) that he is entitled to compensation equal to 15 days' average pay for every completed year of service or any part thereof in excess of 6 months as if he was retrenched. We shall now consider which of these two provision is applicable in the present case. Section 25-F(b) reads:
“25-F. Conditions precedent to retrenchment of workmen.— 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) * * *
(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
* * *
Section 25-FFF(1) reads as follows:
“25-FFF. (1) Compensation to workmen in case of closing down of undertakings.— Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of sub-section (2), be entitled to notice and compensation in accordance with the provisions of Section 25-F, as if the workman has been retrenched:
Provided that where the undertaking is closed down on account of unfavourable circumstances beyond the control of the employer, the compensation to be paid to the workman under clause (b) of Section 25-F shall not exceed his average pay for three months.”
Both the sub-section and the proviso apply to undertakings which close down. If Sharma had continued in service with the Company and the undertaking had closed down, the proviso last quoted would undoubtedly have applied to his case. But the undertaking never closed down. It continued in the hands of the Board. All that happened was that the Company having unlawfully terminated the service of Sharma did not transfer him to the Board as one of the employees in the undertaking and the Board also did not accept him on its service rolls. The result was that Sharma stood retrenched on May 5, 1959 when the undertaking changed hands. He was so retrenched by the action of the Company and his case, therefore, falls squarely within the rule indicated in Section 25-F(b). As he had served for 18 years and a little over 7 months he will be entitled to compensation which will be equivalent to 9½ months' wages. In terms of money it comes to Rs 2401.24 on this head less such compensation as he may have received under the award. In addition he will be entitled to one month's emoluments in lieu of notice unless they have already been paid to him. In the result this appeal succeeds only in respect of the above items and the award shall be modified accordingly. The Company shall also bear its own costs and the costs incurred by the appellants: one set of hearing fee. There shall be no order as to costs in respect of the Board or the Managing Agents.