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  • Sec. 33-C (2) of the Industrial Disputes Act, 1947 (hereinafter called the Act)
  • retrenchment.8. Section 25-FFF (1)
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  • Sec. 33-C (2) of the Industrial Disputes Act, 1947 (hereinafter called the Act)
  • retrenchment.8. Section 25-FFF (1)
Smart Summary

Concise, Structured Summary of the Opinion (Untwalia, C.J.)

Factual and Procedural Background

Two writ applications were heard together because both arose from a common judgment of the Central Government Labour Court, Dhanbad, which disposed of two analogous Sec. 33-C(2) applications filed by workmen employed at Junkundar Colliery of Messrs D. Mandal and Company, Chirkunda, Dhanbad. The first set of claimants (respondents 1–67 in C.W.J.C. 224/70) filed L.C. 15 of 1969 claiming benefits for the period 15 August 1967 to 25 January 1969. The second set (respondents 1–160 in C.W.J.C. 227/70) filed L.C. 518 of 1968 claiming benefits for the period 15 August 1967 to 9 November 1968.

The Labour Court rejected most claims but allowed computation in respect of compensation under Sec. 25-FFF(1) of the Industrial Disputes Act, 1947. The Management (petitioner in the writ applications) sought to quash that portion of the Labour Court's order by obtaining rules in this Court. The petitioner's counsel (Mr. Ranen Roy) advanced several points attacking the Labour Court's findings; the workmen were represented by Mr. S.K. Mazumdar.

Legal Issues Presented

  1. Whether a Labour Court exercising jurisdiction under Sec. 33-C(2) of the Industrial Disputes Act could adjudicate entitlement to compensation under the main provision of Sec. 25-FFF(1) when the employer disputed that compensation was payable under the main provision rather than under the proviso.
  2. Whether the Labour Court erred in holding that compensation for closure was payable under the main provision of Sec. 25-FFF(1) and not under the proviso to that sub-section.
  3. Whether lay-off compensation earlier paid in 1968 should have been set off against the closure (Sec. 25-FFF) compensation awarded by the Labour Court.
  4. Whether closure compensation paid to certain workmen during the pendency of the proceedings should have been taken into account (i.e., credited) by the Labour Court when computing amounts due.

Arguments of the Parties

Petitioner's (Management) Arguments

  • The Labour Court lacked jurisdiction under Sec. 33-C(2) to decide the disputed question whether compensation was payable under the main provision of Sec. 25-FFF(1) as opposed to the proviso; that contested issue could only be raised in an industrial dispute.
  • The Labour Court's conclusion that compensation fell under the main provision of Sec. 25-FFF(1) rather than under the proviso was legally erroneous.
  • The Labour Court erred in not adjusting (setting off) lay-off compensation already paid to the workmen in 1968 against the closure compensation awarded.
  • The Labour Court wrongly failed to take into account closure compensation that had already been paid to certain workmen during the pendency of the two cases.

Respondents' (Workmen's) Arguments

  • The workmen maintained that the fact of closure (on 11 November 1968) was not in dispute and that their entitlement to compensation under Sec. 25-FFF(1) could properly be determined by the Labour Court under Sec. 33-C(2).
  • As to payments made during pendency, learned counsel for the workmen pointed out that although a major portion of the amounts shown in evidence (Exts. M24–M53) were said to have been paid before the written statement was filed, the Management had not pleaded any such payment in its written statement; thus the Labour Court was entitled to treat those payments as not pleaded and to make its findings accordingly.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
R.B. Bansilal Abirchand Mills Co. Ltd. v. The Labour Court, Nagpur (Supreme Court decision) That a Labour Court exercising jurisdiction under Sec. 33-C(2) may decide factual disputes (including facts relevant to entitlement) arising in Sec. 33-C(2) proceedings. The court noted that, even if the fact of closure had been disputed, the Labour Court would have been competent to decide it under Sec. 33-C(2), but in this case the fact of closure was not disputed. The precedent was cited to support the Labour Court's competence to decide relevant factual matters incident to computation of compensation.

Court's Reasoning and Analysis

The Court's analysis proceeded in a sequence that tracked the petitioner's four principal contentions:

  1. Jurisdiction under Sec. 33-C(2): The Court rejected the contention that the Labour Court lacked jurisdiction. Two points supported this conclusion:
    • The fact of closure (11 November 1968) was not disputed in these proceedings; accordingly, the Labour Court was plainly empowered to compute compensation arising from that closure.
    • Even if the fact of closure had been disputed, the Court recognized (citing the Supreme Court decision in R.B. Bansilal Abirchand Mills Co. Ltd. v. The Labour Court, Nagpur) that a Labour Court exercising Sec. 33-C(2) jurisdiction could decide such factual questions. The power to determine the amount of compensation necessarily includes power to decide the subsidiary question of which part of Sec. 25-FFF applies to the case.
    Therefore the Labour Court had jurisdiction to determine whether compensation was payable under the main provision of Sec. 25-FFF(1) or under its proviso.
  2. Merits of the Labour Court's finding on applicability of Sec. 25-FFF(1) main provision: The Labour Court examined substantial oral and documentary evidence and concluded that the employer had failed to prove that the closure was due to unavoidable circumstances beyond the employer's control (which would have brought the case within the proviso). The High Court found no error in that factual appreciation that would justify interference under Article 226 (or "Article 127" as stated in the text). In short, the Labour Court's factual conclusion — that this was a case of closure simpliciter and not closure due to unavoidable circumstances — was accepted as correct or at least not vitiated by such error as to warrant quashing.
  3. Set-off of lay-off compensation (Sec. 25-C interplay): The Labour Court had rejected the employer's set-off claim on three grounds: (i) no such plea was taken in the written statement, (ii) lay-off compensation could not be adjusted against later closure compensation, and (iii) Sec. 25-C was not attracted.
    • The High Court agreed that the Labour Court was not correct in rejecting the set-off claim on the first two grounds, noting that paragraph 15 of the Management's written statement did contain a plea that lay-off compensation in 1968 could be adjusted if the case otherwise fell within the second proviso to Sec. 25-C.
    • However, the Court held the claim ultimately failed because the case did not fall within the second proviso to Sec. 25-C. The second proviso applies only if (a) the case falls within the first proviso to Sec. 25-C (i.e., there was an agreement limiting lay-off compensation beyond 45 days), and (b) the employer retrenched the workman in accordance with Sec. 25-F after the first 45 days. There was no evidence of any agreement under the first proviso, so the first condition was not satisfied.
    • Even on a separate and independent ground, the Court reasoned that compensation under Sec. 25-FFF is not strictly retrenchment compensation: Sec. 25-FFF borrows only two consequences of Sec. 25-F — entitlement to notice (or wages in lieu) and the method of computing the amount of compensation — by legal fiction, "as if the workman had been retrenched." That fiction is limited to those two matters and does not convert an automatic termination by closure into a retrenchment under Sec. 25-F for all purposes. Because no retrenchment in accordance with Sec. 25-F occurred, the second proviso to Sec. 25-C (which speaks of set-off when retrenchment has been effected in accordance with Sec. 25-F) did not apply. Consequently, the set-off was not permissible on that statutory basis.
  4. Credit for payments made during pendency: The Labour Court refused to entertain the Management's belated assertion that closure compensation had been paid to certain workmen during the pendency of the proceedings. The High Court agreed with the Labour Court on two bases:
    • Procedural: The Management had not pleaded in its written statement that any amounts had been paid during the pendency; raising that contention for the first time at hearing was impermissible on the short ground that it had not been pleaded.
    • Factual review: Although a different view of the facts might have been reasonably possible, the Court did not find the Labour Court's factual conclusions to be perverse (i.e., such that no reasonable tribunal could have come to them). Absent perversity, the High Court would not interfere with the Labour Court's findings in exercise of writ jurisdiction.

On the whole, the High Court found no legally sustainable error that would justify quashing the Labour Court's order awarding compensation under the main provision of Sec. 25-FFF(1), and the petitioner's objections therefore failed.

Holding and Implications

Holding:

APPLICATIONS DISMISSED.

Consequences and immediate effects:

  • The Labour Court's award of compensation under the main provision of Sec. 25-FFF(1) stands; the Court refused to quash that portion of the Labour Court's order.
  • The petitioner's points (jurisdictional objection, legal error in applying Sec. 25-FFF(1), set-off of lay-off compensation, and credit for payments during pendency) were considered and rejected for the reasons summarized above.
  • No order as to costs was made in the circumstances.
  • The opinion does not purport to lay down any novel or general doctrine beyond its application to the facts before the Court; it upholds the Labour Court's factual findings and the statutory interpretation that Sec. 25-FFF's "as if retrenched" fiction is limited to notice and method of computing compensation. The Court did note an apparent drafting anomaly in Sec. 25-C as it stood (pre-amendment language), but it applied the unambiguous language as it read.

Note: The summary above is strictly confined to the content of the provided opinion and does not add or infer facts beyond those stated by the Court.

    Management Of Junkundar Colliery Of Messrs D. Mandal And Company v. Sahdeo Thakur And Others

    Untwalia, C.J:— These two writ applications have been heard together as they arise out of a common judgment of the Central Government Labour Court, Dhanbad, by which two cases filed under Sec. 33-C (2) of the Industrial Disputes Act, 1947 (hereinafter called the Act) were analogously tried and disposed of. The facts of the two cases are similar and the points involved in them are identical. They are, therefore, being disposed of by this judgment.

    2. In Junkundar Colliery of Messrs D. Mandal and Company at Chirkunda in the district Dhanbad were employed the various workmen who are respondents 1 to 67 in C.W.J.C 224/70 and respondents 1 to 160 in C.W.J.C 227/70. The said respondents of the former case filed an application under Sec. 33-C (2) of the Act, which was numbered as L.C 15 of 1969. The period of their claim in this case was August 15, 1967 to January 25, 1969. The 160 respondents in the other case filed a similar application which was numbered as L.C 518 of 1968 and the period in question in this case was August 15, 1967 to November 9, 1968. The workmen concerned in both the applications had asked the Labour Court to compute in terms of money several kinds of benefit which, they claimed, they were entitled. It is not necessary to detail all their claims because most of them have been rejected by the Central Government Labour Court in its judgment and order dated November 29, 1969, a copy of which is annexure 6 to the writ application. Computation of their claim in respect of one item only has been allowed by the court below (Labour Court) and that is in respect of the compensation claimed by them under Sec. 25-FFF of the Act. To resist that claim several pleas were raised by the Management which is the petitioner in both these writ applications. Overruling the objections, the Labour Court has awarded compensation under the main provision of sub-sec. (1) of Sec. 25-FFF of the Act. The Management has obtained rules from this court to quash that portion of the order (annexure 6) which is against it. Mr. Ranen Roy has appeared in support of the rule and Mr. S.K Mazumdar has appeared on behalf of the workmen concerned to oppose it.

    3. Learned counsel for the petitioner urged the following points in support of the rule—

    (i) That the claim of the workmen for compensation under the main provision of Sec. 25-FFF (1) was disputed by the employer, according to whom the compensation for closure was payable only under the proviso to sub-sec. (1). That being so, the Labour Court had no jurisdiction to go into this disputed matter and decide it under Sec. 33-C (2) of the Act. Only an industrial dispute could be raised in that regard.

    (ii) That the decision of the Labour Court that the compensation was payable under the main provision of sub-sec. (1) of Sec. 25-FFF and not under the proviso there is erroneous in law.

    (iii) That the lay off compensation earlier paid to the workmen in the year 1968 has wrongly been not adjusted by the Labour Court.

    (iv) That the closure compensation paid to certain workman out of the applicants in the two cases during their pendency has wrongly been not taken into account by the Labour Court.

    4. I have no difficulty in rejecting the first point urged on behalf of the petitioner. There was no dispute in these cases that there was closure of the colliery on November 11, 1968. Perhaps in view of the Supreme Court decision to R.B Bansilal Abirchand Mills Co. Ltd. v. The Labour Court, Nagpur (1) even if his fact would have been disputed, the Labour Court would have been competent to decide it in exercise of its power under Sec. 33-C (2) of the Act. But that apart, there the fact of closure was not disputed. The only question was of computation of the compensation payable to the workmen concerned. The Labour Court was competent to decide the necessary facts in order to find out whether compensation was payable under the main provision of sub-sec. (2) of Sec. 25-FFF or under the proviso to it. In case of closing down of an undertaking, compensation has got to be paid by the employer to the workmen under Sec. 25-FFF. It is not necessary to raise any industrial dispute for this purpose. The workmen, whether they are one or more, can straightaway approach the Labour Court under Sec. 33-C (2) of the Act for determination of the amount of compensation. The power to determine the amount of compensation must necessarily imply a power to determine under which part of the provisions of law contained in Sec. 25-FFF a particular case falls. Determination of this question is incidental to the determination of the main question which undoubted ly is within the ambit of the power of the Labour Court under Sec 33-C (2) of the Act. We have been taken through the relevant portions of the impugned Order of the Labour Court contained in annexure 6. Very many pieces of evidence—both oral and documentary—have been discussed by the Labour Court to arrive at the finding that the colliery was not proved to have been closed down on account of unavoidable circumstances beyond the control of the employer, as his case was. It was a case of closure of the colliery simpliciter. The Labour Court was right in its view that it was for the employer to prove, to bring the case under the proviso to sub-sec. (1) of Sec. 25-FFF, that he was obliged to close down the colliery on account of unavoidable circumstances beyond his control. He miserably failed to do so. It is not necessary to repeat and discuss the various pieces of evidence mentioned in the judgment of the Labour Court, suffice it to say that on appreciation of the argument advanced in that connection by the learned counsel for the petitioner, I have unhesitatingly come to the conclusion that the finding of the Labour Court in that regard is correct or in any event no such error is to be found therein which can justify interference by this Court in exercise of its power under Article 226 or 127 of the Constitution. The first and the second points urged on behalf of the petitioner, therefore, fail and must be rejected.

    5. A claim of set off of the lay off compensation paid by the employer to the workmen sometime in March, 1968 has been rejected by the Labour Court on three grounds—(i) that in the written statement filed by the Management no such plea was taken (ii) that the compensation paid for the earlier period on account of lay off could not be adjusted towards the compensation payable on account of closure brought about later and (iii) that the Sec. 25-C of the Act under which this set off was claimed was not attracted in this case.

    6. In my opinion, the Labour Court is not quite correct in rejecting the claim of set off on the first two grounds. In paragraph 15 of the written statement of the Management the plea was taken, If the claim was otherwise substantiable under the second proviso to Sec. 25-C of the Act then lay off compensation payable in the same year, i.e 1968 during which the closure was brought about could be adjusted, But then the difficulty is that the case is not covered by the second proviso to Sec. 25-C of the Act.

    7. Section 25-C, omitting the explanation., reads as follows:—

    “Whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an Industrial establishment and who has completed not less than one year of continuous service under an employer is laid off, whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid off:

    Provided that if during any period of twelve months, a workman is so laid off for more than forty-five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty-five days, if there is an agreement to that effect between the workman and the employer:

    Provided further that it shall be lawful for the employer in any case falling within the foregoing proviso to retrench the workman is accordance with the provisions contained in Sec. 25-F at any time after the expiry of the first forty five days of the lay-off and when, any compensation paid to the workman for having been laid off during the preceeding twelve months may be set off against the compensation payable for retrenchment.”

    8. Section 25-FFF (1) omitting the explanation appended thereto, runs as follows:—

    (1) 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 subsec. (2), be entitled to notice and compensation in accordance with the provisions of Sec. 25-F, as if the workman had been retrenched:

    Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under clause (b) Sec. 25-F shall not exceed his average pay for three months.”

    9. There are, in my opinion, two difficulties in applying the provision of the second proviso to Sec. 25-G in the case of the petitioner. The second proviso is attracted only on fulfilment of two conditions—(i) if the case falls within the first proviso to Sep. 25-G and (ii) if the Management has retrenched the workman in accordance with the provisions of Sec. 25-F of the Act at any time after the expiry of the first forty-five days of the lay-off. It was not shown nor is there any discussion in the impugned order of the Labour Court that there was any agreement between the workmen and the employer not to pay lay-off compensation beyond the period of forty-five days in accordance with the first proviso. The case was, therefore, not covered by the first proviso. Mr. Ranen Roy perhaps was right in his submission that so interpreting the second proviso makes the law unreasonable because in case the workman enters into an agreement with the employer in accordance with the first proviso, he not only loses his lay-off compensation for a period beyond forty-five days but also suffers the set off of the lay-off compensation payable to him when retrenchment compensation is given. Comparing the language of the provision of law contained in Sec. 25-C, as it stood at the relevant time, with the language of the section, as it stood prior to the amendment brought about by Central Act 37 of 1965, there seems to be some anomaly and defect of drafting. But I need not pursue this matter any further because the language of the second proviso, as it stands, is not ambiguous. It is clear enough to say that this proviso will appply only in a case falling within the first proviso. That being so. I hold that the first condition for the application of the second proviso to Sec. 25-C has not been shown to have been fulfilled in this case.

    10. Even if the view expressed by me in regard to the applicability of the second proviso to Sec. 25-C with reference to the first condition be assumed to be not correct, there is absolutely no doubt in my mind that on the second ground which is the third and the last one mentioned in the impugned order of the Labour Court, the petitioner must fail. J have quoted the relevant provision from Sec. 25-FFF of the Act. The compensation payable to the workmen under this provision, strictly speaking, is not a retrenchment compensation payable to them. In case of closure, in regard to two matters the provision of Sec. 25F has been made applicable—(i) that the workman is entitled to notice which is a provision contained in clause (a) of Sec. 25-F or in lieu of notice he is entitled to wages for the period of notice and (ii) that the amount of compensation payable for closure would be in accordance with the provision of Sec. 25-F of the Act “as if the workman had been retrenched”. The legal fiction which has been brought about in Sec. 25-FFF to treat the compensation payable to the workman in case of closure was a retrenchment compensation is limited to only two points—the point of notice and the amount of compensation. It does not extend further and does not make the automatic termination of service, which is brought about on the closure of an undertaking as retrenchment brought about in accordance with Sec. 25-F of the Act for all purpose. That being so, I have no difficulty in saying that the second proviso to Sec. 25-C was not applicable in this case because no retrenchment in accordance with the provision contained in Sec. 25. F was brought. As I have said above, it was, strictly speaking, not a case of retrenchment at all; it was a case of automatic determination of the service of the workmen on account of the closure of the undertaking. But then law has provided under Sec. 25-FFF that still compensation has got to be paid to such a workman. For the method of calculation of this compensation reference has been made to Sec. 25-F.

    11. Coming to the last and the fourth point, I must state at the outset that it has been rightly pointed out by learned counsel for the workmen that although a major portion of the amount under Exts M24 to M53 was said to have been paid before the filing of the written statement by the Management, no such plea in any form was taken in it. It was not stated in the written statement that any amount of compensation had been paid to any workman during the pendency of either cases. On this short ground, therefore, this plea raised at the time of the hearing of the cases ought not to have been allowed to be raised. I may also add that having examined the order of the Labour Court on facts in that regard, one may say that a differernt view of fact or conclusion of fact could be taken; but it is difficult to accept the argument put forward on behalf of the petitioner that the finding of the Labour Court in the regard is perverse in the sense that no reasonable body or man could have arrived at that finding. The points discussed in the order of the Labour Court are such that one could reasonably arrive at the conclusion at which the Labour Court did. One could arrive at a different conclusion also. But that cannot clothe this court with power to interefore with the findings of the Labour Court in service of its writ jurisdiction. For the reasons stated above, all the points urged on behalf of the petitioner fail and are rejected. The writ applications accordingly also fail and are dismissed but in the circumstances there would be no order as to cost in either.

    Sarwar Ali, J.:— I agree.

    12. Applications dismissed.

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    Management Of Junkundar Colliery Of Messrs D. Mandal And Company v. Sahdeo Thakur And Others
    (Feb 17, 1973)