Appeal No 315 of 1961
Appeal by special leave from the award dated December 29 1960 of the Industrial Trinal Bihar it Patna in Reference No 4 of 1960
C K Daphtary Solicitor General of India
and Sardar Bhadur for the appellants
BP Maheshwari for the respondents
March 9
The Judgment of the Court was delivered by GAJENDRAGADKARJ
This appeal by special leave is directed against the order passed by the Industrial TribunalPatna directing the appellant the Tatanagar Foundry Co to pay to the respondents its workmen 75 of the consolidated wages as compensation for having laid them off for a period of 45 days commencing from December 15 1959
it is common around that the appellant laid off the respondents for the said period
The appellant s case was that it had paid the respondents the statutory compensation for the said lay off as prescribed by s25C of the Industrial Disputes Act No 14 of 1947 hereinafter called the Act
The 797 respondents however contended that the lay off was not justified and so the statutory compensation paid by the appellant did not satisfy the ends of justice
It was this dispute between the parties which was referred for adjudication by the Government of Bihar to the Industrial Tribunal on February 9 1960
On this reference the Tribunal has held that the lay off could not be held to be altogether justified
 That is why it has awarded compensation to the respondents in excess of the amount statutorily fixed in that behalf
The appellant contends that the award thus made by the Tribunal is contrary to law Before dealing with the merits of the contentions raised by the appellant it would be necessary to state some relevant facts which led to the lay off
The appellant is a Public Limited Company and has its factory in Jamshedpur
It manufactures cast iron sleepers pipes general engineering casting and non ferrous castings in the said factory
The raw materials mainly required for the manufacture of sleepers are pig iron coke limestone and moulding sand
The Railway Board is the only buyer of sleepers and the sleepers are therefore manufactured only on receipt of orders upon tenders from the said Board and not otherwise
The normal procedure for procuring raw material was that after an order was received from the Railway Board the appellant submitted its requirement of pig iron to the Iron  Steel Controller of the Government of India who allocates the quantity for the said commodity to the various manufactures such as Tata Iron  Steel Co Ltd and Indian Iron  Steel Co Ltd Formerly supply of pig iron used to come from the said two concerns to the appellant and the appellant used to  pay cash to Tata Iron  Steel Co Ltd for the pig iron supplied by it and by a Letter of credit to the Indian Iron  Steel Co Ltd on which the said Company used to supply the raw material made by it
In 1959 both the companies 798 stopped supply of pig iron in spite of the order issued in that behalf by the Controller and they wrote to the appellant suggesting that the appellant should request the Controller to cancel his order and place the same with some other suppliers
Correspondence followed between the said companies and the appellant and finally in November 1959 the appellant was informed by the said companies that they could not supply its requirements of raw material
In June 1959 the Bhilai Steel Works made their first shipment of pig iron addressed to the appellant
In August 1959 the said Works despatched some wagons of pig iron to the appellant but out of 20 wagons of the consignment 14 were lost completely and the rest misdelivered and were subsequently found somewhere in Gomoh and some in Tatanagar and they never reached the appellant in time
In May 1959 the appellant arranged for Letter of Credit for a sum of Rs 100000 for the Bhilai Steel Works
In August there was a supply of 440 tons and in September followed a supply of 36 wagons Containing pig iron to the extent of 20 to 21 tons each roughly
In all this latter supply came to about 760 tons
In the two subsequent months no supply was received from Bhilai
The Letter of Credit which the appellant had opened for Bhilai Steel Works was revolving with the result that as soon as one transaction was completed the said letter was ready for the subsequent transaction
The effect of this revolving letter was that the value of credit of Rs100000 continued to be outstanding all the time
In spite of this revolving letter the Bhilai Steel Works failed to supply pig iron in the two months October and November
The appellant reminded the Works that no supply of pig iron was received from them and yet no advice of any despatch of pig iron was received from the 799 Works after July 27 1959
Even the 20 wagons which had been sent in August and September did not arrive at the factory
These wagons it was later learnt had been delivered to K P Docks and some other destinations
In regard to the supply of pig iron from Rourkela the appellant arranged for finance on cash basis
In fact between August and December a total advance of Rs 175000 was made to the Rourkela Steel Works
A supply of pig iron worth about Rs 164000 was received by the appellant but the balance of Rs 11000 was still outstanding
In addition to the cash advances the appellant also opened a Letter of Credit for Rs 100000 in November 1959 for financing the purchase of steel from the said Works
As early as 1959 TISCO informed the appellant that it regretted that it would not be possible for it to supply the requirements of the company regularly while in regard to the supply from IISCO the position was still worse
The appellant kept its employees and the Assistant Labour Commissioner fully informed of these unfortunate developments from time to time
Both the Assistant Labour Commissioner and Mr John President of the respondents  Union did what they could by moving the Government to assist the appellant in securing the raw material
Even so when the situation did not show any signs of improvement and the appellant found that no raw material was available with which its foundry could carry on the manufacture of sleepers it issued a notice on December 15 1959 and laid off the  workers of the Sleeper Factory
This lay off con tinued until September 11 1960 and from September 12 1960 the appellant closed the Sleeper Foundry department and issued notice of retrenchment
Subsequently retrenchment compensation was duly paid to the workmen who had been retrenched
800 That in short is the background of the lay off the validity of which formed the subject matter of the present reference
It appears that before the Tribunal it was urged by the respondents that the appellant had deliberately brought about a situation which led to the lay off in order to divert the relevant orders for sleepers to its Belur factory
The argument was that at Belur the appellant gets its work done at cheaper cost with the help of contract labour
Now if this contention had been established then it would clearly have been a case of malafides on the part of the appellant and a claim for additional compensation may have been justified
But the Tribunal has rejected this contention and has hold that no evidence had been adduced to prove such a malafide intention on the part of the appellant
It was also urged by the respondents that even in the absence of pig iron the manufacture of sleepers could have been carried on by utilising a substitute and in support of this case four witnesses were examined by the respondents
The Tribunal has rejected this case also
It has found that the evidence given by the four witnesses was unreliable and unsatisfactory and the statement made by the General Manager in cross examination on this point was sufficient to show that in the absence of pig iron castings with scrap iron and tin could not have been made
In fact the General Manager categorically stated that the appellant  had not casted any sleeper without pig iron at any time
Thus the alternative plea raised by the respondents to suggest that if the appellant had so desired it could have avoided to lay off its workmen has also been rejected by the Tribunal
The Tribunal however was inclined to take the view that if the management had been more foresighted it could have avoided the unfortunate 801 position which it had to face at the relevant time and because the Tribunal thought that the situation which faced the appellant at the relevant time was partly due to its negligence it reached the final conclusion that the lay off was not altogether justified
The Tribunal s view appears to be that if reasonable care had been exercised by the appellant the situation could have been avoided
It is this part of its finding that is seriously disputed before us by the appellant
Under a 2 kkk lay off means inter alia the failure or inability of an employer on account of shortage of raw materials to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched
As we have already seen there is no doubt that raw materials wore not available to the appellant at the relevant time and so the lay off which is the subject matter of the present dispute satisfies the test prescribed by the definition
Section 25C provides for the right of workmen laid off for compensation and it is common ground that compensation equal to 50 of the total of the basic wages and dearness allowance as therein prescribed has been paid by the appellant to the respondents
The issue referred to the Tribunal was whether the action of the management in laying off the workmen was justified
If not to what relief were the respondents entitled  In other words the reference shows that it was only if the Tribunal came to the conclusion that the lay off wag not justified that the question of considering what additional compensation should be paid to the respondents could arise
If the lay off is justified and it satisfies the requirements of the definition under section 2kkk the only relief to which the workmen laid off are entitled is the statutory relief prescribed by a 25C
There is no doubt or dispute about this position
802 It is also not in dispute that if the lay off is malafide in the sense that the employer has deliberately and maliciously brought about a situation where lay off became necessary then it would not be a lay off which is justified under section 2kkk and the relief provided to the laid off workmen under a 25C would not be the only relief to which they are entitled
Malafides of the employer in declaring a lay off really mean that no lay off as contemplated by the definition has in law taken place and so a finding as to malafides of the employer in declaring a lay off naturally takes the lay off out of the definition of section 2kkk and as such a 25C cannot be held to be applicable to it so as to confine the workmen s right to the compensation therein prescribed
If the lay off has been declared in order to victimise the workmen or for some other ulterior purpose the position would be the same
It would Dot be a lay off as contemplated by a 2kkk
But when dealing with a lay off like the one with which we are concerned in the present appeal it would not be open to the Tribunal to enquire whether the appellant could have avoided the lay off if he had been more diligent more careful or more far sighted
That is a matter relating to the management of the undertaking and unless malafides are alleged or proved it would be difficult to assume that the Industrial Tribunal has jurisdiction to sit in judgment over the acts of management of the employer and investigate whether a more prudent management could have avoided the situation which led to lay off
The danger involved in permitting such jurisdiction to the Tribunal is illustrated by the present award itself
The Tribunal has found that the appellant was in financial difficulties at the relevant time  it has found that the appellant was not actuated by any malafide intention it has come to the conclusion that the lay off was not the result of any uleriort 803 motive and yet it has finally come to the conclusion that if the affairs of the appellant it had been better managed and more foresight had been shown by the appellant prior to the time when the crisis was reached pig iron could have been secured and lay off could have been avoided
Apart from the fact that this conclusion does not appear to be borne out by any evidence on record it seems to us that the Tribunal exceeded its jurisdiction in trying to decide whether better
management could have avoided the crisis
The appellant is no doubt expected to manage its affairs prudently but it would we think not be reasonable or fair to hold that if the employer is faced with a situation under which for lack of raw materials he has to lay off his workmen it is necessary that he must submit to an enquiry by the Industrial Tribunal about the prudence of the management and the forethought displayed by it in anticipating and avoiding the difficulties
That is why we think in embarking upon an enquiry as to whether the appellant had shown sufficient foresight in managing its affairs the Tribunal has exceeded its jurisdiction
Besides as we have just indicated its finding on the question of negligence is not supported by any evidence on record nor by probabilities in the case
In that connection it is significant that subsequently the section in question has been closed and the retrenched workmen have been paid retrenchment compensation due to them
The result is the appeal succeeds and the order passed by the Tribunal for the payment of compensation of 75 of the consolidated wages is set aside
There would be no order as to costs
Appeal allowed


Summary:
The appellant has its factory at jamshedpur
It manu factures cast iron sleepers pipes etc in the said factory
The raw materials mainly required for the manufacture of sleepers are pig iron coke limestone and moulding sand
The Railway Board is the only buyer of sleepers and the sleepers are manufactured only on receipt of orders from the said Board and not otherwise
Inspite of its best efforts to secure the raw materials in 1959 the appellant failed to secure the same
As the appellant found that the manufacture of sleepers could not be carried on it issued a notice and laid off the workers of the sleeper factory
The lay off continued from December 15 1959 to September 11 1960
On September 12 1960 the appellant closed the Sleeper Foundry Department and issued notice of retrenchment
Retrenchment compensation was also paid to the workmen retrenched
The appellant paid the respondents the statutory compensation for the lay off period as prescribed by section 25C of the 
However the respondents contended that the lay off was not justified The dispute between the parties was referred for adjudication by the Government of Bihar to the Industrial Tribunal
The Tribunal found that the appellant was in financial difficulties at the relevant time the appellant was not actuated by any malafide intentions and the lay off was not the result of any ulterior motive
However it held that if the affairs of the appellant had been better managed and more foresight had been shown by the appellant prior to the time when the crisis was reached pig iron could have been secured and lay off could have been avoided
Under the circumstances the Tribunal held that the lay off could not be held to be altogether justified and awarded compensation to the respondents in excess of the amount fixed by the statute 796 Held that the lay off was justified as raw materials were not available to the appellant at the relevant time
The only relief to which the workmen were entitled was the statutory relief prescribed by section 25C
If the lay off is malafide in the sense that the employer has deliberately and malaciously brought about a situation where lay off becomes necessary it is not a lay off which in justified tinder section 2kkk and the relief provided under section 25C is not the only relief to which the workmen are en titled
The malafides of the employer in declaring lay off really means that no lay off has in law taken place and a finding as to the malafide of the employer in declaring a layoff takes the lay off out of the definition of section 2kkkIf lay off is declared in order to victimise workmen or for some ulterior purpose the position in the same