Appeals Nos 103  105 of 1956
Appeal from the judgment and order dated January 24 1955 of the Bombay High Court in Special Civil Application No 2546 of 1954
123 N A Palkiwala and J B Dadachanji section N Andley and Rameshwvar Nath for appellants in Civil Appeal No 103 of 1956 M C Setalvad Attorney General for India C K Daphtary Solicitor General for India Porus A Mehta and R H Dhebar for respondents
section M Bose Advocate General of West of BengalN A Palkiwala J B Dadachanji section N Andley and Rameshwar Nath for the appellant in Civil Appeal No 105 of 1956
Rajini Patel M V Jayakar and I N Shroff for respondent No 1
Porus A Mehta and R H Dhebar for respondents Nos 4  5
November 27
The Judgment of the Court was delivered by section K DAS J
These two appeals brought on certificates granted by the High Court of Bombay raise common questions of law and for that reason have been heard together
This judgment will govern them both
CIVIL APPEAL No 105 OF 1956
In Civil Appeal No 105 of 1956 the main appellant is the Barsi Light Railway Company Limited Kurduwadi within the State of Bombay hereinafter called the Railway Company
The principal respondent is the President of the Barsi Light Railwaymen s Union respondent No I to the appeal
The General Manager Central Railway Bombay and the Secretary Railway Board New Delhi are respondents Nos 4 and 5
The facts so far as they are relevant for our purpose are these
Under an agreement dated August 1 1895 between the Secretary of State for India in Council and the Railway Company the latter constructed maintained and worked a light railway between Barsi Town and Barsi Road Station on the railway system known then as the Great Indian Peninsular Railway
It is not necessary to state here the various clauses of the aforesaid indenture of agreement except to mention 124 that it contained a clause under which the Secretary of State could purchase and take over the undertaking after giving the Railway Company not less than twelve calendar months  notice in writing of the intention so to do
On December 19 1952 a notice was given to the Railway Company for and on behalf of the President of India by the Director of the Railway Board to the effect that the undertaking of the Railway Company would be purchased and taken over as from January 1 1954
The notice stated inter alia The President of India hereby gives this notice to the Company of the determination of the original contract of the 1st day of August 1895 and the contract of the 26th day of August 1902 between the Secretary of State in Council and the Barsi Light Railway Company Ltd and of all the contracts supplemental thereto at the expiration of 12 calendar months next after the current month and the contracts shall terminate accordingly on the expiration of 12 calendar months next after the current month and the President of India will on the 1st day of January 1954 purchase and take over the entire railway system of the Company including all the extension andall the railways together with all its rolling stock machinery equipments buildings and property etc and together with all other things stores and fixtures etc
 as specified and in the manner provided in clause 43 of the Indenture of the 1st August 1895 and in clause 63 of the Indenture of the 26th August 1902
 On November 11 1953 the Railway Company served a notice on its workmen intimating that as a result of the Government of India s decision to terminate the contract of the Railway Company and take over the railway from January 1 1954 the services of all the workmen of the Railway Company would be terminated with effect from the afternoon of December 31 1953
The notice further stated that the Government of India intended to employ such of the staff of the Company as would be willing to serve on the railway on terms and conditions which were to be notified later
On December 15 1953 the Railway Board intimated the terms and conditions 125 on which the staff of the Railway Company would be taken over and employed by Government
The letter by which the terms and conditions were communicated enclosed three forms one for clerical and like categories a second for categories of staff needing training or refresher course and a third for workshop staff and other tradesmen requiring trade testing
In substance the new terms and conditions as embodied in the letter and the three forms stated that the service of the staff employed by Government would be treated as continuous for certain specific purposes only such as contribution to provident fund leave passes and privilege ticket orders educational and medical facilities etc
It was made clear however that the Government Railway rules applicable to other staff appointed on the same day would be applicable to the staff of the Railway Company and previous service under the Railway Company would not count for the purpose of seniority
It appears from the statement of respondents 4 and 5 that when the undertaking was actually taken over on January 1 1954 about 77 per cent
of the staff of the Railway Company were re employed on the same scales of pay about 23 per cent
were re employed on somewhat lower scales of pay though the pay which they actually drew at the time of re employment was not affected only about 24 of the former employees of the Railway Company declined service under the Government
Soon after respondent No I filed some sixty one applications on behalf of the erstwhile workmen of the Railway Company under section 15 of the  for payment of retrenchment compensation to the said workmen under cl
b of a 25F of the hereinafter called the Act
The applications were made to respondent No 3 Civil Judge Junior Division Madha who was the relevant authority under the 
These applications were contested by the present appellants and several issues were framed
Three of the issues were 1 whether the authority under the 126  had jurisdiction to deal with and adjudicate on the claim of retrenchment compensation 2 whether the erstwhile workmen were entitled to claim compensation under clause b of a 25F of the Act  and 3 whether they had been retrenched  by their former employer the present appellants on December 31 1953 within the meaning of the expression retrenchment  in the Act
The Civil Judge of Madha found against the workmen on issue No I but in their favour on the other two issues
By consent of parties the aforesaid findings given on one of the applications Miscellaneous Application No 27 of 1954 governed the other applications also and the applications were dismissed as a result of the finding on the question of jurisdiction
Respondent No I then moved the High Court of Bombay in Civil Application No 2546 of 1954 and prayed for writs or appropriate directions under the provisions of articles 226 and 227 of the Constitution for quashing the order of dismissal passed by respondent No 3 the Civil Judge of Madha and directing the latter to dispose of the applications before him on merits
In the High Court the question of jurisdiction of the authority under the  was not argued because learned counsel for the Railway Company rightly pointed out that assuming that the said authority had jurisdiction to deal with the claim of the workmen the controversy between the parties would not come to an end by a decision on the question of jurisdiction only because the Railway Company still contended that the workmen had not been retrenched  within the meaning of the Act and were not entitled to claim compensation under al
b of section 25F
Thereupon both parties agreed in the High Court that Civil Application No 2546 of 1954 should not be restricted to the question of jurisdiction but should be decided on merits that is on the validity or otherwise of the claim of the erstwhile workmen to compensation under cl
b of section 25F on the termination of their services by the Railway Company on December 31 1953
Learned counsel for the Railway Company agreed and undertook on behalf of 127 his client to accept whatever finding was given by the High Court on merits subject to an appeal to this Court
The High Court Chagla C J and Dixit J held by its judgment and order dated January 24 1955 that the workmen were entitled to claim compensation under clause b of section 25F of the Act and the Railway Company was liable to pay such compensation to them
It is from that decision that Civil Appeal No 105 of 1956 has been brought
CIVIL APPEAL No 103 OF 1956
The facts in this appeal are somewhat different
The main appellant is Shri Dinesh Mills Ltd Baroda and the principal respondent is the District Labour Officer and Inspector under the  at Baroda
The appellant Company was running a woollen mill at Baroda for several years and had in its employ at the relevant time 450 workmen and 20 clerks
The work was done in shifts day and night
On or about October 31 1953 the appellant put up a notice declaring its intention to close down the entire mills from December 1 1953
On November 191953 this notice was withdrawn and another notice was put up declaring the intention of the appellant to close down the second shift with effect from December 20 1953
A third notice was put up saying that the second shift would be closed on December 20 1953 as notified earlier and the first shift would be closed as from January 8 1954
A similar notice was put up on the same date terminating the services of the clerks with effect from January 191954
It was not disput ed that though the steps in the process of closure of the business of the appellant Company were staggered
the process was really one and as a result of the closure the services of all 450 workmen and 20 clerks were terminated
The appellant Company claimed that the closure of its business was bona fide being due to heavy losses sustained by the Company
On April 27 1954 the principal respondent made an application to the relevant authority respondent No 3 under the  claiming retrenchment compensation for the workmen of the 128 appellant under el
b of section 25F of the Act
The application was contested by the appellant Company and here again the same questions of jurisdiction of the authority under the  to deal with the claim and the maintainability of the claim under el
b of is
25F of the Act arose for decision
The authority under the decided against the erstwhile workmen on all the important issues
The respondent then moved the High Court of Bombay for appropriate writs or directions and the High court Bavdekar and Shah JJ held that the authority under the  bad jurisdiction to deal with the claim of retrenchment compensation on the merits of the claim the learned Judges felt bound to accept the decision of the Bench Chagla C J and Dixit J in the case of the Railway Company
Accordingly the order of respondent No 3 was set aside and he was directed to dispose of the application before him in accordance with law
Civil Appeal No 103 of 1956 is from the aforesaid decision of the High Court dated July 25 1955
It should be apparent from the facts stated above though they are a little different with regard to the two appeals before us that a common question of law emerges therefrom namely whether the claim of the erstwhile workmen both of the Railway Company and of Shri Dinesh Mills Limited to compensation under cl
b of section 25F of the Act is a valid claim in law
The second question that of jurisdiction of the authority under the  is not a live question in Civil Appeal No 105 of 1956 after the agreement of parties in the High Court
It does arise however in Civil Appeal No 103 of 1956
But learned counsel for the appellants in that appeal has been ingenuous enough to state that he does not wish to take our time by addressing us on that question not because he considers that the question of jurisdiction is devoid of all merit but by reason of the fact that under the provisions of section 25 1 of the Act the claim for retrenchment compensation if found to be legally valid can still be enforced against the 129 appellants
Section 19 of the Industrial Disputes Amendment and Miscellaneous Provisions Act 1956 purports to repeal section 25 I of the principal Act but that section has not yet been brought into force with the result that the provisions of section 25 I are still available for the recovery of retrenchment compensation
Learned counsel has therefore submitted before us that these appellants will be content to abide by our decision on the principal question in these two appeals namely the validity or otherwise of the claim for retrenchment compensation under cl
b of section 25F of the Act
The Act which has been in force since April 1 1947 has bad a plexus of amendments and some of the recent amendments have been quite extensive in nature
Section 25F occurs in Ch
VA of the Act that chapter dealing with lay off and retrenchment  was inserted by an amending Act Act XLIII of 1953 in 1953
Section 25F is in these terms 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 athe 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 the 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 bthe 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 cnotice in the prescribed manner is served on the appropriate Government In the first part of the provisions of the section the word used is  retrenched  and in cls
a and b the word used is retrenchment 
Obviously they have 17 130 the same meaning the only difference being that in the first part the word used is a verb and in the clauses the word is used as a noun
It is obvious that to appreciate the true scope and effect of section 25F we must first understand what is meant by the expression  retrenched  or retrenchment 
By the same amending Act of 1953 a new definition was added to the definitions in section 2 being a definition of the word  retrenchment  in el
oo of section 2
The definition is in these terms Section 2oo  retrenchment  means the termination by the employer of the service of a workman for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action but does not include a voluntary retirement of the workman or b retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains astipulation in that behalf or ctermination of the service of a workman on the groundof continued ill health
 Leaving out the excluding sub cls
a b and c for the time being these sub clauses not being directly applicable to the cases under our consideration the definition when analysed consists of the following four essential requirements a termination of the service of a workman b by the employer c for any reason whatsoever and dotherwise than as a punishment inflicted by way of disciplinary action
It must be conceded that the definition is in very wide terms
The question however before us is does this definition merely give effect to the ordinary accepted notion of retrenchment in an existing or running industry by embodying the notion in apt and readily intelligible words or does it go so far beyond the accepted notion of retrenchment as to include the termination of services of all workmen in an industry when the industry itself ceases to exist on a bona fide closure or discontinuance of his business by the employer 9 Learned counsel for the appellants contend that the 131 first gives the correct meaning of the definition while learned counsel for the principal respondents urge that by reason of the wide words used in the definition the second gives the correct meaning of the expression retrenchment 
There is no doubt that when the Act itself provides a dictionary for the words used we must look into that dictionary first for an interpretation of the words used in the statute
We are not concerned with any presumed intention of the legislature our task is to get at the intention as expressed in the statute
Therefore we propose first to examine the language of the definition and see if the ordinary accepted notion of retrenchment fits in squarely and fairly with the language used
What is the ordinary accepted notion of retrenchment in an industry  We have had occasion to consider this question in Pipraich Sugar Mills Ltdv
Pipraich Sugar Mills Mazdoor Union 1 where we observedBut retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff or the labour force is discharged as plusage and the termination of services of all the workmen as a result of the closure of the business cannot therefore be properly described as retrenchment
 It is true that these observations were made in connection with a case where the retrenchment took place in 1951 and we specially left open the question of the correct interpretation of the definition of retrenchment  in section 2 oo of the Act
But the observations do explain the meaning of retrenchment in its ordinary acceptation
Let us now see how far that meaning fits in with the language used
We have referred earlier to the four essential requirements of the definition and the question is does the ordinary meaning of retrenchment fulfil those requirements  In our opinion it does
When a portion of the staff or labour force is discharged as surplusage in a continuing business there are a termination of the service of a workman b by the employer c for any reason whatsoever and d otherwise than as a punishment 1  132 inflicted by way of disciplinary action
It has been argued that by excluding bona fide closure of business as one of the reasons for termination of the service of workmen by the employer we are cutting down the amplitude of the expression for any reason whatsoever  and reading into the definition words which do not occur there
We agree that the adoption of the ordinary meaning gives to the expression for any reason whatsoever  a somewhat narrower scope one may say that it gets a color from the context in which the expression occurs but we do not agree that it amounts to importing new words in the definition
What after all is the meaning of the expression for any reason whatsoever  When a portion of the staff or labour force is discharged as surplusage in a running or continuing business the termination of service which follows may be due to a variety of reasons eg for economy rationalization in industry installation of a new laborsaving machinery etc
The legislature in using the expression for any reason whatsoever  says in effect It does not matter why you are discharging the surplus if the other requirements of the definition are fulfilled then it is retrenchment
 In the absence of any compelling words to indicate that the intention was even to include a bona fide closure of the whole business it would we think be divorcing the expres sion altogether from its context to give it such a wide meaning as is contended for by learned counsel for the respondents
What is being defined is retrenchment and that is the context of the definition
It is true that an artificial definition may include a meaning different from or in excess of the ordinary acceptation of the word which is the subject of definition but there must then be compelling words to show that such a meaning different from or in excess of the ordinary meaning is intended
Where within the framework of the ordinary acceptation of the word every single requirement of the definition clause is fulfilled it would be wrong to take the definition as destroying the essential meaning of the word defined
There is another way of looking at the problem
Let us assume
that the definition clause is so worded that 133 the requirements laid down therein are fulfilled whether we give a restricted or a wider meaning to that extent there is an ambiguity and the definition clause is readily capable of more than one interpretation
What then is the position  We must then see what light is thrown on the true view to be taken of the definition clause by other provisions of the Act or even by the aim and provisions of subsequent statutes amending the Act or dealing with the same subject matter
In Pipraich Sugar Mills Ltd vs Pipraich Sugar Mills Mazdoor Union 1 it was observed It cannot be doubted that the entire scheme of the Act assumes that there is in existence an industry and then proceeds onto provide for various steps being taken when a dispute arises in that industry
Thus the provisions of the Act relating to lock out strike lay off retrenchment conciliation and adjudication proceedings the period during which the awards are to be in force have meaning only if they refer to an industry which is running and not one which is closed
 In Burn  Co Calcutta vs Their Employees 2 this Court observed that the object of all labour legislation was firstly to ensure fair terms to the workmen and secondly to prevent disputes between employers and employees so that production might not be adversely affected and the larger interests of the public might not suffer
It was then observed in The Pipraich Sugar Mills  case 1 supra  Both these objects again can have their fulfillment only in an existing and not a dead industry
The view therefore expressed in Indian Metal and Metallurgical Corporation vs Industrial Tribunal Madras 3 and K M Padmanabha Ayyar vs The State of Madras 4 that the industrial dispute to which the provisions of the Act apply is only one which arises out of an existing industry is clearly correct
Therefore where the business has been closed and it is either admitted or found that the closure is real and bona fide any dispute arising with reference thereto would as held in K M Padmanabha Ayyar vs The State of Madras 4 fall outside the 1 2  3 AIR 1953 Madras 98
4 134 purview of the 
 In view of these observations it would be against the entire scheme of the Act to give the definition clause relating to retrenchment such a meaning as would include within the definition termination of service of all workmen by the employer when the business itself ceases to exist
Learned counsel for the appellants in the two appeals have pointed out that the definition clause is inartistically drawn up and sub cls
a and b of section 2 oo are not easily intelligible with reference to one of the essential requirements of the definition namely that the termination of service of the workman must be by the employer
It has been submitted that voluntary retirement of the workmen cannot be termination of service by the employer
We do not however think that sub cls
a b and c are conclusive of the question before us they no doubt apply to a running or continuing business only but whether inserted by way of abundant caution or on account of excessive anxiety for clarity they merely exclude certain categories of termination of service from the ambit of the definition
They do not necessarily show what is to be included within the definition
Two other cognate sections to which our attention has been drawn are sections 25G and 25H
They are applicable clearly enough to a running business only
The learned Attorney General who has appeared for the principal respondent in one of the appeals has pointed out that if the definition clause covers the case of termination of service in a continuing business as also termination of service on a closure of business the circumstance that sections 25G and 25H provide for some instances of retrenchment only is no ground for holding that they exhaust all possible cases of retrenchment or that section 25F must also be restricted to a running business only
We agree that if it is conceded that the definition clause includes cases of closure of business no difficulty is presented by sections 25G and 25H
But the fundamental question at issue is does the definition clause cover cases of closure of business when the closure is real and bona fide The point to be emphasised in that connection is that there is no 135 provision except perhaps section 25FF inserted in 1956 by Act XLI of 1956 to which we shall presently refer which can be said to bring a closed or dead industry within the purview of the Act
The provisions of the Act almost in their entirety deal with an existing or continuing industry
All the provisions relating to lay off in sections 25A to 25E are also inappropriate in a dead business
Learned counsel for the appellants have also adverted to some surprising results which would follow the wider interpretation of the definition clause
If an employer dies and his heirs carry on the business or there is compulsory winding up of a company and the company is reconstructed or a business is converted into a limited company or a new partner is taken into the business there is in law a termination of service by a particular employer and a new employer appears on the scene will the workmen in such circumstances be entitled to retrenchment compensation though they continue in service as before  There must indeed be found very compelling reasons in the words of the statute before it can be held that such was the intention of the legislature
We think that no such compelling reasons are available from the provisions of the Act on the contrary they point really one way that the Act contemplates an existing or continuing industry and not a dead industry
This brings us to two other arguments advanced by the learned Attorney General
One is that before the enactment of the amending Act of 1953 Act XLIII of 1953 retrenchment had acquired a special meaning meaning which included the payment of compensation on a closure of business and the legislature gave effect to that meaning in the definition clause and by inserting section 25F The second argument is that section 25FF inserted in 1956 Act XLI of 1956 is parliamentary exposition of the meaning of the definition clause and of section 25F We shall now consider these two arguments
As to the first argument a large number of decisions of Industrial or Lpobour Appellate Tribunals have 136 been placed before us
The learned Attorney General has relied particularly on three decisions The Hyderabad Vegetable Oil Products Ltd vs Their Workers1 Employees Of Messrs India Reconstruction Corporation Ltd Calcutta vs Messrs India Reconstruction Corporation Ltd Calcutta  Kandan Textiles Ltd vs Their Workers3 
The decision in Employees of Messrs India Reconstruction Corporation Ltd Calcutta vs Messrs India Reconstruction Corporation Ltd Calcutta2 Was considered by us in Pipraich Sugar Mills Lid
vs Pipraich Sugar Mills Mazdoor Union4where we said that we were unable to accept the observation of the Tribunal that in substance the difference between closure and normal retrenchment was one of degree only
We are aware that in some cases Labour Appellate Tribunals awarded retrenchment compensation on closure of business even when the closure was bona fide or justified
We expressed our dissent from those decisions in the Pipraich Sugar Mills case4
When closely examined none of those decisions show however that discharge of workmen on bona fide closure of business was held to fall within the meaning of normal retrenchment
In The Hyderabad Vegetable Oil Products Ltd vs Their Workers1 the grounds on which compensation was allowed were 1 involuntary or forced unemployment of the workmen 2 absence of any social security scheme like unemployment insurance and 3 financial position of the company
On similar grounds compensation was awarded in Kandan Textiles Ltd vs Their Workers3 as an equitable relief and a variety of factors were referred to as determining the appropriate relief to be given in a particular case
We consider it unnecessary to examine all the decisions on this point and it is enough to indicate what we consider to be the correct position in the matter
Retrenchment means discharge of surplus workmen in an existing or continuing business it had acquired no special meaning so as to include discharge of workmen on bona fide closure of business  though a number of Labour Appellate Tribunals awarded compensation to 1 1950 3 1954 2 249
2 4 1956 S 872 137 workmen on closure of business as an equitable relief for a variety of reasons
It is reasonable to assume that in enacting section 25F the legislature standardised the payment of compensation to workmen retrenched in the normal or ordinary sense in an existing or Continuing industry the legislature did away with the perplexing variety of factors for determining the appropriate relief in such cases and adopted a simple yard stick of the length of service of the retrenched workmen
If the intention of the legislature was to give statutory effect to those decisions which awarded compensation on real and bona fide closure of business the legislature would have said so instead of being content by merely adding a definition clause every requirement of which is fulfilled by the ordinary accepted meaning of the word retrenchment 
We turn now to the second argument
We have said that section 25FF was inserted in 1956 by amending Act XLI of 1956 which came into force on September 41956
Before that date the two decisions under appeal had been given by the Bombay High Court as also a further decision in The Hospital Mazdoor Sabha vs The State of Bombay1 where it was held that the failure to comply with the condition for payment of compensation to an employee at the time of his retrenchment under section 25F b of the Act gave the employee the right to challenge his retrenchment and to contend that his services were not legally and effectively terminated
Faced with the situation created by those decisions the legislature stepped in and enacted section 25FF
That section is in these terms Notwithstanding anything contained in section 25F no workman shall be entitled to compensation under that section by reason merely of the fact that there has been a change of employers in any case where the ownership or management of the undertaking in which he is employed is transferred whether by agreement or by operation of law from one em ployer to another Provided that 1 18 138 athe service of the workman has not been interrupted by reason of the transfer b the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer and c the employer to whom the ownership or management of the undertaking is so transferred is under the terms of the transfer or otherwise legally liable to pay to the workman in the event of his retrenchment compensation on the basis that his service has been continuous and has not been inter rupted by the transfer
 The section is not retrospective and does not in terms apply to any of the two cases before us
But the question is what light does it throw on the meaning of section 25F The learned Attorney General has placed great reliance on the non obstante clause with which the section begins and has contended that it shows by necessary intendment that a workman whose service has been terminated by reason of a change of employers on account of a change of ownership or management will be entitled to retrenchment compensation under section 25F unless the conditions a b and c laid down in section 25FF are fulfilled
This according to the learned Attorney General is parliamentary exposition of the true meaning of retrenchment in the definition clause and in section 25F
At first sight there appears to be considerable force in this argument and the learned Attorney General has cited English and American decisions of high authority in support of his contention Attorney General vs Clarkson 1  Ormond Investment Co Ltd vs Betts 2 George H Cope vs Janet cope3 Great Northern Railway Co vs United States of America4
In considering the effect of section 25FF we must take note of the circumstances in which it was inserted in the Act
The situation was that any transfer or closure of business and any change of 11900 1 QB 156
21928 AC 143
31891   688
41941   139 employer or management was judicially held to give rise to a claim for retrenchment compensation with consequences which might result in a complete industrial deadlock
The legislature could not declare the decisions to be incorrect but could partially supersede their effect by an amendment of the law
These were the circumstances in which section 25FF was enacted
We agree with learned counsel for the appellants that the aim or object of the enactment was to supersede partially the effect of the aforesaid judicial decisions at least with regard to the urgent matter of change of ownership or management of a business undertaking which is of quite frequent occurrence rather than parliamentary exposition of the pre existing law the general question of closure of business of a lesser degree of urgency was naturally left to be dealt with if necessary after the appeals had been disposed of
We are fortified in this view by an examination of the provisions of the Industrial Disputes Amendment and Miscellaneous Provisions Act 1956
Be it noted that this Act was passed on August 28 1956 only about seven days before the enactment of section 25FF
Section 29 of the Industrial Disputes Amendment and Miscellaneous Provisions Act 1956 inserts new schedules to the Act and item 10 of the Third Schedule Matters within the jurisdiction of Industrial Tribunals is  Retrenchment of workmen and closure of establishment in the Fourth Schedule item 10 is Rationalisation standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen
 It is true that these new Schedules have not yet come into force but the wording of the items mentioned therein shows that the legislature clearly envisaged a distinction between retrenchment and closure and retrenchment did not include closure of business item 10 of the Fourth Schedule almost clinches the issue because it shows how retrenchment of surplus labour may occur in a running industry
If we are to choose between the two amending Acts of 1956 on the point of parliamentary exposition we unhesitatingly hold that the Industrial Disputes Amendment and Miscellaneous Provisions Act 1956 140 Act XXXVI of 1956 is more in the nature of parliamentary exposition than the Industrial Disputes Amendment Act 1956 Act XLI of 1956 which merely supersedes the effect of certain judicial decisions
We are aware that on the narrower interpretation of the definition clause on the basis of the ordinary accepted connotation of retrenchment section 25F will apply to a continuing or running business only and section 25FF will become largely unnecessary
We do not think that consideration need cause any difficulty the judicial decisions on the basis of which section 25FF was enacted being held to be erroneous by us no hardship is caused if section 25FF is rendered superfluous because its aim is served by the correct interpretation now given of the definition clause and of the provisions of section 25F both of which are on that interpretation brought into harmony with the rest of the Act
A few words more about the authorities relied on by the learned Attorney General the American decisions merely enunciate the general principle that  several Acts of Congress dealing as they do with the same subject matter should be construed not only as expressing the intention of Congress at the dates the several Acts were passed but the later Acts should also be regarded as legislative interpretations of the prior ones
 This general rule is not an inflexible rule and as stated in the Great Northern Railway Co vs United States of America1 we are not limited to the lifeless words of the statute and formalistic canons of construction in our search of the intent of Congress Parliament in our case and in construing a statute we may with propriety
recur to the history of the times when it was passed
 That history shows indubitably the aim and purpose of the enactment of section 25FF
As Lord Atkinson pointed out in his speech in Ormond Investment Co Limited vs Betts 2  an Act of Parliament does not alter the law by merely betraying an erroneous opinion of it Legislation founded on a mistaken or erroneous assumption has not the effect of making that the law which the legislature had erroneously assumed to be so
In the cases before us 1   273 94 2  164
141 the legislature proceeded on the basis of the judicial decisions then available to it and on that basis enacted s25FF
We do not think that the general principle of parliamentary exposition or subsequent legislation as an aid to construction of prior Acts can be called in aid for construing the definition clause and section 25F of the Act
For the reasons given above we hold contrary to the view expressed by the Bombay High Court that retrenchment as defined in section 2 oo and as used in section 25F has no wider meaning than the ordinary accepted connotation of the word it means the discharge of surplus labour or staff by the employer for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action and
it has no application where the services of all workmen have been terminated by the employer on a real and bona fide closure of business as in the case of Shri Dinesh Mills Ltd or where the services of all workmen have been terminated by the employer on the business or undertaking being taken over by another employer in circumstances like those of the Railway Company
Mr Mehta appearing for respondents Nos 4 and 5 in Civil Appeal No 105 of 1956 tried to make a distinction between transfer of ownership with continuation of employment which according to him did not come within the definition and termination of service on closure of business
There is in fact a distinction between transfer of business and closure of business but so far as the definition clause is concerned both stand on the same footing if they involve termination of service of the workmen by the employer for any reason whatsoever otherwise than as a punishment by way of disciplinary action
On our interpretation in no case is there any retrenchment unless there is discharge of surplus labour or staff in a continuing or running industry
We have so far dealt with the question of construction of the definition clause and section 25F of the Act
On behalf of the appellants a further question as to tile constitutional validity of section 25F has been raised
The Argument on that question has proceeded from two 142 points of view one of which is based on the point of view that retrenchment includes termination of service on closure of business and the other even in respect of a running or continuing business
Under article 19 1 sub cls
f and g of the Constitution all citizens have the right to acquire hold and dispose of property and to practise any profession or to carry on any occupation trade or business
Under cls
5 and 6 of the said Article the right is inter alia subject to reasonable restrictions in the interests of the general public
The right to carry on a business it is contended has three facets a the right to start a business b the right to continue a business and c the right to close a business
Section 25F of the Act it is argued imposes a restriction on that right if the section is so widely interpreted as to include a closure of business
The restriction it is submitted is not a reasonable restriction in the interests of the general public because a it is unrelated to the capacity of the employer to pay and b unrelated to the needs of the employee
From the other point of view the argument is that even in respect of a running or continuing industry section 25F imposes an unreasonable restriction
Reasonablenessit is submitted has to be considered with regard to the object of the legislation and if the direct and immediate object of section 25F is relief against involuntary unemployment then the restriction imposed is excessive because a provision for such relief unrelated to the period of unemployment and other relevant factors is over simplification of a complex problem
Such over simplification it is stated itself amounts to an unreasonable restriction
On the construction which we have adopted of the definition clause and of section 25F of the Act we are relieved of the task of making any final pronouncement on this constitutional question
On our construction section 25F has no application to a closed or dead industry and the constitutional arguments based on a different construction need not be considered in these appeals
So far as a running or continuing industry is concerned an obvious answer may be that unemployment relief is not the only purpose or object of s25F We have pointed out 143 earlier that it is reasonable to assume that standardisation of retrenchment compensation and doing away with a perplexing variety of factors for granting retrenchment compensation may well have been the purposes of a 25F though the basic consideration must have been the granting of unemployment relief
However on our view of the construction of section 25F no compensation need be paid by the appellants in the two appeals
It is unnecessary therefore to decide whether in other cases of a different character section 25F imposes a reasonable restriction or not
In the result we must allow the two appeals and set aside the decisions of the High Court of Bombay in the two cases
We hold that the appellants in the two appeals are not liable to pay any compensation under section 25F of the Act to their erstwhile workmen who were not retrenched within the meaning of that expression in that section
In the circumstances of these two cases the parties must bear their own costs throughout
Appeals allowed


Summary:
The word retrenchment  as defined in section 2oo and the word retrenched  in section 25F of the  as amended by Act XLIII of 1953 have no wider meaning than the ordinary accepted connotation of those words and mean the discharge of surplus labour or staff by the employer for any reason whatsoever otherwise than as a punishment inflicted by  way of disciplinary action and do not include termination of services of all workmen on a bona fide closure of industry or on change of ownership or management thereof
Pipraich Sugar Mills Ltd vs Pipraich Sugar Mills Mazdoor Union  followed
Burn  Co Calcutta vs Their Employees   referred to
The provisions of the Act have in view an existing and continuing industry and cls
a b and c of the definition only exclude certain categories of termination of service from within its ambit but do not indicate what are to be included therein
The word retrenchment  has acquired no special meaning so as to include a discharge of workmen on a bona fide closure of an industry as a result of certain Labour Appellate Tribunals awarding compensation to workmen on such closure as an equitable relief for a variety of reasons
The intention of the legislature in enacting section 25F of the Act appears to have been to simplify and standardise the payment of compensation for retrenchment as ordinarily understood on the basis of the length of service of the retrenched workman
The Hyderabad Vegetable Oil Products Ltd vs Their Workers  Employees of Messrs India Reconstruction Corporation and Kandan Textiles Ltd vs Their Workers  considered
Section 25FF which was inserted into the Act by the amending Act of 1956 is not retrospective and does not apply to the instant 16 122 cases and the object the legislature had in view in enacting the same was to partially nullify the effect of certain judicial decisions relating to the effect of a change of ownership or management and it was not intended to be a parliamentary exposition of the pre existing law
The language of item Io of the third and fourth schedules engrafted into the Act by section 29 Of the Industrial Disputes Amendment and Miscellaneous Provisions Act 1956 indicates that the legislature envisaged a distinction between retrenchment and closure and the former does not include the latter
Although on such construction section 25F applies only to an existing industry and section 25FF becomes largely redundant no question of any hardship arises as the judicial decisions on the basis of which section 25FF was enacted were themselves incorrect and must be overruled
In construing a parliamentary statute the time when and the circumstances in which it was enacted may be taken into consideration and the general principle of parliamentary exposition or subsequent legislation as an aid to construction of prior legislation can have no application where the subsequent statute itself was based on incorrect assumptions and judicial decisions based on such assumptions
Great Northern Railway vs United States of America 315 US 262 and Ormond Investment Co Limited vs Betts 1928 AC 143 referred to
If the other conditions of the definition clause are fulfilled the transfer of ownership or management of an industry and its closure stand on the same footing so far as the definition clause is concerned notwithstanding that there is a distinction in fact between the two there is however no retrenchment within the meaning of the definition clause unless there is a discharge of surplus labour or staff by the employer in a continuing industry for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action
Consequently in the instant cases where in one the services of all the workmen were terminated by the employer on a real and bona fide closure of the industry and in the other on a change of ownership such termination did not amount to retrenchment within the meaning Of section 200 or section 25F of the Act and the appellants were not bound to pay any compensation under cl
b Of section 25F of the Act