Appeal No 419 of 1956
Appeal by special leave from the decision dated January 17 1955 of the Labour Appellate Tribunal of India Bombay in Appeal Bom No 61 of 1954
NC Chatterjee D H Buch and I N Shroff for the appellants
R J Kolah B Narayanaswami section N Andley J B Dadachanji Rameshwar Nath and P L Vohra for the respondents
March 10
The Judgment of the Court was delivered by HIDAYATULLAH J
This is an appeal with the special leave of this Court against a decision dated January 171955 of the Labour Appellate Tribunal hereinafter called the Appellate Tribunal by which it reversed a decision of the Industrial Court Bombay dated January 20 1954 in a matter referred to the Industrial Court under section 73 of the Bombay Industrial Relations Act 1946 by the Government of Bombay
The appellant is the Rashtriya Mill Mazdoor Sangh representing the employees of the cotton textile mills in the city of Greater Bombay
The respondents are the Apollo Mills Ltd and other companies owning cotton textile mills specified in the annexure to the Special Leave Petition and the Mill Owners  Association Bombay representing the cotton textile mill industry
The dispute relates to the compensation which the workers claimed for loss of wages and dearness allowances due to the short working or closure of the Textile Mills on certain days during the period between November 1 195 1 and July 13 1952
The facts of the case are as follows In the year 1951 monsoon failed and caused scarcity of water in the catchment area of the Tata Hydro Electric system from which the Mills obtained their supply of power
It was therefore found necessary to reduce the consumption of electricity and Government after consulting the various Mills and also the appellant Sangh decided that the Mills should work instead of 233 48 hours for 40 hours per week during a period of 30 weeks from November 1 1951
It was also agreed that if the Mills could reduce their consumption of electricity to 56th of their normal consumption then they could work for 48 hours per week as before
Some of the Mills installed their own generators but many others were compelled to reduce the working time to 40 hours in a week working at 8 hours per day
As a result the working of some of the Mills was reduced by one day in the week and the Mills lost a maximum number of 38 days some more and some less
One of the Mills the Ragbuvanshi Mills remained closed only on one day
The order of the Bombay Government was made under section 6A1 of the Bombay Electricity Special Powers Act 1946
While this short working continued the workers claimed their wages and dearness allowances or compensation in lieu thereof
Negotiations followed but when they did not result in anything to the advantage of the workers the matter was referred for arbitration to the Industrial Court by the Bombay Government on October 30 1952 under section 73 of the Bombay Industrial Relations Act 1946
The Mills raised the objection that the matter was covered by Standing Orders 16 and 17 and inasmuch as the partial closure of the Mills was due to force majeure they were not liable
They contended that the Industrial Court had thus no jurisdiction as these Standing Orders were determinative of the relations between the workmen and their employers under section 401 of the Bombay Industrial Relations Act 1946
They also submitted that the orders of the Government issued under the Bombay Electricity Special Powers Act 1946 had to be obeyed and therefore no compensation was payable
They pointed out that the employees were receiving fair wages and that the Mills were not in a position to bear an additional burden in view of the fact that they had lost their profits due to short working
They relied upon the decision of the Bombay High Court in Digambar Ramachandra vs Khandesh Mills 1 where it was held that though an arbitrator to whom a dispute 1 30 234 falling under B 49A of the Bombay Industrial Disputes Act 1938 was referred had jurisdiction to decide the disputes within the terms of the Standing Orders framed under section 26 of that Act he had no jurisdiction to determine the liability of the employers on grounds outside the Standing Orders
The Industrial Court after hearing the parties made an award on January 20 1954 and directed all the respondent Mills to pay to the employees compensation holding that Standing Orders 16 and 17 were not applicable and were therefore no bar
The Industrial Court held that in view of the provisions of sections 3 402 424 73 and 78 of the Bombay Industrial Relations Act read with Sch 111 item 7 and having regard to the decision of the Federal Court in Western India Automobile Association v Industrial Tribunal Bombay 1 it had jurisdiction to grant compensation
The Industrial Court therefore held that on principles of social justice the workers were entitled to compensation which it assessed at the rate of 50 per cent
of the wages and dearness allowances which the workers would have drawn if the Mills had worked on the days they remained closed
Against that award the Mill Owners  Association and two of the Mills appealed to the Appellate Tribunal Bombay
All the contentions which were raised before the industrial Court were once again raised before the Appellate Tribunal
Two new contentions were raised viz that the claim for compensation was barred under section 1 1 of the Bombay Electricity Special Powers Act 1946 and was also barred by the decision of the Supreme Court in the Muir Mills Co Ltd vs Suti Mills Mazdoor Union Kanpur 2
The Appellate Tribunal by its decision now impugned before us allowed the appeal and set aside the award of the Industrial Court and dismissed the claim of the employees
It held that even if Standing Orders 16 and 17 covered the case the decision in Digambar Ramachandra s case 1 could not now be applied because of the provisions of section 402 and the addition of Sch 111 item 7 in the Bombay Industrial Relations Act which provisions did not find place in the Bombay 1 2  3 235 Industrial Disputes Act 1938 under which the decision of the Bombay High Court was given
The Appellate Tribunal referred to the Federal Court decision cited earlier and observed that there was no doubt that the award of compensation to workmen equal to half of their wages and dearness allowances was fair and just
The Tribunal however felt compelled by the decision of this Court in the Muir Mills case 1 to reject the claim of the workers and allowed the appeal
In this view of the matter the Appellate Tribunal did not decide whether section II of the Bombay Electricity Special Powers Act 1946 barred the grant of compensation
The appellant in this case first contended that the Muir Mills case 1 did not apply and further that if that case was out of the way then in view of the other findings of the Appellate Tribunal and section 7 of the Industrial Disputes Appellate Tribunal Act 1950 the appeal ought to have failed since no question of law survived and the Appellate Tribunal was incompetent to reverse the decision
The Mill Owners  Association on the other hand contended that the opinion of the Appellate Tribunal that the Muir Mills case 1 applied was correct that section II of the Bombay Electricity Special Powers Act barred these proceedings and that in view of the fact that the closure was due to force majeure for which the Milks were not responsible Standing Orders 16 and 17 were determinative of the relations between the parties and the claim for compensation was not entertainable
Other objections raised before the Appellate Tribunal were not pressed before us
We begin first with the question whether section 11 of the Bombay Electricity Special Powers Act 1946 barred the reference
That section reads as follows  11 1
No suit prosecution or other legal proceeding shall lie against any person for anything which is in good faith done or intended to be done in pursuance of any order direction or requirement made or deemed to have been made under section 3 4 5 6 6A 6B or 6C 1  236 The order which was made in this case by the Government of Bombay was under sub section
1 of section 6A which reads  6A1
Notwithstanding anything contained in any law for the time being in force or any permission granted under sub section 3 of section 5 or any instrument having effect by virtue of any law the Provincial Government may with a view to controlling distribution supply consumption or use of electrical energy make an order afor prohibiting or regulating subject to such conditions as it may specify in the order the distribution or supply of electrical energy by a licensee or use of such energy by a consumer for any purpose specified in such order b for determining the order of priority in whichor the period or periods during which work shall be done by an undertaking to which the supply of electrical energy is made by a licensee
 It was contended by the respondents that sub section
1 of section 11 quoted above barred the remedy of arbitration because the closure of the Mills was in good faith and was in pursuance of a direction or order made under section 6A1
Mr Kolah referred to the scheme of the Bombay Electricity Special Powers Act and specially to the sections dealing with penalties and offenses and contended that the Mills were helpless and were compelled to close down their esta blishments for part of the time
He claimed that the protection of section 111 was available  to them and argued that it gave immunity from action of any kind
The present proceedings are for compensation for the period during which the Mills remained closed
This claim is made by the workers against the Mills
The section which confers immunity bars proceedings rising from the interference with the supply of electrical energy and its consumption
It is a protection to the supplier of electrical energy against the consumer and vice versa and protects also those who act to enforce the order
There is no complaint here about the reduction of electricity or even about the closure of the Mills for part of the time
Neither the 237 Mills nor the workers have raised any such contention
Further the sub section is a protection clause which is usually introduced in an Act where it gives new or unusual powers and is designed to give immunity to persons acting under or enforcing it
The ambit of the protection is in relation to the supply and consumption of electricity which alone are curtailed by the order issued under section 6A1 of the Act
The protection conferred by the first subsection of section 11 does not therefore prevent the raising of an industrial dispute resulting in an award for the equitable sharing of loss which had been occasioned to
 both the employers and the employees by the observance of the order
The contention that the Industrial Court had no jurisdiction to hear the reference because the State Government could not make it was not pressed by the respondents and nothing need therefore be said about it
It was raised in another form as will appear in the sequel
Both the parties however criticised the order of the Appellate Tribunal the respondents challenging the findings adverse to them
It is now necessary to deal with these contentions
The case of the appellant was that the Appellate Tribunal had no jurisdiction to interfere with the order of the Industrial Court because the appeal before it did not involve a Substantial question of law and did not fall within any of the eight matters mentioned in section 71b of the Industrial Disputes Appellate Tribunal Act 1950 which gave appellate jurisdiction to the Appellate Tribunal
The appellant referred to cases in which it has been held that the Appellate Tribunal could not interfere on facts
It is not necessary to analyse those cases for reasons which we proceed to state
The Industrial Disputes Appellate Tribunal Act conferred appellate powers on the Appellate Tribunal if there was a substantial question of law arising from the award or the matter fell within eight enumerated subjects
The respondents attempted to bring the matter within cl
1 of section 71b that is to say   wages  which is one of the eight subjects
But there is no question here of wages as such but of 238 compensation
Learned counsel for the respondents also argued that a conclusion drawn without adverting to the evidence involved a question of law and a legal inference from proved facts and an appeal thus lay
He relied upon Anglo Iranian Oil Co India Ltd vs Petroleum Workers  Union 1 and Crompton Parkinson Works vs Its Workmen 2
It may not be necessary to discuss the matter at length because even if the subject matter did not fall within any of the eight enumerated topics there was a substantial question of law involved inasmuch as it was necessary to decide whether a claim for compensation was not admissible in view of the provisions of the Bombay Industrial Relations Act and the Standing Orders
It has been pointed out already that the failure to continue to employ labour was due to the short supply of electrical energy and the question is whether in these admitted circumstances Standing Orders 16 and 17 read with section 401 and item 9 of Sch
1 of the Bombay Industrial Relations Act rendered the employers immune from a claim for compensation for loss of wages and dearness allowances
The respondents claimed that they did while the appellant maintained that they did not and referred to sections 402 424 73 and 781A and item 7 of Sch
III of the same Act
This is a substantial question of law and the appeal was thus competent
The crux of the matter is the provisions of Standing Orders 16 and 17 which are to be read with section 401 of the Bombay Industrial Relations Act
Standing Orders 16 and 17 read as follows 16The Company may at any time or times in the event of a fire catastrophe breakdown of machinery or stoppage of the power supply epidemic civil commotion or other cause beyond the control of the Company stop any machine or machines or department or departments wholly or partially for any period or periods without notice and without compensation in lieu of notice
In the event of a stoppage of any machine or department under this Order during working hours the operatives affected shall be notified by notices 1 2 1959 SUPP
2 SCR 936
239 put upon notice boards in the department concerned and at the time keeper s office as soon as practicable when work will be resumed and whether they are to remain or leave the mill
The period of detention in the mill shall not ordinarily exceed one hour after the commencement of the stoppage
If the period of detention does not exceed one hour operatives so detained shall not be paid for the period of detention
If the period of detention in the mill exceeds one hour operatives so detained shall be entitled to receive wages for the whole of the time during which they are detained in the mill as a result of the stoppage
In the case of pieceworkers the average daily earnings for the previous month shall be taken to be the daily wages
17Any operative played off Linder Order 16 shall not be considered as dismissed from service but as temporarily unemployed and shall not be entitled to wages during such unemployment except to the extent mentioned in Order 16
Whenever practicable a reasonable notice shall be given of resumption of normal work and all operatives playedoff under Order 16 who present themselves for work when the normal working is resumed shall have prior right of reinstatement
 The argument of the respondents was two fold 1 that these two Standing Orders fully covered a closure due to stoppage of power and 2 that under section 401 of the Bombay Industrial Relations Act 1946 the Standing Orders were determinative of the relations between the employer and the employees in regard to all industrial matters specified in Sch 1 which contains the following items   4
Closure or reopening of a department or a section of a department or the whole of the undertaking and  9
Temporary closures of work including playing off and rights and liabilities of employers and employees   They also invoked the decision in Digambar Ramachndra s case 1 and added that the position had not been altered even by the addition of the second sub 1 240 section to section 40 in the Bombay Industrial Relations Act
We may at this stage read section 40  40
1 Standing orders in respect of an employer and his employees settled under this Chapter and in operation or where there are no such standing orders model standing orders if any applicable under the provisions of sub section 5 of section 35 shall be determinative of the relations between the employer and his employees in regard to all industrial matters specified in Schedule I 2Notwithstanding anything contained in subsection 1 the State Government may refer or an employee or a representative union may apply in respect of any dispute of the nature referred to in clause a of paragraph A of section 78 to a Labour Court
 The respondents contended that only the first subsection applied and that under Standing Orders 16 and 17 quoted above no compensation was claimable
The appellant pointed out that the second sub section excluded the first sub section because of the nonobstructive clause with which it is prefaced and in view of the position of the Industrial Court as the appellate authority from awards of the Labour Court the former was not also bound by the first sub section or the Standing Orders
There is some force in the contention of the appellant but in our opinion Standing Orders 16 and 17 do not in terms apply to a claim for compensation such as is made here
Standing Order 16 speaks of stoppage without notice and without compensation in lieu of notice
 The compensation which is claimed by the workers in this case is not in lieu of notice that is to say for a period equal to that in respect of which notice would have had to be given
That period would be before the date of closure
The Standing Order contemplates those cases in which a notice has to be dispensed with and then no compensation in lieu of notice is payable
There is however here a question of quite a different sort and it is not covered by Standing Order 16 even though the closure was by reason of stoppage of power
Standing Order 17 speaks of wages and 41 241 we are not concerned with wages here but with compensation which is not the same thing as wages
In this view of the matter Standing Orders 16 and 17 cannot be said to cover the present facts and they are not therefore determinative of the relations between the parties
The present dispute was referred to the Industrial Court under section 732 of the Bombay Industrial Relations Act 1946
That section reads as followsNotwithstanding anything contained in this Act the State Government may at any time refer an industrial dispute to the arbitration of the Industrial Court if on a report made by the Labour Officer or otherwise it is satisfied that 2the dispute is not likely to be settled by other means
The non obstante clause clearly shows that in spite of the other provisions of the Bombay Industrial Relations Act an industrial dispute may be referred to the Industrial Court
An industrial dispute as defined in that Act means inter alia any dispute or difference between an employer and employee or between employers and employees which is connected with an industrial matter which includes all matters pertaining to non employment of any person
That these workmen were not employed on certain days goes without saying and thus there was an industrial dispute concerning their claim for compensation for the period of non employment
Item 9 of Sch 1 gave the power to frame Standing Orders in relation to temporary closures
The Standing Orders made covered only compensation in lieu of notice and wages for the period of closure but not compensation for closure
In the view which we have taken of the Standing Orders it is not necessary to decide whether item 7 of Sch
III relates only to compensation for permanent closure or whether item 9 of Sch 1 gave the power to make a Standing Order relating to compensation for temporary closure
It is enough to say that Standing Orders 16 and 17 as they stand do not cover a case of compensation for closure
242 The powers of the Industrial Court under section 73 of the Bombay Industrial Relations Act are very wide inasmuch as the State Government can refer an industrial dispute to it notwithstanding anything contained in the Act
It was in view of this that the objection to the jurisdiction of the Industrial Court was not pressed
But the argument was advanced in another form to show that Standing Orders 16 and 17 were determinative and did not enable the Industrial Court to decide in any manner except in accordance with those Standing Orders
Reliance was also placed upon Digambar Ramachandra s case 1 where Chagla CJ and Bhagwati J decided that the arbitrator was bound by the Standing Orders and could not go outside them
We are of opinion that Standing Orders 16 and 17 do not apply to the present facts for reasons already stated and we express our dissent from that decision in so far as it held that the Standing Orders covered a case of compensation for closure also
We note further that in the Bombay Industrial Disputes Act 1938 there was no item similar to the one in Sch
III of the Bombay Industrial Relations Act
In Textile Labour Association Ahmedabad vs Ahmedabad Millowners  Association Ahmedabad 2 Sir H V Divatia Rajadhyaksha J and Mr D V Vyas later Vyas J correctly held that the Standing Orders did not cover a case of compensation for loss of earnings
The head note adequately summarises the decision and may be quoted
It reads  Although the workers are not entitled to demand their wages during the period of stoppage of work as that matter has been sic covered by the Standing Orders there is nothing to prevent them from giving any notice of change demanding compensation for the loss of their earnings
It cannot be said that the jurisdiction of the Court is barred by the provisions of Standing Orders Nos 16  17
No doubt the reference there was under section 43 of the Bombay Industrial Disputes Act 1938 but the provisions of section 73 of the Bombay Industrial Relations Act are wide enough to cover a reference on the same topic
We are therefore of opinion that the claim 1 2 1946 47 Industial Court Reporter 87
243 for compensation was not barred by Standing Orders 16 and 17 read with a 401 of the Bombay Industrial Relations Act
The respondents further contended that the principle of social justice applied by the Industrial Court and accepted by the Appellate Tribunal could not apply because of the decision of this Court in the Muir Mills case 1
They also contended that the case for bonus was decided along with the present case and both bonus and dearness allowances were increased by the Appellate Tribunal in respect of 38 Mills and even the remaining 15 Mills which had suffered loss had given minimum bonus to their workers
They argued that wages were fair and bonus was awarded and dearness allowance was increased and that the Appellate Tribunal took all this into account in refusing compensation
They submitted that the Mills suffered heavy losses due to short working and that it was sheer injustice to make them pay wages or compensation for days on which the Mills remined closed and lost their profits through stoppage of normal working
The Muir Mills case 1 was concerned with the award of bonus which is linked with profits
It was there laid down that inasmuch as the labour employed in an industrial undertaking is ever changing the award of bonus can only be from the profits to which labour in any particular year contributed and labour cannot claim that profits and reserves of some other years should be used for the purpose of giving them bonus
We are not concerned in this case with the award of bonus as such and we need not therefore make use of the reasons which appealed to this Court in that case
The narrow sphere in which social justice demands that workmen going into forced unemployment should receive compensation is quite different
Social justice is not based on contractual relations and is not to be enforced on the principles of contract of service
It is something outside these principles and is invoked to do justice without a contract to back it
Mahajan J as he then was observed in Western India Automobile Association vs Industrial Tribunal Bombay 2 as follows 1  2 244  Adjudication does not in our opinion mean adjudication according to the strict law of master and servant
The award of the Tribunal may contain provisions for settlement of a dispute which no Court could order if it was bound by ordinary law but the Tribunal is not fettered in any way by these limitations
In Volume 1 of I Labour Disputes and Collective Bargaining  by Ludwig Teller it is said at page 536 that industrial arbitration may involve the extension of an existing agreement or the making of a new one or in general the creation of a new obligation or modification of old ones while commercial arbitration generally concerns itself with the interpretation of existing obligations and disputes relating to existing agreements
In our opinion it is a true statement about the functions of an Industrial Tribunal in labour disputes  Here what better measure could have been adopted by the Industrial Court which is approved by the Appellate Tribunal than to divide the loss into two parts one to be borne by the industrial concerns and the other by the workmen  There is no other basis suggested by the one side or the other
It was contended that the loss to labour went into the consideration of the grant of bonus and that the two cases were heard together
The Appellate Tribunal says so
But bonus is to come out of profits and is the share of labour in the profits it has helped to earn to bridge the gap between wages as they are and the living wage
Compensation in the present context is for loss of wages and dearness allowance and the two cannot be considered together on any principle
There is nothing to show that in spite of the formula which the Appellate Tribunal had evolved for itself it took into account some other factors quite alien to the said formula
It appears to us that what the Appellate Tribunal really meant to say was that inasmuch as the workers were paid bonus they should not make a grievance if they lost wages on some of the days because if compensation were paid bonus would have had to be reduced
If that is the meaning as it obviously is then the question of compensation was not decided at all
In our opinion this reasoning was 245 beside the point
It was wholly immaterial whether profits were made or losses were incurred in the year if the employers continued to retain the labour force so as to be available for the days on which the Mills worked
In our opinion the Appellate Tribunal after giving a finding that a claim for compensation equal to half the wages and dearness allowances was just and proper erred in holding that it was not admissible because of the decision of this Court in the Muir Mills case 1
That case had no application to the facts here
The Appellate Tribunal also erred in declining to grant compensation on the ground that since bonus was granted the claim for compensation could not be entertained
The case of badli workers does not appear to have been separately raised and we see no reason not to award them compensation  but payment of such compensation will be subject to the same condition as was imposed by the Industrial Court
In the result the appeal will be allowed the order of the Appellate Tribunal set aside and the order of the Industrial Court restored
The respondents shall bear the costs here and in the Tribunals below
Appeal allowed


Summary:
The Appellant Bank which was registered under the Co operative Societies Act 1922 received in the relevant account years by way of interest on deposits with the Imperial Bank of India certain sums of money
The Income tax Officer assessed the aforesaid sums under section 12 of the Indian Income tax Act 1922 as income from other sources but the appellant claimed that the deposits were made not with the idea of making investments but for the purpose of carrying on its business as a bank and that as the interest received on the deposits was profit attributable to its business activities it was not subject to incometax because of the Notification issued by the Central Government under section 6o of the Act
Under the Notification profits of any Co operative Society are exempt from the tax payable under the Act but not income derived from other sources referred to in section 12 of the Act
Held that the interest from deposits received by the Appel lant Bank in the present case arose out of a transaction entered into for the purpose of carrying on its banking business and fell within the income exempted under the Notification
The Punjab Co operative Bank Ltd vs The Commissioner of Income tax Punjab  relied on