Case: Banaras Ice Factory Limited Vs. Its Workmen

S.K. Das, J.1. This is an appeal by special leave from the judgment and order of the Labour Appellate Tribunal of India at Allahabad dated 30th October 1952. The relevant facts are these. The Banaras Ice Factory Limited, the appellant before us, was incorporated on 13th September 1949 as a private limited company and was carrying on the business of manufacturing ice in the city of Banaras, though its registered office was in Calcutta. The factory worked as a seasonal factory and had in its employment about 25 workmen at all material times. These workmen were employed from the month of March to the month of September every year. The appellant Company got into financial difficulties on account of trade depression, rise in the price of materials and increase in the wages and emoluments of workmen. It tried to secure a loan of Rs. 10,000 from a Bank but met with no success. Thereupon it decided to close down the factory and on 15th January 1952, a notice was given to its workmen saying that the factory would be closed down with effect from 17th January 1952, and the services of the workmen would not be necessary for two months from that date. The workmen received their wages up to 16th January 1952. On 18th March 1952, they were again taken into service but this temporary closing of the factory gave rise to an industrial dispute and the workmen complained that they were wrongfully laid off with effect from 17th January 1952. The dispute was referred to the Regional Conciliation Officer, Allahabad, for adjudication. In the meantime, that is, on 6th June 1952 the workman gave a strike notice and as there was no coal in the factory, the appellant also gave a notice of closure on 12th June 1952. A settlement was however arrived at between the parties on 15th June 1952 at the house of the Collector of Banaras. The terms of that settlement inter alia, were: (1) the management would withdraw its notice of closure dated, 12th June 1952; (2) the workmen would withdraw their strike notice dated 6th June 1952; (3) there being no coal, the workers would remain on leave for a period of thirty days with effect from 16th June 1952, and would report for duty on 16th July 1952 at 8 a.m. and (4) after the workers had resumed their duty on 16th July 1952, the appellant would not terminate the services of any workmen or p73 lay them off in future without obtaining the prior permission of the Regional Conciliation Officer, Allahabad.2. On 28th June 1952, the Regional Conciliation Officer, Allahabad, gave his award in the matter of the industrial dispute between the appellant and its workmen with regard to the alleged wrongful laying off of the workmen from 17th January 1952, to 18th March, 1952, referred to above. By his award the Regional Conciliation Officer gave full wages to the workmen for the period in question. On 16th July 1952, none of the workmen report for duty accordance with the terms of the agreement referred to above, and on that date the appellant gave a notice to its workmen to effect that the appellant found it difficult to run the factory and had decided to close it down; the workmen were informed that their services would not be required and would be terminated upon the expiry of thirty days from 16th July 1952. The workmen, it is stated, accepted the notice and took their pay for one month (from 16th July to 15th August 1952) without any protest. Against the award of the Regional Conciliation Officer dated 28th June 1952, the appellant filed an appeal to the Labour Appellate Tribunal on 25th July 1952.3. On 31st August 1952, a complaint was made on behalf of the workman to the Labour Appellate Tribunal under S. 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950, hereinafter referred to as the Act. The, gravamen of the complaint was that the appellant had contravened the provisions of S.22 of the Act, because the appellant had discharged all the workmen with effect from 15th August 1952, without the permission in writing of the Labour Appellate Tribunal during the pendency before it of the appeal filed on 25th July 1952 against the award of the Regional Conciliation Officer. The Labour Appellate Tribunal dealt with this complaint by its order dated 30th October 1952. Before the Labour Appellate Tribunal it was urged on behalf of the appellant that there was no contravention of S. 22, because on 16th July 1952, when the notice of the discharge was given by the appellant, no appeal was pending before it, the appellants appeal having been filed several days later, namely, on 25th July 1952. This contention was not accepted by Labour Appellate Tribunal on the ground that though the notice of discharge was given on 16th July 1952, the termination of service was to come into operation after one month, that is, from 15th August 1952, on which date the appeal before the Labour Appellate Tribunal was certainly pending. As learned counsel for the appellant has, not again pressed this point before us, it is not necessary to say anything more about it.4. A second point urged before the Labour Appellate Tribunal was that the appellant had the right to close down the factory, when the appellant found that it was not in a position any longer to run the factory. The agreement of 15th June 1952, did not stand in the appellants way, as the workmen themselves did not report for duty on 16th June 1952. The closure being abona fideclosure, it was not necessary to obtain the permission of the Labour Appellate Tribunal and there was therefore no contravention of S.22 of the Act. The Labour Appellate Tribunal apparently accepted the principle that the appellant had the right to close its business but took the view that permission should have been obtained before the closure. It referred to the agreement of 15th June 1952, and held that though the appellant had the right to close its business, permission was still necessary and in the absence of such permission, the appellant was guilty of contravening cl. (b) of S.22 of the Act, and directed that the appellant should pay its workmen full wages as compensation for the period of involuntary unemployment up to the date of its award, that is, during the period from 16th August 1952, to 30th October 1952.5. Relying on the decision in J. K. Hosiery Factory v. Labour Appellate Tribunal of India, (S) AIR 1956 All 498 (A), learned counsel for the appellant has urged three points before us. His first point is that the termination of the services of all workmen on a real andbona fideclosure of business is not, discharged within the meaning of cl. (b) of S.22 of the Act. His second point is that if the word discharge in cl.(b) aforesaid includes termination of services of all workmen onbona fideclosure of business, then the clause is an unreasonable restriction on the fundamental night guaranteed in cl.(g) of Art. 19(1) of the Constitution. His third point is that, in any view, the Labour Appellate Tribunal was not entitled to grant compensation to the workmen, because S.23 of the Act did not in terms entitle the Labour Appellate Tribunal to pass an order of compensation. We may state here that if the appellant succeeds on the first point, it becomes unnecessary to decide the other two points.6. For a consideration of the first point, we must first read Ss. 22 and 23 of the Act.Section 22: "During the period of thirty days allowed for the filing of an appeal under S.10 or during the pendency of any appeal under this Act, no employer shall -(a) alter, to the prejudice of the workmen concerned in such appeal, the conditions of service applicable to them immediately before the filing of such appeal, or(b) discharge or punish, whether by dismissal or otherwise, any workmen concerned in such appeal, save with the express permission in writing of the Appellate Tribunal".Section 23: "Where an employer contravenes the provisions of S.22 during the pendency of proceedings before the Appellate Tribunal, any employee, aggrieved by such contravention, may make a complaint in writing, in the prescribed manner, to such Appellate Tribunal and on receipt of such complaint, the Appellate Tribunal shall decide the complaint as if it were an appeal pending before it, p73 in accordance with the provisions of this Act and shall pronounce its decision thereon and the provisions of this Act shall apply accordingly".7.The short question before us is whether the word discharge occurring in cl.(b) of S.22 includes termination of the services of all workmen on a real and bona fide closure of his business by the employer.It is true that the word discharge is not qualified by any limitation in cl.(b). We must however, take the enactment as a whole and consider S.22 with reference to the provisions of the Industrial Disputes Act 1947 (Act XIV of 1947) which is inpari material with the Act under our consideration. We have had occasion to consider recently in two cases the general scheme and scope of the Industrial Disputes Act, 1947. InMessrs Burn and Co., Ltd., Calcutta v. Their Employees,(A. No. 325 of 1955, D/-11-10-1956: (S) AIR 1957 S C 38) (B)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.In thePipraich Sugar Mills, Ltd. v. Pipraich Sugar Mills Mazdoor Union,CA No. 247 of 1954, D/-23-10-1956: ((S) A I R 1957 SC 95) (C) it was observed -"The objects mentioned above can have their fulfillment only in an existing and not a dead industry". We accepted the view expressed inIndian Metal and Metallurgical Corporation v. Industrial Tribunal Madras, AIR 1953 Mad 98 (D), and Padmanabha Ayyar v. State of Madras,1954-1 Lab L J 469 (E) that the provisions of the Industrial Disputes Act 1947, applied to an existing industry and not a dead industry. The same view was reiterated inHariprasad Shivshankar Shukla v. A.D.Divelkar,C.A. Nos.103 and 105 of 1956, D/-27-11-1956: ((S) AIR 1957 S C 121)(F), where we held that retrenchment in cl.(oo) of S.2 and S.25-F did not include termination of the services of workmen onbona fideclosure of business.8. Turning now to S.22 of the Act, it is clear enough that cl.(a) applies to a running or existing industry only; when the industry itself ceases to exist, it is otiose to talk of alteration of the conditions of service of the workmen to their prejudice, because their service itself has come to an end.The alteration referred to in cl.(a) must, therefore, be an alteration in the conditions of service to the prejudice of the workmen concerned in an existing or running industry. Similarly, the second part of cl.(b) relating to punishment can have application to a running or existing industry only. When the industry itself ceases to exist, there can be no question of punishment of a workman by dismissal or otherwise. We are then left with the word discharge. Unqualified though the word is, it must, we think, be interpreted in harmony with the general scheme and scope of the Industrial Disputes Act, 1947.Our attention has been drawn to the definition of workman in cl.(s) of S.2, which says -"..........for the purposes of any proceedings under this Act in relation to an industrial dispute, (the definition) includes any person who has been dismissed, discharged or retrenched in connection with, or as a consequence of that dis p73 pute, or whose dismissal, discharge or retrenchment has led to that dispute".In the said definition clause also, the word discharge means discharge of a person in a running or continuing business - not discharge of all workmen when the industry itself ceases to exist on abona fideclosure of business.9. The true scope and effect of Ss.22 and 23 of the Act were explained inAutomobile Products of India, Ltd. v. Rukmaji Bala,1955- 1 S C R 1241: ((S) AIR 1955 S C 258) (G).It was pointed out that the object of S.22 was "to protect workmen concerned in disputes which form the subject -matter of pending proceedings against victimization" and the further object was "to ensure that proceedings in connection with industrial disputes already pending should be brought to a termination in a peaceful atmosphere and that no employer should during the pendency of those proceedings take any action of the kind mentioned in the sections which may give rise to fresh disputes likely to further exacerbate the already strained relations between the employer and the workmen". Those objects are capable of fulfillment in a running or continuing industry only, and not in a dead industry. There is hardly any occasion for praying for permission to lift the ban imposed by S.22, when the employer has the right to close his business andbona fidedoes so, with the result that the industry itself ceases to exist. If there is no real closure but a mere pretence of a closure or it ismala fide,there is no closure in the eye of law and the workmen can rise an industrial dispute and may even complain under S.23 of the Act.10. For these reasons, we must uphold the first point taken before us on behalf of the appellant. The Appellate Tribunal was in error in holding that the appellant had contravened cl.(b) of S.22 of the Act.The Appellate Tribunal did not find that the closure of the appellants business was notbona fide;on the contrary, in awarding compensation, it proceeded on the footing that the appellant was justified in closing its business on account of the reasons stated by it. As to the agreement of 15th June 1952, the workmen themselves did not abide by it and the appellants right cannot be defeated on that ground.11. In view of our decision on the first point it becomes unnecessary to decide the other two points. On the point of construction of S.22 of the Act, we approve of the decision of the Allahabad High Court inJ. K. Hosiery Factory v. Labour Appellate Tribunal of India (A)(supra),but we refrain from expressing any opinion on the other points decided therein and we must not be understood to have express our assent, contrary to the opinion expressed by us in the case ofAutomobile of India, Ltd. (G) (Supra),to view that under S.23 of the Act., it is not open to an Industrial Tribunal to award compensation in an appropriate case.

Decision reasoning: 1[ds]8. Turning now to S.22 of the Act, it is clear enough that cl.(a) applies to a running or existing industry only; when the industry itself ceases to exist, it is otiose to talk of alteration of the conditions of service of the workmen to their prejudice, because their service itself has come to an end.The alteration referred to in cl.(a) must, therefore, be an alteration in the conditions of service to the prejudice of the workmen concerned in an existing or running industry. Similarly, the second part of cl.(b) relating to punishment can have application to a running or existing industry only. When the industry itself ceases to exist, there can be no question of punishment of a workman by dismissal or otherwise. We are then left with the word discharge. Unqualified though the word is, it must, we think, be interpreted in harmony with the general scheme and scope ofthe Industrial Disputes Act,objects are capable of fulfillment in a running or continuing industry only, and not in a dead industry. There is hardly any occasion for praying for permission to lift the ban imposed by S.22, when the employer has the right to close his business andbona fidedoes so, with the result that the industry itself ceases to exist. If there is no real closure but a mere pretence of a closure or it ismala fide,there is no closure in the eye of law and the workmen can rise an industrial dispute and may even complain under S.23 of the Act.10. For these reasons, we must uphold the first point taken before us on behalf of the appellant. The Appellate Tribunal was in error in holding that the appellant had contravened cl.(b) of S.22 of the Act.The Appellate Tribunal did not find that the closure of the appellants business was notbona fide;on the contrary, in awarding compensation, it proceeded on the footing that the appellant was justified in closing its business on account of the reasons stated by it. As to the agreement of 15th June 1952, the workmen themselves did not abide by it and the appellants right cannot be defeated on that ground.In view of our decision on the first point it becomes unnecessary to decide the other two points. On the point of construction of S.22 of the Act, we approve of the decision of the Allahabad High Court inJ. K. Hosiery Factory v. Labour Appellate Tribunal of India (A)(supra),but we refrain from expressing any opinion on the other points decided therein and we must not be understood to have express our assent, contrary to the opinion expressed by us in the case ofAutomobile of India, Ltd. (G) (Supra),to view that under S.23 of the Act., it is not open to an Industrial Tribunal to award compensation in an appropriate case.