Case: K.N. Joglekar &amp; Others Vs. Barsi Light Railway Company Limited

is nothing more than a further step towards the standardisation of the rights of the workman.The Legislature has fixed a certain amount as the proper amount to be paid to a workman whose services have been terminated. What exactly should be the rights of labour, where the line must be drawn, are matters of policy with which the Court is not concerned. But it cannot possibly be said that if the Legislature passes a law in order to improve the status and position of labour and to confer upon it certain rights and to standardise those rights, the restriction imposed upon the employer to carry on his business is not a reasonable restriction or not in public interest.11. It is then pointed out that this restriction is unreasonable because it may confer a right upon the workman, although the termination of his services may not result in any detriment to him. Instances are given where a workman may be dismissed and his services may be continued by the successor business where there may be no break in the continuity of the business at all, and it is pointed out that in such a case the workman has suffered no prejudice by his services being terminated by one business because his services are continued by the succeeding business. In our opinion that is a wrong approach to this piece of legislation.What the Legislature was contemplating was the prejudice caused to the workman by his losing his job with a particular employer with whom he was employed. It was not contemplating the possibility of the workman getting employment with the successor business or getting employment with some other employer. There is no obligation on the successor business employing a workman who has been dismissed by the owner of a business to which it succeeds, nor has the workman any guarantee that after his services are terminated he would be reemployed.Therefore the Legislature was satisfied with providing for compensation for loss of service without entering into the region of speculation as to whether in certain cases the employee may or may not be employed. We are not also prepared to accept the contention that merely because an employee immediately gets fresh employment or is re-employed by the same business no prejudice or detriment is caused to him.If an employee has continued in service for a certain length of time, the termination of his service by its very nature causes some detriment or prejudice to him. The new business may not have the same security of tenure, it may not be as acceptable as the previous business, and it is precisely because of various human factors which it is impossible to legislate about that the Legislature did not provide for cases where the employee receives employment immediately on the termination of his services.12. Therefore, we are not prepared to hold that merely because the Legislature did not provide for a case where a business is being closed down because the owner of the business has suffered loss and therefore the services of the workman have been terminated, and the case where the employee obtains fresh employment immediately on his services being terminated, the restriction imposed upon a person carrying on business to pay compensation on his terminating the services of his workmen is an unreasonable restriction.That the restriction is in the interests of the public goes without saying. As we have already pointed out, welfare of labour is in public interest and any legislation intended to advance the welfare of labour must satisfy the test of public interest.13. In this connection perhaps we may look at a recent decision of the Supreme Court reported in - Bijay Cotton Mills Ltd. v. State of Ajmer, AIR 1953 SC 33 (A), where the Supreme Court was considering the constitutionality of the Minimum Wages Act, and some of the arguments advanced there are reminiscent of the arguments advanced by Mr. Palkhivala before us. Mr. Seervai who was arguing the case for the employer advanced the argument that the compulsion with regard to payment of minimum wages was unreasonable and even oppressive with regard to one class of employers who for purely economic reasons were not able to pay the minimum wages, and this argument was rejected by the Supreme Court by observing (p.35):"Individual employers might find it difficult to carry on the business on the basis of the minimum wages fixed under the Act but this must be due entirely to the economic conditions of these particular employers. That cannot be a reason for striking down the law itself as unreasonable."Applying the same argument to the impugned Act before us, the mere fact that some employers are not in a position to pay the compensation fixed under S.25F may be unfortunate from the point of view of the employers, but that is no reason for declaring the law as unconstitutional.14. The third contention raised by Mr. Palkhivala, which he did not elaborate but just stated it, was that S.25F will not apply to the case of a business which was succeeded by another business. Now, our reasons for rejecting this contention have already been set out in the earlier part of our judgment.We may mention only one thing more that if the Legislature intended to exempt certain classes of termination of service from the operation of S.25F, no reason is suggested why the Legislature should not have added to the three classes mentioned in S.2(oo) which are not included in the definition of "retrenchment". Nothing was easier and simpler than for the Legislature to say that retrenchment shall not include a case where the business is closed or a case where the continuity of the business is maintained by another business succeeding to the business already being carried on. But the very fact that the Legislature has not chosen to exempt these cases is sufficient for us to take the view that we should not add to the three classes expressly enumerated by the Legislature in S.2(oo).

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]Mr. Palkhivala rightly points out that if we hold that the Authority had jurisdiction and if the Authority passes an order for payment in favour of the workmen, he will have a right to appeal to the Districtparties are agreed that on this petition we should review the judgment of the Authority on merits under S.25F. We have ample jurisdiction to do so under Art.227 of the Constitution, and as we just said both parties are agreed that we should exercise that jurisdiction.Mr. Patel and Mr. Palkhivala are agreed that the question as to whether a particular person is a workman or not should be decided by the Conciliator, Central Division, Poona, as an arbitrator and his decision will be binding upon both the parties. In the event of the Conciliator not being able to undertake this arbitration, parties are agreed that this question should be decided by the Authority under the Payment of Wages Act of Madha also as an arbitrator and his decision will also be binding upon the parties.The undertaking given by Mr. Patel and by Mr. Palkhivala and the agreement arrived at between Mr. Patel and Mr. Palkhivala will not only apply to the applications covered by this petition, but also to applications still pending before the Authority or applications intended to be filed before the Authority and to suits filed or to be filed in the civil Court. In short they will apply to all cases of workmen of the Railway Company who claim compensation underputting forward this argument Mr. Palkhivala forgets that he is doing away with the essential element present in the expression "retrenchment". The essential element is not whether the business is carried on or the business is closed. As we have just pointed out, the essential element is that the termination of service must be in the interest of economy.Once it is conceded that even though an employer may terminate the services of an employee for a reason which is not the reason of economy, then the Legislature obviously has given a meaning to the expression "retrenchment" which is far divorced from its ordinary naturalour opinion this is putting an entirely unwarranted restriction upon the expression used by the Legislature.If the Legislature uses an artificial expression or a term of art, then that expression or that term must be construed according to the language used by the Legislature, and if the Legislature advisedly provides that the termination of the service of an employee for any reason whatsoever shall be deemed to be retrenchment, within the meaning of the Act, there is no reason why the Court should select or accept certain reasons as coming within the meaning of the definition and certain other reasons as not coming within the meaning of the definition.Whether the reason is that the employer is dismissing his servant on the ground of economy or that he is dismissing him because he does not like the colour of his politics or that he wishes to close down his business, these are all different reasons for termination of the service of an employee, and the Legislature clearly and emphatically says that never mind the reason, if the employer dismisses the employee it will constitute retrenchment within the meaning of thatare not prepared to accept the position in law that in one case where the business is being run at a loss no compensation should be determined either under Chap. VA or by the Industrial Court, and in the case where a business is being run at a profit and which is closed down the compensation should be determined by the Industrial Court.The whole object of Chap. VA was to standardize the compensation to be paid on the termination of the services of an employee and not to leave it to various Industrial Tribunals awarding different compensation on different bases. It is well known that before Chap. VA was enacted Industrial Courts did in certain cases award compensation for termination of services by theour opinion, S.25F imposes a statutory liability upon the employer to pay a certain amount when he terminates the services of an employee. No employer is heard to say that because his business suffers loss and because he wishes to close down the business he should not be made to pay the wages due to the employees. Just as there is a contractual liability upon the employer to pay the wages due to the employees whether the business is running at a loss or not and whether he intends to close the business, similarly the Legislature has imposed a statutory liability upon the employer to pay to the employees, over and above the wages and whatever other dues he may be liable to pay, the amount fixed under S.25F. Therefore, in our opinion, this contention of Mr. Palkhivala has not much substance.Therefore, if we give to the expression "retrenchment" the wide meaning which the Legislature obviously intended should be given to it, then there can be no doubt that this case falls under S.25F. Admittedly the Railway Company has terminated the services of the workmen and by doing so they have become liable to pay compensation as calculated under cl. (b) ofmay be that Mr. Palkhivala is right when he contends that the right to carry on business must imply the right to carry on a business as the owner of the business likes, including the right to close it down when he chooses, and if the Legislature were to put a restriction upon the right of a businessman to close his business, it may be that the case may fall within the ambit of Art.19(1)(g).But we fail to see how this legislation prevents any businessman from closing his business as and when he likes. The Legislature does not dictate to those who are carrying on business whether they should carry on the business at a loss or whether they should close it down and when they should close it down. But what is urged by Mr. Palkhivala is that the penalty imposed by S.25F for closing down the business is so severe that in effect it might prevent a businessman from closing hisour opinion that argument is entirely untenable. Labour Legislation has gradually proceeded to standardise several rights of workmen, and when the Legislature standardises these rights, it does not consider whether the employer is making a profit or a loss. The legislation is put on the statute book from the point of view of the workman, and what the Legislature is considering is what the workman is entitled to receive irrespective of whether the employer makes a profit or not, and S.25F is nothing more than a further step towards the standardisation of the rights of the workman.The Legislature has fixed a certain amount as the proper amount to be paid to a workman whose services have been terminated. What exactly should be the rights of labour, where the line must be drawn, are matters of policy with which the Court is not concerned. But it cannot possibly be said that if the Legislature passes a law in order to improve the status and position of labour and to confer upon it certain rights and to standardise those rights, the restriction imposed upon the employer to carry on his business is not a reasonable restriction or not in publicis then pointed out that this restriction is unreasonable because it may confer a right upon the workman, although the termination of his services may not result in any detriment to him. Instances are given where a workman may be dismissed and his services may be continued by the successor business where there may be no break in the continuity of the business at all, and it is pointed out that in such a case the workman has suffered no prejudice by his services being terminated by one business because his services are continued by the succeeding business.In our opinion that is a wrong approach to this piece ofare not prepared to hold that merely because the Legislature did not provide for a case where a business is being closed down because the owner of the business has suffered loss and therefore the services of the workman have been terminated, and the case where the employee obtains fresh employment immediately on his services being terminated, the restriction imposed upon a person carrying on business to pay compensation on his terminating the services of his workmen is an unreasonable restriction.That the restriction is in the interests of the public goes without saying. As we have already pointed out, welfare of labour is in public interest and any legislation intended to advance the welfare of labour must satisfy the test of publicmay mention only one thing more that if the Legislature intended to exempt certain classes of termination of service from the operation of S.25F, no reason is suggested why the Legislature should not have added to the three classes mentioned in S.2(oo) which are not included in the definition of "retrenchment". Nothing was easier and simpler than for the Legislature to say that retrenchment shall not include a case where the business is closed or a case where the continuity of the business is maintained by another business succeeding to the business already being carried on. But the very fact that the Legislature has not chosen to exempt these cases is sufficient for us to take the view that we should not add to the three classes expressly enumerated by the Legislature in S.2(oo).