Case: The Fine Knitting Co., Ltd Vs. The Industrial Court, Bombay And Others

Sri Mehta, it is inconceivable that the employees engaged in two departments integral connected with each other and constituting one unit would be paid different minimum wages. What is true about the minimum wages and the dearness allowance is also true about the bonus. It appears that even in years in which the appellant made profits and actually paid bonus to the workmen employed in the spinning department, no bonus was paid to the employees engaged in the knitting department. That again can be explained and justified only on the basis that the appellant treated the two departments as distinct and separate and so the employees in the one got bonus and not the employees in the other. It was suggested by Sri Mehta that the genesis of the present dispute lies in the anxiety of respondent 3 to take within its jurisdiction the employees engaged by the appellant in its spinning department. On the other hand, Sri Barot for respondents 3 and 4 contends that the present trouble arose because the appellant began to deny to its employees in the spinning department the benefits of all relevant conditions of service which were applicable to the employees in the textile industry in Ahmedabad. Whatever may be the background of the dispute and its genesis, it is clear beyond doubt that the way in which the appellant has treated its employees in spinning as distinguished from its employees in knitting leads very strongly to the inference that the appellant treated the two departments, not as one unit but as separate units, each one functioning on its own and independently of the other.It is in the light of these circumstances that respondents 1 and 2 were not impressed by the relevant factors in which the appellant relied in support of its plea of the unity of the two activities and came to the conclusion that the two activities were separate and as such, must be separately recognized under S. 11. We do not see how the appellant can successfully challenged the correctness of this conclusion.7. There is one more point which yet remains to be considered. Sri Mehta argues that the impugned order recognizing two different undertaking under S. 11(1) is not justified by the provisions of the statute. Section 11 provides that the Registrar may, after making such inquiry as he deems fit, recognize for the purposes of the Act -(1) any concern in an industry to be an undertaking;(2) any section of an undertaking to be an occupation.8. The argument is that S. 11(1) does not authorized the splitting up of a concern into two undertakings. A concern, says Sri Mehta, is the whole of the concern or establishment run by the appellant and as such, it has to be recognized as one undertakings; in so far as the order under appeal treats the appellants concern as two undertakings, it is contrary to S. 11(1). We are not impressed by this argument. The appellant is undoubtedly engaged in the hosiery industry and that part of its business cannot be recognized as cotton textile industry because it is a concern engaged in spinning only which can be recognized under that category. If that is so, industrial activity of the appellant in relation to hosiery industry must be recognized separately from the textile undertaking. If one concern or company carries on several business or undertakes different types of industrial works, these business or works would amount to separate enterprises or undertakings and would have to be recognised as such. In fact, if the appellant itself has been treating the two kinds of work separately and has thus split up its whole business into two independent sections, it is not easy to understand why the Registrar cannot recognize the existence of two undertakings carried on by the appellant and treat the said undertakings as such. We see no justification for the assumption made by Sri Mehta that S. 11(1) does not permit the recognition of several undertakings carried on by the same company separately. It all depends on whether the undertakings are separate, distinct and independent of each other or are functionally integral to interdependent. In the former case, the registrar would be justified in treating the several undertakings separately while in the latter case, he may recognize all of them as one undertaking.There is one minor point to which reference may incidentally be made. It appears that before respondent 1, it was urged by the made by respondents 3 and 4 were barred by res judicata. The argument was that since respondent 2 had on an earlier occasion considered the merits of the case and refused to grant the request made by respondent 3 for recognizing the two undertakings separately, the same question could not be re-agitated again before the same authority. In our opinion, there is no substance in this argument. As we have already pointed out, when respondent 2 passed his earlier order, an appeal was preferred against the said order by respondent 4 before respondent 1. That appeal was, however, dismissed on the ground that respondent 4 was not a party to the proceedings before respondent 2 and, therefore, he could not prefer an appeal was, however, dismissed on the ground that respondent 4 was not a party to the proceedings before respondent 4 was not a party to the proceedings before respondent 2 and, therefore, he could not prefer an appeal. If respondent 4 had no right to make an appeal because he was not a party to the said proceedings, it is difficult to see how he can be precluded from making the present application on the ground of res judicata. At the highest, a plea of res judicata may perhaps be raised against respondents 3 but that would not be effective view of the fact that in the present case, an application has been made by respondent 4 as well. That is why Sri Mehta did not seriously press the point of res judicata before us.9.

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

Explanation:
0[ds]It is in the light of these decisions that the point raised by Sri Mehta has to bedealing with the significance and the effect of the factors on which Sri Mehta has rightly relied, it is necessary bear in mind certain other relevant factors on which the decision under appeal is substantially based. It is true that in 1924, the spinning section of the establishment may have begun as a subsidiary to the hosiery section and in order to serve as its feeder. But the evidence on the record clearly shows that the position is now reversed and that the spinning section has now assumed major importance and hosiery takes a minor place in the industrial activities of theMehta quarrels with some of these figures but does not dispute the broad conclusion which is drawn from the figures that the number of employees engaged in the spinning section is far more than that employed in the hosiery section. Thus, there can be no doubt that the spinning activity of the appellant which may have begun as subsidiary to the hosiery activity has now grown in importance and has taken a place of pride in the industrial activity of the appellant considered as a whole; it can no longer be regarded as subsidiary to hosiery.It is common ground that by the notification issued under the Cotton Textile (Control) Order, 1948, the appellant is called upon to supply to the Government the prescribed quantity of yarn produced by the spinning department. It is unnecessary to refer to the details of the order or to the extent of the yarn required to be supplied by the appellant under it. What is significant is the fact that by the application of the order issued in that behalf, the Government has treated the appellant as a producer who has a spinning plant and in that sense, the existence of the spinning activity of the appellant has been treated as an independent activity liable to be controlled by the notification issued under the Cotton Textile (Control) Order,as to the argument that the spinning and the hosiery are functionally integrated, it is clear that hosiery can exist without spinning, provided the industry engaged in hosiery purchases yarn required for the purpose of hosiery. That is one aspect of the matter. But the more important aspect on which reliance has been placed against the appellant is that the appellants spinning department produces yarn of all counts some of which would admittedly not be useful for hosiery work. When the appellant was asked whether the allegation made by respondents 3 and 4 in that behalf was true or not, the management of the appellant hesitatingly denied the said allegation. But an advertisement published in the local daily Sandesh was produced by respondents 3 and 4 and it clearly showed that yarn of all counts was offered by the appellant for sale in the general market. Therefore, it would be idle to contend that the spinning work carried on in the spinning department is meant exclusively or solely for the hosiery department. If the spinning department produces yarn which is not useful or necessary for, and which cannot be used by, the hosiery section, the only inference is that the spinning department is working on its own and is producing yarn to be sold in the market. That being so, the argument of functional interdependence or integrality cannot be treated as valid.Besides, it is not disputed that when the knitting department was closed in 1948, the spinning department was not. If the two departments are functionally interdependent, the closure of the one without the closure of the other may need an explanation. The explanation which has appealed to respondents 1 and 2 apparently is that though the spinning work carried on by the appellant may, to some extent, be useful for the hosiery work, the major part of its work is carried on independently with an eye on the market and so the closure of the hosiery cannot and did not effect the continuance of the spinningis difficult to understand how an employer can make a distinction in the payment of minimum wages between one class of employees and another if both the classes of employees are engaged in different departments of the same establishment or concern. If there is unity of employment and unity of purpose and design as suggested by Sri Mehta, it is inconceivable that the employees engaged in two departments integral connected with each other and constituting one unit would be paid different minimum wages. What is true about the minimum wages and the dearness allowance is also true about the bonus. It appears that even in years in which the appellant made profits and actually paid bonus to the workmen employed in the spinning department, no bonus was paid to the employees engaged in the knitting department. That again can be explained and justified only on the basis that the appellant treated the two departments as distinct and separate and so the employees in the one got bonus and not the employees in themay be the background of the dispute and its genesis, it is clear beyond doubt that the way in which the appellant has treated its employees in spinning as distinguished from its employees in knitting leads very strongly to the inference that the appellant treated the two departments, not as one unit but as separate units, each one functioning on its own and independently of the other.It is in the light of these circumstances that respondents 1 and 2 were not impressed by the relevant factors in which the appellant relied in support of its plea of the unity of the two activities and came to the conclusion that the two activities were separate and as such, must be separately recognized under S. 11. We do not see how the appellant can successfully challenged the correctness of thisargument is that S. 11(1) does not authorized the splitting up of a concern into twoWe are not impressed by this argument. The appellant is undoubtedly engaged in the hosiery industry and that part of its business cannot be recognized as cotton textile industry because it is a concern engaged in spinning only which can be recognized under that category. If that is so, industrial activity of the appellant in relation to hosiery industry must be recognized separately from the textile undertaking. If one concern or company carries on several business or undertakes different types of industrial works, these business or works would amount to separate enterprises or undertakings and would have to be recognised as such. In fact, if the appellant itself has been treating the two kinds of work separately and has thus split up its whole business into two independent sections, it is not easy to understand why the Registrar cannot recognize the existence of two undertakings carried on by the appellant and treat the said undertakings as such. We see no justification for the assumption made by Sri Mehta that S. 11(1) does not permit the recognition of several undertakings carried on by the same company separately. It all depends on whether the undertakings are separate, distinct and independent of each other or are functionally integral to interdependent. In the former case, the registrar would be justified in treating the several undertakings separately while in the latter case, he may recognize all of them as one undertaking.There is one minor point to which reference may incidentally be made.In our opinion, there is no substance in this argument. As we have already pointed out, when respondent 2 passed his earlier order, an appeal was preferred against the said order by respondent 4 before respondent 1. That appeal was, however, dismissed on the ground that respondent 4 was not a party to the proceedings before respondent 2 and, therefore, he could not prefer an appeal was, however, dismissed on the ground that respondent 4 was not a party to the proceedings before respondent 4 was not a party to the proceedings before respondent 2 and, therefore, he could not prefer an appeal. If respondent 4 had no right to make an appeal because he was not a party to the said proceedings, it is difficult to see how he can be precluded from making the present application on the ground of res judicata. At the highest, a plea of res judicata may perhaps be raised against respondents 3 but that would not be effective view of the fact that in the present case, an application has been made by respondent 4 as well. That is why Sri Mehta did not seriously press the point of res judicata before us.