Case: Pipraich Sugar Mills Limited Vs. Pipraich Sugar Mills Mazdoor Union

the machinery dismantled and delivered to the purchaser peacefully. Did the workman ever agree to it? As late as 5th March 1951 Kashinath Pandey wrote to the Government that if the Mills were to be shifted from Pipraich, he would go on hunger strike. Even after the Government had informed him that the sale could not be interfered with, the workman did not co-operate with the management in the dismantling of the machinery with the result that the appellant had to give up the contract with reference thereto and to lose Rs. 2 lakhs profits. To crown all, the workmen having successfully prevented the appellant from getting the contract for dismantling, themselves entered into it directly with the purchaser and undoubtedly intercepted a part, if not the whole, of the profits which the appellant would have earned. It is impossible to hold on these facts that there was a concluded agreement between the parties binding the appellant to give the workmen a share of the profits of the sale transaction.14. It was next contended by Mr. Umrigar that even if there was no concluded agreement by the management to pay the workmen a share of profits on the sale of transaction, it would have been open to the Tribunal to have awarded compensation for the termination of their services treating it as retrenchment, and that the award of compensation of Rs. 45,000 which was what the management itself has suggested, might be sustained on that footing. This contention assumes that the termination of the services of workmen on the closure of business is retrenchment. But 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 surplusage and the termination of services of all the workmen as a result of the closure of the business cannot therefore be properly described as the retrenchment. It is however contended by Mr. Umrigar that the definition of retrenchment in S. 2 (00) of the Industrial Disputes Act, 1947 (14 of 1947) is wide enough to include discharge consequent on the closure of business, and that under S. 25-F, compensation could be awarded therefore. Our attention has been invited on behalf of the appellant to the decision in J. K. Hosiery Factory v. Labour Appellate Tribunal(S) A I R 1956 All 498 (D), where it was held that retrenchment as defined in S. 2 (00) does not comprehend discharge on the closure of business, but Mr. Umrigar contends that it is erroneous. We do not consider it necessary to decide this question as the definition of "retrenchment" in S. 2 (00) of act, 14 of 1947 and S. 25-F therein were inserted by the Industrial Disputes (Amendment) Act, 1953 (43 of l953) and we have held in Burn and Co. Ltd., Calcutta v. Their Workman(C) (supra) that this Act has no retrospective operation. The rights of the parties to the present appeal must, therefore, be decided in accordance with the law as it stood on 21-3-1951 when the workmen were discharged.15. It was next contended, on the strength of the decisions in Employees of India Reconstruction Corporation Ltd. Calcutta, v. India Reconstruction Corporation Ltd. Calcutta, 1953 Lab A C 563 (Cal) (E) and Benett Coleman and Co. Ltd. v. Their Employees,1954 Lab A C 24 (Cal) (F) that even prior to the enactment of the Act 43 of 1953, the Tribunals had acted on the view that retrenchment included discharge on closure of business, and had awarded compensation on that footing and that the award of the Tribunal in the present case could be supported in that view and should not be disturbed. Inp73 Employees of India Reconstruction Corporation Ltd., Calcutta v. India Reconstruction Corporation Ltd., Calcutta(E) (supra) the Tribunal observed at p. 576 as follows:"Ordinarily retrenchment means discharge from service of only the surplus part of the labour force but in the case of closure the whole labour force is dispensed with. In substance the difference between closure and normal retrenchment is one of degree only. As in the case of retrenchment so in the case of closure the workmen are not responsible for closing their jobs. In both the cases what is called compensation by way of retrenchment relief should be admissible".We are unable to agree with these observations. Though there is discharge of workman both when there is retrenchment and closure to business, the compensation is to be awarded under the law, not for discharge as such but for discharge on retrenchment, and if, as is conceded retrenchment means in ordinary parlance, discharge of the surplus, it cannot include discharge on closure of business. Moreover, there was no question of closing of business in Employees of India Reconstruction Corporation Ltd. Calcutta v. India Reconstruction Corporation Ltd. Calcutta(E) (supra) as what happened there was that one of the units of the company, that at Calcutta, was closed and that would be a case of retrenchment, and the observations quoted above were purely obiter. They were, however, quoted and followed without discussion by the Appellate Tribunal inBenett Coleman and Co. Ltd. v. Their Employees(F) (supra) which further remarked at p. 27:"Thus, whether the closure was justified or not, the workman who have lost their jobs would in any event get compensation. If it was not bona fide or not justified, it may be that the measure of compensation would be larger than if it was otherwise".16. For the reasons given above, we cannot assent to these observations. It should be mentioned that in Benett Coleman and Co. Ltd. v. Their Employees(F) (supra) there was no closure of business but winding up of the Calcutta unit by a news paper publishing company which had its head quarters at Bombay. We must accordingly overrule this contention also. We should add that the Tribunal was of the opinion that, apart from agreement, the workman should not, in view of their conduct, be awarded compensation, and we entirely agree with it.

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

Explanation:
1[ds]7. It cannot be doubted that the entire scheme of the Act assumes that there is in existence an industry and then proceeds on to 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 isview therefore expressed inI ndian Metal and Metallurgical Corporation v. Industrial Tribunal Madras(A) (supra) and K. M. Padmanabha Ayyar v. State of Madras(B) (supra)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 inK. M. Padmanabha Ayyar v. State of Madras(B) (supra), fall outside the purview of the Industrial Dispute Act. And that will a fortiori be so, if a dispute arises - if one such can be conceived - after the closure of the business between the quondam employer andif this contention is well-founded, the dispute relates to a claim which arose while the industry was in existence and between persons who stood in the relationship of employer and employees, and that would clearly be an industrial dispute as defined in thedo not find anything in the language of S. 3 of the Act to warrant the imposition of this additional limitation on the power of the State to make a reference. That section only requires, apart from other conditions, with which we are not concerned, that there should be an industrial dispute before there can be a reference, and we have held that it would be an industrial dispute if it arises out of an existing industry. If that condition is satisfied, the competence of the State for taking action under that section is complete, and the fact that the industry has since been closed can have no effect on it.Any other construction would, in our opinion, result in serious anomalies and gravethink that on a true construction of S. 3, the power of the State to make a reference under that section must be determined with reference not to the date on which it is made but to the date on which the right which is the subject-matter of the dispute arises, and that the machinery provided under the Act would be available for working out the rights which had accrued prior to the dissolution of thethis argument proceeds on a misapprehension of the correct position on the facts. The true scope of the promise contained in the letter dated 3-1-1951 is that the workmen acquired there under a right in praesenti to 25 percent of the profits but that the amount became payable only on 30-4-1951, the reason obviously being that it could be precisely p73 determined only after the transaction was completed. In this view, as the claim for share of profits arose on 3-1-1951 and 10-1-1951 when the industry was working, the reference dated 6-11-1951 would be valid, notwithstanding that the business was closed onwe, should not interfere with the finding of the Industrial Tribunal that there was a concluded and enforceable agreement. But our difficulty is that the Tribunal has spoken in two voices, and has given inconsistent and conflicting findings, and it has consequently become necessary for us to determine which of its findings should be accepted as supported bywould not be acceptance as required by the appellant, and that alone would be sufficient to reject the contention of the respondent. But this contention must fail even on the merits. In its letter dated 10-1-1951, the respondent while stating that the strike was not taking place on the 12th, made it clear that this was pending the final decision of the Union. That clearly is not an acceptance of the offer. The matter does not rest there. The object of the strike was, it should be remembered, not anything directly connected with the terms of the employment but something collateral to it. It was to prevent the mills from being removed from Pipraich to Madras. When the management offered to part with 25 percent of the sale transaction, its object was clearly to disarm the opposition of the workmen and to get the machinery dismantled and delivered to the purchaser peacefully. Did the workman ever agree to it? As late as 5th March 1951 Kashinath Pandey wrote to the Government that if the Mills were to be shifted from Pipraich, he would go on hunger strike. Even after the Government had informed him that the sale could not be interfered with, the workman did not co-operate with the management in the dismantling of the machinery with the result that the appellant had to give up the contract with reference thereto and to lose Rs. 2 lakhs profits. To crown all, the workmen having successfully prevented the appellant from getting the contract for dismantling, themselves entered into it directly with the purchaser and undoubtedly intercepted a part, if not the whole, of the profits which the appellant would have earned. It is impossible to hold on these facts that there was a concluded agreement between the parties binding the appellant to give the workmen a share of the profits of the salecontention assumes that the termination of the services of workmen on the closure of business is retrenchment. But 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 surplusage and the termination of services of all the workmen as a result of the closure of the business cannot therefore be properly described as thedo not consider it necessary to decide this question as the definition of "retrenchment" in S. 2 (00) of act, 14 of 1947 and S. 25-F therein were inserted by the Industrial Disputes (Amendment) Act, 1953 (43 of l953) and we have held in Burn and Co. Ltd., Calcutta v. Their Workman(C) (supra) that this Act has no retrospective operation. The rights of the parties to the present appeal must, therefore, be decided in accordance with the law as it stood on 21-3-1951 when the workmen wereare unable to agree with these observations. Though there is discharge of workman both when there is retrenchment and closure to business, the compensation is to be awarded under the law, not for discharge as such but for discharge on retrenchment, and if, as is conceded retrenchment means in ordinary parlance, discharge of the surplus, it cannot include discharge on closure of business. Moreover, there was no question of closing of business in Employees of India Reconstruction Corporation Ltd. Calcutta v. India Reconstruction Corporation Ltd. Calcutta(E) (supra) as what happened there was that one of the units of the company, that at Calcutta, was closed and that would be a case of retrenchment, and the observations quoted above were purely obiter.For the reasons given above, we cannot assent to these observations. It should be mentioned that in Benett Coleman and Co. Ltd. v. Their Employees(F) (supra) there was no closure of business but winding up of the Calcutta unit by a news paper publishing company which had its head quarters at Bombay. We must accordingly overrule this contention also. We should add that the Tribunal was of the opinion that, apart from agreement, the workman should not, in view of their conduct, be awarded compensation, and we entirely agree with it.