Case: Hariprasad Shivshankar Shukla Vs. A.D. Divelkar

2. In Civil Appeal No. 105 of 1956 the main appellant is the Barsi Light Railway Company Limited, Kurduwadi within the State of Bombay (hereinafter called the Railway Company). The principal respondent is the President of the Barsi Light Rail waymens Union, respondent No. 1 to the appeal. The General Manager, Central Railway, Bombay, and the Secretary, Railway Board, New Delhi, are respondents Nos. 4 and 5. The facts, so far as they are relevant for our purpose, are these. Under an agreement dated 1 st August 1895, between the Secretary of State for India in Council and the Railway Company, the latter constructed, maintained and worked a light railway between Barsi Town and Barsi Road Station on the railway system, known then as the Great Indian Peninsular Railway. It is not necessary to state here the various clauses of the aforesaid indenture of agreement except to mention that it contained a clause under which the Secretary of State could purchase and take over the undertaking after giving the Railway Company not less than twelve calendar months notice in writing of the intention so to do. On 19th December 1952 a notice was given to the Railway Company, for and on behalf of the President of India, by the Director of the Railway Board to the effect that the undertaking of the Railway Company would be purchased and taken over as from 1st January 1954. The notice stated inter alia:"The President of India hereby gives this notice to the Company of the determination of the original contract of the 1st day of August 1895 and the contract of the 26th day of August 1902 between the Secretary of State in Council and the Barsi Light Railway Company Ltd.; and of all the contracts supplemental thereto, at the expiration of 12 calendar months next after the current month and the contracts shall terminate accordingly on the expiration of 12 calendar months next after the current month and the President of India will on the 1st day of January 1954 purchase and take over the entire railway system of the Company including all the extension and all the railways together with all its rolling stock, machinery, equipments, buildings and property etc., and together with all other things, stores and fixtures, etc., as specified and in the manner provided in Cl 43 of the Indenture of the 1st August 1895 and in Cl 63 of the Indenture of the 26th August 1902".3. On 11th November 1953, the Railway Company served a notice on its workmen intimating that as a result of the Government of Indias decision to terminate the contract of the Railway Company and take over the railway from 1st January 1954, the services of all the workmen of the Railway Company would be terminated with effect from the afternoon of 31st December 1953. The notice further stated that the Government of India intended to employ such of the staff of the Company as would be willing to serve on the railway on terms and conditions which were to be notified later. On 15th December 1953, the Railway Board intimated the terms and conditions on which the staff of the Railway Company would be taken over and employed by Government. The letter by which the terms and conditions were communicated enclosed three forms- one for clerical and like categories, a second for categories of staff needing training or refresher course, and a third for workshop staff and other tradesmen requiring tradetesting. In substance, the new terms and conditions as embodied in the letter and the three forms stated that the service of the staff employed by Government would be treated as continuous for certain specific purposes only, such as, contribution to provident fund, leave, passes and privilege ticket orders, educational and medical facilities etc. It was made clear, however, that the Government Railway rules applicable to other staff appointed on the same day would be applicable to the staff of the Railway Company and previous service under the Railway Company would not count for the purpose of seniority. It appears from the statement of respondents 4 and 5 that when the undertaking was actually taken over on 1st January 1954, about 77 percent of the staff of the Railway Company were re-employed in the same scales of pay, about 23 percent were re-employed on somewhat lower scales of pay though the pay they actually drew at the time of re-employment was not affected; only about 24 of the former employees of the Railway Company declined service under the Government.4. Soon after, respondent No. 1 filed some sixty-one applications on behalf of the erstwhile workmen of the Railway Company under S.15 of the payment of Wages Act 1936 for payment of retrenchment compensation to the said workmen under cl.(b) of S.25F of the Industrial Disputes Act 1947 (hereinafter called the Act). The applications were made to respondent No. 3, Civil Judge (Junior Division) Madha, who was the relevant authority under the Payment of Wages Act, 1936.5. These applications were contested by the present appellants and several issues were framed. Three of the issues were-(1) whether the authority under the Payment of Wages Act, 1936 had jurisdiction to deal with and adjudicate on the claim of retrenchment compensation; (2) whether the erstwhile workmen were entitled to claim compensation under cl.(b) of S.25F of the Act; and (3) whether they had been retrenched by their former employer, the present appellants, on 31st December 1953, within the meaning of the expression retrenchment in the Act. The Civil Judge of Madha found against the workmen on issue No.1 but in their favour on the other two issues. By consent of parties, the aforesaid findings given on one of the applications (Miscellaneous Application No. 27 of 1954) governed the other applications also and the applications were dismissed as a result of the finding on the question of jurisdiction.6. Respondent No.1 then moved the High Court of Bombay in Civil Application No. 2546 of 1954 and prayed for writs or appropriate directions under the provisions of Arts 226 and 227 of the Constitution, for quashing the order of dismissal passed by respondent No.3, the Civil Judge of Madha, and directing the latter to dispose of the applications before him on merits. In the High Court the question of jurisdiction of the authority under the Payment of Wages Act, 1936 was not argued, because learned counsel for the Railway Company rightly pointed out that assuming that the said authority had jurisdiction to deal with the claim of the workmen, the controversy between the parties would not come to an end by a decision on the question of jurisdiction only; because the Railway Company still contended that the workmen had not been retrenched within the meaning of the Act and were not entitled to claim compensation under cl. (b) of S.25-F. Thereupon, both parties agreed in the High Court that Civil Application No. 2546 of 1954 should not be restricted to the question of jurisdiction but should be decided on merits; that is, on the validity or otherwise of the claim of the erstwhile workmen to compensation under cl. (b) of S.25-F on the termination of their services by the Railway Company on 31st December 1953. Learned counsel for the Railway Company agreed and undertook on behalf of his client to accept whatever finding was given by the High Court on merits, subject to an appeal to this court. The High Court (Chagla, CJ. and Dixit, J.) held by its judgement and order dated 24th January 1955 that the workmen were entitled to claim compensation under cl. (b) of S.25-F of the Act and the Railway Company was liable to pay such compensation to them. It is from that decision that Civil Appeal No. 105 of 1956 has been brought.The facts in this appeal are somewhat different. The main appellant is Shri Dinesh Mills Ltd., Baroda, and the principal respondent is the District Labour Officer and Inspector under the Payment of Wages Act, 1936, at Baroda. The appellant company was running a woollen Mill at Baroda for several years and had in its employ at the relevant time 450 workman and 20 clerks. The work was done in shifts day and night. On or about 31st October 1953, the appellant put up a notice declaring its intention to close down the entire mills from 1st December 1953. On 19th November 1953 this notice was withdrawn and another notice was put up declaring the intention of the appellant to close down the second shift with effect from 20th December 1953. A third notice was put up saying that the second shift would be closed on 20th December 1953, as notified earlier, and the first shift would be, closed as from 8th January 1954. A similar notice was put up on the same date terminating the services of the clerks with effect from 8th January 1954. It was not disputed that though the steps in the process of closure of the business of the appellant company were staggered the process was really one, and as a result of the closure the services of all 450 workman and 20 clerks were terminated. The appellant Company claimed that the closure of its business was bona fide being due to heavy losses sustained by the Company.8. On 27th April 1954, the principal respondent made an application to the relevant authority (respondent No. 3) under the Payment of Wages Act, 1936, claiming retrenchment compensation for the workman of the appellant under cl. (b) of S.25-F of the Act. The application was contested by the appellant Company, and here again the same questions of jurisdiction of the authority under the Payment of Wages Act, 1936 to deal with the claim and the maintainability of the claim under cl. (b) of S.25-F of the Act arose for decision. The authority under the Payment of Wages Act decided against the, erstwhile workmen on all the important issues. The respondent then moved the High Court of Bombay for appropriate writs or directions, and the High Court (Bavdekar and Shah JJ.) held that the authority under the Payment of Wages Act, 1936, had jurisdiction to deal with the claim of retrenchment compensation, on the merits of the claim, the learned Judges felt bound to accept the decision of the Bench (Chagla CJ. and Dixit J.) in the case of the Railway Company. Accordingly, the order of respondent No. 3 was set aside and he was directed to dispose of the application before him in accordance with law. Civil Appeal No. 103 of 1956 is from the aforesaid decision of the High Court dated 25th July 1955.

Reasoning:
In our opinion it does. When a portion of the staff or labour force is discharged as surplusage in a continuing business, there are (a) termination of the service of a workman; (b) by the employer; (c) for any reason whatsoever; and (d) otherwise than as a punishment inflicted by way of disciplinaryagree that the adoption of the ordinary meaning gives to the expression for any reason whatsoever a somewhat narrower scope; one may say that it gets a colour from the context in which the expression occurs; but we do not agree that it amounts to importing new words in the definition. What after all is the meaning of the expression for any reason whatsoever? When a portion of the staff or labour force is discharge as surplusage in a running or continuing business, the termination of service which follows may be due to a variety of reasons; eg. for economy, rationalisation in industry, installation of a new labour saving machinery etc. The legislature in using the expression, for any reason whatsoever says in effect: "It does not matter why you are discharging the surplus; if the other requirements of the definition are fulfilled, then it is retrenchment". In the absence of any compelling words to indicate, that the intention was even to include a bona fide closure of the whole business, it would, we think, be divorcing the expression altogether from its context to give, it such a wide meaning as is contended for by learned counsel for the respondents. What is being defined is retrenchment, and that is the context of the definition. It is true that an artificial definition may include a meaning different from or in excess of the ordinary acceptation of the word which is the subject of definition but there must then be compelling words to show that such a meaning different from or in excess of the ordinary meaning is intended.Where, within the framework of the ordinary acceptation of the word, every single requirement of the definition clause is fulfilled, it would be wrong to take the definition as destroying the essential meaning of the wordview of these observations, it would be against the entire scheme of the Act to give the definition clause relating to retrenchment such a meaning as would include within the definition termination of service of all workmen by the employer when the business itself ceases to exist. Learned counsel for the appellants in the p73 two appeals have pointed out that the definition clause is inartistically drawn up and sub-cls. (a) and (b) of S. 2 (00) are not easily intelligible with reference to one of the essential requirements of the definition; namely, that the termination of service of the workman must be by the employer. It has been submitted that voluntary retirement of the workman cannot be termination of service by the employer.We do not, however, think that sub-cls. (a), (b) and (c) are conclusive of the question before us; they, no doubt apply to a running or continuing business only, but whether inserted by way of abundant caution or on account of excessive anxiety for clarity, they merely exclude certain categories of termination of service from the ambit of the definition. They do not necessarily show what is to be included within theagree that if it is conceded that definition clause includes cases closure of business, no difficulty is presented by Ss. 25-G andpoint to be emphasised in that connection is that there is no provision (except perhaps S 25-FF inserted in 1956 by Act 41 of 1956 to which we shall presently refer) which can be said to bring a closed or dead industry within the purview of the Act. The provisions of the Act, almost in their entirety, deal with an existing or continuing industry. All the provisions relating to lay off in Ss. 25-A to 25-E are also inappropriate in a deadthink that no such compelling reasons are available from the provisions of the Act; on the contrary, they point really one way - that the Act contemplates an existing or continuing industry and not a deadclosely examined, none of those decisions show, however, that discharge of workmen on bona fide closure of business was held to fall within the meaning of normalconsider it unnecessary to examine all the decisions on this point and it is enough to indicate what we consider to be the correct position in the matter. Retrenchment means discharge of surplus workmen in an existing or continuing business; it had acquired no special meaning so as to include discharge of workmen onbona fideclosure of business, though a number of Labour Appellate Tribunals awarded compensation to workmen on closure of business as an equitable relief for a variety of reasons.It is reasonable to assume that in enacting S. 25-F, the legislature standardised the payment of compensation to workmen retrenched in the normal or ordinary sense in an existing or continuing industry; the legislature did away with the perplexing variety of factors for determining the appropriate relief in such cases and adopted a simple yard stick of the length of service of the retrenched workmen. If the intention of the legislature was to given statutory effect to those decisions which awarded compensation on real andbona fideclosure of business, the legislature would have said so instead of being content by merely adding a definition clause, every requirement of which is fulfilled by the ordinary, accepted meaning of the wordagree with learned counsel for the appellants that the aim or object of the enactment was to supersede partially the effect of the aforesaid judicial decisions, at least with regard to the urgent matter of charge of ownership or management of a business undertaking which is of quite frequent occurrence,rather than parliamentary exposition of the pre-existing law, the general question of closure of business, of a lesser degree of urgency, was naturally left to be dealt with, if necessary, after the appeals had been disposedare fortified in this view by an examination of the provisions of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956. Be it noted that this Act was passed on August 28,1956-only about seven days before the enactment of S.25-FF. Section 29 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act 1956, inserts new schedules to the Act, and item 10 of the Third Schedule (Matters within the jurisdiction of Industrial Tribunals) is : "Retrenchment of workmen and closure of establishment"; in the Fourth Schedule, item 10 is: "Rationalisation, standardisation or improvement of plant or technique which is likely to lead to retrenchment of workmen." It is true that these new Schedules have not yet come into force, but the wording of the items mentioned therein shows that the legislature clearly envisaged a distinction between retrenchment and closure and retrenchment did not include closure of business; item 10 of the Fourth Schedule almost clinches the issue, because it shows how retrenchment of surplus labour may occur in a running industry. If we are to choose between the two amending Acts of 1956 on the point of parliamentary exposition, we unhesitatingly hold that the Industrial Disputes Amendment and Miscellaneous Provisions Act, 1956 (Act 36 of 1956) is more in the nature of parliamentary exposition than the Industrial Disputes (Amendment) Act, 1956 (Act 41 of 1956) which merely supersedes the effect of certain judicial decisions. We are aware that on the narrower interpretation of the definition clause on the basis of the ordinary, accepted connotation of retrenchment, S. 25-F will apply to a continuing or running business only and S. 25-FF will become largely unnecessary. We do not think that consideration need cause any difficulty; the judicial decisions on the basis of which S.25-FF was enacted being held to be erroneous by us, no hardship is caused if S. 25-FF is rendered superfluous, because its aim is served by the correct interpretation now given of the definition clause and of the provisions of S. 25-F, both of which are on that interpretation brought into harmony with the rest of thefounded on a mistaken or erroneous assumption has not the effect of making that the law which the legislature had erroneously assumed to be so. In the cases before us, the legislature proceeded on the basis of the judicial decisions then available to it, and on that basis enacted S. 25-FF. We do not think that the general principle of parliamentary exposition or subsequent legislation as an aid to construction of prior Acts can be called in aid for construing the definition clause and S.25-F of the Act.19. For the reasons given above, we hold, contrary to the view expressed by the Bombay High Court,that retrenchment as defined in S.2 (00) and as used in S.25-F has no wider meaning than the ordinary, accepted connotation of the word: it means the discharge of surplus labour or staff by the employer for any reasons whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and it has no application where the services of all workmen have been terminated by the employer on a real and bona fide closure of business as in the case of Shri Dinesh Mills Ltd. or where the services of all workmen have been terminated by the employer on the business or undertaking being taken over by another employer in circumstances like those of the Railway Company.Mr. Mehta, appearing for respondents Nos. 4 and 5 in Civil Appeal No.105 of 1956, tried to make a distinction between transfer of ownership with continuation of employment (which according to him did not come within the definition) and termination of service on closure of business. There is in fact a distinction between transfer of business and closure of business; but so far as the definition clause is concerned, both stand on the same footing if they involve termination of service of the workmen by the employer for any reason whatsoever, otherwise than as a punishment by way of disciplinary action. On our interpretation, in no case is there any retrenchment, unless there is discharge of surplus labour or staff in a continuing or running industry.On the construction which we have adopted of the definition clause and of S.25-F of the Act, we are relieved of the task of making any final pronouncement on this constitutional question. On our construction, S.25-F has no application to a closed or dead industry and the constitutional arguments based on a different construction need not be considered in these appeals. So far as a running or continuing industry is concerned, an obvious answer may be that unemployment relief is not the only purpose or object of S.25-F. We have pointed out earlier that it is reasonable to assume that standardisation of retrenchment compensation and doing away with a perplexing variety of factors for granting retrenchment compensation may well have been the purposes of S.25-F though the basic consideration must have been the granting of unemployment relief. However, on our view of the construction of S.25-F, no compensation need be paid by the appellants in the two appeals. It is unnecessary therefore to decide whether, in other cases of a different character, S. 25-F imposes a reasonable restriction or not.