Case: The Associated Cement Companies Limited,Chaibassa Cement Vs. Their Workmen

2. The facts are simple and are shortly set out below. The Associated Cement Companies Ltd., hereinafter called the Company, have a number of cement factories in different States of the Indian Union as also in Pakistan. There are two such factories in the State of Bihar, one at Khelari and the other at a place called Jhinkpani in the district of Chaibasa in Bihar. The latter factory is commonly known as the Chaibasa Cement Works. There is a limestone quarry owned by the same Company situate about a mile and a half from the Chaibasa Cement Works, the quarry being known as the Rajanka limestone quarry. Limestone is the principal raw material for the manufacture of cement and the Chaibasa Cement Works depended exclusively for the supply of limestone on the said quarry. At the time relevant to this appeal there were two classes of labourers at the quary, those employed by the Company through the management of the Chaibasa Cement Works and others who were engaged by a contractor. There was one union known as the Chaibasa Cement Workers Union, hereinafter called the Union, of which the Companys labourers both at the Cement Works and the quarry were members. There was another union consisting of the contractors labourers which was known as the A. C. C. Limestone Contractors Mazdoor Union. On 3-1-1955, the Union made certain demands on the management on behalf of the labourers in the limestone quarry, but these were rejected by the management. Then by a subsequent letter dated 18-2-1955,the Central Secretary of the Union gave a notice to the Manager of the Chaibasa Cement Works to the effect that the Union proposed to organise a general stay-in-strike in the limestone quarry from 1-3-1955, if certain demands, details whereof are unnecessary for our purpose, were not granted on or before 28-2-1955. A similar notice was also given on behalf of the A. C. C. Limestone Contractors Mazdoor Union. These notices led to certain efforts at conciliation which, however, failed. On 24-2-1955, the management gave a notice to all employees of the Chaibasa Cement Works, in which it was stated that in the event of the strike materalising in the limestone quarry, it would be necessary for the management to close down certain sections of the factory at Jhinkpani on account of the non-supply of limestone; the notice further stated that in the event of such closure, it would be necessary to lay off the workers not required during the period of closure for the sections concerned. The strike commenced on 1-3-1955, and lasted till 4-7-1955. On March 25, 1955, the management wrote to the General Secretary of the Union intimating to him that the workers in certain departments referred to in an earlier letter dated 19-3-1955, would be laid -off with effect from 1-4-1955. On March 28, 1955, the management gave the lists of employees who were to be laid-off with effect from 1-4-1955, and they were actually laid-off from that date. During the period of the strike fresh efforts at conciliation were made and ultimately the strike came to an end on 5-7-1955, when the Central Government referred the dispute between the management and the workers of the limestone quarry to the Central Industrial Tribunal at Dhanbad. This reference was, however, withdrawn by mutual consent in terms of a settlement arrived at 7-12-1955. The details of this settlement are not relevant to this appeal3. Thereafter, a demand was made by the Union for payment of lay-off compensation to those workers of the Chaibasa Cement Works who had been laid-off for the period 1-4-1955 to 4-7-1955. This demand was refused by the management. This gave rise to an industrial dispute which was referred by the Government of Bihar under S. 10 of the Act of the Industrial Tribunal, Bihar. The terms of reference set out the dispute in the following words:Whether the workmen of the Chaibasa Cement Works are entitled to compensation for lay-off for the period from April 1, 1955 to July 4, 1955The parties filed written statements before the Industrial Tribunal and the only witness examined in the case was Mr. Dongray, Manager of the Chaibasa Cement Works, Jhinkpani4. At this point it is necessary to read the two sections of the Act which relate to the right of workmen to lay-off compensation and the circumstances in which they are disqualified for the same. The right is given by S. 25C and the disqualification is stated in three clauses of S. 25E, of which the third clause only is important for our purpose. We now proceed to read Ss. 25C and 25E so far as they are material for our purpose. (1) Whenever a workmen (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid-off, he shall be paid by the employer for all days during which he is so laid-off, except for such weekly holidays as may intervene,. Compensation which shall be equal to fifty percent, of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid-offSection 25E. No compensation shall be paid to a workman who has been laid-off-(i) .... .... ....5. Now, the central point round which the controversy between the parties has raged is this. Was the lay-off of the workers in certain sections of the Chaibasa Cement Works due to a strike on the part of workmen in another part of the establishment within the meaning of cl. (iii) of S. 25E? In other words, was the limestone quarry at Rajanka part of the establishment known as the Chaibasa Cement Works? The contention of the management was and is that the Cement Works and the limestone quarry form one establishment within the meaning of cl. (iii) aforesaid. The contention on behalf of the workmen is that they are not parts of one establishment but are separate establishments. The learned Chairman of the Industrial Tribunal held for reasons which we shall presently discuss, that the limestone-quarry was not part of the establishment known as the Chaibasa Cement Works and the workmen in the latter were not disentitled to lay-off compensation by reason of cl. (iii) of S. 25E. The correctness of this view is the principal point for decision in this appeal.

Court's reasoning:
We do not think that this contention is correct and we shall presently deal with it. We propose, however, to examine first the relation between the limestone quarry at Rajanka and the cement factory at Jhinkpani in the light of the evidence given before the Tribunal and the findings arrived at by it; because they will show the process of reasoning by which the Tribunal came to its final conclusionIt was not disputed that the Company owned the limestone quarry as also the factory and there was unity of ownershipIt is worthy of note here that the Union itself gave notice to the Manager of the factory with regard to the intended strike in the limestone quarry. The geographical proximity of the limestone quarry was never in dispute. It was adjacent to the factory, being situate within a radius of about a mile. As to general unity of purpose and functional integrality, this was also not seriously in dispute. Mr. Dongray said that limestone was the principal raw material for the manufacture of cement and the cement factory at Jhinkpani depended exclusively on the supply of limestone from the quarry at Rajanka. His evidence no doubt disclosed that some excess limestone was sent to the factory at Khelari as wellThe Judgment of the Tribunal itself shows that the final conclusion was arrived at by a process of reasoning which involved a consideration of several provisions of the Act and some provisions of the Mines Act, 1952. The Tribunal accepted a major portion, if not all, of the evidence of Mr. Dongray; but it felt compelled to hold against the appellant despite that evidence by reason of an anomalous position which, it though, would arise if the factory and the quarry were held to be one establishmentThat question was not a pure question of fact, as it involved a consideration of the tests which should be applied in determining whether a particular unit is part of a bigger establishment. Indeed, it is true that for the application of the tests certain preliminary facts must be found; but the final conclusion to be drawn therefrom is not a mere question of factLearned counsel for the respondent is not, therefore, justified in asking us to adopt the short cut of disposing of the appeal on the footing that a finding of fact should not be disturbed in an appeal by special leave. In this case we cannot relieve ourselves of the task of determining the true scope and effect of cl. (iii) of S. 25E by adopting the short cut suggested by learned counselIt uses the word establishment only. We agree, however, that if S. 25E is read with S. 25C and the definition of lay-off in S. 2(kkk) of the Act, as it must be read, the word establishment in S. 25E has reference to an industrial establishmenWe do not think that there is any warrant for the assumption.The Explanation only gives the meaning of the expression industrial establishment for certain sections of the Act; it does not purport to lay down any test as to what constitutes one establishment. Let us take, for example, a factory which has different departments in which manufacturing process are carried on with the aid of power.Each department, if it employs ten or more workmen, is a factory within the meaning of cl. (m) of S. 2 of the Factories Act 1948; so is the entire factory where 1000 workmen may be employed. The Explanation merely states that an under-taking of the nature of a factory as defined in cl. (m) of S. 2 of the Factories Act; 1948 is an industrial establishment. It has no bearing on the question if in the example taken the factory as a whole or each department thereof should be treated as one establishment.That question must be determined on other considerations, because the Explanation does not deal with the question of one establishment. In our view, the true scope and effect of the Explanation is that it explains what category, factory, mine or plantation, come within the meaning of the expression industrial establishment; it does not deal with the question as to what constitutes one establishment and lays down no tests for determining that question. We cannot, therefore, accept the argument of learned counsel for the respondent that a factory and a mine, a mine which supplies the raw material to the factory, can never be one establishment under the Act; that we do not think is the effect of the Explanation to S. 25AIt is perhaps impossible to lay down any one tests as an absolute and invariable tests for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units, etc. If in their true relation they constitute one integrated whole, we say that the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes a disqualification therefor. Thus, in one case the unity of ownership, management and control may be important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for consideration at the same time12. Fortunately for us, such complexities do not present themselves in the case under our consideration. We do not say that it is usual in industrial practice to have one establishment consisting of a factory and a mine; but we have to remember the special facts of this case where the adjacent limestone quarry supplies the raw material, almost exclusively, to the factory; the quarry is indeed a feeder of the factory and without limestone from the quarry, the factory cannot function. Ours is a case where all the tests are fulfilled, as shown from the evidence given on behalf of the appellant to which we have earlier referred.There are unity of ownership, unity of management, supervision and control, unity of finance and employment, unity of labour and conditions of service of workmen, functional integrality, general unity of purpose and geographical proximity. We shall presently deal with the legal difficulties at which the Tribunal has hinted and which have been elaborated by learned counsel for the respondent.But apart from them, the only fair conclusion from the facts proved in the case is that the Chaibasa Cement Works consisting of the factory and the limestone quarry form one establishment. The existence of two sets of Standing Orders and a separate attendance register for the limestone quarry have already been adverted to.They have been sufficiently explained by Mr. Dongray, particularly the existence of two sets of Standing Orders by reason of the statutory requirement of approval by different authorities - one set by the Labour Commissioner, Bihar, and the other by the relevant Central authorityWe are unable to accept this argument as correct. We do not think that S.17 of the Mines Act, 1952 has any relevance to the question whether the limestone quarry was part of a bigger establishment. It prescribes the appointment of a Manager for purposes of the Mines Act, 1952 and does not deal with the question of one establishment within the meaning of cl. (iii) of S. 25E of the Act.The fact that the quarry Manager worked under the over-all control and supervision of Mr. Dongray showed, on the facts proved in this case, just the contrary of what learned counsel for the respondent has contended; it showed that the factory and the quarry were treated as one establishment13. We proceed now to consider the legal difficulties which according to learned counsel for the respondent stand in the way of treating the limestone quarry and the factory as one establishmentThe first difficulty is said to arise out of S. 17 of the Mines Act, 195215. The second difficulty is said to arise out of certain provisions of the Act which relate to the constitution of Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and the reference of industrial disputes to these bodies for settlement, in inquiry or adjudicationSub-sections (2) and (3) we need not reproduce, because for the purpose of this appeal, the argument is the same, which is that if a proceeding is pending before a Central Tribunal, say in respect of the limestone quarry, there will be difficulty in applying the provisions of S. 33 in respect of workmen in the factory over which the Central Tribunal will have no jurisdiction. The Industrial Tribunal did not specifically refer to these provisions, but perhaps, had them in mind when it said that an anomalous position would arise if the factory and the quarry were treated as one establishment16. We have given our most earnest consideration to these arguments, but are unable to hold that they should prevail. It is indeed true that in the matter of constitution of Boards of Conciliation Courts of Inquiry, Labour Courts and Tribunals and also in the matter of reference of industrial dispute to them, and perhaps for certain other limited purposes, the Act gives jurisdiction to two distinct authorities, the Central Government in respect of the limestone quarry and the State Government in respect of the factory.The short question is - does this duality of jurisdiction, dichotomy one may call it, necessarily imply that for all purpose of the Act, and particularly for payment of unemployment compensation as per the provisions in Ch. VA, the factory and the quarry must be treated as separate establishments. We are unable to find any such necessary implication. There is no provision in the Act which says that the existence of two jurisdictions has the consequence contended for by learned counsel for the respondent; nor do we find anything in the provisions creating two jurisdictions which by reason of the principle underlying them or by their very nature give rise to an implication in law that the existence of two jurisdiction means the existence of two separate establishments.On the contrary, such an implication or inference will be at variance with the scheme and object of unemployment compensation as provided for by the provisions in Ch. VA of the Act. We have pointed out earlier that the object of unemployment compensation is to relieve hardship caused by involuntary unemployment, that is, unemployment not due to any fault of the employees. If in the ordinary business sense the industrial establishment in one, a lay-off of some of the workmen in that establishment as a result of a strike by some other workmen in the same establishment cannot be characterised as involuntary unemployment.To hold that such an establishment must be divided into two separate parts by reason of the existence of two jurisdictions is to import an artificiality for which we think there is no justification in the provisions of the Act17. Nor do we think that Ss. 18(3) and 33 present any real difficulty. Section 18(3) clearly contemplates a settlement or an award which is binding on a part of the establishment. It says so in express terms. If, therefore, in the case before us there is a settlement or award in respect of the limestone quarry it will be binding in the circumstances mentioned in the sub-section, on the workmen in that part of the establishment which is the limestone quarry. Similarly, settlement or award in respect of the factory will be binding on the workmen of the factory. Section 33 so far as it is relevant for the argument now under consideration, is in two parts. Sub-section (1) relates to a matter connected with the dispute in respect of which a proceeding is pending. Sub-section (2) relates to a matter not connected with the dispute in respect of which the proceeding is pending. In one case permission of the authority before which the proceedings is pending has to be obtained for punishing etc; in the other case, an application for approval of the action taken by the employer has to be made. We see no difficulty in applying S. 33 in a case like the one before us.For workmen in the mine, the authority will be the one appointed by the Central Government; for the factory, the authority will be that appointed by the State Government. This is the same arguments as the argument of two jurisdictions in another form. The assumption is that there cannot be two jurisdictions for two parts of one establishment.This argument is valid, if the assumption is correct. If, however, there is no warrant for the assumption, as we have held there is none, then the argument has no legs to stand upon18. So far we have dealt with the case irrespective of and apart from reported decisions, because there is no decision which really covers the point in controversy before us20. We do not think that these decisions carry the matter any further than what we have explained in earlier paragraphs of this judgment. We must have regard to the provisions of the statute under which the question falls to be considered; if the statute itself says what is one establishment, then there is no difficulty.If the statute does not, however, say what constitutes one establishment, then the usual tests have to be applied to determine the true relation between the parts, branches etc., namely, whether they constitute one integrated whole or not. No particular test can be adopted as an absolute test in all cases of this type and the word establishment is not to be given the sweeping definition of one organisation of which it is capable, but rather is to be construed in the ordinary, business or commercial sense21. For the reasons which we have already given, we are of the view that the learned Chairman of the Industrial Tribunal wrongly held that the limestone quarry at Rajanka and the factory at Jhinkpani were separate establishments. In our view, they constituted one establishment within the meaning of cl. (iii) of S. 25E of the ActThat being the position, the disqualification in cl. (iii) aforesaid clearly applied and the workmen at the factory were not entitled to claim lay-off compensation.