Case: Banaras Ice Factory Limited Vs. Its Workmen

2. The relevant facts are these. The Banaras Ice Factory Limited, the appellant before us, was incorporated on 13th September 1949 as a private limited company and was carrying on the business of manufacturing ice in the city of Banaras, though its registered office was in Calcutta. The factory worked as a seasonal factory and had in its employment about 25 workmen at all material times. These workmen were employed from the month of March to the month of September every year. The appellant Company got into financial difficulties on account of trade depression, rise in the price of materials and increase in the wages and emoluments of workmen. It tried to secure a loan of Rs. 10,000 from a Bank but met with no success. Thereupon it decided to close down the factory and on 15th January 1952, a notice was given to its workmen saying that the factory would be closed down with effect from 17th January 1952, and the services of the workmen would not be necessary for two months from that date. The workmen received their wages up to 16th JanuaryOn 18th March 1952, they were again taken into service but this temporary closing of the factory gave rise to an industrial dispute and the workmen complained that they were wrongfully laid off with effect from 17th JanuaryThe dispute was referred to the Regional Conciliation Officer, Allahabad, for adjudication. In the meantime, that is, on 6th June 1952 the workman gave a strike notice and as there was no coal in the factory, the appellant also gave a notice of closure on 12th JuneA settlement was however arrived at between the parties on 15th June 1952 at the house of the Collector of Banaras. The terms of that settlement inter alia, were: (1) the management would withdraw its notice of closure dated, 12th June 1952; (2) the workmen would withdraw their strike notice dated 6th June 1952; (3) there being no coal, the workers would remain on leave for a period of thirty days with effect from 16th June 1952, and would report for duty on 16th July 1952 at 8 a.m. and (4) after the workers had resumed their duty on 16th July 1952, the appellant would not terminate the services of any workmen or p73 lay them off in future without obtaining the prior permission of the Regional Conciliation Officer, Allahabad.On 28th June 1952, the Regional Conciliation Officer, Allahabad, gave his award in the matter of the industrial dispute between the appellant and its workmen with regard to the alleged wrongful laying off of the workmen from 17th January 1952, to 18th March, 1952, referred to above. By his award the Regional Conciliation Officer gave full wages to the workmen for the period in question. On 16th July 1952, none of the workmen report for duty accordance with the terms of the agreement referred to above, and on that date the appellant gave a notice to its workmen to effect that the appellant found it difficult to run the factory and had decided to close it down; the workmen were informed that their services would not be required and would be terminated upon the expiry of thirty days from 16th JulyThe workmen, it is stated, accepted the notice and took their pay for one month (from 16th July to 15th August 1952) without any protest. Against the award of the Regional Conciliation Officer dated 28th June 1952, the appellant filed an appeal to the Labour Appellate Tribunal on 25th July 1952.On 31st August 1952, a complaint was made on behalf of the workman to the Labour Appellate Tribunal under S. 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950, hereinafter referred to as the Act. The, gravamen of the complaint was that the appellant had contravened the provisions of S.22 of the Act, because the appellant had discharged all the workmen with effect from 15th August 1952, without the permission in writing of the Labour Appellate Tribunal during the pendency before it of the appeal filed on 25th July 1952 against the award of the Regional Conciliation Officer. The Labour Appellate Tribunal dealt with this complaint by its order dated 30th OctoberBefore the Labour Appellate Tribunal it was urged on behalf of the appellant that there was no contravention of S. 22, because on 16th July 1952, when the notice of the discharge was given by the appellant, no appeal was pending before it, the appellants appeal having been filed several days later, namely, on 25th JulyThis contention was not accepted by Labour Appellate Tribunal on the ground that though the notice of discharge was given on 16th July 1952, the termination of service was to come into operation after one month, that is, from 15th August 1952, on which date the appeal before the Labour Appellate Tribunal was certainly pending. As learned counsel for the appellant has, not again pressed this point before us, it is not necessary to say anything more about it.A second point urged before the Labour Appellate Tribunal was that the appellant had the right to close down the factory, when the appellant found that it was not in a position any longer to run the factory. The agreement of 15th June 1952, did not stand in the appellants way, as the workmen themselves did not report for duty on 16th JuneThe closure being abona fideclosure, it was not necessary to obtain the permission of the Labour Appellate Tribunal and there was therefore no contravention of S.22 of the Act. The Labour Appellate Tribunal apparently accepted the principle that the appellant had the right to close its business but took the view that permission should have been obtained before the closure. It referred to the agreement of 15th June 1952, and held that though the appellant had the right to close its business, permission was still necessary and in the absence of such permission, the appellant was guilty of contravening cl. (b) of S.22 of the Act, and directed that the appellant should pay its workmen full wages as compensation for the period of involuntary unemployment up to the date of its award, that is, during the period from 16th August 1952, to 30th October 1952.

Court's reasoning:
8. Turning now to S.22 of the Act, it is clear enough that cl.(a) applies to a running or existing industry only; when the industry itself ceases to exist, it is otiose to talk of alteration of the conditions of service of the workmen to their prejudice, because their service itself has come to an end.The alteration referred to in cl.(a) must, therefore, be an alteration in the conditions of service to the prejudice of the workmen concerned in an existing or running industry. Similarly, the second part of cl.(b) relating to punishment can have application to a running or existing industry only. When the industry itself ceases to exist, there can be no question of punishment of a workman by dismissal or otherwise. We are then left with the word discharge. Unqualified though the word is, it must, we think, be interpreted in harmony with the general scheme and scope ofthe Industrial Disputes Act,objects are capable of fulfillment in a running or continuing industry only, and not in a dead industry. There is hardly any occasion for praying for permission to lift the ban imposed by S.22, when the employer has the right to close his business andbona fidedoes so, with the result that the industry itself ceases to exist. If there is no real closure but a mere pretence of a closure or it ismala fide,there is no closure in the eye of law and the workmen can rise an industrial dispute and may even complain under S.23 of the Act.10. For these reasons, we must uphold the first point taken before us on behalf of the appellant. The Appellate Tribunal was in error in holding that the appellant had contravened cl.(b) of S.22 of the Act.The Appellate Tribunal did not find that the closure of the appellants business was notbona fide;on the contrary, in awarding compensation, it proceeded on the footing that the appellant was justified in closing its business on account of the reasons stated by it. As to the agreement of 15th June 1952, the workmen themselves did not abide by it and the appellants right cannot be defeated on that ground.In view of our decision on the first point it becomes unnecessary to decide the other two points. On the point of construction of S.22 of the Act, we approve of the decision of the Allahabad High Court inJ. K. Hosiery Factory v. Labour Appellate Tribunal of India (A)(supra),but we refrain from expressing any opinion on the other points decided therein and we must not be understood to have express our assent, contrary to the opinion expressed by us in the case ofAutomobile of India, Ltd. (G) (Supra),to view that under S.23 of the Act., it is not open to an Industrial Tribunal to award compensation in an appropriate case.