Case: Ramakrishna Ramnath Vs. Presiding Officer, Labour Court, Nagpur and Another

3. The appellant is a partnership firm carrying on the manufacture and sale of bidis at various places in the Vidarbha region of the State of Maharashtra and other places including Nagpur. It employed 4000 men in its factories. On the issue of a notification by the Government of Bombay dated June 11, 1958 under S.5(2) read with S. 5(1)(b) of the Minimum Wages Act, 1948 the appellant felt that the situation created by the notification was such that the working of the factories had become a financial impossibility. On July 1, 1958 it issued a notice in writing, sending copies thereof to the Assistant Labour Commissioner, Nagpur, the Labour Officer, Nagpur, and the Secretary of the recognised trade union styled "notice of closure". The relevant portion of this reads as follows :"As per standing order approved by Labour Commissioner paragraph 11 and also under general power of the employer to close down the business, we beg to inform you that it is our intention to close down our bidi factory and anywhere outside the factory as from 1st July, 1958.We have been forced to take this step by the action of the Bombay Government is issuing a notification dates 11th June, 1958The minimum rate/rates of wages made payable as from 1st July, 1958 are so excessive and unworkable that it is impossible for any employer to give effect to them. This is so particularly in relation to clause 6 of the notification. Thus the changes introduced by the notification ..... regarding wages, chhat and other matters are such as to attract the provisions of cl. 11 of the Standing OrdersFurther the employers have under the peculiar circumstances created by the aforesaid notification a right to close the business the working of which has become ....... a financial impossibilityWe hereby therefore further wish to inform you that the aforesaid closure of the bidi making business of the firm will continue as long as the notification dated8 continues in force."4. Whatever be in the reason, the Government notification was withdrawn within the space of a few weeks and the appellant started to work its factories once more from 10th August, 1958 taking in all its employees who were there before the 1st July, 1958. The respondent in this case who was a bidi binder earning Rs. 1.86 per day on an average made an application to the Presiding Officer, Labour Court, at Nagpur, on November 5, 1963 claiming Rs. 334.80 on account of retrenchment and one months notice pay in of lieu of notice. She stated that the factory was closed as from 1st July, 1958 as a result of which she and other workers has been retrenched. As she had put in 12 years of continuous service before the said date, she claimed computation of the benefit in terms of money under S.33C(2) of the Industrial Disputes Act (hereinafter referred to as the Act)5. The appellant put in its written statement on 25th September, 1962 which was later amended on 2nd March, 1964. It raised various contentions both of fact and of law, urging, inter alia, that the applicant was not an employee but an independent contractor, that there had been no closure of the business to attract S.25FFF of the Act and that in any event the dispute could not be referred to a labour court. The issue relevant for our purpose settled on 20th september, 1965 were as follows :(1) Does the applicant prove that she had been in continuous service of the opponent for more than one year in that undertaking immediately before the closure ?(2) If so, does she prove that she is entitled to retrenchment compensation equivalent to fifteen days average pay for every completed year of service ?(3) Does the opponent prove that the closure of the factory did not result in the retrenchment of the applicant ?(4) Alternatively, does he proves the closure was on account of unavoidable circumstances beyond the control of the employer ?6. The Labour Court tried issues 1, 2 and 6 along with a number of others of a similar nature and allowed the claims of all the applicants barring three and held that they were entitled to compensation under the proviso to S. 25FFF and pay in lieu of notice as per schedule attached to the order.

Court's reasoning:
2. The amount in stake in this appeal is quite an insignificant one but the appeal has been brought as a test case for a number of other similar disputes9. The above provisions of the Act make it clear that the jurisdiction of a Labour Court is not confined to disputes specified in the Second Schedule but the said court has also to perform other functions as may be assigned to it. If there is a closure of a business within the meaning of S. 25FFF, a workman who has been in continuous service for not less than one year in that undertaking immediately before the closure becomes entitled to notice and compensation in accordance with the provisions of S. 25F, as if he or she had been retrenches.13. The concluding portion of the above observations cannot be considered dissociated from the setting in which they were made. As was pointed out in the case of the Central Bank (supra) the examination of the claim under S.33C(2)may in some cases have to be preceded by an enquiry into the existence of the right. A mere denial of the fact of retrenchment would not be enough to take the matter out of the jurisdiction of the Labour Court14. In this case the written statement of the appellant before the Labour Court does not even show that there was any plea that there had been af or a. All that was said in paragraph 9 was that "the closure in accordance with the notice, i.e., 1st July, 1958, does not fall within the scope ofS.25FFF of theAct". No such issue was even raised before the Labour Court. By issue 7 the appellant contended that the closure was on account of unavoidable circumstances beyond the control of the employer, and issue 6 related to the question as to whether the closure had resulted in the retrenchment of the applicant. These two issues, in our opinion, go to show that the fact of closure was not challenged but an attempt was made to establish that the closure was within the meaning of the proviso to S.) or otherwise that the closure was of such a type as did not really amount to retrenchment16. In our opinion, the express terms of the notice, preclude such contention. Nobody could say on the 1st July, 1958 that the Government would think fit to withdraw the notification and the first paragraph of the notice shows that under the general power of the employer to close down the business the appellant was informing all concerned that it was proceeding to do so as from 1st July, 1958. The Labour Court had jurisdiction to make a preliminary enquiry as to whether there had been a closure of the business and the text of the notice made the determination of the question quite a simple affair. As already noted, the question oft was not even mooted when the issues were settled nor was any plea taken that there had been a temporary cessation of work under Standing Order No. 11. By the notice the employer gave the employees to understand that the factory would not function because the Government notification had made the running of it a financial impossibility18. In our view decision of this Court in Kalinga Tubes Ltd. v. Their Workmen A.I.R., (1959) S.C.R. 19, does not help the appellant.19. The contention that a workman has to establish that he had worked for 240 days in all the years for each year the compensation was claimedis without force. It is significant to note that by the first issue before the Labour Court the applicant was only called upon to prove that she had been in continuous service of the appellant for not less than 240 days immediately before the closure. In our opinion the issue had been properly framed. Section25FFFlays down that in order that a workman may claim the benefit of the provision he must establish that he has been in continuous service for not less than one year in that undertaking immediately before the closure. As soon as this is done he becomes entitled to notice and compensation in accordance with the provisions of S.25F as ifhe had been retrenched subject to the provisions of. (2).n (2) of S.25FFFis not applicable to this case. Section) lays down that a workman cannot be retrenched unless he had been paid compensation equivalent to 15 days average pay for every completed year of service or any part thereof in excess of six months. Further no such workman can claim the benefit of the provision for compensation unless he can show that he has been in continuous service for not less than one year under the employer. Under S.25Ba workman who during the period of 12 calendar months has actually worked in an industry for not less than 240 days is to be deemed to have completed one years service in the industry. Consequently an enquiry has to be made to find out whether the workman had actually worked for not less than 240 days during a period of 12 calendar months immediately preceding the retrenchment. These provisions of law do not show that a workman after satisfying the test under S.25Bhas further to show that he has worked during all the period he has been in the service of the employer for 240 days in the year. However the compensation to be paid to the workman under cl. (b) of S.25Fis not to exceed his average pay for three months. In the case of the respondent it was found by the Labour Court that she had worked for eight years and but for the proviso to S.25Fshe would have been entitled to four months pay.