Case: Workmen Of Subong Tea Estate Vs. The Outgoing Management Of Subongtea Estate &amp; Another

1. The industrial dispute which has given rise to this appeal arose between the appellants, the workmen of Snbong Tea Estate, and the management of Subong Tea Estate represented by respondents 1 and 2. Respondent No. 1, M/s. Macneill and Barry Ltd., who managed the Subong Tea Estate, has transferred the said estate to respondent No. 2, M/s. Gungaram Tarachand otherwise known as Hindustan Tea Company. On the occasion of the retrenchment of the 8 employees in question respondent No. 1 has paid adequate retrenchment compensation to them. The appellants, however, contended that at the relevant date when the 8 workmen were retrenched, respondent No. 2 was their employer, and so, respondent No. 1 had no authority to pass the orders of retrenchment. It was further their case that the impugned retrenchment is invalid and illegal inasmuch as it is not justified under S. 25F of the Industrial Disputes Act, 1947 (No. 14 of 1947) (hereinafter called the Act), and has not been carried out according to the principles prescribed by S. 25G of the said Act. That is how the dispute in regard to the impugned retrenchment came to be referred by the Governor of Assam for industrial adjudication to the Industrial Tribunal Assam, under S. 10 (1) (d) of the Act. Four issues were referred to the Tribunal for its adjudication. The first issue was whether the impugned retrenchment of the 8 workmen was justified, the second was whether respondent No. 2 the transferee Company was justified in refusing to maintain the continuity of service and original terms and conditions of the workmen concerned; under the third issue, the Tribunal was required to consider whether the workmen concerned were entitled to reinstatement and any other relief; the fourth issue which was added some time later, required the Tribunal to decide whether the retrenched workmen were entitled to any further relief in case their retrenchment was held to be valid. The Tribunal has answered ail these questions against the appellants, except in regard to two employees Mr. G. C. Bhattacharjee and Mr. P. K. Sarma Chowdhury in whose cases the Tribunal has recommended that respondent No. 1 should pay them gratuity gratia in such sums as respondent No. 1 may consider reasonable with due regard to compensation already paid to them. It is the award which is challenged before us by the appellants in the present appeal which has been brought to this Court by special leave.2. Before dealing with the points of law raised in the present appeal by Mr. Sen Gupta on behalf of the appellants, it is Necessary to state the material facts in some detail. The agreement of transfer between respondent No. 1 and respondent No. 9 (hereinafter called the Vendor and the Vendee respectively) was reached on January 12, 1959. It was agreed between the parties that when the agreement was completed, it would take effect from January 1, 1959. This agreement was subject to the approval of the Reserve Bank of India. The said approval was accorded on July 15, 1959, and the conveyance was actually executed on December 28, 1959. Pending the execution of the conveyance, on February 17, 1959, the Vendee was put in possession of the tea garden. These facts are not in dispute.3. On August 31, 1959, Mr. Hammond, the Manager of the Vendor Company served notices on the 8 employees in question intimating to them that their services would be terminated with effect from October 1. 1959. The said employees were told that they would be paid the salary for the month of September, tent would not be required to work. They were also informed that retrenchment compensation under Section 25F of the Act as well as pro-rata dues on account of leave wages earned on August 31, 1959 would he paid to them and their claims for Provident Fund dues would like wise be settled. In pursuance of these notices, the eight employees were paid retrenchment compensation due to them on August 31, 1959. On September 1, 1959. the Union representing the said employees protested against the retrenchment in question. Mr. Bhattacharjee, the Secretary of the Union, alleged in his communication to the Vendor Company that the impugned retrenchment was invalid and that Mr. Hammond had no power to terminate the services of the said employees. The said employees further complained that they were compelled to take notices of retrenchment and receive the amount of compensation, and that the acceptance of the said amount by them was without prejudice to their claim for continuity of service and to their right to challenge the validity of their retrenchment. The case made try the Union and the retrenched workmen in substance, was that on February 17, 1959 the tea garden had been delivered over to the Vendee and that thereafter the Vendor had no right, title or connection with the said garden and as such, it ceased to be the employer of the employees working in the garden. This position was disputed by the Vendee and that has ultimately led to the present dispute.

Court's reasoning:
It is not retrenchment consequent upon transfer; it is retrenchment effected after the transfer was made and it had been brought about by the transferee who, in the meanwhile, had become the employer of the retrenched workmen. Therefore, we are satisfied that Mr. Sen Gupta is right in contending that the Tribunal erred in law in holding that the impugned retrenchment had been properly effected by the Vendor and that the only relief to which the retrenched employees were entitled was compensation and notice under S. 25FF of the Act.26. It is true that the notices for effecting the retrenchment were issued by Mr. Hammond and it was Mr. Hammond who paid the retrenchment compensation to the employees. Mr. Sastri sought to make a point against the appellants by suggesting that the employees had accepted retrenchment compensation and should not now be permitted to question the validity of the retrenchment. Apart from the fact that such technical pleas are not generally entertained in industrial adjudication, we cannot overlook the fact that after retrenchment compensation was paid to the employees on August 31, 1959, the next day they complained that they had been forced to accept the said compensation, because they were virtually told that if they did not accept the compensation, they would not receive their wages for the month of August. The notices issued by Mr. Hammond and the payment of compensation made by him; and the fact that the payment of wages for the month of August was made by the Vendees Manager, can all be explained on the basis that once the Vendor and the Vendee agreed to retrench the 8 workmen, they decided to adopt the course which would apparently comply with the provisions of S. 25FF. That being so,we are not impressed by the argument that the acceptance of retrenchment compensation by the 8 workmen should be held to create a bar against them in the present proceedings.27. It is not disputed that if we hold that the retrenchment ostensibly effected by Mr. Hammond is invalid because the Vendor Company represented by Mr. Hammond had ceased to be the employer, then it would follow that the retrenchment must be deemed to have been effected by the Vendee and in that case, it is clearly invalid. It is conceded that if the retrenchment is held to be effected by the Vendee, it has not complied with S. 25F or S. 25G of the Act, and there can be little doubt that failure to comply with S. 25F would make the retrenchment invalid, and so would the failure to comply with S. 25G, because no reasons have been recorded by the Vendee for departing from the rule prescribed by S. 25G. In fact, we ought to add that no case has been made out for effecting any retrenchment at all, and as we have already emphasized, the employers right to retrench his employees can he validly exercised only where it is shown that any employee has become surplus in the undertaking.28. That being so, we must hold that the retrenchment of the 8 workmen being invalid in law, cannot be said to have terminated the relationship of employer and employee between the Vendee, respondent No. 2 and the 8 workmen concerned. They are accordingly entitled to reinstatement with continuity of service; they would also be entitled to recover their full wages for the period between the date of the retrenchment and the date of their reinstatement. In this connection, it has been brought to our notice that these 8 employees have been paid their retrenchment compensation. The only direction we can make in that behalf is that when the Vendee reinstates the said employees and pays them their back wages, appropriate adjustments should be made taking into account the amount of retrenchment compensation received by each one of them.