Case ID: 1684

Judgment:
Appeal No. 390 of 1963. Appeal by special leave from the award dated December 11	 1959	 of the Industrial Tribunal	 Assam at Gauhati in Reference No. 7 of 1959. C.B. Agarwal	 J.N. Hazarika and K.P. Gupta	 for the appellants. Sankar Bannerjee	 P.K. Chatterjee	 D.N. Gupta and B.N.Ghosh	 for the respondents. November 25	 1963. The judgment of the Court was delivered by GAJENDRAGADKAR	 J. This appeal by special leave arises from an industrial dispute between the respondent	 the Management of 11 Tea Estates and the appellants	 their workmen. It appears that the appellants raised a dispute against the respondent in regard to the lay off declared by them in the 11 550 estates in question in February	 1959. The said (ay off lasted for 45 days and the appellants ' contention was that the lay off was not justified	 and so	 they were entitled to their full wages for the period of the lay off. The respondent 's Managing Agents for the nine Companies that run the 11 tea estates in question	 resisted this claim on the ground that the lay off was justified and they alleged that the appellants were not entitled to anything more than the compensation prescribed by section 25C of the (hereinafter called 'the Act '). This dispute was referred to the adjudication of the Industrial Tribunal by the Governor of Assam under section 10(1)(d) of the Act. The 11 tea estates which are concerned with this dispute were described in Appendix A to the order of reference. It is common ground that these 11 tea estates ' are run by nine Companies and M/s. Macneill and Barry Ltd. are the Managing Agents of all these companies. The case for the respondent was that the tea estates in question which are all situated in Cachar District had to face a long period of depression in trade by reason of the poor prices generally commanded by the tea produced by them. In 1959	 the management faced a very difficult financial position and it took the view that in the interests of the employees and its own business	 it would be appropriate to lay off the workmen for a certain period in order to avoid closure of business. The circumstances which caused financial depression were beyond the control of the management and lay off was	 therefore	 inevitable and fully justified. On the other hand	 the appellants urged that there were other tea estates in the district of Cachar which had to face similar problems; the labour costs incurred by the respondent were not higher than the corresponding costs incurred by the other tea estates	 the burden of taxes was the same for all the tea estates in the district and the quality of the tea produced was relatively similar. They contended that the difficulty which the respondent had to face 551 was partly the result of its mismanagement and neglect. They pleaded that the workmen employed by the respondent had been promised continuous work throughout the year and the declaration of lay off for such a long period as 45 days exposed them to the risk of semi starvation. The appellants also urged that depression in trade or financial difficulties which may be characterised as trade reasons did not justify the lay off under the relevant Standing Order	 and so	 they justified their claim for full wages during the period of the lay off. The Tribunal has held that the relevant Standing Order No. 8 justified the lay off. The trade reasons resulting from the depression in trade and financial liabilities arising therefrom fell within the scope of the Standing Order; it has also held that the last clause in the Standing Order which was general in terms could be relied upon by the respondent in support of its plea that the lay off was justified. In the alternative	 the Tribunal thought that even if the lay off was not justified by the relevant clause in the Standing Order	 the respondent had a common law right to declare a lay off and this right was recognised by section 25C of the Act. According to the Tribunal	 section 25 C recognises this common law right and since it is a statutory provision	 it over rides the relevant clause in the standing Order. Having thus found that the lay off was justified	 the Tribunal proceeded to examine the question as to whether the trade reasons on which the respondent relied had 'been proved. It then considered the relevant documentary evidence bearing on the point and noticed some general features applicable to all the tea companies before it. "They have suffered losses which are by no means inconsiderable"	 said the Tribunal	 "and some of the companies have not been able to declare dividends in time during the last ten years	 though others have declared them from year to year. " The Tribunal rejected the respondent 's contention that the losses were due to high labour charges	 but it found that the tea companies were not making adequate profits. It was satisfied that 552 the companies had reserves and large capital assets and would not have found it difficult to raise necessary finances. On the whole	 the Tribunal thought it necessary to distinguish between the different tea estates with which it was dealing	 and having considered their respective individual cases	 it came to the conclusion that out of the nine companies	 five companies need not have declared lay off for 45 days. In its opinion	 there was justification for lay off in their cases	 but its duration should have been 21 days. Acting on this finding	 the Tribunal has ordered that for the 24 days in excess of three weeks for which the lay off was justified the said companies should pay their workmen full wages and not merely the compensation prescribed by section 25C of the Act. In regard to the remaining four companies	 the Tribunal held that the lay off was fully justified	 and so	 the workmen were not entitled to full wages for the period of the lay off. In other words	 the award made by the Tribunal partially granted relief to the appellants inasmuch as it gave them full wages against five companies for 24 days only. These five companies are: Bhubandhar	 Doyapore	 Western Cachar	 Borak and Koyah. The other four companies in respect of which the Tribunal has given no relief to the workmen are: Doodputlee ' Majagram	 Scottpore and Tarrapore. It is this award which has given rise to the present appeal by the appellants. The first question which arises for our decision is whether the Tribunal was justified in holding that section 25C recognises the common law right of the respondent to declare a lay off for reasons other than those specified in the relevant clause of the Standing Order. While dealing with this argument	 we must proceed on the assumption that the financial difficulties experienced by the respondent at the relevant time which have been compendiously described by it as constituting trading reasons for the lay off do not fall within the purview of the said relevant clause. The respondent 's argument is that though the trading reasons may not justify the declaration of the lay off 553 under the said clause	 as prudent employers who must be given liberty to run their industry in the best manner they choose	 they have a common law right to declare a lay off if they feel that the alternative to the lay	 off would be closure and acting bonafide they want to avoid closure and adopt the lesser evil		 of declaring the lay off. Does section 25C of the	 Act justify this argument? Section 25C(1) which	 recognises the right of the workmen who are laid; off	 for compensation	 provides that whenever a workman therein specified has been laid off	 he shall be paid by the employer for whole of the period of the lay off	 except for such weekly holidays as may intervene	 compensation at the rate prescribed by the section. The proviso to this section lays down that the compensation payable to a workman during any period of twelve months shall not be for more than; 45 days; and this proviso seems to indicate that the legislature thought that normally the period of lay off within 12 months may not exceed 45 days. Section 25C(2)	 however	 contemplates the possibility that the period of lay off may exceed 45 days	 and it lays down that if during any period of 12 months	 a work 	 man is laid off for more than 45 days	 whether continuously or intermittently	 he shall be paid compensation in the manner indicated by it. Thus	 the position is that workmen who are laid off are entitled to compensation and the method in which the said compensation has to be calculated has been prescribed by the two clauses of section 25C. It is	 however	 significant that when section 25C deals with workmen who are laid off and proceeds to prescribe the manner in which compensation should be paid to them	 it is inevitably referring to the lay off as defined by section 2(kkk) of the Act. The said section defines a "lay off" (with its grammatical variations and cognate expressions) as meaning: "the failure	 refusal	 or inability of an employer on account of shortage of coal	 power or raw materials or the accumulation of stocks or the breakdown of machinery or for any other reason 554 to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrench ed. " It would be legitimate to hold that lay off which primarily gives rise to a claim for compensation under section 25C must be a lay off as defined by section 2(kkk) If the relevant clauses in the Standing Orders of industrial employers make provisions for lay off and also prescribe the manner in which compensation should be paid to them for such lay off	 perhaps the matter may be covered by the said relevant clauses; but if the relevant clause merely provides for circumstances under which lay off may be declared by the employer and a question arises as to how compensation has to be paid to the workmen thus laid off	 section 25C can be invoked by workmen provided	 of course	 the lay off permitted by the Standing Order also satisfies the requirements of section 2(kkk). Whether or not section 25C can be invoked by workmen who are laid off for reasons authorised by the relevant clause of the Standing Order applicable to them when such reasons do not fall under section 2(kkk)	 is a matter with which we are not directly concerned in the present appeal. The question which we are concerned with at this stage is whether it can be said that section 25C recognises a common law right of the industrial employer to lay off his workmen. This question must	 in our opinion	 be answered in the negative. When the laying off of the workmen is referred to in section 25C	 it is the laying off as defined by section 2(kkk)	 and so	 workmen who can claim the benefit of section 25C must be workmen who are laid off and laid off for reasons contemplated by section 2(kkk); that is all that section 25C means. If any case is not covered by the Standing Orders	 it will necessarily be governed by the provisions of the Act	 and lay off would be permissible only where one or the other of the factors mentioned by section 2(kkk) is present	 and for such lay off compensation would be awarded under section 25C. Therefore	 we do not think that the Tribunal was right in holding that section 25C recognises the inherent right 555 of the employer to declare lay off for reasons which he may regard as sufficient or satisfactory in that behalf. No such common law right can be spelt out from the provisions of section 25C. That takes us to the question whether the lay off in the present case is justified under Rule 8 of the	 Standing Orders which have been duly certified under ' the Industrial Employment (Standing Orders) Act	 (No. 20 of 1946). The relevant portion of Rule 8 reads thus: "Closing and re opening of sections of the in dustrial establishments	 and temporary stoppages of work	 and the rights and liabilities of the employer and workmen arising therefrom. (a) (1) The Manager may at any time in the event of fire	 catastrophe	 break down of machinery	 stoppage of power or supply	 epidemic	 civil commotion	 strike	 extreme climate conditions or other causes beyond his control	 close down either the factory or field work or both without notice. In cases where workmen are laid off for short periods on account of failure of plant or a temporary curtailment of production	 the period of unemployment shall be treated as compulsory leave either with or without pay	 as the case may be	 when	 however	 workmen have to be laid off for an indefinitely long period	 their services may be terminated after giving them due notice or pay in lieu thereof. " It will be seen that the circumstances under which a lay off can be declared have been specifically described by Rule 8(a)(1). Two grounds have been urged before us by Mr. Banerjee in support of the Tribunal 's conclusion that the impugned lay off is justified. He contends that the clause "stoppage of supply" may cover cases of stoppage of financial assistance. The argument is that in 1959 when the lay off was declared. the companies found that they 556 could not raise enough money to carry on the operations in the tea gardens	 and so	 it was a case of stoppage of supply. If that be so	 the lay off would be justified. In our opinion	 this argument is wholly misconceived. Stoppage of supply must	 in the context	 mean stoppage of raw material or other such thing. In regard to the factory	 the stoppage of supply may mean the stoppage of tea leaves	 or in the case of field work	 it may mean the stoppage of supply of other articles necessary for field operations. It is impossible to accept the argument that "supply" in the context can mean money or funds. The other argument urged before us is that the last clause of R. 8(a)(i) which refers to "other causes beyond his control" would take in the financial difficulties of the Cos. We are not inclined to accept this argument also. Other causes beyond his control for one thing should be similar to the causes that have preceded; even otherwise we see no justification for the argument that the financial difficulty which is alleged to have confronted the respondent was beyond its control. In fact	 on this point the Tribunal has made a definite finding that though the respondent had produced a letter from the Chartered Bank of the 9th April	 1959 in which the Bank expressed its re luctance to afford financial facilities	 it was by no means clear that the Companies acting through their Managing Agents completely failed to raise the necessary finances at the relevant time. As the Tribunal has observed	 the letter written by the Bank shows that it had promised to consider the matter and write to the Companies again; no evidence was produced to show what the Bank subsequently stated and whether finances became available or not ' On the other hand	 it is clear that at the end of the period of the lay off	 all the Cos. started operating their tea gardens and we have been told that the operations have continued uninterrupted ever since. Besides	 the letter on which reliance is placed was written in April	 1959	 whereas the lay off was declared in February	 1959. Therefore	 there is no evidence on the record which can justify 557 the assumption made by Mr. Banerjee when he raised the contention that the financial difficulties faced by the respondent at the relevant time were beyond its control. The fact that some of the Cos. have been incurring losses and have not made profits would not necessarily show that the financial position which they had to face at the relevant time was beyond their control. It is true	 as Mr. Banerjee has pointed out	 that the three Cos. Scottpore	 Tarrapore and Doodputalee have not been able to pay dividends between 1951 to 1958 and it may be that with the exception of the year 1954	 the position of all of them is not very satisfactory; but	 on the other hand	 there are other tea gardens in the same area and it is not suggested or shown that their position was any better than that of the companies before us. It is also true that at the relevant time	 all the tea companies in Cachar in general	 and the Managing Agents of the nine companies before us in particular M/s. Macneill and Barry Ltd. were trying their best to persuade the Assam Government to give them some relief in the matter of taxation. But the question which we have to decide is whether the financial position disclosed by the evidence on the record can be described as constitu ting a cause beyond the control of the respondent. We are not inclined to answer this question in favour of the respondent. Besides	 as we have already indicated	 having regard to the factors specified by Rule 8(a)(i) before the clause in regard to other causes beyond his control was introduced	 it would not be easy to entertain the argument that a trading reason of the kind suggested by Mr. Banerjee can be included in that clause. Therefore	 we are satisfied that the Tribunal was in error in holding that the impugned lay off could be justified by Rule 8(a)(i). Rule 8(a) (iii) which refers to temporary curtailment of production must obviously be read in the light of R. 8(a)(1) and if the case of the present lay off does not fall under R. 8 (a)(i)	 R. 8(a) (iii) would not improve the position. Mr. Banerjee has then urged that the present Standing Orders which were duly certified under the 558 Standing Orders Act came into force in 1950	 whereas section 2(kkk) which defines a lay off was added to the Act by the Amending Act 43 of 1953 on the 24 th October	 1953. His argument is that the Standing Orders having been certified before the definition of the lay off was introduced in the Act	 the respondent is entitled to rely upon the said definition in support r of the plea that the impugned lay off was justified. Basing himself on the definition of the lay off as prescribed by section 2(kkk)	 Mr. Banerjee urged that this definition was wider than R. 8(a)(1) of the respondent 's Standing Orders and would take in the trading reasons on which he relies. We are not prepared to accept the argument that in the present case	 the respondent can rely on the definition of lay off as prescribed by section 2(kkk). It will be recalled that the Standing Orders which have been certified under the Standing Orders Act became part of the statutory terms and conditions of service between the industrial employer and his employees. Section 10(1) of the Standing Orders Act provides that the Standing Orders finally certified under this Act shall not	 except on agreement between the employer and the workmen	 be liable to modification until the expiry of six months from the date on which the Standing Orders or the last modification thereof came into operation. If the Standing Orders thus become the part of the statutory terms and conditions of service	 they will govern the relations between the parties unless	 of course	 it can be shown that any provision of the Act is inconsistent with the said Standing Orders. In that case	 it may be permissible to urge that the statutory provision contained in the Act should over ride the Standing Order which had been certified before the said statutory provision was enacted. Assuming without deciding that section 2(kkk) may include the trading reasons as suggested by Mr. Banerjee	 the definition prescribed by section 2(kkk) is not a part of the operative provisions of the Act	 and so	 the argument that there is inconsistency between the definition and the relevant Rule of the Standing Orders does not assist Mr. Banerjee 's case. If there had been a provision in the Act specifically providing 559 that an employer would be entitled to lay off his workmen for the reasons prescribed by section 2(kkk)	 it might have been another matter. The only provision on which reliance has been placed is contained in section 25C and that	 as we have already seen	 merely takes in the definition of lay off inasmuch as it refers to the workmen as laid off and provides the manner in which compensation would be paid to them. An alleged conflict between the definition of lay off and the substantive rule of the Standing Orders would not	 therefore	 help the respondent to contend that the definition over rides the statutory conditions as to lay off included in the certified Standing Order. Therefore	 we do not think Mr. Banerjee would be entitled to contend that section 2(kkk) of the Act is wider than the relevant Rule in the Standing Orders and should apply to the facts of this case. We ought to make it clear that in dealing with this argument	 we have not thought it necessary to consider whether the broad and general construction of section 2(kkk) for which Mr. Banerjee contends is justified. In fact	 Mr. Agarwala for the appellants has very strongly urged that the words "for any reason" found in section 2(kkk) will not take in the trading considerations. He contends and prima facie with some force that the said words must be construed ejusdem generis with the words that precede them. (vide Management of Kairbetta Estate	 Kotagiri vs Rajamanickam & Ors.)(1) According to him	 the circumstances specified in section 2(kkk) which justify a lay off must be integrally connected with production	 and so	 trading reasons cannot be included in that definition. According to this argument	 the distinguishing features of the genus of which the several circumstances mentioned in the definition are different species	 are: they are beyond the control of the employer	 are expected to be of a short duration	 and are of compulsive effect. As we have already indicated	 we do not think it necessary to decide this interesting point in the present appeal because we are satisfied that the present dis (1) ; 560 pute must be governed by Rule 8(a)(1) of the respondent 's Standing Orders. In the result	 we reverse the finding of the Tribunal that the lay off declared by the respondent for 45 days in 1959 was justified. That being so	 it is unnecessary to consider the individual cases of the nine respective companies	 because whatever may have been their respective financial position	 under the relevant Rule they could not validly declare a lay off at all	 nor could they have declared the lay off in exercise of their alleged common law right. The questions referred to the Tribunal must	 therefore	 be answered in favour of the appellants. The appeal is accordingly allowed and the appellants ' claim for full wages for the 45 days of lay off in respect of the 11 tea gardens is awarded to them. The appellants will be entitled to their costs throughout. Appeal allowed.

Summary:
As a result of the lay off declared by the respondent in the II tea estates	 managed by them an industrial dispute arose between the respondent and their workmen	 the appellant. The respondent justified the lay off on the ground that its financial position was very difficult and that the lay off was appropriate in the interests of the employees and their own in order to avoid closure of business. The appellants urged	 inter alia	 that the depression in trade or financial difficulties which may be characterised as trade reasons did not justify the lay off under the relevant Standing Order	 and so	 they justified their claim for full wages during the period of the lay off. The Tribunal held that the relevant Standing Order No. 8 justified the lay off	 and the trade reasons resulting from the depression in trade and financial liabilities arising therefrom fell within the scope of the Standing Order. Alternatively	 the Tribunal thought that even if the lay off was not justified by the relevant clause of the Standing Order	 the respondent had a common law right to declare a lay off and this right was recognised by section 25C of the and since it is a statutory provision	 it overrides the relevant clause in the Standing Order. In appeal by special leave: Held: (i) The Tribunal was not right in holding that section 25C of the recognises the inherent right of the employer to declare lay off for reasons which he may regard as sufficient or satisfactory in that behalf. No such common law right can be spelt out from the provisions of section 25C. When the laying off of the workmen is referred to in section 25C	 it is laying off as defined by section 2 (kkk)	 and so	 workmen who can claim the benefit of section 25C must be workmen who are laid off for the reasons contemplated by section 2(kkk); that is all that section 25C means. If in any case the lay off is not covered by the Standing Orders	 it will necessarily be governed by the provisions of the Act	 and lay off would be permissible only where one or the other of the factors mentioned by section 2(kkk) is present	 and for such lay off compensation would be awarded under section 25C. 549 (ii) "Stoppage of supply" must	 in the context	 mean stoppage ' of raw material or other such thing. In regard to the factory	 "stoppage of supply" may mean the stoppage of tea leaves	 or in the case of field work	 it may mean the stoppage of supply of other articles necessary for field operations. "Supply" in the context cannot mean money or funds. (iii) The last clause of r. 8(a) (i) of the Standing Order which refers to "other causes beyond his control" would not take in the financial difficulties of the companies. Other causes beyond his control for one thing should be similar to the causes that have preceded; even otherwise there is no justification for the argument that the financial difficulty which is alleged to have confronted the respondent was beyond its control. Rule 8(a) (iii) which refers to temporary curtailment of production must obviously be read in the light of r. 8(a) (i) and if the case of the present lay off does not fall under r. 8(a) (i)	 r. 8(a)(iii) would not improve the position. (iv) The present dispute must be governed by r. 8(a)(i) of the respondent 's Standing Orders. It cannot be accepted that the Standing Orders having been certified before the definition of the lay off was introduced in the Act	 the respondent is entitled to rely upon the said definition in support of the plea that the impugned lay off was justified. Management of Kairbetta Estate	 Kotagiri vs Raja manickam & Ors.	 ; 	 referred to.