The Cachar Chah Sramik Union Silchar,
Assam Vs. The Management of The Tea Estate Of Cachar, Assam  INSC 226 (26
26/10/1965 RAMASWAMI, V.
GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N.
CITATION: 1966 AIR 987 1966 SCR (2) 344
Industrial Disputes-Standing Orders-cl. 8(a)
(i) and (iii), and Cl. 9-Slump in market-Lay off; Retrenchment-whether
justified Amount of compensation; when can be gone into.
In pursuance of the recommendation of a
Committee, appointed on a representation by the Tea Producers in the Cachar
District to investigate into the difficulties of the Industry as a result of
steep fall in prices, a notification was issued providing that there shall be
no issue of foodstuffs at concessional rates and no cash compensation as such
in lieu thereof, but the existing dearness allowance was raised temporarily for
all estates in the district.
Thereupon the condition of the industry which
was on the verge of collapse improved; many gardens which had closed down
started refunctioning and many of the workmen who were retrenched were taken
back in employment. Upon rival contentions, the Industrial Tribunal held that,
(i) the financial crisis was genuine and was not a result of any manipulation and
that the management was entitled under cl.
8(a)(i) and (iii) of the Standing orders to
lay off the workmen for an indefinite period, (2) the management was also
entitled to. retrench workmen under cl. 9 of the Standing orders, and (3) even
if the lay off and retrenchment were bona fide and justified, the workmen were
entitled to a reasonable compensation, and the Tribunal fixed the quantum of
compensation. In appeal to this Court :
HELD : (i) The lay off in the present case,
was justified by cl. 8 (a) (i) and (iii) of the Standing orders. The last part
of cl. 8 (a) (i) which refers to "other cases beyond his control"
would cover a case of sudden slump in the world market and consequent financial
difficulties of the tea industries [350 B] Workmen of Dewan Tea Estate v. Their
Management.  5 S.C.R. 548, distinguished.
(ii) The management had also the additional
power to retrench workmen under cl. 9 of the standing orders. [350 C] (iii) In
the present case, the Tribunal had not committed any error of law or legal
principle in deciding the amount of compensation. [351 G] The quantum of
compensation is a matter primarily for the Tribunal to estimate and it is not
open to this Court to go into this question unless it is shown that the
Tribunal has committed any error of law or legal principle in deciding it.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 969 of 1963.
345 Appeal by special leave from the award
dated November 13, 1959 of the Industrial Tribunal, Assam in Sub-References
Nos. 25 to 39, 41, 43 to 45, 47 to 51, 54 to 57, 59 to 61, 63 to 67, 69 to 73,
76 and 91 of 1957 and 15 of 1958.
C. B. Agarwala, D. L. Sen Gupta and K. P.
Gupta, for the appellant.
M. C. Setalvad, Purnendu Choudhri, R. C.
Dutta and D. N Mukherjee for the respondents Nos. 1-5, 7, 9, 11, 14, 15, 21, 22
25-28, 31(1), 31(4), 31(6), 31(8), 31(10), to 31(14), 32, 33(2), 34, 35,
37-:40, 42(2)-42(10), 43 and 44.
R. C. Dutta and D. N. Mukherjee, for
respondents Nos. 8, 12 23 and 42(1).
D. N. Mukherjee and D. N. Gupta,, for
respondents Nos. 6 and 31(5).
Dipak Chaudhry, for respondent No. 33(1).
S. N. Mukherjee, for respondent No. 6(1).
Sukumar Ghose, for respondents Nos. 10,
13(2), 13(3), 19, 30, 31(2)(1), 31(5)(1), 31(6)(1), 31(14)(1), 35(1), 35(2)(1),
35(3)(1), 38(1)(1), 38(2)(1) and 43(11).
B. P. Maheshwari and S. Murthy, for
respondents Nos. 8(1), 31(9)(1) and 35(6)(1).
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought, by special leave,.
against the award of the Industrial Tribunal,
Assam, published in Assam Gazette dated January 13, 1960, vide Assam Government
Notification No. 361/55/690 dated December 29, 1959, in References Nos. 25 to
39, 41, 43 to 45, 47 to 51, 54 to 57, 59 to 61, 63 to 67, 69 to 73, 76 and 91
of 1957 and 15 of 1958.
During the period from June, 1951 to March,
1953 the entire tea industry in the Cachar district of Assam was subject to an
unusual economic crisis. There was a steep rise in the cost of production due
to increase of wages and introduction of subsidized rations. In October, 1949,
a Tripartite Conference was held at Silchar and it was decided in this
Conference that nearly 20 Tea Estates had become uneconomic and should be
allowed to convert food concessions into cash at the rate of 0-4-6 per 34 6
head per day. The need for re-adjustment of labour force was also recognised in
this Conference. The financial position of the Tea Estates however continued to
cause anxiety to the Government. On February 12, 1949, an Ad hoc Committee was
appointed which submitted its report on September 13, 1950. In this report the
Committee stressed the inability of the tea industry to bear the burden of
subsidised food-stuffs. The Committee further found that the increase in
production cost was considerable and the tea estates were compelled to borrow
more money and the Scheduled Banks were finding it difficult to meet the
demand. The Committee found that the yield of tea in Cachar district was 7 mds.
per acre and in its view the absolute minimum yield which could be economic in
Cachar was 8 mds. per acre. In view of the critical condition of the tea
industry in Cachar another Committee named as 'The Cachar Plantation Committee'
was constituted on April 4, 1.950. The report of the Committee was submitted on
January 4, 1951. The Committee recommended abandonment of uneconomic areas
under tea and suggested offer of alternative employment to the surplus labour
or provision of whet land, if available. The Committee also recommended a seven
annas conversion rate per day in lieu of food concession for all estates and it
was proposed that Government should undertake to supply foodgrains to tea
estates at controlled wholesale rates. The Committee also reached the finding
that the average return to the shareholder was 2-2/3% and the remuneration to
the managerial staff constituted a very small fraction of the total cost of
production. Even according to the labour representatives on this Committee the
labour costs represented 47 per cent of the total cost of production of tea.
In the year 1 951 there was a sudden
recession in the world price of tea. Fluctuations commenced in the middle of
June, 1 951 and there was a rather rapid decline in prices of tea in November,
1951. Cachar prices came down from 1-10-1 per lb. on October 30, 1951 to 1-2-11
per lb. on March 17, 1952.
'The prices of Cachar tea ranged between 01
4-4 per lb. to 0-12-11 per lb. between June, and August 1952. In May the price
came down to 0-12-3. After June 1952 the price of Cachar tea ranged between
1-1-0 to 0-12-2. The decline in prices covered a long period and was
unprecedented in its character. To add to the difficulties of the tea industry
there was a notification under the Minimum Wages Act dated March 11, 1952
raising wages of labour substantially. A representation was made to the
Government of India by Associations of Tea Producers in March and April, 1952
regarding the difficulties of the industry 347 as a result of the steep fall in
prices. The Government of India appointed a two-member Committee (known as the Official
Team) to investigate into the matter. Before the team concluded its
investigation the situation had taken a critical turn and the tea industry in
Cachar was on the verge of a total collapse. By January 22, 1953, 82 out of Ill
gardens in Cachar district had closed down. The Official team recommended
conversion of food concessions into cash, arrangement for credit facilities
through suitable co-operative banks and postponement of the implementation of
the Plantation Labour Act for a period of two years. As regards the question of
the revision of the Minimum Wage the tea industry was asked to make necessary
representation to the State concerned. In its report dated January 31, 1953 the
Minimum Wage Committee observed that the estates in Cachar District stood on an
entirely different footing and expressed a fear that almost all of them were
likely to go out of business if the existing low prices of tea continued for
any length of time. Even at the time of the Minimum. Wage Notification a number
of estates were known to be uneconomic and the increase in wage rates resulting
from the Notification. was a severe blow to them.
The hope that prices of tea would rise was
completely belied and events so conspired that most of the, estates turned out
to be uneconomic. The Committee further observed that it was realised that
labour could ill-afford to agree. to any Suggestion to reduce the existing
minimum wage but the situation was such that drastic measures had to be
considered in, the interest of the laborers themselves. It is to be noted also
in this connection that Cachar labourers who have been settled on the estates
for generations had alternative sources of income in common with the village
folk in the neighbourhood. In pursuance, of the recommendation of the Committee
there was a revised notification dated February 9, 1953, under the Minimum
Wages Act with regard to all the tea estates in the district of Cachar and the
uneconomic tea estates in the Assam Valley. The notification provided that
there shall be no issue of foodstuffs at concessional rates and no cash
compensation as such in lieu thereof. But with a view to mitigate the hardship
of labour due to suspension of food concessions, the existing dearness
allowance was raised temporarily for all Cachar tea estates at the rate of one
anna for adults and' six pies for minors for each working day. After the issue
of the revised notification the economic condition of the tea estates improved
and many tea estates started refunctioning. Many of the workmen who were
retrenched were taken back in employment and' others were provided alternative
employment in tea estates outside Cachar district in the Assam Valley district
348 The case of the Cachar Chah Sramik Union
(hereinafter called -the Union) before the Industrial Tribunal was that there
was no genuine crisis which could justify retrenchment, lay off or even
reduction of working days in a week. According to the Union the financial
crisis was manipulated by the management because of the notification under the
Minimum Wages Act issued in March, 1952. The object of the management was to
force the Government to revise that notification and at the same ,time to crush
the growing trade union movement. It was contended that the introduction of short
working hours and retrenchment were unfair labour practice. The Union claimed
compensation on the ,ground that the measures taken by the management were
wholly unjustified. It was alternatively contended that even if the measures
'were justified, the workmen were entitled to compensation on account of
involuntary unemployment which they had suffered for no fault of theirs.
The opposite view was put forward by the
management and it was contended on its behalf that it was compelled to reduce
the number of working days and, in some cases, to resort to retrenchment
because there was a real and sudden financial crisis in the industry and the
industry could not be run with profit without resort to these measures.
Upon these rival contentions the Industrial
Tribunal held, in the first place, that the financial crisis was genuine and
was not a result of any manipulation and that the management was entitled under
cl. 8(a)(i) and (iii) of the Standing Orders to lay off the workmen for an
indefinite period. The Tribunal further held that the management was also
entitled to retrench workmen under cl. 9 of the Standing Orders. The Tribunal
considered that even if the lay off and retrenchment were bona fide and
justified, the workmen were entitled to a reasonable compensation and fixed the
quantum of compensation at the rate of one week's pay for every four months of
unemployment. Finally the Tribunal held that the provision of khet land and
other amenities like housing and medical facilities available to the workmen should
be taken to adequately represent one week's wages.
After laying down these principles the
Industrial Tribunal examined the case of each individual garden and awarded
compensation in some cases while refusing to grant any compensation in others.
On behalf of the appellant-Union Mr.
Aggarwala submitted, in the, first place, that cl. 8(a) of the Standing Orders
had no application to the present case and the Tribunal was not justified in
holding that the financial difficulty facing the tea estates was a matter
beyond the control of the management, and the workmen 349 could not, therefore,
be laid off by the management under this clause. The relevant portion of cl. 8
reads as follows :
"Closing and re-opening of sections of
the industrial establishments, and temporary stoppages of work, and the rights
and liabilities of the employer and workmen arising Therefrom.
(a) (i) 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
(iii) 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." In support of this
argument Mr. Aggarwala referred to the decision of this Court in Workmen of
Dewan Tea Estate v. Their Management(1). But the ratio of that decision has no
application to the present case in which the material facts are different. In
Workmen of Dewan Tea Estate v. Their Management(1) there was no sudden slump in
the price of tea but there was difficulty experienced by the management in
obtaining financial facilities from banks. It was an individual case of
management experiencing financial difficulty, and it was, therefore, held by
this Court that the stoppage of financial assistance will not fall within the
phrase "stoppage of power or supply" in cl. 8(a)(i) of the Standing
Orders. It was also pointed out in that case that there was no evidence
produced on behalf of the management to substantiate its plea of
non-availability of finance.
There was also no evidence on the record to
justify the assumption of the management that the financial difficulty faced by
it was beyond its control. The material facts in the present case are
different. It has been found by the Industrial Tribunal that there was a sudden
slump in the price of tea in the world markets, that the recession of prices of
tea commenced in the middle of 1951 and continued during the whole of 1952 for
a (1)  5 S.C.R. 548.
350 period of about 18 months. The low level
of prices reached in May, 1952, was unprecedented. The Tribunal has also found
that the economic crisis of the tea industry in Cachar region was real and was
caused by reasons beyond the control of the management of the tea estates. In
our opinion, the last part of cl. 8(a)(i) which refers to "other causes
beyond his control" would cover a case of sudden slump in the world market
and the consequent financial difficulties of the tea estates. We accordingly
hold that the Jay off in the present case was justified by cl. 8(a)(i) and
(iii) of the Standing Orders and the argument of Mr. Aggarwala on this aspect
of the case is not warranted.
As regards retrenchment, we are satisfied
that the management had also the additional power of retrenching workmen under
cl. 9 of the Standing Orders which reads as follows :
"Termination of employment and notice
thereof to be given by the employer and workmen.
Notice of termination of employment, whether
by Manager or by worker, shall be given equal to the wage period of the worker
Provided that(a) The Manager may terminate
the employment of a worker forthwith and pay his wages for the wage period
(equivalent to his average earnings over the preceding period of three months)
in lieu of notice.
(b ) Notice of termination of employment
shall be necessary only in case of permanent workers and not in the case of
outside or temporary workers except insofar as is laid down in any agreement
entered into between the Manager and such outside or temporary workers.
(d) Where the employment of any worker is
terminated the wages earned by him and other dues, if any, shall be paid before
the expiry of the second working day on which his employment is terminated.
The Tribunal has found that there was no
victimisation or unfair labour practice or mala fide on the part of the
management in closing the gardens or in making the retrenchment. Mr. Aggarwala
on behalf of the appellant did not challenge the finding of the Tribunal on
this point, but learned Counsel 3 5 1 argued that even if the management was
justified, the workmen were entitled to payment of compensation according to
the scale laid down in s. 25F of the Industrial Disputes Act. It was conceded
by learned Counsel that Ch. VA which contains s. 25F came into force on October
24, 1953 by amending Act 43 of 1953 and the retrenchment in the present case
was effected long before that date. It was, however, contended that the
principle embodied in s. 25F should be applied in the present case. It was said
that by enacting Ch. VA the legislature was merely recognising the practice of
payment of compensation by Labour Tribunals before the date of the amendment
and the legislature decided, by the amendment, to standardise the payment of
compensation by prescribing a statutory rule in that behalf (See The Indian
Hume Pipe Co. Ltd. v. The Workmen and another) (1). There is substance in the
argument put forward on behalf of the appellant and the Tribunal has also
applied this principle in granting compensation to the retrenched workmen even
though the case was not attracted by s. 25F of the Industrial Disputes Act. But
the Tribunal has taken the view that one week's wages for every four months of
unemployment was adequate compensation. The contention of the appellant is that
the compensation should have been awarded on the scale laid down in s. 25F of
the Industrial Disputes Act. We are unable to accept this argument as correct.
As pointed out by this Court in The Indian Hume Pipe Co. Ltd. v. The Workmen,
and another(1), Industrial Tribunals had been awarding compensation even before
the enactment of s. 25F but there was no uniformity or certainty in the matter
and in determining the, amount of compensation the Tribunals considered a
variety of relevant factors. It is manifest that in determining the amount of
compensation the Tribunals exercised complete discretion and took into, account
whatever factors they considered relevant. In the present case, the Tribunal
has estimated the amount of compensation as one week's wages for every four
months of unemployment and it is not shown on behalf of the appellant that in
making this estimate the Tribunal has committed any error of law or applied any
As regards the compensation to retrenched
workmen, the Tribunal has stated in para 135 of the Award that the amenities
granted to them included undisturbed possession of residential quarters and
khet lands. They were also granted medical relief, fuel and other forest
produce even during the period of suspension of work. The Tribunal did not
attempt to evaluate accurately the pecuniary value of all these concessions but
it has expressed the(1)  2 S.C.R. 32 at p. 42.
Sup CI/66-9 3 5 2 view that the value of
these concessions would be roughly equal to one week's, wages for every four
months of unemployment and therefore the retrenched workmen were not entitled
to any compensation in cash apart from any right to wages in lieu of a week's
notice under cl. 9 of the Standing Orders. On behalf of the appellant Mr.
Aggarwala said that the retrenched workmen were entitled to get a larger amount
of compensation than that awarded by the Tribunal. The quantum of compensation
is, however, a matter primarily for the Tribunal to estimate and it is not open
to this Court to go into this question unless it is shown that the Tribunal has
committed any error of law or legal principle in deciding it. As regards the
workmen who were subjected to short hours of work, the Tribunal has observed
that they have been granted ex gratia payments which were, in several cases in
excess of the total loss of wages by reason of the revision of the daily wages
under the notification of February 9, 1953 under the Minimum Wages Act. On
behalf of the appellant reference was made by Mr. Aggarwala to the deposition
of Mr. R. M. Bipan at page 97, Part 1 that the ex gratia payment compensated
merely, for the minimum wages cut and not the loss to labour by the short
workweek. But the Tribunal having examined the entire evidence reached the
conclusion that the ex gratia payment was in several cases in excess of total
loss of remuneration on account of the notification under the Minimum Wages
Act. There is also undisputed evidence in this case to show that even in normal
times short hours had to be imposed by employers upto a period of three days in
a week in Cachar tea gardens. In this state of facts it is not possible for us
to hold that the Tribunal was in error in holding that the ex gratia payment
made by the management was sufficient compensation to the workmen who were not
retrenched outright but who were put on short hours of work.
For the reasons expressed we hold that there
is no merit in this appeal which is accordingly dismissed. We do not propose to
pass any order as to costs.