Banaras Ice Factory Limited Vs. Its
Workmen  INSC 77 (28 November 1956)
DAS, SUDHI RANJAN (CJ) BHAGWATI, NATWARLAL H.
AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR
CITATION: 1957 AIR 168 1957 SCR 143
Industrial Dispute-Appeal Pending before
Labour Appellate Tribunal-Closure of factory-Termination of services of Workmen
without permission of the Tribunal-Legality "Discharge", meaning
of-Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950), ss. 22,
Clause (b) Of S. 22 of the Industrial
Disputes (Appellate Tribunal) Act, 1950 provides that during the pendency of
any appeal under the Act no employer shall discharge any workmen concerned in
such appeal, save with the express permission in writing of the Appellate
Tribunal, and S. 23 enables any employee to make a complaint in writing to such
Appellate Tribunal, if the employer contravenes the provisions Of S. 22 during
the pendency of proceedings before the said Tribunal.
144 During the pendency of an appeal filed
before the Labour, Appellate Tribunal the appellant company finding it
difficult to run the factory decided to close it down and gave notice to all
the workmen that their services would be terminated upon the expiry of thirty
days from July 16, 1952. On August 31, 1952, a complaint was made on behalf of
the workmen to the Tribunal under S. 23 Of the Act that the appellant had
discharged them without the permission in writing of the Tribunal and had
thereby contravened the provisions of S. 22 of the Act. It was found that the
closure of the appellant's business was bona fide.
Held, that S. 22 of the Act is applicable
only to an existing or running industry and that the termination of the
services of all workmen, on a real and bona fide closure of business, is not
'discharge' within the meaning of s. 22(b) of the Act.
J. K. Hosiery Factory v. Labour Appellate
Tribunal of India (A.I.R. 1956 All. 498), approved on the point of construction
of s. 22 of the Act.
Pipraich Sugar Mills Ltd. v. The Pipraich
Sugar Mills Mazdoor Union  S.C.R. 872 followed.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 135 of 1955.
Appeal by special leave from the judgment and
order dated October 30, 1952, of the Labour Appellate Tribunal of India,
Allahabad, in Misc. Case No. C-146 of 1952.
R. R. Biswas, for the appellant.Sukumar Ghose
(amicus curiae), for the respondents.
1956. November 28. The Judgment of the Court
was delivered by S.K. DAS J.-This is an appeal by special leave from the judgment
and order of the Labour Appellate Tribunal of India at Allahabad dated October
30, 1952. The relevant facts are these. The Banaras Ice Factory Limited, the
appellant before us, was incorporated on September 13, 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 145 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 January 15, 1952, a notice was given to its
workmen saying that the factory would be closed down with effect from January
17, 1952, and the services of the workmen would not be necessary for two months
from that date. The work. men received their wages up to January 16, 1952. On
March 18, 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 January 17, 1952. The
dispute was referred to the Regional Conciliation Officer, Allahabad, for
adjudication. In the meantime, that is, on June 6, 1952, the workmen gave a strike
notice and as there was no coal in the factory, the appellant also gave a
notice of closure on June 12, 1952. A settlement was, however, arrived at
between the parties on June 15, 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 June 12, 1952 ; (2) the workmen would
withdraw their strike notice dated June 6, 1952; (3) there being no coal, the
workers would remain on leave for a period of thirty days with effect from June
16, 1952, and would report for duty on July 16, 1952, at 8 A.M.
and (4) after the workers had resumed their
duty on July 16, 1952, the appellant would not terminate the services of any
workmen or lay them off in future without obtaining the prior permission of the
Regional Conciliation Officer, Allahabad.
On June 28, 1952, the Regional Conciliation
Officer, Allahabad, gave his award in the matter of the industrial dispute
between the appellant and its work-, men with regard to the alleged wrongful
laying off of the workmen from January 17, 1952, to March 18, 1952, 19 146
referred to above. By his award the Regional Conciliation Officer gave full
wages to the workmen for the period in question. On July 16, 1952, none of the
workmen reported for duty in accordance with the terms of the agreement
referred to above, and on that date the appellant gave a notice to its workmen
to the 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
July 16, 1952. The workmen, it is stated, accepted the notice and took their
pay for one month (from July 16 to August 15, 1952) without any protest.
Against the award of the Regional Conciliation Officer dated June 28, 1952, the
appellant filed an appeal to the Labour Appellate Tribunal on July 25, 1952.
On August 31, 1952, a complaint was made on
behalf of the workmen 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 August 15, 1952, without the permission in
writing of the Labour Appellate Tribunal during the pendency before it of the
appeal filed on July 25, 1952, against the award of the Regional Conciliation
Officer. The Labour Appellate Tribunal dealt with this complaint by its order
dated October 30, 1952.
Before the Labour Appellate Tribunal it was
urged on behalf of the appellant that there was no contravention of a. 22,
because on July 16, 1952, when the notice of discharge was given by the
appellant, no appeal was pending before it, the appellant's appeal having been
filed several days later, namely, on July 25, 1952. This contention was not
accepted by the Labour Appellate Tribunal on the ground that though the notice
of discharge was given on July 16, 1952, the termination of service was to come
into operation after one month, that is, from August 15, 1952, on which date
the appeal before the Labour Appellate Tribunal was certainly pending. As
learned counsel for the 147 appellant has not again pressed this point before
us, it is not necessary to say anything more about it.
A second point uroed 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 June 15, 1952, did not stand in the
appellant's way, as the workmen themselves did not report for duty on July 16,
The closure being a bona fide closure, 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 June 15, 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
August 16, 1952, to October 30, 1952.
Relying on the decision in J. K. Hosiery
Factory v. Labour Appellate Tribunal of India (1), learned counsel for the
appellant has urged three points before us. His first point is that the
termination of the services of all workmen on a real and bona fide closure of
business is not 'discharge' within the meaning of cl. (b) of s. 22 of the Act.
His second point is that if the word 'discharge' in cl. (b) aforesaid includes
termination of services of all workmen on bona fide closure of business, then
the clause is an unreasonable restriction on the fundamental right guaranteed
in el. (g) of Art. 19 (1) of the Constitution. His third point is that, in any
view, the Labour Appellate Tribunal, was not entitled to grant compensation to
the workmen, because s. 23 of the Act did not in terms entitle the Labour (1)
A.I.R. 1956 All. 498. 148 Appellate Tribunal to pass an order of compensation.
We may state here that if the appellant succeeds on the first point, it becomes
unnecessary to decide the other two points.
For a consideration of the first point, we
must first read ss. 22 and 23 of the Act.
Section 22: " During the period of
thirty days allowed for the filing of an appeal under section 10 or during the
pendency of any appeal under this Act, no employer shall- (a)alter, to the
prejudice of the workmen concerned in such appeal, the conditions of service
applicable to them immediately before the filing of such appeal, or
(b)discharge or punish, whether by dismissal or otherwise, any workmen
concerned in such appeal, save with the express permission in writing of the
Appellate Tribunal." Section 23: " Where, an employer contravenes the
provisions of section 22 during the pendency of proceedings before the
Appellate Tribunal, any employee, aggrieved by such contravention, may make a
complaint in writing, in the prescribed manner, to such Appellate Tribunal and
on receipt of such complaint, the Appellate Tribunal shall decide the complaint
as if it were an appeal pending before it, in accordance with the provisions of
this Act and shall pronounce its decision thereon and the provisions of this
Act shall apply accordingly." The short question before us is whether the
word 'discharge' occurring in cl. (b) of s. 22 includes termination of the
services of all workmen on a real and bona fide closure of his business by the
employer. It is true that the word 'discharge' is not qualified by any
limitation in cl. (b).
We must, however, take the enactment as a
whole and consider s. 22 with reference to the provisions of the Industrial
Disputes Act, 1947, (XIV of 1947) which is in pari materia with the Act under
our consideration. We have had occasion to consider recently in two cases the
general scheme and 149 scope of the Industrial Disputes Act, 1947. In Burn
& Co., Calcutta v. Their Employees(1) this Court observed that the object
of all labour legislation was' firstly, to ensure fair terms to the workmen and
secondly, to prevent disputes between employers and employees so that
production might not be adversely affected and the larger interests of the
public might not suffer. In Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills
Mazdoor Union (2) it was observed-" The objects mentioned above can have
their fulfilment only in an existing and not a dead industry." We accepted
the view expressed in Indian Metal and Metallurgical Corporation v.
Industrial Tribunal(3) and K. M. Padmanabha
Ayyar v. The State Of Madras (4) that the provisions of the Industrial Disputes
Act, 1947, applied to an existing industry and not a dead industry. The same
view was reiterated in Hariprasad Shivshankar Shukla v. A. D. Divikar (5) where
we held that 'retrenchment' in cl. (oo) of s. 2 and s. 25F did not include
termination of the services of workmen on bona fide closure of business.
Turning now to s. 22 of the Act, it is clear
enough that el. (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 of the Industrial
Disputes Act, 1947. Our attention has been drawn to (1)  S.C.R. 781. (4)
 1 L.L.J. 469.
(2)  S.C. R. 87 2. (5)  S.C.
(3) A.I. R. 1953 Mad. 98.
150 the definition of 'workman' in cl. (s) of
a. 2, which says- "...for the purposes of any proceeding under this Act in
relation to an industrial dispute, (the definition) includes any person who has
been dismissed, discharged or retrenched in connection with, or as a
consequence of, that dispute, or whose dismissal, discharge or retrenchment has
led to that dispute." In the said definition clause also, the word 'discharge'
means discharge of a person in a running or continuing business-not discharge
of all workmen when the industry itself ceases to exist on a bona fide closure
The true scope and effect of ss. 22 and 23 of
the Act were explained in The Automobile Products of India Ltd. v. Rukmaji Bala
(1). It was pointed out there that the object of s. 22 was " to protect
the workmen concerned in disputes which formed the subject-matter of pending
proceedings against victimisation " and the further object was " to
ensure that proceedings in connection with industrial disputes already pending
should be brought to a termination in a peaceful atmosphere and that no
employer should during the pendency of these proceedings take any action of the
kind mentioned in the sections which may give rise to fresh disputes likely to
further exacerbate the already strained relations between the employer and the
workmen." Those objects are capable of fulfillment in a running or
continuing industry only, and not 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 and bona fide does 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 is mala fide, there Is no closure in the eye of law
and the workmen can raise an industrial dispute and may even complain under
a.23 of the Act.
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 (1)  1 S.C.R. 1241.
151 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 not bona 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 June 15, 1952, the workmen themselves did not abide by it and the
appellant's 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 in J. K. Hosiery Factory v. Labour Appellate Tribunal of India
(supra) but we refrain from expressing any opinion on the other points decided
therein and we must not be understood to have expressed our assent, contrary to
the opinion expressed by us in the case of The Automobile Product8 of India
(supra) to the view that under s. 23 of the
Act, it is not open to an industrial Tribunal to award compensation in an
In the result, the appeal is allowed and the
decision of the Labour Appellate Tribunal dated the 30th October 1952 is set
aside. As the workmen did not appear before us, there will be no order for
costs. We are indebted to Mr. Sukumar Ghosh for presenting before us the case
of the workmen as amicus curiae.