The Associated Cement Companies
Limited, Chaibassa Cement Vs. Their Workmen [1959] INSC 113 (11 September 1959)
DAS, S.K.
DAS, SUDHI RANJAN (CJ) HIDAYATULLAH, M.
CITATION: 1960 AIR 56 1960 SCR (1) 703
CITATOR INFO :
R 1960 SC1213 (5) R 1962 SC1221 (17) R 1963
SC1710 (8) R 1964 SC 864 (13) F 1974 SC1132 (10,11)
ACT:
Industrial Dispute-Lay-off
compensation-DisqualificationCement factory-Limestone quarry -Whether both
Parts of one establishment--Lay-off of workers in cement factory due to strike
in limestone quarry-" In another Part of the establishment " meaning
of-Test for determining whether a particular unit is Part of a bigger
establishment-Factories Act, 1948 (63 of 1948), s. 2(m)-Plantations Labour Act,
1951 (69 of 1951), s. 2(f)-Mines Act, 1952 (35 of 1952), ss. 2(j) 17-Industrial
Disputes Act, 1947 (14 of 1947), ss. 2(kkk), 18(3), 25C, 25E, 33.
HEADNOTE:
The cement factory in question which is in
the State of Bihar belonged to the appellant company and a limestone quarry owned
by the same company As situate about a mile and a half from the factory.
Limestone being the principal raw material for the manufacture of cement, the
factory depended exclusively for the supply of limestone on the said quarry. On
behalf of the labourers in the limestone quarry certain demands were made on
the management of the company but as they were rejected they went on strike;
and on account of the non-supply of limestone due to the strike, the management
had to close down certain sections of the factory and to lay-off the workers
not required during the period of closure of the sections concerned.
Subsequently, after the dispute between the management and the workers of the
limestone quarry was settled and the strike came to an end, a demand was made
on behalf of the workers of the factory who had been laid-off during the
strike, for payment of lay-off compensation under s. 25C of the Industrial Disputes
Act, 1947, but the management refused the demand relying on cl. (iii) to s. 25E
of the Act, which provided that " no compensation shall be paid to a
workman who had been laid-off............... if such laying-off is due to
strike............ on the part of workmen in another part of the establishment
". The Industrial Tribunal took the view that the limestone quarry was not
part of the establishment of the cement factory and that the workmen in the
latter were not disentitled to lay-off compensation by reason of Cl. (iii) of
S. 25E of the Act. The appellant company appealed by special leave to the
Supreme Court and contended that the decision of the Tribunal was erroneous
because the facts of the case showed (a) that in respect of both the factory
and the limestone quarry there was unity of ownership, unity of management,
supervision and control, unity of finance and employment, unity 704 of labour
and conditions of service of workmen, functional integrality, general unity of
purpose and geographical proximity, and (b) that the strike was decided on by
the same Workers' Union which consisted of the workmen at the factory and the
quarry. It was contended for the respondents inter alia (1) that the conclusion
of the Industrial Tribunal that the factory and the limestone quarry are not
parts of one establishment is a finding of fact which should not be disturbed
in an appeal by special leave, (2) that the effect of the Explanation to s. 25A
of the Act is to negative the idea of a factory and a mine forming parts of one
establishment, and (3) that since in the matter of reference of industrial
disputes, the Act gives jurisdiction to two distinct authorities, the Central
Government in respect of the limestone quarry and the State Government in
respect of the factory, the two units, the factory and mine, cannot -be treated
as one establishment.
Held: (1) that the question whether the
factory and the limestone quarry form one establishment depends upon the true
scope and effect of the expression "in another part of the
establishment" in cl.(iii)of s. 25E of the Industrial Disputes Act, 1947,
and involves a consideration of the tests which should be applied in
determining whether a particular unit is part of a bigger establishment, and
though for that purpose certain preliminary facts must be found, the final
conclusion to be drawn there from is not a mere question of fact ;
(2) that the true scope and effect of the
Explanation to s. 25A of the Act is that it explains what categories, factory,
mine or plantation, come within the meaning of the expression " industrial
establishment "; it does not deal with the question as to what constitutes
one establishment and lays down no tests for determining that question;
(3) that existence of two jurisdictions does
not necessarily imply that for all purposes of the Act, and particularly for
payment of unemployment compensation, the factory and quarry must be treated as
separate establishments ; and, (4) that on the facts of the present case the
limestone quarry and the factory constituted one establishment within the
meaning of cl. (iii) of s. 25E of the Act and that the workmen at the factory
were not entitled to claim lay-off compensation.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 87 of 1958.
Appeal by special leave from the Award dated
October 10, 1956, of the Industrial Tribunal, Bihar, Patna, in Reference No. 6
of 1956.
R. J. Kolah, S. N. Andley and Rameshwar Nath,
for the appellants.
B. C. Ghose and P. K. Chatterjee, for the
respondents.
705 1959. September 11. The Judgment of the
Court was delivered by S. K. DAS J.-This appeal by special leave from an award
dated October 10, 1956, made by the Industrial Tribunal, Bihar, raises an
important question of interpretation in the matter of a disqualification for
lay-off compensation under s. 25E read with s. 25C of the Industrial Disputes
Act, 1947 (hereinafter called the Act), and so far as we know, this is the
first case of its kind in which the expression " in another part of the
establishment " occurring in cl. (iii) of s. 25E has come up for an
authoritative interpretation.
The facts are simple and are shortly set out
below. The Associated Cement Companies Ltd., hereinafter called the Company,
have a number of cement factories in different States of the Indian Union as
also in Pakistan. There are two such factories in the State of -Bihar, one at
Khelari and the other at a place called Jhinkpani in the district of Chaibasa
in Bihar. The latter factory is commonly known as the Chaibasa Cement Works.
There is a limestone quarry owned by the same Company situate about a mile and
a half from-the Chaibasa Cement Works, the quarry being known as the Rajanka
limestone quarry. Limestone is the principal raw material for the manufacture
of cement and the Chaibasa Cement Works, depended exclusively for the supply of
limestone on the said quarry. At the time relevant to this appeal there were
two classes of labourers at the quarry, those employed by the Company through
the management of the Chaibasa Cement Works and others who were engaged by a
contractor. There was one union known as the Chaibasa Cement Workers' Union,
hereinafter called the Union, of which the Company's labourers both at the
Cement Works and the quarry were members. There was another union consisting of
the contractor's labourers which was known as the A. C. C. Limestone
Contractor's Mazdoor Union. On January 3, 1955, the Union made certain demands
on the management on behalf of the labourers in the limestone quarry, but these
were rejected by the management. Then, by a subsequent letter dated February
18, 706 1955, the General Secretary of the Union gave a notice to the Manager
of the Chaibasa Cement Works to the effect that the Union proposed to organise
a general stay-in-strike in the limestone quarry from March 1, 1955, if certain
demands, details whereof are unnecessary for our purpose, were not granted on
or before February 28,1955. A similar notice was also given on behalf of the
A.C.C. Limestone Contractor's Mazdoor Union. These notices led to certain
efforts at conciliation which however, failed. On February 24, 1955, the
management gave a notice to all employees of the Chaibasa Cement Works, in
which it was stated that in the event of the strike materialising in the
limestone quarry, it would be necessary for the management to close down
certain sections of the factory at Jhinkpani on account of the non-supply of
limestone; the notice further stated that in the event of such closure, it
would be necessary to lay off the workers not required during the period of
closure for the sections concerned. The strike commenced on March 1, 1955, and
lasted till July 4, 1955. On March 25, 1955, the management wrote to the
General Secretary of the Union intimating to him that the workers in certain
departments referred to in an earlier letter dated March 19, 1955, would be
laid-off with effect from April 1, 1955. On March 28, 1955, the management gave
the lists of employees who were to be laid-off with effect from April 1, 1955,
and they were, actually laid-off from that date. During the period of the
strike fresh efforts at conciliation were made and ultimately the strike came
to an end on July 5, 1955, when the Central Government referred the dispute
between the management and the workers of the limestone quarry to the Central
Industrial Tribunal at Dhanbad. This reference was, however, withdrawn by
mutual consent in terms of a settlement arrived at on December 7, 1955. The
details of this settlement are not relevant to this appeal.
Thereafter, a demand was made by the Union
for payment of lay-off compensation to those workers of Chaibasa Cement Works
who had been laid-off for the period April 1, 1955, to July 4, 1955. This
demand 707 was refused by the management. This gave rise to an industrial
dispute which was referred by the Government of Bihar under s. 10 of the Act to
the Industrial Tribunal, Bihar. The terms of reference set out the dispute in
the following words:" Whether the workmen of the Chaibasa Cement Works are
entitled to compensation for lay-off for the period from April 1, 1955, to July
4, 1955." The parties filed written statements before the Industrial
Tribunal and the only witness examined in the case was Mr. Dongray, Manager of
the Chaibasa Cement Works, Jhinkpani.
At this point it is necessary to read the two
sections of the Act which relate to the right of workmen to lay-off
compensation and the circumstances in which they are disqualified for the same.
The right is given by s. 25C and the disqualification is stated in three
clauses of s. 25E, of which the third clause only is important for our purpose.
We now proceed to read ss. 25C and 25E so far
as they are material for our purpose.
" S. 25C. (1) Whenever a workman (other
than a badli workman or a casual workman) whose name is borne on the muster
rolls of an industrial establishment and who has completed not less than one
year of continuous service under an employer is laid-off, he shall be paid by
the employer for all,days during which he is so laid-off, except for such
weekly holidays as may intervene, compensation which shall be equal to fifty
per cent. of the total of the basic wages and dearness allowance that would
have been payable to him had he not been so laid-off." " S. 25E. No
compensation shall be paid to a workman who has been laid-off(i)
........................
(ii)........................
(iii) if such laying-off is due to a strike
or slowingdown of production on the part of workmen in another part of the
establishment." 708 Now, the central point round which the controversy
between the parties has raged is this. Was the lay-off of the workers in certain
sections of the Chaibasa Cement Works due to a strike on the part of workmen in
another part of the establishment within the meaning of cl. (iii) of s. 25E ?
In other words, was the limestone quarry at Rajanka part of the establishment
known as the Chaibasa Cement Works? The contention of the management was and is
that the Cement Works and the limestone quarry form one establishment within
the meaning of cl. (iii) aforesaid. The contention on behalf of the workmen is
that they are not parts of one establishment but are separate establishments.
The learned Chairman of the Industrial Tribunal held, for reasons which we
shall presently discuss, that the limestone quarry was not part of the
establishment known as the Chaibasa Cement Works and the workmen in the latter
were not disentitled to lay-off compensation by reason of cl. (iii) of s. 25E.
The correctness of this view is the principal point for decision in this
appeal.
On behalf of the respondent workmen it has
been contended that the conclusion of the Industrial Tribunal that the factory
at Jhinkpani and the limestone quarry at Rajanka are not parts of one
establishment is a finding of fact and this appeal should be disposed of on
that footing. We do not think that this contention is correct and we shall
presently deal with it. We propose, however, to examine first the relation
between the limestone quarry at Rajanka and the cement factory at Jhinkpani in
the light of the evidence given before the Tribunal and the findings arrived at
by it;
because they will show the process of
reasoning by which the Tribunal came to its final conclusion.
The evidence was really one sided and the
only witness examined was Mr. Dongray, Manager of the Chaibasa Cement Works.
Now, the relation between the limestone quarry and the factory can be
considered from several points of view, such as (1) ownership, (2) control and
supervision, (3) finance, (4) management and employment, (5) geographical
proximity and (6) general unity of purpose and functional integrality, 709 with
particular reference to the industrial process of making cement. On all that
above points Mr. Dongray gave evidence. It was not disputed that the Company
owned the limestone quarry as also the factory and there was unity of
ownership. Mr. Dongray's evidence further showed that there was unity of
control, management and employment. He said that the limestone quarry was
treated as a part and parcel of the Chaibasa Cement Works, that is, as a
department thereof and he as the Manager was in overall charge of both, though
there was a Quarry Manager in charge as a departmental head under him. On this
point Mr. Dongray said:" There is a Manager appointed for the quarries.
The Manager is working under me. The Cement
Works itself has about eight or nine departments under it. There are heads of
each department. The Manager of the quarry has the same status as the heads of
other departments at the Cement Works." This was supported by a circular
letter dated March 11, 1952, which said that the entire factory and the associated
quarries were under the sole control of the Manager, who was responsible for
maintaining full output at economic cost up to the expected standard. The
circular letter further stated that all orders and contracts were to be issued
by the Manager for the working of the factory and quarries and the relevant
bills were to be passed by him. As to finance and conditions of employment, Mr.
Dongray said:" All requirements of the quarry are sent by the Manager
there to the office of the Cement. Works and if they are available in the
Cement Works Stores, they are issued from there; otherwise I indent them from
the Bombay office or purchase them locally. There is no account office in the
quarries and their account is maintained in the Cement Works' Office. I as
Manager of the Chaibasa Cement Works make payment for the indents or
requirements of the quarries stated above. The quarry has no separate banking
account.
The Quarry Manager is not entitled to operate
banking account apart from myself At the quarries there are dailyrated workers
and monthly-paid staff.
90 710 To the daily-paid workers in the
quarries, the cashier of the Cement Works or his Assistant makes payment, when
required. The monthly-paid staff of the quarries come to the Cement Office for receiving
payment. In the Cement Works we have got a system of allocation of work for
different jobs every day. It is done by the Departmental Heads. Same system
prevails in the quarries also. The Quarry Manager does the distribution as head
of that department. Attendance Register is maintained at the quarry in the same
way as it is done in the different departments of the Cement Works. There is
only one common pay sheet for all the monthly-paid staff, whether he is at the
factory or in the quarries. For the daily-rated workers we have got different
sheets department-wise and there is one such sheet for the daily workers of the
quarry as well. There is one summary sheet of the payment showing the payment
of all the departments including the payment in the quarries as well.
I have to send statutory intimation to the
authorities under the Mines Act regarding the quarries for working faces and
other accidents etc. The staff and workers working in the quarries are
transferable to the Cement Works according to the exigencies of the work and
also vice versa. There have been a few instances of such transfers. The terms
and conditions of service, for instance, T. A., leave, provident fund,
gratuity, etc., are same for workers in the Cement Works as also the workers in
the quarries. We got the application of the statutory provident fund rules
extended to our department in the quarries also. The report of the working of
the quarry comes to me from the Manager there from time to time. I as Manager
of the Cement Marks make payments of royalties in in respect of limestone’s
raised from the quarries. Payments for compensation, maternity benefits,
accidents, etc., in the quarry are made under my authority by the factory
office and not by the Quarry Manager." Exhibits 1 to 26 filed on behalf of
the management, which showed the working of the quarry and the 711 factory,
supported the aforesaid evidence of Mr. Dongray;
they showed, as has been observed by the
Tribunal itself, that the management was maintaining one common account and the
final authority on the spot in respect of the quarry as also in respect of
other departments of the factory was Mr.
Dongray, the Manager. There were also other
documents to show that the transfer of members of the staff from the quarry to
the factory and vice versa was made by Mr. Dongray according to the exigencies
of service. It is worthy of note here that the Union itself gave notice to the
Manager of the factory with regard to the intended strike in the limestone
quarry. The geographical proximity of the limestone quarry was never in
dispute. It was adjacent to the factory, being situate within a radius of about
a mile.
As to general unity of purpose -and
functional integrality, this was also not seriouly in dispute. Mr. Dongray said
that limestone was the principal raw material for the manufacture of cement and
the cement factory at Jhinkpani depended exclusively on the supply of limestone
from the quarry at Rajanka. His evidence no doubt disclosed that some excess
limestone was sent to the factory at Khelari as well. On this point Mr. Dongray
said:" Limestone from this quarry is at times sent to the Khelari Cement
Works, but that is very rare and in small quantity.
It is done only in cases of emergency."
Mr. Dongray explained that the normal number of departmental workers in the
quarry before the strike was in the neighbourhood of 250; but there were about
1,000 workers employed by contractors. The number of daily-rated workers was in
the neighbourhood of 950 and the total monthly-paid staff varied from 100 to
105. The wages paid to the workers in the quarry were debited to limestone
account of the Cement Works, and in the matter of costing, the amount spent on
limestone was also debited. The bank accounts, however, were in the name of the
Company and the persons who were entitled to operate on those accounts were Mr.
Dongray, the Manager, the Chief Engineer, and the Chief Chemist of the Cement
Works.
712 All the aforesaid evidence, oral and
documentary, was apparently accepted by the Tribunal as correct; for the
learned Chairman summarised the evidence of Mr. Dongray without any serious
adverse comment. He then referred to certain contentions urged on behalf of the
Union, which he said were not without force. We may now state those contentions.
The first contention was that under the provisions of the Act, the appropriate
authority in respect of the factory at Jhinkpani was the State Government of
Bihar, whereas the appropriate authority in respect of the limestone quarry,
which was a mine as defined in the Mines Act, 1952, was the Central Government.
The second contention was that there were two sets of Standing Orders, one for
the workmen of the factory and the other for the workmen in the limestone
quarry. The third contention was that the limestone quarry had an office of its
own and a separate attendance register, and the fourth contention was that under
the provisions of the Mines Act, 1952, Mr. Dongray was an Agent in respect of
the limestone quarry and there was a separate Manager who was responsible for
the control, management and direction of the mine under the provisions of s. 17
thereof. The learned Chairman referred to certain criticisms made in respect of
the evidence of Mr. Dongray.
One criticism was that though the Company was
the owner of both the factory and the limestone quarry, it had also factories
and limestone quarries at other places in India and Pakistan and if the test of
one ownership were the determining test, then all the factories and limestone
quarries of the Company wherever situtate would be one establishment. This
criticism was not, however, pertinent because the Company never claimed that
all its factories in different parts of India and Pakistan formed one
establishment by reason of unity of ownership only. The other criticism was
that Mr. Dongray admitted that, if necessary in the interest of service, the
workmen at the Chaibasa Cement Works could be transferred to some other factory
of the Company and therefore transferability was not a sure test. This
criticism was also not germane, because the Company 713 never claimed that
transferability was the only sure test.
A third criticism also advanced on behalf of
the workmen was that Mr. Dongray admitted that all the accounts of the
different factories and limestone quarries of the Company were ultimately
consolidated into one Profit and Loss Account, a criticism which in our view
was equally not pertinent to the question at issue. The learned Chairman then
expressed his final finding in the following words:" From these and other
admissions made by Mr. Dongray it would appear that it is only for economy and
convenience that he was given charge of the control of both the concerns but
his capacity was dual. While he was controlling the Cement Works as it Works
Manager he had the control of the quarries as its Agent under the Mines Act. It
has also to be noted that if both these establishments which are inherently
different by their very nature are treated as one and the same, anomalous
position may arise in dealing with the employees in the quarries in matters of
misconduct and such other things if there is a pendency of a dispute in the
Cement Works and vice versa. Obviously, the employees of the Cement Works have
to be dealt with by the State Tribunal while the employees of the quarries by
the Central Tribunal.
This also nullifies the force of the
management's contention that both are parts of the same establishment.
Considering these it has to be held that the contention of the management fails
and that of the Union must prevail." We now revert to the contention urged
on behalf of the respondent that this appeal should be disposed of on the
footing that the final conclusion of the Industrial Tribunal is a finding of
fact. The judgment of the Tribunal itself shows that the final conclusion was
arrived at by a process of reasoning which involved a consideration of several
provisions of the Act and some provisions of the Mines Act, 1952. The Tribunal
accepted a major portion, if not all, of the evidence of Mr. Dongray; but it
felt compelled to hold against the appellant despite that evidence by reason of
an 714 anomalous position which, it thought, would arise if the factory and the
quarry were held to be one establishment.
The question before the Tribunal, and this is
also the question before us, was the true scope and effect of cl.
(iii) of s. 25E of the Act, with particular
reference to the expression " in another part of the establishment "
occurring therein. That question was not a pure question of fact, as it
involved a consideration of the tests which should be applied in determining
whether a particular unit is part of a bigger establishment. Indeed, it is true
that for the application of the tests certain preliminary facts must be found;
but the final conclusion to be drawn therefrom is not a mere question of fact.
Learned counsel for the respondent is not, therefore, justified in asking us to
adopt the short cut of disposing of the appeal on the footing that a finding of
fact should not be-disturbed in an appeal by special leave. In this case we
cannot relieve ourselves of the task of determining the true scope and effect
of cl. (iii) of s. 25E by adopting the short cut suggested by learned counsel.
We proceed now to consider what should be the
proper tests in determining what is meant by " one establishment ".
Learned counsel for the respondent has
suggested that the test has been laid down by the Legislature itself in the
Explanation to s. 25A of the Act. That Explanation states:" In this
section and in sections 25C, 25D and 25E, "industrial establishment "
means(i) a factory as defined in clause (m) of section 2 of the Factories Act,
1948; or (ii) a mine as defined in clause (j) of section 2 of the Mines Act,
1952; or (iii) a plantation as defined in clause (f ) of section 2 of the Plantations
Labour Act, 1951." The argument is that the Explanation states in clear
terms what an industrial establishment means in certain sections of the Act
including s. 25E, and on a proper construction it negatives the idea of a
factory and a mine forming parts of one establishment. Curiously enough, s. 25E
does not contain the 715 expression "industrial establishment". It uses
the word " establishment " only. We agree, however, that if s. 25E is
read with s. 25C and the definition of " layoff " in s. 2 (kkk) of
the Act, as it must be read, the word " establishment " in s. 25E has
reference to an industrial establishment. On the footing that the word "
establishment " in s. 25E means an industrial establishment, what then is
the effect of the Explanation ? The contention of the respondent is that an
industrial establishment may be either a factory as defined in clause (m) of s.
2. of the Factories Act, 1948, or a mine as defined in cl. (j) of s. 2 of the Mines
Act, 1952, or a plantation as defined in cl. (f) of s. 2 of the Plantations
Labour Act, 1951; but it cannot be a combination of any two of the aforesaid
categories; therefore, a factory and a mine together, as in the present case,
cannot form one establishment. This argument proceeds on the assumption that
the Explanation while stating what undertakings or enterprises come within the
expression " industrial establishment " necessarily lays down the
test of 'one establishment' also. We do not think that there is any warrant for
this assumption. The Explanation only gives the meaning of the expression
" industrial establishment " for certain sections of the Act; it does
not purport to lay down any test as to what constitutes one ' establishment'.
Let us take, for example, a factory which has different departments in which
manufacturing processes are carried on with the aid of power. Each department,
if it employs ten or more workmen, is a factory within the meaning of cl. (m)
of s. 2 of the Factories Act, 1948; so is the entire factory where 1,000
workmen may be employed. The Explanation merely states that an undertaking of
the nature of a factory as defined in cl. (m) of s. 2 of the Factories Act,
1948, is an industrial establishment. It has no bearing on the question if in
the example taken, the factory as a whole or each department thereof should be
treated as one establishment.
That question must be determined on other
considerations, because the Explanation does not deal with the question of one
establishment. In our view, the true scope and effect 716 of the Explanation is
that it explains what categories, factory, mine or plantation, come within the
meaning of the expression " industrial establishment " ; it does not
deal with the question as to what constitutes one establishment and lays down
no tests for determining that question. We cannot, therefore, accept the
argument of learned counsel for the respondent that a factory and a mine, a
mine which supplies the raw material to the factory, can never be one establishment
under the Act; that we do not think is the effect of the Explanation to s. 25A.
The Act not having prescribed any specific
tests for determining what is 'one establishment', we must fall back on such
considerations as in the ordinary industrial or business sense determine the
unity of an industrial establishment, having regard no doubt to the scheme and
object of the Act and other relevant provisions of the Mines Act, 1952, or the Factories
Act, 1948. What then is ' one establishment' in the ordinary industrial or
business sense ? The question of unity or oneness presents difficulties when
the industrial establishment consists of parts, units, departments, branches
etc. If it is strictly unitary in the sense of having one location and one unit
only, there is little difficulty in saying that it is one establishment.
Where, however, the industrial undertaking
has parts, branches, departments, units etc. with different locations, near or
distant, the question arises what tests should be applied for determining what
constitutes 'one establishment'. Several tests were referred to in the course
of arguments before us, such as, geographical proximity, unity of ownership,
management and control, unity of employment and conditions of service,
functional integrality, general unity of purpose etc. To most of these we have
referred while summarising the evidence of Mr. Dongray ,and the findings of the
Tribunal thereon. It is, perhaps, impossible to lay down any one test as an
absolute and invariable test for all cases. The real purpose of these tests is
to find out the true relation between the parts, branches, units etc. If in
their true relation they constitute one integrated whole, we say 717 that the
establishment is one; if on the contrary they do not constitute one integrated
whole, each unit is then a separate unit. How the relation between the units
will be judged must depend on the facts proved, having regard to the scheme and
object of the statute which gives the right of unemployment compensation and
also prescribes disqualification there for. Thus, in one case the unity of
ownership, management and control may be the important test;
in another case functional integrality or
general unity may be the important test; and in still another case, the
important test may be the unity of employment. Indeed, in a large number of
cases several tests may fall for consideration at the same time. The difficulty
of applying these tests arises because of the complexities of modern industrial
organisation; many enterprises may have functional integrality between factories
which are separately owned; some may be integrated in part with units or
factories having the same ownership and -in part with factories or plants which
are independently owned. In the midst of all these complexities it may be
difficult to discover the real thread of unity. In an American decision (Donald
L. Nordling v. Ford Motor Company (1)) there is an example of an industrial
product consisting of, 3,800 or 4,000 parts, about 900 of which came out of one
plant; some came from other plants owned by the same Company and still others
came from plants independently owned, and a shutdown caused by a strike-or
other labour dispute at any one of the plants might conceivably cause a closure
of the main plant or factory.
Fortunately for us, such complexities do not
present themselves in the case under our consideration. We do not say that it
is usual in industrial practice, to have one establishment consisting of a
factory and a mine; but we have to remember the special facts of this case
where the adjacent limestone quarry supplies the raw material, almost
exclusively, to the factory ; the quarry is indeed a feeder of the factory and
without limestone from the quarry, the factory cannot function. Ours is a case
where all the tests are fulfilled, (1) (1950) 28 A.L.R., 2d. 272.
91 718 as shown from the evidence given on
behalf of the appellant to which we have earlier referred. There are unity of
ownership, unity of management, supervision and control, unity of finance and
employment, unity of labour and conditions of service of workmen, functional
integrality, general unity of purpose and geographical proximity. We shall
presently deal with the legal difficulties at which the Tribunal has hinted and
which have been elaborated by learned counsel for the respondent. But apart
from them, the only fair conclusion from the facts proved in the case is that
the Chaibasa Cement Works consisting of the factory and the limestone quarry
form one establishment. The existence of two sets of Standing Orders and a
separate attendance register for the limestone quarry have already been
adverted to. They have been sufficiently explained by Mr. Dongray, particularly
the existence of two sets of Standing Orders by reason of the statutory
requirement of approval by different authorities-one set by the Labour
Commissioner, Bihar, and other by the relevant Central authority.
We proceed now to consider the legal
difficulties which according to learned counsel for the respondent stand in the
way of treating the limestone quarry and the factory as one establishment. The
Tribunal has merely hinted at these difficulties by saying that an anomalous
position will arise if the quarry and the factory are treated as one
establishment. It is necessary to refer briefly to the scheme and object of lay-off
compensation and the disqualifications therefor as envisaged by the relevant
provisions in Chapter VA of the Act. That chapter was inserted by the
Industrial Disputes (Amendment) Act, 1953 (43 of 1953), which came into effect
from October 24, 1953.
The right of workmen to lay-off compensation
is obviously designed to relieve the hardship caused by unemployment due to no
fault of the employee; involuntary unemployment also causes dislocation of
trade and may result in general economic insecurity. Therefore, the right is
based on grounds of humane public policy and the statute which gives such right
should be 719 liberally construed, and when there are disqualifying provisions,
the latter should be construed strictly with reference to the words used therein.
Now, s. 25 gives the right, and there are three disqualifying clauses in s.
25E.
They show that the basis of the right to
unemployment compensation is that the unemployment is involuntary; in other
words, due to no fault of the employees themselves;
that is why no unemployment compensation is
payable when suitable alternative employment is offered and the workman refuses
to accept it as in cl. (1) of s. 25E ; or the workman does not present himself
for work at the establishment as in cl. (ii); or when the laying-off is due to
the strike or slowing down of production on the part of workmen in another part
of the establishment as in cl. (iii).
Obviously, the last clause treats the work
men in one establishment as one class and a strike of slow-down by some
resulting in the laying-off of other workmen disqualifies the workmen laid-off
from claiming unemployment compensation, the reason being that the unemployment
is not really involuntary.
It is against this background of the scheme
and object of the relevant provisions of the Act that were must now consider
the -legal difficulties alleged by the respondent.
The first difficulty is said to arise out of
s. 17 of the Mines Act, 1952. That section says in effect that every mine shall
be under a Manager having prescribed qualifications who shall be responsible
for the control, management and direction of the mine; it is then pointed out
that the word 'agent' in relation to a mine means a person who acts as the
representative of the owner in respect of the management of the mine and who is
superior to a Manager.
The argument is that the limestone quarry at
Rajanka had a ' Manager' under the Mines Act, 1952, and Mr. Dongray acted as
the agent, that is, representative of the owner, viz., the Company; and this
arrangement which was in consonance with the provisions of the Mines Act, 1952,
it is argued, made the factory and the quarry two separate establishments. We
are unable to accept this argument as correct. We do not think that s. 17 of
the Mines Act, 1952, has any relevance 720 to the question whether the
limestone quarry was part of a bigger establishment. It prescribes the
appointment of a Manager for purposes of the Mines Act, 1952, and does not deal
with the question of 'one establishment' within the meaning of cl. (iii) of s.
25E of the Act. The fact that the quarry Manager worked under the overall
control and supervision of Mr. Dongray showed, on the facts proved in this
case, just the contrary of what learned counsel for the respondent has
contended ; it showed that the factory and the quarry were treated as one
establishment.
The second difficulty is said to arise out of
certain provisions of the Act which relate to the constitution of Boards of
Conciliation, Courts of Inquiry, Labour Courts and Tribunals and the reference
of industrial disputes to these bodies for settlement, inquiry or adjudication.
The scheme of the Act is that except in the case of National Tribunals which
are appointed by the Central Government, the appropriate Government makes the
appointment of Boards of Conciliation, Courts of Inquiry, Labour Courts and
Tribunals and it is the appropriate Government which makes the reference under
s. 10 of the Act. Now, the expression appropriate Government is defined in s.
2(a) of the Act. So far as it is relevant for our purpose, it means the Central
Government in relation to the limestone quarry at Rajanka and the State
Government of Bihar in relation to the factory at Jhinkpani. We had stated
earlier in this judgment that in this very case the original dispute between
the management and the workmen in the limestone quarry was referred to the
Central Tribunal at Dhanbad, while the latter dispute about lay-off
compensation to workmen of the factory was referred by the Government of Bihar
to the Industrial Tribunal at Patna. The argument before us is that when the
statute itself brings the two units, factory and mine, under different
authorities, they cannot be treated as one establishment for the purposes of
the same statute. Our attention has also been drawn to s. 18(3) of the Act
under which in certain circumstances, a settlement arrived at in the course of
conciliation proceedings under the Act or an award of 721 a Labour Court or
Tribunal is made binding " on all persons who were employed in the
establishment or part of the establishment, as the case may be, to which the
dispute relates on the date of the dispute and all persons who subsequently
become employed in that establishment or part." It is contended that it
will be difficult to apply s. 18(3) if the factory and the limestone quarry are
treated as one establishment. Lastly, learned counsel for the respondent has
referred us to s. 33 of the Act. Sub-section (1) of that section, in substance,
lays down that during the pendency of any conciliation proceedings or of any
proceeding before a Labour Court or Tribunal in respect of any industrial
dispute, no employer shall alter the conditions of service to the prejudice of
workmen or punish any workmen, save with the permission in writing of the
authority before which the proceeding is pending. Subsections (2) and (3) we
need not reproduce, because for the purposes of this _ appeal, the argument is
the same, which is that if a proceeding is pending before a Central Tribunal,
say in respect of the limestone quarry, there will be difficulty in applying
the provisions of s. 33 in respect of workmen in the factory over which the
Central Tribunal will have no jurisdiction. The Industrial Tribunal did not
specifically refer to these provisions, but perhaps, had them in mind when it
said that an anomalous position would arise if the factory and the quarry were
treated as one establishment.
We have given our most earnest consideration
to these arguments, but are unable to hold that they should prevail.
It is indeed true that in the matter of
constitution of Boards of Conciliation, Courts of Inquiry, Labour Courts and
Tribunals and also in the matter of reference of industrial disputes to them,
and perhaps for certain other limited purposes, the Act gives jurisdiction to
two distinct authorities, the Central Government in respect of the limestone
quarry and the State Government in respect of the factory. The short question
is-does this duality' of jurisdiction, dichotomy one may call it, necessarily
imply that for all purposes of the Act, and particularly for 722 payment of
unemployment compensation as per the provisions in Ch. VA, the factory and the
quarry must be treated as separate establishments. We are unable to find any
such necessary implication. There is no provision in the Act which says that
the existence of two jurisdictions has the consequence contended for by learned
counsel for the respondent; nor do we find anything in the provisions creating
two jurisdictions which by reason of the principle underlying them or by their
very nature give rise to an implication in law that the existence of two
jurisdictions means the existence of two separate establishments. On the
contrary, such an implication or inference will be at variance with the scheme
and object of unemployment compensation as provided for by the provisions in
Ch. VA of the Act. We have pointed out earlier that the object of unemployment
compensation is to relieve hardship caused by involuntary unemployment, that
is, unemployment not due to any fault of the employees. If in the ordinary
business sense the industrial establishment is one, a lay-off of some of the
workmen in that establishment as a result of a strike by some other workmen in
the same establishment cannot be characterised as involuntary unemployment. To
hold that such an establishment must be divided into two separate parts by
reason of the existence of two jurisdictions is to import an artificiality for
which we think there is no justification in the provisions of the Act.
Nor do we think that ss. 18(3) and 33 present
any real difficulty. Section 18(3) clearly contemplates a settlement or an
award which is binding on a part of the establishment.
It says so in express terms. If, therefore,
in the case before us there is a settlement or award in respect of the
limestone quarry, it will be binding in the circumstances mentioned in the
subsection, on the workmen in that part of the establishment which is the
limestone quarry. Similarly, a settlement or award in respect of the factory
will be binding on the workmen of the factory. Section 33, as far as it is
relevant for the argument now under consideration, is in two parts. Sub-section
(1) relates 723 to a matter connected with the dispute in respect of which a
proceeding is pending. Sub-section (2) relates to a matter not connected with
the dispute in respect of which the proceeding is pending. In one case
permission of the authority before which the proceeding is pending has to be
obtained for punishing etc. ; in the other case, an application for approval of
the action taken by the employer has to be made. We see no difficulty in
applying s. 33 in a case like the one before us. For workmen in the mine, the
authority will be the one appointed by the Central Government; for the factory,
the authority will be that appointed by the State Government. This is the same
argument as the argument of two jurisdictions in another form. The assumption
is that there cannot be two jurisdictions for two parts of one establishment.
This argument is valid, if the assumption is correct. If, however, there is no
warrant for the assumption, as we have held there is none, then the argument
has no legs to stand upon.
So far we have dealt with the case
irrespective of and apart from reported decisions, because there is no decision
which really covers the point in controversy before us. Learned counsel for the
appellant has referred to the decisions in Hoyle v. Cram (1) and Coles v.
Dickinson (2 ). The question in the first case was if the appellants there were
liable to be convicted of an offence against the Bleaching Works Act, 23 and 24
Vict. c. 78 in employing the child without a school master's certificate. It was
held that a child employed on the premises where the bleaching, dyeing and
finishing were performed was employed in an incidental printing process within
the second section of 8 and 9 Vict.
c. 29; and that the place where he was so
employed formed part of " the establishment where the chief process of
printing was carried on " within the meaning of that Act.
The decision proceeded mainly on the words of
the statute;
but Earle, C.J., said:
" It appears that the works at Mayfield
having some years ago become inadequate, by reason of the (1) (1862) 12 C.B.
(N.S.) 125; 142 E.R. 1090.
(2) (1864) 16 C.B.(N.S.) 604; 143 E.R. 1264.
724 increase of the business and by the
detorioration and deficiency of the water of the river Medlock, the appellants
transferred part of their works to Sandy Vale: but that the principal part of
the work continued to be carried on at Mayfield, which was the principal seat
of the firm. In a commercial sense, therefore, Sandy Vale clearly was part of
one entire establishment. It was contended for the respondent that the statute
did not mean forming part in a commercial sense, but in a popular and local
sense. But I see no reason for confining the meaning to local proximity.
The whole substantially forms one
establishment." In the second case the question was this : by the 73rd
section of 7 and 8 Vict. c. 15, premises which are used solely for the
manufacture of paper were excluded from the operation of the Factory Acts;
there were two mills, one at Manchester and the other in Hertfordshire. The
Manchester mill prepared what was called half-stuff which was sent to the mill
in Hertfordshire to be manufactured into paper, and the question was if the
Manchester mill was exempted from the operation of the Factory Acts. The answer
given was in the affirmative. It was stated that each step in the process was a
step in the manufacture of paper, and the distance between the two places where
the several parts were carried on was wholly immaterial in view of the words of
the statute.
The last decision to which our attention has
been drawn is the American decision in Donald L. Nordling v. Ford Motor Company
(1). This decision is perhaps more in point as it related to unemployment
compensation. The statute in that case provided that an individual losing his
employment because of a strike or other labour dispute should be disqualified
during its process " at the establishment in which he is or was employed
". The claimants there had been employed at a Minnesota automobile
assembly plant which was partially shut down because of a lack of parts due to
a strike at a manufacturing plant owned and operated by the same corporation in
Michigan. The Minnesota Supreme Court to which an application was made for (1)
(1950) 28 A.L.R. 2d. 272.
725 a certiorari to review a decision of the
director of the division of employment and security reviewed the tests which
have generally been applied for determining what is meant by the term '
establishment' within the meaning of the statute concerned; it pointed out that
there was no uniformity of decision on the question and it was not possible to
lay down an absolute or invariable test. The decision was based on the broader
ground that the tests of functional integrality, general unity and physical
proximity should all be taken into consideration in determining the ultimate
question of whether a factory, plant or unit of a larger industry is a separate
establishment within the meaning of the employment and security law. The test
which was emphasized in that case was the test of the unity of employment and
on that footing it was found that the evidence was ample to support the
director's finding that the Minnesota plant was a separate establishment.
We do not think that these decisions carry
the matter any further than what we have explained in earlier paragraphs of
this judgment. We must have regard to the provisions of the statute under which
the question falls to be considered; if the statute itself says what is one
establishment, then there is no difficulty. If the statute does not, however,
say what constitutes one establishment, then the usual tests have to be applied
to determine the true relation between the parts, branches etc., namely,
whether they constitute one integrated whole or not. No particular test can be
adopted as an absolute test in all cases of this type and the word
'establishment' is not to be given the sweeping definition of one organisation
of which it is capable, but rather is to be construed in the ordinary business
or commercial sense.
For the reasons which we have already given,
we are of the view that the learned Chairman of the Industrial Tribunal wrongly
held that the limestone quarry at Rajanka and the factory at Jhinkpani were
separate establishments. In our view, they constituted one establishment within
the meaning of cl. (iii) of 92 726 s.25E of the Act. It was conceded on behalf
the respondent workmen that the lay-off in the factory was due to the non-supply
of limestone by reason of the strike in the limestone quarry and the strike was
decided on by the same Union which consisted of the workmen at the factory and
the quarry.
That being the position, the disqualification
in cl. (iii) aforesaid clearly applied and the workmen at the factory were not
entitled to claim lay-off compensation.
The result, therefore, is that the appeal
succeeds and is allowed and the award of the Industrial Tribunal is set aside.
In the circumstances of the case in which a difficult question of
interpretation arose for decision for the first time, we pass no order as to
costs.
Appeal allowed.
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