Tea Districts Labour Association, Calcutta
Vs. Ex-Employees of Tea Districts Labour Association & ANR [1960] INSC 40
(9 March 1960)
GAJENDRAGADKAR, P.B.
WANCHOO, K.N.
CITATION: 1960 AIR 815 1960 SCR (3) 207
CITATOR INFO :
R 1964 SC1617 (9) R 1968 SC1002 (7) R 1969 SC
90 (8) RF 1970 SC1960 (3)
ACT:
Industrial Dispute-Closure of business centers
held mala fide--If no closure in the eye of law in spite of actual closure-industrial
Disputes (Appellate Tribunal) Act, 1950 (XLVII Of 1950), SS. 22, 23,25F(C).
HEADNOTE:
As there was appreciable decline in the
activities and business of the appellant it decided, by means of a resolution,
to close down two local agencies at Koraput and Berhampur (Ganjam) by May 31,
957. About the same time the appellant also thought of retrenching its
employees and decided to retrench ten of its employees with effect from
December 1, 1956. An industrial dispute having arisen as a result of the said
closure and 208 retrenchment it was referred to the industrial tribunal for
adjudication. Before the industrial Tribunal it was conceded on behalf of the
appellant that the retrenchment of ten employees was invalid as the statutory
notice required by S. 25F(c) of the Industrial Disputes (Appellate Tribunal)
Act had not been served. It was also stated afterwards that the statutory
compensation had been paid to the retrenched workmen. As regards the question
of closure the tribunal came to the conclusion that the closure was not bona
fide, and it held that the legal consequence was that there was not a real
closure. Accordingly it directed the appellant to reinstate the ten retrenched
workmen and to pay all its workmen employed at the two centers as though the centers
had not been closed and were actually working. On appeal by special leave :
Held, that when the two agencies had in fact
been closed the finding about malafides could not justify the conclusion that
the said two agencies should be deemed to continue and the tribunal was not
entitled to make an award on that basis.
Banaras Ice Factory Ltd. v. Its Workmen,
[1957] S.C.R. 143, explained and distinguished.
CIVIL APPELLATE, JURISDICTION : Civil Appeal
No. 169 of 1959.
Appeal by special leave from the Award dated
June 26, 1958, of the Industrial Tribunal, Orissa, at Cuttack in Reference No.
2 of 1957.
M.C. Setalvad, Attorney-General for India,
Vidya Sagar and B. N. Ghosh, for the appellants.
M.S. K. Sastri and R. Patnaik, for respondent
No. 1.
B. Patnaik, for respondent No. 2.
1960. March 9. The Judgment of the Court was
delivered by GAJENDRAGADKAR, J.-This appeal by special leave arises from an
industrial dispute between the appellant, the Tea Districts Labour Association,
and the respondents the ex-employees of the appellant and another. The dispute
which was referred to the industrial tribunal for its adjudication consisted of
two items:,,(a) Whether the retrenchment of ten workers of Koraput and Ganjam
Agencies of Tea Districts Labour Association effected on the 30th November,
1956, was justified, if not, to what relief those workers are entitled?
(b)Whether the closure of the Koraput and Ganjam Agencies contemplated by
Messrs. Jardine Henderson Ltd, Secretaries, Tea District, Labour 209
Association with effect from the 31st May, 1957, is bona fide: If so, whether
the affected workers are entitled to some other alternative employment in any
other establishment under the same management. If not bona fide, to what relief
those workers are entitled ? " On this reference the award which was passed
by the Tribunal directs the appellant to pay to the ten retrenched workmen all
the pay and allowances to which they were entitled from November 30,1956, to
May 31, 1957, and it further orders the appellant to pay all its employees of
the Berhampur and Koraput agencies, including the said ten retrenched workmen,
all their pay and allowances from May 31, 1957, till one month after the
publication of the award within which time the Management, if it so chooses,
may close down the agencies, and in that event there would be no necessity for
further notice of retrenchment to those ten retrenched workmen. The award has
further added that if no bona fide closure is effected the ten retrenched
workmen would be entitled to statutory notice if the Management still wants to
retrench them. In regard to the other employees the award provides that they
shall be entitled to all their pay and allowances as before and the agencies
will in the eye of law be continuing agencies. The validity of the latter portion
of the award in particular is challenged before us by the appellant in the
present appeal by special leave.
The appellant is a Company Limited by
Guarantee of performance of service only for its members and was formed in
1917. The appellant's members are the owners of several tea gardens in West
Bengal and Assam and its chief object is to recruit labour from different parts
of India and to supply it to the said tea gardens according to their
requirements. Jardine Henderson Ltd. have since 1953 been and still are the Secretaries
of the appellant. The appellant had a number of establishments in different
parts of India which were known as Local Agencies, Local Forwarding Agencies
and Forwarding Agencies. The function of Local Agencies and Local Forwarding
Agencies was mainly to recruit labour and the function of 27 210 Forwarding
Agencies was mainly to accommodate and feed labour while in transit to and from
tea gardens.
Towards the end of the appellant's financial
year 1955-56, the appellant's Secretary received estimates from the constituent
members regarding their estimated requirements of labour for the seasons from
1956 to 1959, and it appeared that these estimates were between 6,000 to 10,000
adults per annum, whereas in the past the appellant's organisation catered for
the recruitment of about 30,000 laborers per annum. This appreciable decline in
the activities and business of the appellant raised the problem of closing some
of its agencies. In or about the beginning of March, 1957, it became apparent
to the appellant that the requirement of labour was rapidly falling and that it
would be necessary to close some of its agencies. Thereupon, the question was
considered by the appellant's general committee held on March 7, 1957, and it
was decided inter alia that the two local agencies at Koraput and Berhampur
(Ganjam) should be closed, if possible by April 1, 1957. It was in pursuance of
this resolution that the. appellant ultimately decided to close down the said
two agencies by May 3 1, 1957. One of the points referred to the Industrial
Tribunal is in regard to this closure.
About the same time the appellant also
thought of retrenching its employees and in pursuance of its decision in that
behalf ten employees were retrenched with effect from December 1, 1956. This retrenchment
is the other issue referred to the Industrial Tribunal for adjudication.
Before the Industrial Tribunal it was
conceded on behalf of the appellant that the impugned retrenchment of ten
employees was invalid in view of the fact that the statutory notice required by
s. 25F(c) had not been served, and the appellant agreed that the said ten
persons would therefore, be entitled to the same pay and privileges that they
were getting on the date of retrenchment until May 31, 1957, which was the date
of the closure. Thus the position with regard to the impugned retrenchment was
not in doubt.
In regard to the question of closure the
tribunal has observed that what it had to consider was whether 211 the closure
was real and bona fide. It considered the evidence and it was inclined to hold
that the apprehensions entertained by the appellant in regard to the fall in
its activities and work were not justified and that the appellant could have
carried on with the two agencies in question. The tribunal also considered the
fact that soon after the closure of Koraput and Berhampur agencies the
appellant opened another agency at Vizianagaram, which is a place in Andhra
Pradesh but is at some distance from Koraput in Orissa. The tribunal was not
satisfied that the explanation given by the appellant for reopening of the
Vizianagaram agency, which had been closed on the 6th September, 1956, was
satisfactory. In the result the tribunal came to the conclusion that the
closure was not bona fide, and it held that the legal consequence was that it
was not a real closure. It is on the basis of this conclusion that it issued a
direction to the appellant to reinstate the ten retrenched workmen and to pay
all its workmen employed at the two centres as though the centres had not been
closed and were actually working. In reaching this conclusion the tribunal has
relied on the observations made by this Court in Banaras Ice Factory Ltd. v.
Its Workmen (1).
It is common ground that the compensation,
due to the employees on the footing that the closure was not justified, has
been duly paid to all the employees concerned, and the learned Attorney General
has stated to us that so far as the ten retrenched workmen are concerned they
have also been paid the statutory compensation. On behalf of the appellant the
learned Attorney General had made it perfectly clear that even if the appeal
were to succeed the appellant would not claim any amount back from any of its
employees concerned though it would be entitled in law to do so.
The main grievance made before us by the
appellant is about the direction of the tribunal that the closure must be
treated as non est. and that the agencies must be held to be continuing and
must continue to function despite their factual closure. The argument is (1)[1957]
S.C.R. 143.
212 that even if the closure may not be bona
fide it does not follow that the closure in fact has not taken place. It is not
a case where closure is a pretence or the plea of closure is unreal in the
sense that having purported to close the agencies, the same agencies have been
functioning all the time, under a different garb. In fact the agencies have
been closed even according to the finding of the tribunal. It is contended that
the finding about the mala fides of the closure is open to serious doubt
because the said finding is not supported by any legal evidence, and in a sense
is opposed to the weight of the evidence on the record. We are inclined to
think that there is considerable force in this contention. But assuming that
the closure is not shown to be bonafide, does it necessarily follow that the
closure is a fiction and it is unreal in the sense that the agencies can be
treated to be in existence in the eye of the law ? That is the very narrow
point which arises for our decision in the present appeal.
As we have already indicated the conclusion
of the tribunal on this point is based on the observations of this Court in the
case of Banaras Ice Factory Ltd. v. Its Workmen (1). It will, therefore, be
necessary to examine those observations and decide whether they really justify
the conclusion of the tribunal. In that case this Court was dealing with the
decision of the Labour Appellate Tribunal on a complaint filed before it under
s. 22 of the Industrial 'Disputes (Appellate Tribunal) Act (Act No. XLVIII of
1950), hereafter called the Act. It appears that during the pendency of an
appeal before the Labour Appellate Tribunal the appellant Company decided to
close down its business and gave notice to all the workmen that their services
would be terminated upon the expiry of 30 days from July 16, 1952. That led to
the complaint under s. 23 of the Act on the allegation that s. 22 of the said
Act had been contravened. The Labour Appellate Tribunal had found that the
closure was bona fide.
It conceded that the appellant had the right
to close its business for bona fide reasons; but nevertheless it took the view
that permission should have been obtained before the said closure. That is why
according to it the appellant was guilty of contra(1) (1957] S.C.R. 143.
213 vening s. 22(b) of the Act. This decision
was reversed by this Court. In doing so, the true scope and effect of ss. 22
and 23 of the Act were considered and it was held that if the impugned closure
was bona fide then neither of the two sections came into operation. Thus the
position was that the closure was bona fide and that the appellant had
committed no breach of s. 22(b) of the Act. In dealing with the scope and
effect of s. 23 this Court observed: "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 ". Then it was added: " 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 the law and the workmen can raise an industrial
dispute and may even claim under s. 23 of the Act". It is on this latter
observation that the Tribunal has founded its decision. With respect we do not
read the observations as laying down an. unqualified and categorical
proposition of law that wherever a closure is mala fide it must be deemed to be
unreal and non-existent. What this Court has said is that in cases of pretence of
closure no closure in fact has taken place and for the purpose of s. 23 of the
Act with which the Court was dealing a mala fide closure may conceivably be
treated as falling in the same class as a pretence of closure. But in the
present case the facts are not in dispute. There has been a closure and the
agencies have been closed and their business has been wound up. If it is found
that the closure was not bona fide the consequences would be the liability of
the employer to pay the higher compensation under s. 25-FFF of the Industrial Disputes
Act, 1947. But it is difficult to see how when the two agencies have in fact been
closed the finding about mala fides can justify the conclusion that the said
two agencies should be deemed to continue and how the award can make an order
on that basis. Besides, as we have already indicated even the finding about the
mala fides of the closure is itself open to serious doubt. In our opinion the
said finding is 214 based on mere surmises and is entirely opposed to the
weight of evidence adduced in this case.
The result is that portion of the award which
issues directions to the appellant on the basis that the closure, in the eyes
of law, had not taken place is set aside. The appeal succeeds to that extent
and must be allowed. There will be no order as to costs in the circumstances.
Appeal allowed.
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