The Management of Indian Cable Co.
Ltd., Calcutta Vs. Its Workmen  INSC 81 (5 March 1962)
Industrial Dispute--Closure of
branch--Retrenchment of workmen--Right to be absorbed in other
branches--Branch, if an industrial establishment--Individual dispute and
industrial dispute--Distinction--Dispute raisd by majority of workmen, if an
industrial dispute--Competence of State Government to make
reference--"Industrial dispute" "Industrial establishment",
meaning of--Industrial Dieputes Act, 1947 (14 of 1947), ss. 2(k), 10, 25G.
Section 25-G of the Industrial Disputes Act, 1947,
provided : "Where any workman in an' industrial establishment .... is to
be retrenched and he belongs to a 590 particular category of workmen in that
establishment.... the employer shall ordinarily retrench the workman who was
the last to be employees in that category. . . . " The appellant company
which was carrying on business in the manufacture and sale of electric cables,
wires etc., bad a number of branches including Ambala all over India, Its registered office was at Calcutta. The business of the Ambala branch consisted,
apart from the sale of goods manufactured by the appellant, in the execution of
certain contracts with the Government. After the contracts were completed the
appellant considered that, having regard to the volume of its own business in
that area, the maintenance of a branch at Ambala was un-remunerative, and
decided to close it. Accordingly on May 8, 1958, the appellant terminated the services of all its workmen at Ambala, numbering 1 1 in all,' paid them their
salaries etc., and wound up the branch. On a representation made by six of the
workmen who had been discharged that the closure of the branch was unjustified,
that all the branches of the company formed one unit the retrenchment should be
done according to All-India seniority basis and that the workmen bad a legal
right to get employment in the other branches, the Punjab Government referred
the matter for adjudication to the Industrial Tribunal, Punjab, on the
questions whether the retrenchment was justified and legal under s. 25-G of the
Industrial Disputes Act. 1947, and whether the seniority of workmen in all the
branches of the company should be pooled for the purpose of effecting
retrenchment. By an order dated February 11, 1960, the Tribunal directed the
appellant company to take back the six workmen in their employment with effect
from May 8, 1958, so that there was no break in the continuity of service of
any of them.
The appellant challenged the legality of the
order on the grounds, inter alia, (1) that after the closure of the branch at
Ambala it had no place of business on the State of Punjab and that, in
consequence, the Government of Punjab had no jurisdiction to make the
reference, (2) that the disputes of the workmen were individual disputes and
not industrial disputes as defined in the Act and that, therefore. the
Government had no power to refer the same for adjudication, and (3) that, in
any case, the branch at Ambala was an industrial establishment within s. 25G of
the Act and that having been closed no relief could be granted to the workmen
under that section. After the Government of Punjab had made the reference, the
Delhi Union and the Union of Kanpur branch appeared before the Tribunal and
supported the cause of the six workmen. The 591 evidence in this case showed
(1) that though all the employees of the company were treated alike in the
matter of provident fund, bonus and similar benefits, the rules relating to the
category of workmen and their scales of wages for the various branches were
different, (2) that each branch had its own labour union, maintained its own
accounts and had its own banking accounts, and (3) that the workmen when
recruited for the particular branch were to be employed only there.
Held, (1) that in coming to a decision on the
question whether a particular branch of company is an industrial establishment
under s. 25 G of the Industrial Disputes Act, 1947, the decisive elements are
the location of the establishment and the functional integrality i.e., the
existence of one code relating to the categories of workmen and their scales of
wages, and that, as in the present case, the branches were located in different
places and there was also a lack of functional integrality, the Ambala branch
was a separate industrial establishment.
Associated Cement Companies v. Their Workmen,
(1960) 1 S.C.R. 703, relied on.
India Tyre and Rubber Co. v. Their Workmen
506 and Tulsidas Khimji v. F. Jeejeebhoy,
(1960) 19 F.J. R.
The question whether a branch or a department
is in itself an industrial establishment within s. 25 G of the Act is one of
mixed fact and law, and the correct inference to be drawn from the facts
established is one of law open to consideration by the Court.
(2)that what imparts to the dispute of a
workman the character of industrial dispute is that it affects the rights of
the workmen as a class, so that where the dispute of a workmen is sponsored by
a Union or by a considerable number of workmen it becomes an industrial dispute
within s. 2(k) of the Act.
In order that an individual dispute can
validly become an industrial dispute by being supported by a Union or by a
considerable number of workmen such support must precede the reference.
Central Provinces Transport Services Ltd. v.
Raghunath Gopal Patwardhan, (1956) S.C.R. 956, The newspapers Ltd. v. The State
Industrial Tribunal, U.P., (1957) S.C.R. 754 and Bombay Union of Joumalists v.
"Hindu", Bombay, (1961) 2 L.L.J. 436, relied on.
592 (3)that in considering whether the Punjab
Government was competent to make the order of reference, the principle that a
court or tribunal would have jurisdiction if the parties reside within
jurisdiction or if the subject matter of the dispute substantially arises
within jurisdiction, was applicable.
Lalbhai Tricumlal Mills Ltd. v. Yin and
others, (1956) 1.L.L.J. 557, approved and applied.
In the instant case, as the majority of the
workmen in the Ambala branch had joined in the dispute, it was an industrial
dispute, and as the dispute was in Punjab, the reference made by the Punjab
Government was proper, but as the establishment had been closed and the closure
itself was not impugned, s. 25 G had no application, and therefore, the
respondent workmen were not entitled to any relief under that section.
CIVIL APPELLATE JURISDICTION :Civil Appeal
No. 402 of 1961.
Appeal by special leave from the award dated
February 11, 1960, of the Industrial Tribunal, Punjab, Reference No. 5 of 1959.
G. B. Pai, J. B. Dadachanji, 0. C. Mathur and
Ravinder Narain, for the appellant.
C. B. Aggarwal, H. C. Aggarwal and Janardan
Sharma, for the respondents.
1962. March 5. The Judgment of the Court was
delivered by VENKATARAMA AIYAR, J.-This is an appeal by special leave against
the award of the Industrial Tribunal, Punjab, passed in Reference No. 5 of 1959
on February 11, 1960. The appellant is a Public Limited Company incorporated
under the Indian Companies Act, 1913, and it carries on business in the
manufacture and sale of electric cables, wires etc. Its registered office is at
Calcutta and its factory is located at Jamshedpur. Before January 1, 1956, it
had no branches and was selling its goods through Messrs Gillanders Arbuthnot
and Co., as its agents. During this period, a company incorporated in England
and called the British Insulated 593 Callendars Cables Ltd. referred to as the
B.I.C.C. Ltd., in these proceedings was carrying on business in the sale of
cables and wires in India with branches at Bombay, Madras, Calcutta, Delhi,
Trivandrum, Ahmedabad, Nagpur, Kanpur, Bangalore and Ambala. Towards the end of
1955, the B.I.C.C.
Ltd. decided to stop its trading in India and
to close its branches. The appellant Company then decided to take them over and
run them as its own. The workmen in the service of the B.I.C.C. Ltd. were most
of them offered reemployment on terms and conditions contained in a
communication dated November 23, 1955, sent by the appellant to them, and they
having accepted them the branches began to function as those of the appellant
from January 1,. 1956. Among the branches thus taken over was the one at
Ambala. The business of that branch consisted, apart from the sale of goods
manufactured by the appellant, in the execution of the contracts of the
B.I.C.C. Ltd., with the Government of Punjab, which it had taken over. These
contracts were about to be completed in the beginning of 1958, and as, having
regard to the volume of its, own business in that area, the appellant
considered that the maintenance of a branch at Ambala was unremunerative, it
decided to close it. Accordingly on May 8, 1958, it terminated the services of
all its workmen at Ambala, numbering 11 in all,paid them their salaries, wages
in lieu of notice, retrenchment compensation, gratuity, and provident fund, and
wound up the branch.. According to the appellant, the workmen accepted these
amounts without any protest and co-operated with the management in the despatch
of its goods to Delhi and other places. It is the ease of the workmen that they
received the amounts under protest.
But nothing, however, turns on this. On June
5, 1958, six of the workmen who had been discharged on 594 May 8, 1958, sent a
representation to the management complaining that the closure of the branch was
unjustified, that as all the branches of the Company formed one unit, the
retrenchment should be done according to "All India seniority basis"
and that the workmen had a legal right to get employment in the other branches.
A copy of this representation was sent to the Punjab Government, which issued a
notification on February 2, 1959, referring the dispute for adjudication to the
Industrial Tribunal, Punjab, under s. (1)(d) of the Industrial Disputes Act,
1947, hereinafter referred to as "the Act." The reference was in
these terms :"Whether the retrenchment of the following workmen of Ambala
Branch of the Indian Cable Company Ltd., is justified and legal under the
provisions of section 25 G of the Industrial Disputes Act, 1947, and whether
the seniority of workmen in all the branches of the company was pooled for the
purpose of effecting retrenchment? If not, to what relief are the following
workmen entitled ? Then follow the names of the six workmen.
Before the Tribunal, the appellant raised certain
preliminary objections to the maintainability of the referred. By its order
dated August 17, 1959, the Tribunal overruled these objections. Then the matter
was heard on the merits, and on February 11, 1960, the Tribunal pronounced its
award directing the appellant to take back the "six workmen in their
employment with effect from 8 5-1958 so that there is no break in the
continuity of service of any of them" and to pay them "their full wages
from 8-5-1958 till the date they are absorbed". It is against this award
that the present appeal by special leave has been brought.
595 The appellant has urged the following
contentions in support of this appeal:(1) The Tribunal was not competent to
entertainer adjudicate on the reference.
(2) The Punjab Government was not competent
to make the order of reference dated February 2, 1959.
(3)The disputes of the workmen were
individual disputes and not industrial disputes as defined in the Act and that,
in consequence the Government had no power to refer the same for adjudication.
(4)The branch at Ambala was an industrial
establishment within s. 25G and that having been closed no relief could be
granted to the workmen under that section.
(1)The question as to the competence of the
Tribunal to entertain or adjudicate on the reference could shortly be disposed
of as it is covered by our decisions in The Atlas Cycle Industries Ltd. v.
Their Workmen (1) and M/s. Dalmia Dadri Cement Ltd. v. Shri A.N. Gujral and
others(2) with which the present appeal was heard. The material facts bearing
on this question are that Shri A.N. Gujral was appointed to the Industrial
Tribunal on April 28, 1953, when he was over sixty years of age. The validity
of his appointment is impugned on the ground that it is not in accordance with
s. 7(3)(c) of the Act. Then, on April 9, 1957, Shri A. N.Gujral was appointed
as presiding officer of a new Tribunal constituted under s. 7C of the Act. The
validity of this appointment is attacked on the ground that as his appointment
as Tribunal on April 28, 1953, was invalid he was not qualified to be appointed
under s. 7A(3)(b) of the Act. Then again, under s. 7('(b), Shri A. N. Gujral
would have had to retire on June 4, 1957, when he would have attained the age
of (1) C. A No. 188 of 1961 decided on February 8, 1963.
(2) C.A. No. 375 of 1960 decided on February
696 sixty-five. But the Punjab Legislature
then enacted Act 8 of 1957 raising the age of retirement under s. 7C (b) from
sixty-five to sixty-seven. This law, it is said, is repugnant to Art. 14 of the
Constitution as its object was to benefit one individual Shri A. N. Gujral and
the notifications under the Act extending his term of office from time to time
are inoperative. The present reference which was made to him on February 2,
1959, is said to be invalid on the ground that Shri Gujral was not validly in
office. On June 4, 1959, the term of office of Shri A. N.
Gujral expired, and Shri Passey, retired
Judge of the Punjab High Court was appointed as Tribunal in his place. The
present reference came up before him and resulted in the award dated 'February
11, 1960, which is the subject matter of the present appeal. It is said that as
the reference was not validly pending before Shri A. N. Gujral, Shri Passey was
not seized of it as his successor and that as there was no fresh reference to
him, the proceedings are without jurisdiction and void. We have held in our
Judgments in The Atlas Cycle Industrial case (1) and M/s Dalmia Dadri Cement
case (2) that the notification dated April 28, 1953, appointing Shri A. N.
Gujral as Tribunal under s. 7(3) of the Act and the notification dated April
19, 1957, appointing him as the Presiding Officer under s. 7C are valid, that
the Punjab Act 8 of 1957 is not, unconstitutional, and the notifications
extending the tenure of office of Shri A. N. Gujral till June 4, 1959, are
intra vires. Following these decisions, we must overrule this contention.
(2)We shall next consider the question as to
the competence of the Punjab Government to make the order of reference dated
February 2, 1959. The contention of .-he appellant is that after the closure of
the branch at Ambala on May 8, 1958, it had no place of business in the State
of Punjab, (1) C.A. No. 188 of 1961 decided on February 8, 1962.
(2) C.A. No. 375 of 1960 decided on February
597 and that, in consequence, on February 2,
1959, the Government of Punjab bad no jurisdiction to make the reference.
Section 10 of the Act provides that when an industrial dispute exists or is
apprehended the appropriate Government may refer it to a Tribunal for
Section 2 (a) defines appropriate Government
as meaning the Central Government in relation to certain classes of disputes
and State Government in relation to other industrial disputes. It is common
ground that the dispute with which we are concerned is not one falling within
the jurisdiction of the Central Government and that it is only the State
Government that has the competence to make the reference.
The point in controversy is as to which of
the States has jurisdiction to do so. The Act contains no provisions bearing on
this question, which must, consequently, be decided on the principles governing
the jurisdiction of Courts to entertain actions or proceedings. Dealing with a
,similar question under the provisions of the Bombay Industrial Relations Act,
1946, Chagla, C. J. observed in Lalbhai Tricumlal Mills Ltd. v. Vin and other
"But what we are concerned with to
decide is :
where did the dispute substantially arise?
Now, the Act does not deal with the cause of action, nor does it indicate what
factors will confer jurisdiction upon the Labour Court. But applying the
well-known tests of jurisdiction, a court, or tribunal would have jurisdiction
if the parties reside within jurisdiction or if the subject matter of the
dispute substantially arises within jurisdiction.
In our opinion, these principles are
applicable for deciding which of the States has jurisdiction to make a reference
under s. 10 of the Act.
598 Discussing the question on the principles
stated above, it is not in dispute that the appellant was not carrying on
business anywhere in Punjab on the date of the reference.
The Punjab Government would therefore have
jurisdiction to make the reference only if the cause of action had arisen
wholly or in part within the State. If the validity of .he closure of the
branch had itself been in dispute, the cause of action must undoubtedly be held
to have arisen within the State and the reference would be competent. It is
argued for the respondents that as the retrenchment on which, the dispute has
arisen was made in Ambala, the State of Punjab had jurisdiction to refer under
s. 10 of the Act, the question of the appropriate reliefs to be granted under
25G. But the appellants contend thatwhen once
the closure itself is accepted as valid and binding, then there could be no
question of retrenchment, which can only be with reference to a continuing
industry as held by this Court in Pipraich Sugar Mills Ltd. v. Pipraich Sugar
Mills Mazdoor Union(1) and Hariprasad Shivshankar Shukla v. A. D. Divikar (2)
and that to attract s. 25G, it must be held that the Calcutta office and the
branches all form one establishment and that in that view as relief under that
section could be granted only in relation to branches situate in other States,
no part of the cause of action could be held to have arisen within the State of
Punjab. In the view we are taking on the question as to whether the branch at
Ambala was an industrial establishment within s. 25G, we do not consider it
necessary to express any opinion on this question.
(3)It is next contended for the appellant
that the disputes raised by the respondent-workmen were not industrial disputes
as defined in the Act but merely individual disputes, and that in consequence
the Government had no power to refer (1) (1956) S. C. R. 872.
(2)  S.C.R. 121.
599 them to a tribunal under s. 10 of the
Act. Section 2 (k) defines industrial dispute as meaning "'any dispute or
difference between employers and employers, or between employers and workmen,
or between workmen and workmen, which is connected with the employment or
non-employment or the terms of employment or with the conditions of labour, of
any person." According to the appellant a dispute can be an industrial
dispute within this definition only whenit is raised by workmen and not merely
by one of them. The respondents, on the other hand,contend that on its true
construction, s. 2(k) willcomprehend even a dispute between an employer and a
single workman, and the observations in R v. National Arbitration Tribunal (1)
are relied on as supporting that position. There the question discussed was
whether the expression "dispute or difference between employers and
workmen" in Article 7 of the Conditions of Employment and National
Arbitration Order, 1940, would cover a dispute between an employer and one
workman, and Lord Goddard, C. J., answered it in the affirmative, basing
himself on s. 1 (1) of the Interpretation Act, 1889, which provides that words
in the plural shall include the singular. The. argument is that, having regard
to the rule of interpretation embodied in s. 13 (2) of the General Clauses Act,
1897, the ratio of this decision is equally applicable to the construction of
s. 2 (k) and that it must be held to include a dispute between an employer and
a single workman.
This question however is not res integra. It
has been considered in a number of cases in this Court and decided adversely to
the present contention of the respondents. In Central Provinces Transport
Services Ltd. v. Raghunath Gopal Patwardhan (2) the point in controversy was whether
an individual (1)  2 All .E.R.828,831.
(2)  S.C.R. 956.
600 dispute was an industrial dispute within
s. 2 (k) of the Act. After stating that three divergent views had been
expressed on the question and that the preponderance of judicial opinion was in
favour of the view that a dispute between an employer and a single employee
could not per se be an industrial dispute but that it might become one if it
was taken up by a Union or a number of workmen, this Court observed:
"there is considerable reason behind it.
Notwithstanding that the language of s. 2 (k)
is wide enough to cover a dispute between an employer and a single employee,
the scheme o f the Industrial Disputes Act does appear to contemplate that the
machinery provided therein should be set in motion, to settle only disputes
which involve the rights of workmen as a class and that a dispute touching the
individual rights of a workman was not intended to be the subject of an
adjudication under the Act, when the same had not been taken up by the Union or
a number of workmen." (p. 964).
This view was adopted in The. Newspapers Ltd.
v. The State Industrial Tribunal, U. P. (1) where the point arose directly for
decision. Discussing the meaning of the expression "industrial
dispute" in the U.P. Industrial Disputes Act which is the same as s. 2(k)
of the Act, this Court observed that though on the rule of construction laid
down in s. 13(2) of the General Clauses Act, 1897, the plural would include the
singular, in the context of the, legislation, the word "workmen" did
not include "a workman", and that a dispute between an employer and a
single workman did not fall within the definition of industrial dispute.
Both these decisions were followed by this
Court in Bombay Union of (1)  S. C.R. 754.
601 Journalists v. "Hindu", Bombay
(1) and the law was thus stated :"Therefore, the applicability of the Industrial
Disputes Act to an individual dispute as distinguished from a dispute involving
a group of workmen is excluded, unless the workmen as a body or a considerable
section of them make common cause with the individual workman". (p. 439).
The respondents seek to distinguish these
decisions on the ground that in all of them the dispute was raised by a single
workman, whereas in the present case six of the workmen have joined in making a
demand. They urge that a dispute ceases to be an individual dispute and becomes
an industrial dispute when more than one workman, joins in it.
It is true that in the decisions cited above
the dispute was raised by a single workman. But the reasons on which these
decisions rest, viz., that the policy behind the Industrial Disputes Act is to
protect workmen as a class against, unfair labour practices and not to enact
special provisions for enforcing the claims of individual workmen, would
equally militate against the contention that a dispute which is essentially
individual in character would become an industrial dispute merely because two
persons have joined in it. What imparts to the dispute of a workman the
character of industrial dispute is that it affects the rights of the workmen as
a That is why the above decision lay down that the, dispute of a single workman
would become an industrial dispute when it is sponsored by a Union or by a
considerable number of workmen; for it (,an then be taken that it does affect
them as a class. No hard and fast rule can laid down as to the number of
workmen whose association will convert an individual into an industrial
dispute. That must depend on the facts of each case, and the nature of (1)
602 the dispute. The group might even be a
minority, as held by this Court in Associated Cement Companies Ltd. v. Their
Workmen(1). But it must be such as to lead to an inference that the dispute is
one which affects workmen as a class.
In this view, we shall have now to consider
whether the dispute of the respondents was taken up by a Union, or by a large
number of workmen. The Ambala branch bad a Union of the workmen of the
appellant company, and that has not moved in the matter. The Delhi branch of
the appellant has its own union, and it wrote to the Concilation Officer,
Delhi, on December 10, 1958, to intervene in the dispute, but he replied on
December 17, 1958 that he had no jurisdiction in the matter. Thereupon the union
withdrew its application.
According to the respondents the Commercial
Employees' Union in Delhi was also moved by them to take up their cause and it
did so, but this is not established. Moreover as it is admitted that no other
employees of the appellant company were members of this Union, it would have
had, on the decision of this Court in Bombay Union of Journalists v. "Hindu",
Bombay(2), no locus standi to take up the dispute.
After the Government of Punjab had made the
reference on February 2, 1959, the Delhi Union appeared before the Tribunal in
March 1959, and so did the Union of the Kanpur branch in April 1959, and both
of them supported the respondents. It is argued that this was sufficient to
clothe the disputes of the respondents with the character of industrial
dispute. But if a reference can validly be made only if an industrial dispute
exists or is apprehended, and if an individual dispute becomes an industrial
dispute only when it is supported by a Union or by a considerable number of
workmen, that support must necessarily precede the reference and from the
foundation for it. The intervention, therefore, of the Delhi Union (1) 
3. S.C.R. 157.
(2)  2L.L.J. 436, 603 in March, 1959
and of the Kanpur Union in April, 1959, cannot give validity to the reference,
if it was not valid when it was made. That has been held by this Court in
Bombay Union of Journalists v. "The Hindu", Bombay(1), where it was
observed that the validity of a reference must be judged on the facts as they
stand on the date of reference and that just as a withdrawal of the support by
a union after a reference is made cannot render it invalid, likewise the
support by it after the date of reference cannot make it valid. If, therefore,
the validity of the reference a dated February 2, 1959, depended upon whether
the cause of the respondents had been taken up by a Union, the question will
have to be, answered in the negative.
It is then contended for the respondents that
even apart from the support of the union, their dispute must be considered to
be an industrial dispute, because six of the workmen have joined in it, and if
regard is had only to the Ambala branch, they even constituted a majority. To
this the appellant replies that the claim of the respondents that retrenchment
should have been made under s. 25 G of the Act after pooling for purposes of
seniority all the branches proceeds on the footing that all the branches from
one establishment, that that is also the basis on which the reference dated
February 2, 1959, is made, that therefore in deciding whether a considerable
number of workmen have joined in the dispute, regard must be had to the number
of workmen in all the branches, and that was 860, and that six out of 860 was
an infinitesimal number, a mere drop in an ocean, and that therefore the
disputes did not become industrial disputes. The respondents retort that the
contention of the appellant that in discharging the respondents, it had not
violated s. 25 G proceeds on an assertion that the Ambala branch is a distinct
industrial establishment, (1) 2. L.L.J. 430.
604 and that on that footing the respondents
from a majority of the workmen being six out of eleven. It is manifest that the
stand taken by both the parties on the question whether the dispute in backed
by considerable number of workmen is inconsistent with the stand taken by them
on the question whether the discharge of the workmen at Ambala was in
contravention of s. 25G of the Act. In this situation the course which we
propose to adopt is first to determine whether the branch at Ambala is a
separate industrial establishment within s. 25 G of the Act, and then decide
the rights of the parties in accordance therewith.
(4) Section 25 G provides that when it is
proposed to retrench workmen on the ground of surplusage the rule that the last
to come should be the first to go should ordinarily be observed. But this is
subject to two limitations. It operates only within the establishment in which
the retrenchment is to be made and to the category to which the retrenched
workmen belong. It is these two factors that are determinative of the true
scope` of the section.
Now what is an industrial establishment ?
There is a definition of it given in the Explanation to s. 25 A(2) but that is
limited to ss. 25C, 25D and 25E, There being no definition of the expression in
that Act applicable to s. 25G, we must construct it in its ordinary sense,
guided by such indications as the context might furnish. In Pravat Kumar Kar v.
W.T.C. Parker (1), Harries, C.J., observed that the words "industrial
establishment" meant the place at which the workmen were employed, and
that accordingly s. 23 of the Act which imposes a prohibition against strikes
by any "workman who is employed in any, industrial establishment"
could not cover a case of workmen in Bombay striking against an employer with
whom employees in Calcutta have a (1)  1.F.J.R. 245.
605 dispute." According to this view, it
is of the essence of the concept of an industrial establishment that it is
local in its set-up. This is also implicit in the Explanation to the definition
of "lay-off" in s.2(kkk) of the Act, that "every workman whose
name is borne on the muster rolls of the industrial establishment and who
presents himself for work at the establishment at the time appointed for the
purpose during normal working hours on any day and is not given employment by
the employer within two hours of his so presenting himself shall be deemed to
have been laid-off for that day within the meaning of this clause." If
this be the correct connotation of the words "industrial
establishment", then the branches of a company located in different places
must be held to be distinct "industrial establishments", for purposes
of s. 25G. This question came up directly for decision before the Madras High
Court in India Tyre and Rubber Co. v. Their workmen (1). In that case, a
company whose business was to manufacture and sell tyres had its head office in
Bombay and a branch office at Madras. There were sub-depots at Ernakulam, Bangalore
and Vijawada within the jurisdiction of the Madras Branch. The company
retrenched some of the workmen at the Madras office as surplus, and on that a
dispute was raised by them that as the retrenchment had been made without
pooling all the depots as one unit, s. 25G had been infringed. The Tribunal
accepted that contention and held that the retrenchment was bad. The
correctness of this decision having been questioned in a petition under Art.
226, the Madras High Court held on an examination of the scheme of the Act and
on a review of the authorities, that if in industry had establishments located
in different places, each of them would be a separate industrial establishment
within s. 250 of the Act, and that accordingly the office at Madras was one industrial
establishment (1)  2 L.L.J. 506.
606 and that the sub-depots in the different
States were separate industrial establishments. On the facts, this decision is
very near the present case and is strongly relied on for the appellant.
We should, in this connection, refer also to
s. 10(1A) of the Act, wherein it is provided that when the dispute relates to
industrial establishments in more than one State, the Central Government might
refer it for adjudication to a National Tribunal. This provision is based on
the notion that the industrial establishments of a concern situated in
different States are distinct establishments.
Then again on the terms of s. 25G, the relief
provided therein is to be granted within the category of workmen who are
proposed to be discharged. This posits that there is one code governing the
grades of Workmen and their scales of wages and that is ordinarily possible
only when the establishment is functioning at a given place. If there are
different branches in different places and there are different scales of wages,
the rule laid down in s. 25G would be incapable of compliance unless all the
branches have one scale of wages and the rules provide for automatic transfer
from place to place having regard to the seniority and grades. Thus whether we
have regard to the popular sense of the words industrial establishment', or to
the limitation of relief under s. 25G to workmen in the same category, the
conclusion would appear to be inescapable that each branch of a company should normally
be regarded as a distinct industrial establishment.
Bearing the above principles in mind, we may
now proceed to consider whether, on the facts found the Ambala branch is an
industrial establishment. The Tribunal has held that it is not and the respondents
insist that it is a finding of fact with which this Court cannot interfere in
an appeal 607 under Art. 136 of the Constitution. We are unable to agree.
In Associated Central Companies v. Their
Workmen (1), this Court has held that the question whether a factory at
Chaibasa and a quarry at Rajanka owned by the appellant were two different
establishments for the purpose of s. 25E was not merely one of fact, as its
determination involved the application of the correct tests underlying s. 25E,
and in that view, this Court examined the correctness of the conclusions of the
Tribunal and reversed its decision on the merits. In our judgment, the question
whether a branch or a department is in itself an industrial establishment
within s. 25G is likewise one of mixed fact and law, and the correct inference
to be drawn from the fact established is one of law open to consideration by
this Court, vide also the decision of the Bombay High Court in Tulsidas Khimji
v. F. Jeejeebhoy (2), where a finding by the Tribunal that four departments of
a firm which were all parts of one establishment was set aside in an
application under Art., 226, the Court holding that it was not purely a
question was fact.
We may now proceed to examine the facts of
the present case.
The Tribunal begins its award with the
statement, "it may lie held straightaway that the workmen have not been
able to prove strictly any common pool of seniority". The appellant
contends that having regard to the scope of the reference, the Tribunal should
have on this finding answered it against the respondents, What the Tribunal did
was that it then went on to examine certain other facts and stated its
conclusion thus :"All these facts establish abundantly that each of the
branches of the I. C. C. is of a separate industrial entity or establishment
but only a component part of the central unit a Calcutta to which it belongs.
It is thus the (1)  1 S.C.R. 703.
(2)  19 F.J.R. 396.
608 Company (I. C. C.) that forms the
industrial unit and it must have as required by s. 25G of the Industrial
Disputes Act gives effect to the principle of last come first go when the
occasion for the retrenchment had arisen." Now the facts on which the
above conclusion was reached may be classed into two categories-those which
have reference to the management of the industry and those which ')ear on the
service conditions of the workmen. Dealing with the former, the Tribunal finds
that it is the company with its registered office at Calcutta that controls and
runs all the branches, that it is the company that employs the workmen and
dismisses them, that the ,six respondents were appointed not by the Ambala
branch but by the company and that they were discharged on May 8, 1958, by the
company, that the branches do not prepare each its own individual annual
balance sheet but that it is only the company that prepares its annual balance
sheet including therein the accounts of all the branches and that it is the
company that meets the financial requirements of the branches. These facts, it
is said, show that the branches have no separate existence of their own.
We are of the opinion that the facts stated
above do not support the conclusion of the Tribunal that all the branches from
one unit of industrial establishment. If a Company establishes several
branches, the control of these branches must necessarily vest in it, and under
the provisions of the Indian Companies Act, there can be only one annual balance
sheet for the whole company. On this point R. W. I gave the following evidence
:"My duty consists of amalgamation of all the accounts of, the various
branches of the Co., and to get them audited. The audited accounts are
forwarded to the head office at Calcutta, 609 Under my signatures and they are
later incorporated in the Company's accounts. The branches prepare their own
accounts and forward them to me. I then make a consolidated statement and get
the accounts audited and send them to the head office." It is therefore
clear that while the branches have their own separate accounts the company has
its own consolidated annual balance sheet as required by the provision of the
Companies Act. In our opinion, the facts stated above do not necessarily lead
to the conclusion that the head office and the branches must all be regarded as
forming one industrial establishment. On the reasoning of the Tribunal, where
the industry has a head office, and branches in other places,-it may be, even
in different States-all of them will have to be regarded as forming one
establishment. Such a conclusion would in our opinion, be wholly erroneous.
Turning next to the facts relating to service
conditions of the workmen, the finding is that the rules of the company relating
to provident fund, gratuity and bonus and service conditions in general are
applicable to the employees of the company in all its branches. But this again
appears to us to be not of much consequence. It only signifies that all the
employees of the company were treated alike in the matter of provident fund,
bonus and similar benefits. It does not lead to the inference that all the
branches were treated as one. What is material for the purpose of the present
discussion is whether the same rules relating to the category of workmen and
their scales of wages are in force in all the branches. It is only then that
the s. 25G could be applied. On that the uncontradicted evidence of R. W. I is
that "the I. C. C. has different scale of pay for different branches".
On this evidence, there can be no question of integrating workmen trenched in
one branch in another branch and, in 610 consequence, the establishment in each
branch must be treated as a separate entity. An attempt was made on behalf of
the respondents to get over this evidence by showing that transfers from one
branch to another were usual. W. I denied that there was any provision in the
rules for transfer of the employees from one branch to another, and cross
examined with reference to the transfer of some of the employees from Bombay to
Delhi, he stated :
"The Delhi branch wanted a typist very
very urgently and we sent Mr. Mamm from Bombay.
After doing his work at Delhi, he was
reverted to Bombay. The same was the case with regard to Mr. Tamboowala. Mr.
Tamboowala was also sent from Bombay. After having been at Delhi for several
weeks he returned back to Bombay.
No employee of one branch is sent to another
even for a temporary period without his consent." This evidence is fully
borne out by the communication dated November 23, 1955, containing the terms on
which the respondents and other workmen in the, branches were employed. It
expressly provides that the "will be stationed in the same place to do
work of a similar nature as at present with British Insulated Callender's
Cables Ltd." This clearly establishes that the workmen were recruited only
for the particular branch where they were employed and that is destructive of
the contention that all the establishments are to be regarded as forming one unit.
How unrealistic the contention of the respondents is will be easily seen when
we examine how it will work in the case of some of the respondent. For example,
Shrimati Chameli is a sweepress, who has been in service for 9 years. Is she to
be sent to Trivandrum branch, displacing a sweepress, employed there more
recently, and on a lower scale of wages? 611 Then again Shri Ram Avatar is a
peon employed less than two years previously. Is he to be absorbed in the
Madras branch, displacing a peon employed one year age on lower wages ? There
are likewise two clerks recruited some 2 1/2 years previously. It is these
workmen that go to make up the majority of six.
The appellant also contends that each branch
has its own Labour Union, maintains its own accounts and has its own banking
'accounts and that these facts go to show that each branch is a distinct
Now the question is whether on the facts
found the Ambala branch is a separate industrial establishment or whether the
Head Office and the branches all constitute one establishment. In Associated
Cement Companies v. Their Workmen (1) considering the tests applicable for
determining what constitutes one establishment for purpose of s. 25E(3) of the
Act this Court observed:"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...... 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, unit etc. If in their true relation they constitute one integrated
whole we say that the establishment is one; if on the contrary they do not
constitute one integrated whole, each unit is then a separate unit." (pp.
716717) (1) 1 S.C.R. 703.
612 Relying on the above observations the
respondents contend that as there is unity of ownership: management and
control, and of conditions of service between the Head Office and the branches
they should be hold to be one establishment, where as the appellant contends
that as there is absence of geographical unity and functional integrality, each
branch should be, held to be a separate establishment.
In Associated Cement Companies case (1) it
was held that all the tests referred to in the judgment were satisfied and
therefore the question of the comparative weight to be attached to the several
tests did not arise for consideration. Having regard to the principles
deducible from the language of the section already stated the decisive elements
in our judgment are the location of the establishment and the functional
integrality i.e. the existence of one code relating to the categories of
workmen and their scales of wages. In Tulsidas Khimji's case (2) the question
was whether four Departments of a business establishment in the city of Bombay
were distinct industrial establishments within s. 25G and it was held that as
there was no functional integrality between them, they should be held to be
different establishments, notwithstanding they were located in the same place.
And in this cage the branches are located in different places and there is also
a lack of functional integrality. We are of opinion that each branch is a
separate industrial establishment.
On this finding it follows that the dispute
of the respondents is an industrial dispute as defined in s. 2(k) as that has
been raised by the majority of the workmen of the Ambals branch, which is an
But as the establishment has been closed and
the closure itself is not impugned as bad on the ground that it (1)  1.
(2)  90 F.J.R. 396.
613 is colourable and not bona fide, s.25G
has no application and the respondents, therefore, are not entitled to any
relief under that section. In the result the appeal is allowed, the order of
the Tribunal is set aside and the reference answered against the respondents.
In the circumstances the parties will bear their own costs throughtout.