PETITIONER:
M/s:MODI FOOD PRODUCTS CO. LIMITED
Vs.
RESPONDENT:
SHRI FAQIR CHAND SHARMA & OTHERS.
DATE OF JUDGMENT:
08/05/1956
BENCH:
AIYYAR, T.L. VENKATARAMA
JAGANNADHADAS, B.
SINHA, BHUVNESHWAR P.
CITATION:
1956 AIR 628 1956 SCR 560
ACT
Industrial Disputes (Appellate Tribunal) Act, 1950, No.
XLVIII of 1950-Ss. 23 and 22(a)-Lay off during pendency of
prior dispute-Application under s. 23 alleging breach of s.
22(a) Tribunal finding lay off justified-Application should
be dismissed Quantum of compensation payable-When proviso
(b) to s. 25-C, Industrial Disputes Act applicable.
HEADNOTE
During the pendency of an appeal before the Labour Appellate
Tribunal in respect of a prior industrial dispute between
the same parties the management laid off certain workmen and
offered to pay compensation equal to half the basic wages
and dearness allowance for the first 45 days in accordance
with the provisions of proviso (a) to s. 25-C, Industrial
Disputes Act. The workmen made an application to the
Tribunal under s. 23 of the Industrial Disputes (Appellate
Tribunal) Act, 1950 alleging that there was a breach of s.
22(a) of the same Act, and that the lay off was not bona
fide and claimed full wages for the entire period of the lay
off as compensation. The Tribunal held that the lay off was
justified but that the workmen were entitled to half the
basic wages and dearness allowance not merely for the first
45 days but for the entire period under proviso (b) to s.
25-C.
Held, that on the finding of the Tribunal that the lay off
wag justified the application under s. 23 was liable to be
dismissed.
Proviso (b) to s. 25-C, Industrial Disputes Act, is only
applicable in case of a second and distinct lay off and does
not apply to a period subsequent to the first 45 days of one
continuous lay off.
JUDGMENT
CIVIL APPELLATE JURISDICTION: civil Appeal No. 353 of 1955.
On appeal by special leave from the judgment and order dated
the 22nd August 1955 of the Labour Appellate Tribunal of
India at Lucknow in Misc. Case No. 111-C-650 of 1954.
Veda Vyas, (S. K. Kapur and N. H. Hingorani, with him) for
the appellant.
J. N. Bannerji, (P. C. Agarwalla, with him) for the
respondent.
561
1956. May 8. The Judgment of the Court was delivered by
VENKATARAMA AYYAR J.-The appellant is a company registered
under the Indian Companies Act, and owns a factory called
Modi Oil Mills in the district of Meerut. The respondents
are workmen employed in the Mills. The business of the
Mills consists in the manufacture of oils and paints. On
12-7-1954 the management put up the following notice:
"Notice is hereby given that due to non-availability of
groundnut seed and neem seed at the parity with the ruling
prices of the groundnut oil and neem oil, the Management is
reluctantly compelled to close the Groundnut Crushing
Section and Neem Section till the next groundnut season and
thus the workers in the attached list are surplus and their
services are laid off with effect from 14th July, 1954.
Workers, thus affected, shall be paid compensation according
to Industrial Disputes (Amendment) Act, 1953, subject to
conditions laid therein. It is further notified that the
time of the attendance as provided in Section 25(D) and (E)
shall be 10 a.m. for all the laid off workers".
Pursuant to this notice, 142 workmen mentioned therein,
being the respondents in this appeal, were laid off from the
14th July 1954. On 26-7-1954 the workmen acting through
their Union sent a notice to the management demanding full
wages for the period of lay off on the ground that it was
unjustified and illegal. The management denied these alle-
gations, and. refused the demand. This being an industrial
dispute as defined in section 2(k) of the Industrial
Disputes Act XIV of 1947, in the ordinary course,
proceedings would have been taken with reference thereto
under the provisions of that Act. But there was at that
time another industrial dispute between the parties pending
final adjudication. That dispute had been referred -under
section 10 of the Industrial Disputes Act for adjudication
to the Regional Conciliation Officer, Meerut. He had pro-
nounced his award, and against that, both the parties
562
had preferred appeals to the Labour Appellate Tribunal, and
they were pending at the date of the, notice. The
Industrial Disputes (Appellate Tribunal) Act XLVIII of 1950,
hereinafter referred to as the Act, contains special
provisions with reference to certain disputes which might
arise between parties, when there is already pending
adjudication between them another industrial dispute. They
are sections 22 and 23, which are as follows:
"22. During the period of thirty days allowed for the
filing of an appeal under section 10 or during the pendency
of any appeal under this Act no employer shall-
(a)alter, to the prejudice of the workmen concerned in such
appeal, the conditions of service applicable to them
immediately before the filing of such appeal, or
(b)discharge or punish, whether by dismissal or otherwise,
any workmen concerned in such appeal, save -with the express
permission’ in writing of the Appellate Tribunal.
23. Where an employer contravenes the provisions of section
22 during the pendency of proceedings before the Appellate
Tribunal, -any employee aggrieved by such contravention, may
make a complaint in writing, in the prescribed manner to
such Appellate Tribunal and on receipt of such complaint,
the Appellate Tribunal shall decide the complaint as if it
were an appeal pending before it, in accordance with the
provisions of this Act and shall pronounce its decision
thereon and the provisions of this Act shall apply
accordingly"’.
On 24-8-1954 the respondents filed an application before the
Labour Appellate Tribunal under section 23 of the Act.
Therein, they alleged that the lay off was not bona fide,
because the ground given therefor, namely, non-availability
of groundnut and neem seeds at parity with ruling prices was
not true; that further in view of the pendency before the
Labour Appellate Tribunal of an industrial dispute between
the parties, the lay-.off was in contravention of section
22(a) of the Act, and they accordingly prayed
563
that they might be awarded by way of compensation full wages
for the entire period of the lay off. The appellant
contested the claim. It contended that the non-availability
of groundnut and neem seeds as ,mentioned in the notice was
true, and that the lay off was bonafide. It also claimed
that section 22(a ) of the Act had no application to the
dispute, as the notice distinctly stated that the workmen
would be paid compensation as provided in section 25-C of
the Industrial Disputes Act as amended by Act XLIII of 1953.
It also contended that under that section compensation was
payable only for the first 45 days at the rate mentioned in
the body of the section and not for any period subsequent
thereto. The Tribunal held that the lay off was justified.
It further held on a construction of section 25-C that the
workmen were entitled to half the basic wages and dearness
allowance not merely for the first 45 days but for the
entire period, and that as the appellant did "not observe
them provisions’of that section", there was an alteration of
the conditions of service within section 22(a) of the Act.
It accordingly awarded compensation for the whole of the
period at 50 per cent. of the basic wages and dearness
allowance. Against this decision, the management has
preferred this appeal by special leave.
On behal of the appellant, Sri Veda Vyas contended firstly,
that on its finding that the lay off was justified, the only
order which the Tribunal could have passed was one of
dismissal of the petition filed by the respondents and that
the award of compeneation was in consequence, without
jurisdiction; and secondly, that on a true construction of
section 25-C of the industrial Disputes Act, the workmen
were entitled to compensation only for a period of 45 days
as provided in proviso (a) to section 25-C. We are of
opinion that both these contentions are well-founded.
On the first question, the jurisdiction of the Tribunal to
grant relief under section 23 of the Act arises only if it
is made out that there was contravention of section 22 by
the management. The respondents ,understood this position
quite correctly, and with
564
view to bring themselves within section 23, they alleged
that the lay off was not bona.’ fide, inasmuch as, in fact,
groundnut and neem seeds were available. This contention
rests on the supposition that the conditions under which
workmen could be laid off are conditions as to their
service, ’and that when the employer lays off workmen
without proper grounds therefor, it is a violation of the-
conditions of service within section 22(a) of the Act.
There was some argument before’ us whether lay off, whether
justifiable or otherwise, could be -brought within section
22(a) of the ’Act as amounting to breach of the conditions
of service. On the one hand, the argument was that the
expression "conditions of service" would include only such
conditions as would operate when the workmen were actually
in service ,such as the quantum of wages, hours of work,
provision for leave and so forth, and that when there was a
lay off, these conditions could by their very nature have no
application, and that if the lay off ’was unjustified, that
would give the workmen a right to take proceedings under the
’provisions of the Industrial Disputes Act, but that they
could make no claim under section 23 as for a breach of the
provisions of section 22(a). The contention on the other
side, was that the workmen and the management ,should be
deemed to have agreed that there would be lay off only for
good and proper reasons and under conditions permitted by
law, and that if those conditions were not satisfied, the
lay off would be an alteration of the conditions of service
within section 22(a). The question is one of some
importance, but it is unnecessary to express any opinion on
it, as counsel for the appellant conceded after some argu-
ment that conditions under which the workmen could be laid
off would be conditions of service. - On this -footing, he
contended that as the lay off *as, in fact, justified, there
Was no breach of those conditions, and that, in consequence,
section 22(a) of the Act had no application. On behalf of
the respondents, it is argued that the lay off must, by its
very nature, be temporary and of short duration, and that if
it is for
565
a long or indefinite period as in the present case, it could
not be said to be a proper lay off such as could be deemed
to have been agreed to by the workmen, and that section
22(a) of the Act would, therefore, be applicable.
It is common ground that there are no statutory rules
prescribing the conditions under which there could be a lay
off. If there had been, they would operate as conditions of
service between the parties, and then the question would
simply have been whether there had been a compliance with
them. Under the provisions of the Industrial Employment
(Standing Orders) Act XX of 1946, certain Standing Orders
had been framed with reference to this matter. Counsel on
both sides state that after the enactment of the Industrial
Disputes (Amendment) Act XLIII of 1953, they are no longer
in force, and that there are no statutory provisions
applicable to the present dispute. We must, therefore,
decide the question on the footing that the only condition
which the parties might be taken to have agreed to is that
the lay off should be for adequate grounds and for a
reasonable period. On this question, there is a clear
finding in favour of the appellant. The Tribunal has found
that groundnut and neem seeds were not available at parity
prices, and that for that reason, the work had to be
stopped. It is not likely that businessmen would cut their
profits to spite the workmen. The period of the lay off was
expressed to be until the next groundnut season and we have
been told that the season for groundnut begins sometime in
November December. In fact, all the respondents have been
reemployed in relays from September onwards, and by the
first week of December all of them had been absorbed. On
the finding of the Tribunal that the lay off -was justified,
it follows that the application of the respondents under
section 23 of the Act was liable to be dismissed on the
ground that there had been no contravention of section
22(a).
But., notwithstanding this finding, the Tribunal went on to
hold that the application under section 23 of the Act was
maintainable. To appreciate the
566
reasoning ’behind this decision, it is necessary to refer to
section 25-C of the Industrial Disputes Act, which runs as
follows:
"Right of workmen laid-off for compensation: 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 bad he not been so laid
off:
Provided that-
(a)the compensation payable to a workman during any period
of twelve months shall not be for more than forty-five days
except in the case specified in clause (b);
(b)if during any period of twelve months, a workman has been
paid compensation for forty-five days and during the same
period of twelve months he is again laid off for further
continuous periods of more than one week at a time, he
shall, unless there is any agreement to the contrary between
him and the employer, be paid for all the days’ during such
subsequent periods of lay-off compensation at the rate
specified in this section".
The appellant does not dispute the right of the respondents
to compensation, and, in fact, they were informed by the
very notice dated 12-7-1954 under which they were laid off,
that compensation would be paid to them in accordance with
section 25-C. It is as regards the quantum of compensation
payable under that section that the parties are disagreed.
It will be remembered that the lay off commenced on 14-7-
1954 and was to continue until the next groundnut season,
and that the workers were actually absorbed in batches from
September, and that by the first week of December, they had
all of them been employed. There was thus one continuous
lay off
567
for periods varying from 57 to 121 days. The contention of
the appellant is that, on these facts, the workmen were
entitled to compensation only in accordance with proviso (a)
to section 25-C, and that they would therefore be entitled
to 50 per cent. of the basic wages and dearness allowance
for the first 45 days and for the rest of the period, no
compensation was payable. The respondents agree that
proviso (a) to section 25-C applies to the first period of
45 days; but they contend that for the remaining period of
the lay off, the governing provision is proviso (b) to sec-
tion 25-C, and that under that proviso, they would ,be
entitled to compensation as provided in the body of the
section, i.e. 50 per cent. of the basic wages and dearness
allowance, for the remaining period also. This contention
-was accepted by the Tribunal, and holding that the
compensation awarded by the appellant was not in accordance
with section 25-C, it decided, as already mentioned, that
there was an alteration of the conditions of service, and
accordingly awarded compensation under section 23 of the
Act.
It is contended for the appellant that the construction
which the Tribunal has put on section 25-C is erroneous, and
that the amount of compensation offered by the appellant was
the correct amount payable under that section. As already
stated, there is no dispute that the compensation payable
for the first 45 days has to be determined in accordance
with proviso (a) to section 25-C. The dispute is only as to
whether for the rest of the period of lay off the workmen
are entitled to compensation under proviso (b) to section
25-C. That proviso would apply only if the workmen had been
paid compensation for 45 days, and were again laid off for
further periods of more than one week at a time. On the
wording of the section, it is clear that the lay off which
falls within proviso (b) to section 25-C must be distinct
from that for which compensation had been paid in accordance
with proviso (a) to section 25-C and subsequent thereto in
point of time. And as, in the present case, there was one
continuous lay off for the entire period, proviso (b) could
have no application.
568
Counsel for the respondents contends that though there was
only one lay off, it should notionally be split up into two,
the first period being the 45 days covered by proviso (a) to
the section and the rest of the period, by proviso (b) It is
arguable that there could be a second and distinct lay off
following the first without a break, as for example, when
the management first notifies lay off for a period of 45
days and pays compensation therefor, and again issues a
fresh notification at the end of the period declaring a
further lay off for a period exceeding 7 days in
continuation of the notified lay off, and that that would
fall within proviso (b). But, in the present case, there
was only one notification., and the period specified therein
was up to the next season. By no straining of the language.
of proviso (b) to section 25-C can such a lay off be brought
within its purview. The respondents rely in support of
their contention on the decision in Automobile Products of
India Ltd. v. Their Workmen(1). But that decision gives no
effect whatever to the words "again laid off", and moreover,
if the construction adopted therein is correct, there would
be no need for the provisos (a) and (b), as what would be
-payable under them, according to the respondents, would
become payable under the body of the section itself. If, as
observed in the above decision, this conclusion leads to an
anomalous position, it is for the legislature, if it thinks
fit, to amend the section and not for the Tribunal to
construe it otherwise than what it plainly means. We are
accordingly of opinion that the respondents are entitled to
compensation only for the 45 days as provided in proviso
(a), and that as the appellant had offered to pay the same
by its notice dated 12-7-1954, there was no aIteration of
the conditions of service within section 22 of the Act, and
that, in consequence, the petition of the respondents was
liable to be rejected.
We accordingly allow the appeal, set aside the order of the
Tribunal, and dismiss the petition of the respondents. The
parties will bear their own costs.
(1) [19551 1 Labour Law Journal 67.
569