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PETITIONER: JAHIRUDDIN

       Vs.

RESPONDENT: K.D. RATMI, FACTORY MANAGER, THE MODEL MILLS NAGPUR LTD.

DATE OF JUDGMENT: 22/11/1965

BENCH: SATYANARAYANARAJU, P. BENCH: SATYANARAYANARAJU, P. GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. RAMASWAMI, V.

CITATION:  1966 AIR  907            1966 SCR  (2) 660  CITATOR INFO :  D          1973 SC1227  (55)  F          1975 SC2025  (6)

ACT:     Central   Province   and   Berar   Industrial   Disputes Settlement  Act,  1947 (Act 23 of  1947),  s.  16--Dismissal within   exemption   in  force--Withdrawal   of   exemption- Application  to  Labour Commissioner  for  reinstatement--If lies.

HEADNOTE:     The  State of Bombay by a notification under the  Bombay Relief Undertakings (Special Provisions) Act 1958 declared a Mill  a  ’relief  undertaking’  and  exempted  it  from  the applicability  of  s. 16 of the C.P.  and  Berar  Industrial Dispute&  Settlement-Act,  1947.   During  the  period   the exemption was in force, the appellants-employees of the Mill abstained  from  work  and were  dismissed  for  joining  an illegal  strike.  After the exemption was withdrawn and  was no  longer  in operation, the employees  filed  applications before  the Labour Commissioner claiming reinstatement  with back   wages.    The   Labour   Commissioner   allowed   the applications.    The   Mill  preferred  revisions   to   the Industrial  Court  which were allowed.   In  writ  petitions filed by the employees, the High Court confirmed the finding of the Industrial Court, that the employees had no right  to file applications under s. 16 and the applications filed  by them  before the Labour Commissioner were not  maintainable. In appeal to this Court.      HELD : The High Court was in error in holding that  the applications were not maintainable.      The  right of an employee to claim reinstatement  on  a wrongful  dismissal  existed de hors s. 16  of  the  Central Provinces  and  Berar Industrial  Disputes  Settlement  Act. Section  16  provides a forum for a  dismissed  employee  to claim reinstatement but does not create a right.  The effect of an exemption granted by the notification issued under the Bombay Relief Undertakings (Special Provisions) Act, is  not to destroy the right but to suspend the remedy prescribed by s.  16 for enforcing that right during the period  when  the

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exemption remains in force.  The right can be enforced by  a dismissed  employee by restoring to the provisions of s.  16 of  the  Act provided he makes the  application  within  six months from the date of his dismissal. [668 E]

JUDGMENT:       CIVIL APPELLATE JURISDICTION: Civil Appeal No. 156  of 1965.       Appeal  by special leave from the judgment  and  order dated  August  12,  1963 of the Bombay  High  Court  (Nagpur Bench) in Special Civil Application No. 315 of 1962.        V. P.   Sathe   and  A.  G.  Ratnaparkhi,   for   the appellants. 661      M.  N.  Phadke,  J.  B.  Dadachanji,  O.C.  Mathur  and Ravinder Narain, for respondents Nos.  1 and 3.      N.  S.  Bindra and B. R. G. K.  Achar,  for  respondent No.4.      The Judgment of the Court was delivered by      Satyanarayana  Raju, J. This is an appeal,  by  Special Leave,,  against  the judgment of a Division  Bench  of  the Bombay High Court dismissing an application for the issue of a  Writ of certiorari under Art. 226 of the Constitution  to quash the order of the State Industrial Court at Nagpur.       For  a proper appreciation of the questions that  have been  raised in the appeal, it would be necessary  to  state the  material facts.  The Model Mills,  Nagpur  (hereinafter referred  to  as  the Mills) is  a  public  limited  company incorporated  under the Indian Companies Act.  On  July  18, 1959, in exercise of the powers conferred by s. 18-A of  the Industries  (Development  and  Regulation)  Act,  1951,  the Central Government took over the management of the Mills and appointed the 3rd respondent as the authorised Controller of the  Mills.  On March 25, 1960 the State of Bombay (now  the State  of Maharashtra), in exercise of the powers  conferred by  ss. 3 and 4 of the Bombay Relief  Undertakings  (Special Provisions) Act, 1958 (hereinafter referred to as the Bombay Act)  made  a  notification declaring the Mills to  be  a  ’ "relief  undertaking"  for a period of one  year  commencing from  March  26, 1960 and ending with March 25,  1961.   The appellants, eight in number, were, at the relevant time, the permanent employees of the Mills.  It would be convenient to refer  to them as "employees".  On December 15,  1960,  when the  notification  made by the State  Government  under  the Bombay Act was in force, the employees abstained from  work. Thereupon, the 1st respondent who is the Factory Manager  of the Mills issued notices to the employees to show cause  why they  should  not be dismissed from service for  joining  an "illegal  strike".  On January 6, 1961 the  Factory  Manager passed  orders  dismissing the employees from  service.   On January  12, 1961 the employees filed an application in  the High  Court  of Bombay for the issue of a writ  of  mandamus directing  the  employees to be reinstated in  service.   On April  4,  1961,  the  exemption  of  the  Mills  from   the application  of  s. 16 of the Central  Provinces  and  Berar Industrial Disputes Settlement Act (XXIII of 1947)  (herein- after called the State Act) was made.  On April 25, 1961 the employees   filed   applications   before   the    Assistant Commissioner Sup.CI./76-12 662 of Labour claiming reinstatement with back wages.  The  High Court  dismissed  the Writ Petition filed by  the  employees with  liberty to file a fresh petition, if necessary,  since

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they  were  prosecuting  their applications  for  relief  of reinstatement  before the Assistant Commissioner of  Labour. In and by his order dated September 29, 1961, the  Assistant Commissioner   allowed   the  applications  filed   by   the employees.  He held that as there was no illegal strike  the orders  of  dismissal were unsustainable and should  be  set aside.  He directed that the employees should be  reinstated with back wages.  Against the orders passed by the Assistant Commissioner,  the Mills preferred applications in  revision to the State Industrial Court.  By its order dated  February 16,   1962,  the  Industrial  Court  allowed  the   revision applications  filed  by  the Mills on the  ground  that  the applications  before  the Assistant  Commissioner  were  not maintainable.   On the merits, the Industrial  Court  agreed with  the Assistant Commissioner that there was  no  illegal strike.   Aggrieved by the orders of the  Industrial  Court, the employees filed an applicaton under Arts. 226 and 227 of the  Constitution for the issue of a writ of  certiorari  to quash the orders of dismissal passed by the Factory  Manager and  to direct their reinstatement with back wages.  By  its judgment dated August 12, 1963 the High Court dismissed  the Writ Petition filed by the employees.      The  High  Court  has  held that  the  right  to  claim reinstatement  is  not  a right which  is  available  to  an employee  under  the  Common  Law and  that  the  relief  of reinstatement is a special right which has been conferred on an employee under S. 16 of the State Act.  In the opinion of the High Court, the essential pre-condition for an  employee to claim relief under S. 16 is that he is an employee in  an industry to which that section is applicable and in  respect of which a notification under S. 16(1) also has been issued. The High Court has reached this conclusion by reason of  the fact  that  the  State  Government  issued  a   notification exempting the Mills from the operation of S. 16 of the State Act  and that the exemption was withdrawn only on  April  4, 1961 while the employees were dismissed on January 6,  1961. In the opinion of the High Court, by reason of the fact that s.  16 of the Act was not applicable, the dismissal  of  the employees even if it was wrongful did not give them a  right to claim TV instatement and that to hold otherwise would  be to  give retrospective operation to S. 16 of the  State  Act which  became applicable to the Mills on and from  April  4, 1961  by reason of the withdrawal of the exemption.  in  the result,  the High Court confirmed the finding of  the  State Industrial Court that the employees had 663 no  right to file applications under s. 16 of the State  Act and  the  applications filed by them  before  the  Assistant Commissioner were not maintainable.      Now  it is contended by Mr. V. Sathe on behalf  of  the employees  that  though  the industry was  exempt  from  the operation of certain sections including s. 16 of the Act, on the  date when the appellants were dismissed, there  was  an existing industrial dispute relating to an industrial matter between  the employees and the Mills on April 4, 1961,  when the notification withdrawing the exemption in favour of  the Mills  from  the  operation of s. 16 of the  State  Act  was issued  by  the  Government,  that  on  the  date  when  the employees  filed  an  application under  s.  16  before  the Commissioner of Labour, the period of six months provided by that  section  had  not  elapsed  and  that  therefore   the employees  could  invoke the provisions of s. 16  and  claim reinstatement.   The  learned  counsel for  the  Mills,  Mr. Phadke, has endeavoured to support the judgment of the  High Court and the reasons on which its conclusions were rested.

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    The  questions  which arise for determination  in  this appeal are :                     1.   Whether  the right of  a  dismissed               employee    to   claim    reinstatement,    in               appropriate  cases, exists. de hors s. 16  of’               the State Act ?                     2.   Whether  by  reason  of  the  State               Government’s  exemption of the  industry  from               the  operation of s. 16 on the date  when  the               employees  were dismissed from service,  their               right  to  apply for reinstatement  ceased  to               exist ? For  a  proper determination of the above questions,  it  is necessary  to  refer to the material  statutory  provisions. The  State  Act became law on June 2, 1947.  S.  15  of  the State  Act  empowers  the State Government  to  appoint  any person  as  Labour Commissioner for the State and  he  shall exercise   all   or  any  of  the  powers  of   the   Labour Commissioner.  Now s. 16 of the State Act as it stood at the relevant date provides as follows:               "(1)    Where   the   State   Government    by               notification    so   directs,    the    Labour               Commissioner  shall  have power to  decide  an               industrial  dispute  touching  the  dismissal,               discharge,   removal  or  suspension   of   an               employee working in any industry in general or               in  any local area as may be specified in  the               notification. 664 .lm15 (2)  Any  employee,  working in an  industry  to  which  the notification under sub-section (1) applies, may, within  six months  from the date of such dismissal, discharge,  removal or   suspension,  apply  to  the  Labour  Commissioner   for reinstatement and payment of compensation for loss of wages.     The  different  powers that could be  exercised  by  the Labour  Commissioner  are then set out in sub-s. (3)  :  "On receipt  of  such application, if the  Labour  Commissioner, after  such  enquiry as may be prescribed,  finds  that  the dismissal .... was in contravention of any of the provisions of  this Act or in contravention of a standing order....  he may  direct that the employee shall be reinstated  forthwith or  by a specified date and paid for the whole  period  from the  date of dismissal .... to the date of the order of  the Labour Commissioner".     It is common ground that s. 16 is made applicable to the textile  industry  with  effect from.  March 1,  1951  by  a notification dated February 22, 1951.  The provisions of  s. 16 were thus applicable to the Mills till March 25, 1960, on which   date,  however,  the  State  Government   issued   a notification in exercise of the powers conferred under ss. 3 and 4 of the Bombay Act declaring the Mills to be a  ’relief undertaking’.  The notification directed that the provisions of S. 16 of the State Act and Chapter V-A of the  Industrial Disputes Act (XIV of 1947) (Lay-off and Retrenchment)  shall not  apply  to  the  Mills  and  that  it  shall  be  exempt therefrom.   This  notification was extended  by  the  State Government  on  March 8, 1961 for a further  period  of  one year.  A subsequent notification dated April 4, 1961  issued by  the State of Bombay amended the earlier notification  by withdrawing  the exemption in so far as it related to s.  16 of the State Act.     The alleged participation by the employees in an illegal strike occurred on December 15, 1960 and the 1st  respondent dismissed the employees in and by his order dated January 6,

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1961.   It was during the period between March 25, 1960  and April  4,  1961  when the exemption was in  force  that  the incident  which  resulted  in the  Mills  framing  a  charge against the employees happened and the subsequent orders  of dismissal were passed.      It is submitted by the learned counsel on behalf of the Mills  that the right of an employee to claim  reinstatement has  been  granted by s. 16 of the State Act and  since  the Mills were exempt 665 from  the provisions of that section on the  material  dates the  employee  had  no right to  claim  reinstatement.   The Industrial  Disputes  Act (XIV of 1947) came into  force  on April  1,  1947.   For  our  present  purposes,  it  is  not necessary   to   consider  whether  the   right   to   claim reinstatement  by  a dismissed employee existed  before  the Central Act became law.  The question about the jurisdiction of  an  Industrial  Tribunal to direct  reinstatement  of  a dismissed  employee was raised as early as 1949, before  the Federal  Court  in Western India Automobile  Association  v. Industrial  Tribunal, Bombay(1).  In that case, the  Federal Court  considered  the larger question about the  powers  of industrial  tribunals  in all its aspects and  rejected  the argument  of the employer that to invest the  tribunal  with jurisdiction  to  order reinstatement amounts to  giving  it authority to make a contract between two persons when one of them is unwilling to enter into a contract of employment  at all.   This argument, it was observed, "overlooks  the  fact that when a dispute arises about the employment of a  person at the instance of a trade union or a trade union objects to the  employment  of  a certain  person,  the  definition  of industrial dispute would cover both those cases.  In each of those cases, although the employer may be unwilling to,  do, there  will  be jurisdiction in the tribunal to  direct  the employment or non-employment of the person by the employer". The Federal Court also added                   "The  disputes  of  this  character  being               covered  by the definition of  the  expression               ’industrial   disputes’,  there   appears   no               logical  ground to exclude an award  of  rein-               statement   from  the  jurisdiction   of   the               Industrial Tribunal. For nearly two decades the decision of the Federal Court has been  accepted  without  question.   Therefore,  after   the Industrial  Disputes Act, 1947, at any rate, the right of  a dismissed  employee to claim reinstatement in  proper  cases has  been  recognised.  It is no doubt true that  under  the Central  Act  the  right to claim reinstatement  has  to  be enforced  in the manner laid down by that  statute,  whereas under  the  State  Act it is open to an  employee  to  claim reinstatement  without the intervention of  the  appropriate Government.  This would not however make any difference.    It  is argued that by reason of the exemption granted  by the  Bombay State when it declared the Mills to be a  relief undertaking,  rights  and obligations which accrued  to  the employees or were incurred by the Mills during the period of exemption, stood (1) [1949] F.C.R. 321. 666 abrogated.   This takes us to the question as to  the  legal effect  of  ’the exemption granted by the State  of  Bombay. The  notification  issued by the State of Bombay is  in  the following terms :                   "The  Government of Bombay hereby  directs               that   in   relation  to   the   said   relief

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             undertaking and in respect of the said  period               of one year for which that relief  undertaking               continues  as  such,  the  provisions  of  (i)               Sections 16, 31 and 37, section 40 (in so  far               as it relates to lock-out) and section 51  and               section 61 [in so far as it relates to clauses               (b)  and  (c)  of  Rule  36  of  the   Central               Provinces   and  Berar   Industrial   Disputes               Settlement Rules, 1949] Central Provinces  and               Berar  Act No. XXIII of 1947 and (ii)  Chapter               V-A of the Industrial Disputes Act, 1947  (XIV               of  1947) shall not apply and the said  relief               undertaking shall be exempt from the aforesaid               provisions of the Central Provinces and  Berar               Industrial   Disputes  Settlement  Act,   1947               (Central Provinces and Berar Act No. XXIII  of               1947)  and the Industrial Disputes  Act,  1947               (XIV of 1947)."    The  contention urged on behalf of the Mills proceeds  on the  assumption  that the right to claim  reinstatement  has been granted by S. 16 of the State Act.  As we have  already stated,  S.  16  only recognises the right  of  a  dismissed employee,  in appropriate cases, to claim reinstatement  but does  not  confer  the  right.   The  section  provides  the procedure for enforcing the right.  In this view, the  right of  the  dismissed employee to claim  reinstatement  was  in existence  even during the period of exemption, but only  it could  not be enforced under S. 16.  Once the  exemption  is withdrawn the status quo ante is restored and it is open  to the  employee  to  file  an  application  for  reinstatement provided,  however, his application is within the period  of six months from the date of his dismissal.     Under  S. 4 ( 1 )(a), on a notification being made,  the industry   becomes  a  relief  undertaking  and   the   laws enumerated  in  the  Schedule to the Bombay  Act  shall  not apply.  The Schedule specifies Chapter V-A of the Industrial Disputes Act and S. 16 of the State Act.  Section 4 ( 1 )(a) (i)  also  provides  that the relief  undertaking  shall  be exempt  from  the  operation of the Acts  mentioned  in  the Schedule.     Learned   counsel   drew  a  distinction   between   the expressions exemption’ and ’suspension’ by relying upon  the meanings  given  to these words in  the  Oxford  Dictionary. ’Exempton’ means 667 ’immunity  from a liability’ whereas the  word  ’suspension’ means  ’put  it  off’.  Basing  himself  on  the  dictionary meanings,  learned counsel for the Mills has contended  that the  word  ’exemption’  is  of  a  wider  connotation   than ’suspension’  and  means that the industry shall  be  immune from the liabilities arising under the statutes specified in the  Schedule  and that the order of dismissal  having  been passed  while  the exemption was in force,  the  Mills  were immune  from liability to reinstate the employees  on  their dismissal being held to be wrongful.     The order dismissing the employees was passed on January 6,  1961 when the notification was in force.  The  employees filed  applications  before the Commissioner  of  Labour  on April  25,  1961.  On the date of  their  applications,  the exemption  granted to the Mills by the State Government  was no  longer  in operation.  The decision in  Birla  Brothers, Ltd.  v. Modak(1) has firmly established the principle  that for  a  dispute  which  originated  before  the   Industrial Disputes  Act  came into force but was in existence  on  the date  when  that  Act became law, the  Act  applied  to  the

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dispute  since  it was in existence and continuing  on  that date  and no question of giving retrospective effect to  the Act arose.  At p. 22 1, the learned Chief Justice,  Harries, who spoke for the Court stated thus :                   "In  my judgment, the Act of 1947  clearly               applies  to  the present dispute  without  any               question   arising  of  giving  the  Act   any               retrospective effect.  It is true the  dispute               arose before the Act was passed, but on  April               1,  1947,  when the Act came into  force,  the               dispute was in existence and continuing.   The               employees  were  on  strike  and  the   strike               actually continued until May 19, that is, five               days  after  the  Government  made  the  order               referring  the dispute to arbitration.  In  my               judgment,  the Act must apply to  any  dispute               existing  after it came into force, no  matter               when that dispute commenced.  There is nothing               in  the  Act to suggest that it  should  apply               only  to disputes which originated  after  the               passing of the  Act.   On  the  contrary,  the               opening words of s.10 of the Act make it clear               that the Act would apply to    all    disputes               existing when it came into force.  The opening               words of s. 10(1) are---     If any industrial dispute exists or is apprehended,  the appropriate Goverment may, by order in writing etc. (1)  L.L.R. [1948] 2 Cal. 209. 668               It  seems  to  me that  these  words  make  it               abundantly  clear that the Act applies to  any               industrial dispute existing when it came  into               force and, therefore, the Act applies to  this               dispute." It  is  argued by Mr. Phadke that  the,  notification  dated April 4, 1961 withdrawing the exemption is only  prospective and  no  retrospective  effect can be  given  to  it.   This argument proceeds on a fallacy.  There is no question of the notification  withdrawing an exemption being prospective  or retrospective.     It is finally submitted by learned counsel for the Mills that the validity of the order passed by the Factory Manager dismissing   the  employees  from  service  has   not   been determined  by  the High Court and that the matter  must  be remitted to that Court for a consideration of that question. We  may point out that the Assistant Commissioner of  Labour has held that the dismissal is wrongful.  This conclusion is affirmed  by  the  Industrial Court.  The  validity  of  the dismissal  was therefore finally concluded in favour of  the employees.   There is therefore no question of the  validity of  the  dismissal order now being considered  by  the  High Court.      We may now summarise the conclusions reached by us as a result of the above discussion.  The right of an employee to claim  reinstatement on a wrongful dismissal exists de  hors s.  16 of the State Act.  Section 16 provides a forum for  a dismissed  employee  to  claim reinstatement  but  does  not create  a right.  The effect of an exemption granted by  the notification  issued under the Bombay Act is not to  destroy the right but to suspend the remedy prescribed by s. 16  for enforcing  that right during the period when  the  exemption remains in force.  The right can be enforced by a  dismissed employee by resorting to the provisions of s. 16 of the  Act provided he makes the application within six months from the date of his dismissal.  In the present case, the  appellants

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filed  their applications within the period specified in  S. 16 of the State Act.  The High Court was in error in holding that the applications were not maintainable.      In  the result the judgment of the High Court  and  the order  of the Industrial Court are set aside and  the  award made  by the Assistant Commissioner of Labour  is  restored. The  appeal  is allowed and the appellants will  have  their costs in this Court paid by respondent No. 1.                               Appeal allowed. 669