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PETITIONER: PRAKASH COTTON MILLS PVT. LTD.

       Vs.

RESPONDENT: RASHTRIYA MILLS MAZDOOR SANGH

DATE OF JUDGMENT01/08/1986

BENCH: DUTT, M.M. (J) BENCH: DUTT, M.M. (J) ERADI, V. BALAKRISHNA (J)

CITATION:  1986 AIR 1514            1986 SCR  (3) 419  1986 SCC  (3) 588        JT 1986    18  1986 SCALE  (2)118

ACT:      Bombay Industrial  Relations Act  1946,  s.  42(4)  and 78(1)(a)  (iii)-Closure   of  textile  mill  on  account  of circumstances  beyond   control   of   the   company-Regular employees-Whether entitled  to "Closure  compensation"-Badli employees-Not entitled .

HEADNOTE:      Certain goods which are essential for the manufacturing process in  the appellant’s mill were detained by the Excise Authorities for  non- payment  of Central  Excise  Duty  and consequently there  was a  disruption in  the functioning of the appellant’s  mill compelling  the appellant  to stop the working of  the mill  for the  period from March 24, 1964 to June 10, 1964.      The Respondent-Sangh  demanded that  the employees  who were affected by the said closure should be paid their wages for the  aforesaid  period.  As  the  said  demand  was  not accepted  by   the  appellant,   the  respondent   filed  an application before  the First  Labour Court, praying for the payment  of   full  closure  compensation  to  the  affected employees.      The Labour  Court held  the  appellant  liable  to  pay closure  compensation  to  the  employees  affected  by  the closure of  the mill for the aforesaid period at the rate of 50% of the basic wages and dearness allowance.      The Industrial  Court partly allowing the appeal of the appellant,   directed   the   appellant   to   pay   closure compensation to  the employees  affected by  the closure for the period  from March  24,1964 to June 10, 1964 at the rate of 50  per cent  of their basic wages and dearness allowance and further  directed that where the employees had been sick and enjoyed  sickness benefits  for all the days or had been on privilege  leave or  enjoyed leave with wages for all the days or secured alternative employment for any period during the closure, such employees would 420 not be  entitled to  any closure compensation for such days, but in  respect of  such days  half of  the wages payable to Badli workmen  in lieu  of  the  said  three  categories  of workmen would be paid to the Badli workmen equitably.

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    In appeal  to this Court, it was contended on behalf of the  appellant   that  as  the  closure  had  been  made  in accordance with the provisions of the Standing orders 16 and 17 due to circumstances beyond the control of the appellant, the appellant  is not  liable to pay any compensation to its employees for the period of closure including payment to the Badli workmen.      Allowing the appeal in part, ^      HELD: (1)  The order  of the Industrial Court in so far as it  directs payment  of compensation to the Badli workmen is set  aside and, except that, the rest of the order of the Industrial Court is affirmed. [427F-G]      2.(i) Sub-s.  (4) of Sec. 42 read with the provision of s. 78(1)(a)(iii)  of the  Bombay  Industrial  Relations  Act 1946, makes it manifestly clear that an employee is entitled to challenge  the refusal by the company to pay compensation of the closure and claim such compensation before the Labour Court whether  or not  such closure was due to circumstances beyond the control of the company, as enumerated in Standing order 16.  The Respondent-Sangh  therefore, was  entitled to make  the  application  before  the  Labour  Court  claiming compensation for  the period  of closure  even  though  such closure was  made in  accordance with  the provisions of the Standing orders 16 and 17.[425E-H]      2.(ii) The Standing order 16 provides that such closure can be  made without  notice and  no compensation  would  be required to  be paid  in lieu  of notice.  It is  clear from Standing order  16 that  it does  not contemplate  that when there has  been a  closure on  account of  some  unavoidable circumstances, no compensation is required to be paid to the employees. Therefore,  the order  of  the  Industrial  Court directing payment  of compensation  to the  employees of the appellant for  the above period of closure is upheld. [426A- C]      3.  Badli   workmen  get  work  only  in  the  absence, temporary or  otherwise, of regular employees, and that they do not  have any guaranteed right of employment. Their names are not  borne on  the muster  rolls  of  the  establishment concerned. Indeed a Badli workman 421 has no  right to  claim employment  in place of any absentee employee. In A any particular case, if there be some jobs to be performed  and the  employee  concerned  is  absent,  the Company may  take in  a Badli workman for the purpose. Badli workmen are  really casual employees without any right to be employed. Therefore,  the Badli  employees could not be said to have been deprived of any work to which they had no right and, consequently, they are not entitled to any compensation for the  closure. It may be that the Company may not have to pay  closure   compensation  to   the  three  categories  of employees as  mentioned by  the Industrial  Court, but  that does not  mean that  the company  has to pay compensation to the Badli workmen in place of these categories of employees. [426D-Il]      Rashtriya Mill  Mazdoor Sangh  v.  Appollo  Mill  Ltd., []960] 3 SCR 231 distinguished.

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 768 (NL) of 1973      From the order dated 27.9.1972 of the Industrial Court, Maharashtra, Bombay in Appeal (IC) No. 133 of 1971.

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    G.B. Pai, O.C.. Mathur, S. Sukumaran, Miss Meera Mathur and D.N. Mishra for the Appellant. E      Naunit Lal and Jitendra Sharma for the Respondent.      The Judgment of the Court was delivered by      M.M. DUTT,  J. This  appeal by  special leave  has been preferred by  the appellant, Prakash Cotton Mills Pvt. Ltd., against the order dated September 27, 1972 of the Industrial Court, Maharashtra, Bombay directing payment of compensation by the  appellant to its employees and to some badli workmen for the  period from  March 24,  1964 to June 10, 1964 (both days inclusive)  during which  the mill of the appellant had been closed  down under  circumstances beyond control of the appellant.      The appellant  is a  Company engaged in the business of manufacture of  cotton textile  goods and  comes within  the purview of the provisions of the Bombay Industrial Relations Act, 1946  (hereinafter referred to as the ’Act’). It is not disputed that the mill of the appellant H 422 is recognised as an undertaking under section 11 of the Act. The respondent,  the Rashtriya  Mill Mazdoor  Sangh, is  the approved, registered  and representative union under section 14 of  the Act,  representing the  employees in  the  cotton textile industry within the limits of Greater Bombay.      It appears  that on  account of  the alleged failure of the appellant  to  pay  the  Central  Excise  duty,  certain detention orders  were passed  by the Assistant Collector of Central Excise  detaining the  goods of  the appellant  like cotton fabrics,  cotton yarn  and cotton  bales Lying in the premises of  the appellant’s  mill. As  a result of the said detention orders,  the goods  which were  essential for  the manufacturing process  in the  appellants mill were detained and, consequently, there was a disruption in the functioning of the appellant’s mill compelling the appellant to stop the working of  the mill. It is not necessary for us to state in detail the  proceedings that  were taken  by  the  appellant against the  said detention  orders, but  suffice it  to say that the  detention orders  were withdrawn and the appellant started the working of the mill after June 10,1964.      The respondent-Sangh  demanded that  the employees  who were affected  by the  said closure  from March  29, 1964 to June 10,  1964 should  be paid  their wages  for the  entire period.  As   the  said  demand  was  not  accepted  by  the appellant, the  respondent filed  an application  before the First Labour  Court, Bombay,  under  section  79  read  with section 78  of the  Act and  prayed for  the payment of full closure compensation  to the  employees affected  during the aforesaid period.      The application  of the  respondent was  opposed by the appellant. It  was contended on behalf of the appellant that as the  closure was  due to certain circumstances beyond the control of  the appellant,  the appellant  was not liable to pay any  compensation for  such closure.  The Labour  Court, after hearing  the parties,  by  its  order  dated  February 19,1968 held  that the  appellant was  liable to pay closure compensation to the employees affected at the rate of 50% of the total  basic wages  and dearness allowance on the ground that such  closure amounted to lay off within the meaning of section 2(kkk)  of the  Industrial Disputes  Act, 1947,  and that compensation  at the same rate as prescribed by section 25C of  the Industrial Disputes Act, namely 50% of the total wages would be payable to the employees affected by the said closure.      The appellant  preferred an  appeal  against  the  said order of the

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423 Labour Court  to  the  Industrial  Court,  Maharashtra.  The Industrial A  Court set  aside the order of the Labour Court and remanded  the matter  to that  Court for a fresh enquiry and finding  on the  question of  liability  and  extent  of compensation for  the period  of closure.  After remand, the Labour Court again held that the appellant was liable to pay closure  compensation  to  the  employees  affected  by  the closure of  the mill  from March 24,1964 to June 10, 1964 at the rate  of 50%  of the basic wages and dearness allowance. The appellant  again preferred  an appeal  to the Industrial Court, Maharashtra,  contending, inter alia, that it was not liable to  pay any  compensation on  account of closure that took place  under circumstances  beyond the  control of  the appellant and  that, in  any event,  the appellant  was  not liable to pay compensation to the Badli workmen. C      The  Industrial  Court  by  the  impugned  order  dated September 27,  1972 partly  allowed the  appeal and directed the appellant  to pay  closure compensation to the employees affected by  the closure  for the said period from March 24, 1964 to  June 10,  1964 at  the rate  of 50%  of their basic wages and dearness allowance and further directed that where the employees  had been  sick and  enjoyed sickness benefits for all  the days  or had been on privilege leave or enjoyed leave with  wages for  all the  days or  secured alternative employment for any period during the closure, such employees would not  be entitled  to any closure compensation for such days, but  in respect of such days half of the wages payable to Badli  workmen in  lieu of  the said  three categories of workmen would be paid to the Badli workmen equitably.      Being aggrieved  by the  said order  of the  Industrial Court, the present appeal has been filed by the appellant by special leave.      Mr. G.B.  Pai, learned  Counsel appearing  on behalf of the appellant,  submits in  the first  instance that  as the appellant had  closed down  the mill  in accordance with the provisions of  Standing orders  16 & 17, it is not liable to pay any  compensation. Standing  orders 16  & 17  provide as follows:           "16. The Company may, at any time or times, in the           event  of   a  fire,   catastrophe,  breakdown  of           machinery  or  stop  page  of  the  power  supply,           epidemic, civil  commotion or  other cause, beyond           the control  of the  Company, stop  any machine or           machines or  department or  departments, wholly or           partially  for  any  period  or  periods,  without           notice and without compensation in lieu of notice. 424                In the  event of a stoppage of any machine or           department under  this order during working hours,           the  operatives  affected  shall  be  notified  by           notices put  upon notice  boards in the department           concerned and at the time keeper’s office, as soon           as practicable,  when work  will  be  resumed  and           whether they  are to remain or leave the mill. The           period  of   detention  in   the  mill  shall  not           ordinarily exceed  one hour after the commencement           of the  stop page. If the period of detention does           not exceed  one hour, operatives so detained shall           not be  paid for  the period  of detention. If the           period of  detention in the mill exceeds one hour,           operatives  so   detained  shall  be  entitled  to           receive wages  for the  whole of  the time  during           which they are detained in the mill as a result of           the stoppage.  In the  case of  piece-workers, the

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         average daily  earnings  for  the  previous  month           shall be taken to be the daily wages.                17. Any  operative played-off  under order 16           shall not be considered as dismissed from service,           but as  temporarily unemployed,  and shall  not be           entitled to  wages during such unemployment except           to the  extent mentioned  in  order  16.  Whenever           practicable a  reasonable notice shall be given of           resumption  of  normal  work  and  all  operatives           played-off under order 16, who present them selves           for work,  when the  normal  working  is  resumed,           shall have prior right of reinstatement."      Relying upon  the provision of Standing order 16, it is urged by  the learned  counsel for the appellant that as the said Standing  order does not make any provision for payment of compensation on account of closure of the mill, when such closure was  due to  circumstances beyond the control of the Company, the Industrial Court was wrong in directing payment of compensation  to the  employees of  the appellant for the period in question including payment to the Badli workmen.      The question whether compensation should be paid to the Badli workmen  will  be  considered  by  us  later  in  this judgment. We  are, however,  unable to accept the contention of the  appellant that  as the  closure  had  been  made  in accordance with  the provisions  of the Standing orders 16 & 17 due to circumstances beyond the control of the appellant, the appellant  is not  liable to pay any compensation to its employees for  the period  of  closure.  Nor  are  we  in  a position to accept 425 the contention  of the  Counsel for  the appellant  that the application of  A  the  respondent-Sangh  before  the  First Labour Court  was not  maintainable as  the closure was made under the provisions of the Standing orders 16 & 17. In this connection, we may refer to the provision of sub-section (4) of section 42 of the Act which provides as follows:           "42(4). Any  employee or  a  representative  union           desiring a  change in  respect of  (i)  any  order           passed by  the employer  under standing orders, or           (ii) any  industrial matter  arising  out  of  the           application or  interpretation of standing orders,           or  (iii)   an  industrial   matter  specified  in           Schedule III,  except item  (5) thereof shall make           an application to the Labour Court and as respects           change desired  in any industrial matter specified           in item  (3) of  Schedule III,  to the  Industrial           Court:                Provided that  no such  application shall lie           unless the  employee or a representative union has           in the  prescribed manner  approached the employer           with a request for the change and no agreement has           been arrived  at in  respect of  the change within           the prescribed period."      Item No.  7 of Schedule III, referred to in sub-section (4), relates  to "Payment  of  compensation  for  closures". Further,  clause  (a)(iii)  of  section  78(1)  of  the  Act provides that  a Labour Court shall have power to decide any change made  by an  employer or  desired by  an employee  in respect of  an industrial  matter specified in Schedule-III, except item  (5) thereof,  and matters  arising out  of such change. In  view of  the provision  of  sub-section  (4)  of section  42   read  with  the  provision  of  section  78(1) (a)(iii),  it  is  manifestly  clear  that  an  employee  is entitled to  challenge the  refusal by  the Company  to  pay compensation for  the closure  and claim  such  compensation

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before the  Labour Court whether or not such closure was due to circumstances  beyond the  control  of  the  Company,  as enumerated in Standing order 16.      Such a contention, if accepted, will make the provision of section  42(4) and  that of  section 78(1)(a)(iii) of the Act  nugatory.   The  respondent-Sangh,  therefore,  in  our opinion, was  entitled to  make the  application before  the Labour Court claiming compensation for the period of closure even though  such closure  was made  in accordance  with the provisions of the Standing orders 16 & 17.      There  is   no  substance  in  the  contention  of  the appellant that as 426 the  closure   had  to  be  made  under  certain  compelling circumstances,  the   appellant  was   not  liable   to  pay compensation to  any of its employees. The Standing order 16 provides that such closure can be made without notice and no compensation would be required to be paid in lieu of notice. It is  clear  from  Standing  order  16  that  it  does  not contemplate that when there has been a closure on account of some unavoidable  circumstances, no compensation is required to be  paid to the employees. Under the circumstances, there is no  substance in  the contention of the appellant that as the closure had been made in accordance with Standing orders 16 &  17, it  is not  liable to  pay any  compensation.  The contention is, accordingly, overruled. We, therefore, uphold the order  of the  Industrial  Court  directing  payment  of compensation to the employees of the appellant for the above period of closure.      The next  question that  remains to  be  considered  is whether the  Industrial  Court  is  justified  in  directing payment of  compensation to some of the Badli workmen. It is not in  dispute that  Badli workmen  get work  only  in  the absence, temporary  or otherwise,  of regular employees, and that they do not have any guaranteed right of employment. Their names  are not  borne  on  the  muster  rolls  of  the establishment concerned.  Indeed, a  Badli  workman  has  no right to claim employment in place of any absentee employee. In any  particular  case,  if  there  be  some  jobs  to  be performed and  the employee concerned is absent, the Company may take  in a  Badli workman for the purpose. Badli workmen are  really   casual  employees  without  any  right  to  be employed. It  has been  rightly  submitted  by  the  learned Counsel for the appellant that the Badli employees could not be said  to have been deprived of any work to which they had no right  and, consequently,  they are  not entitled  to any compensation for  the closure.  Indeed, the Industrial Court has itself observed that to allow the claim of Badli workmen would be tantamount to penalising the appellant. In spite of the said  observation, the Industrial Court directed payment of compensation  to the  Badli workmen  in place  of certain categories of  regular employees.  We fail to understand how the Industrial  Court can  direct payment of compensation to the Badli  workmen when,  admittedly, such Badli workmen, as noticed already,  have no  right to  be employed.  It may be that the Company may not have to pay closure compensation to the three  categories of  employees,  as  mentioned  by  the Industrial Court,  but that  does not  mean that the Company has to  pay compensation  to the  Badli workmen  in place of these categories  of employees.  In this  connection, we may refer to section 25C of the 427 Industrial Disputes Act, 1947 which excludes a Badli workman or a  A casual  workman from  the benefit of compensation in the case of layoff.

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    In the  circumstances, although  we uphold the order of the Industrial  Court for  payment of  compensation  to  the regular employees  of the appellant at the rate fixed by it, we are unable to subscribe to the view that the compensation which would  have been  payable to  the three  categories of employees, should  be paid  to the  Badli workmen.  In other words, we  hold that  Badli workmen  have no  right to claim compensation on account of closure.      Mr. Naunit  Lal, learned Counsel appearing on behalf of the respondent-Sangh, has placed reliance upon the fact that in the Rashtriya Mill Mazdoor Sangh v. Apollo Mills Ltd ., l 1960’ 3  SCR 231,  this Court  awarded compensation to Badli workmen. Accordingly,  it is  submitted by  him that  it  is implied that  this Court must have taken the view that Badli workmen are  also entitled  to compensation  on  account  of closure under  Standing orders  16 &  17. We  are unable  to accept  the  contention.  The  question  whether  the  Badli workmen are  entitled to compensation or not, was not raised in Apollo  Mills case  (supra). Indeed, in that case, it has been observed  by this  Court that the case of Badli workmen does  not   appear  to  have  been  separately  raised  and, accordingly,  there   is  no   reason  not   to  award  them compensation. Thus  it appears  that nothing  was decided by this Court but, as no body challenged the right of the Badli workmen to  get compensation, this Court directed payment of compensation  to   them.  We  have,  however,  come  to  the conclusion that  the Badli  workmen are  not entitled to any compensation on  account of closure under Standing orders 16 & 17.      In the circumstances, the order of the Industrial Court in so far as it directs payment of compensation to the Badli workmen is set aside and, except that, the rest of the order of the Industrial Court is affirmed.      The appeal  is allowed  in part to the extent indicated above. In  view of  the facts and circumstances of the case, there will, however, be no order for costs. A.P.J.                               Appeal allowed in part. 428