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PETITIONER: THE CACHAR CHAH SRAMIK UNION SILCHAR, ASSAM

       Vs.

RESPONDENT: THE MANAGEMENT OF THE TEA ESTATE OF CACHAR,ASSAM

DATE OF JUDGMENT: 26/10/1965

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

CITATION:  1966 AIR  987            1966 SCR  (2) 344

ACT: Industrial Disputes-Standing Orders-cl. 8(a) (i) and  (iii), and  Cl.  9-Slump in  market-Lay  off;  Retrenchment-whether justified Amount of compensation; when can be gone into.

HEADNOTE: In pursuance of the recommendation of a Committee, appointed on  a  representation  by the Tea Producers  in  the  Cachar District  to  investigate  into  the  difficulties  of   the Industry as a result of steep fall in prices, a notification was  issued providing that there shall be no issue of  food- stuffs  at  concessional rates and no cash  compensation  as such  in lieu thereof, but the existing  dearness  allowance was  raised  temporarily for all estates  in  the  district. Thereupon  the  condition of the industry which was  on  the verge  of collapse improved; many gardens which  had  closed down started refunctioning and many of the workmen who  were retrenched  were  taken  back  in  employment.   Upon  rival contentions,  the  Industrial Tribunal held  that,  (i)  the financial  crisis  was genuine and was not a result  of  any manipulation and that the management was entitled under  cl. 8(a)(i)  and  (iii) of the Standing orders to  lay  off  the workmen  for  an indefinite period, (2) the  management  was also  entitled  to.  retrench workmen under  cl.  9  of  the Standing   orders,  and  (3)  even  if  the  lay   off   and retrenchment were bona fide and justified, the workmen  were entitled  to  a reasonable compensation,  and  the  Tribunal fixed the quantum of compensation.  In appeal to this  Court : HELD : (i) The lay off in the present case, was justified by cl.  8 (a) (i) and (iii) of the Standing orders.   The  last part  of cl. 8 (a) (i) which refers to "other  cases  beyond his control" would cover a case of sudden slump in the world market  and  consequent financial difficulties  of  the  tea industries [350 B] Workmen  of Dewan Tea Estate v. Their Management.  [1964]  5 S.C.R. 548, distinguished. (ii) The  management  had  also  the  additional  power   to retrench workmen under cl. 9 of the standing orders. [350 C] (iii)     In   the  present  case,  the  Tribunal  had   not

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committed  any error of law or legal principle  in  deciding the amount of compensation. [351 G] The  quantum of compensation is a matter primarily  for  the Tribunal to estimate and it is not open to this Court to  go into this question unless it is shown that the Tribunal  has committed any error of law or legal principle indeciding it. [352 B-C]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 969 of 1963. 345 Appeal  by special leave from the award dated  November  13, 1959  of  the Industrial Tribunal, Assam  in  Sub-References Nos.  25 to 39, 41, 43 to 45, 47 to 51, 54 to 57, 59 to  61, 63 to 67, 69 to 73, 76 and 91 of 1957 and 15 of 1958. C.   B. Agarwala, D. L.  Sen Gupta and K. P. Gupta, for  the appellant. M.   C.  Setalvad, Purnendu Choudhri, R. C. Dutta and  D.  N Mukherjee  for the respondents Nos. 1-5, 7, 9, 11,  14,  15, 21, 22 25-28, 31(1), 31(4), 31(6), 31(8), 31(10), to 31(14), 32, 33(2), 34, 35, 37-:40, 42(2)-42(10), 43 and 44. R.   C.  Dutta and D. N. Mukherjee, for respondents Nos.  8, 12 23 and 42(1). D.   N.  Mukherjee and D. N. Gupta,, for respondents Nos.  6 and 31(5). Dipak Chaudhry, for respondent No. 33(1). S. N. Mukherjee, for respondent No. 6(1). Sukumar  Ghose, for respondents Nos. 10, 13(2),  13(3),  19, 30,   31(2)(1),   31(5)(1),  31(6)(1),   31(14)(1),   35(1), 35(2)(1), 35(3)(1), 38(1)(1), 38(2)(1) and 43(11). B.   P. Maheshwari and S. Murthy, for respondents Nos. 8(1), 31(9)(1) and 35(6)(1). The Judgment of the Court was delivered by Ramaswami,  J.  This appeal is brought, by  special  leave,. against  the  award  of  the  Industrial  Tribunal,   Assam, published  in  Assam Gazette dated January  13,  1960,  vide Assam Government Notification No. 361/55/690 dated  December 29,  1959, in References Nos. 25 to 39, 41, 43 to 45, 47  to 51,  54  to 57, 59 to 61, 63 to 67, 69 to 73, 76 and  91  of 1957 and 15 of 1958. During the period from June, 1951 to March, 1953 the  entire tea industry in the Cachar district of Assam was subject  to an  unusual economic crisis.  There was a steep rise in  the cost of production due to increase of wages and introduction of  subsidised  rations.   In October,  1949,  a  Tripartite Conference  was held at Silchar and it was decided  in  this Conference that nearly 20 Tea Estates had become  uneconomic and should be allowed to convert food concessions into  cash at the rate of 0-4-6 per 34 6 head per day.  The  need for re-adjustment of  labour  force was also recognised in   this  Conference.   The   financial position of the Tea Estates   however  continued  to   cause anxiety to the Government.  On February 12, 1949, an Ad  hoc Committee  was  appointed  which  submitted  its  report  on September  13, 1950.  In this report the Committee  stressed the  inability  of the tea industry to bear  the  burden  of subsidised  food-stuffs.  The Committee further  found  that the increase in production cost was considerable and the tea estates  were  compelled  to  borrow  more  money  and   the Scheduled  Banks  were  finding it  difficult  to  meet  the demand.   The  Committee  found  that the yield  of  tea  in Cachar district     was 7 mds. per acre and in its view  the

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absolute minimum yield   which  could be economic in  Cachar was  8 mds. per acre.  In view of the critical condition  of the  tea industry in Cachar another Committee named as  ’The Cachar  Plantation  Committee’ was constituted on  April  4, 1.950. The report of the Committee was submitted on  January 4,   1951.    The  Committee  recommended   abandonment   of uneconomic   areas   under  tea  and  suggested   offer   of alternative employment to the surplus labour or provision of whet  land, if available.  The Committee also recommended  a seven  annas  conversion  rate  per  day  in  lieu  of  food concession  for  all estates and it was proposed  that  Gov- ernment should undertake to supply foodgrains to tea estates at  controlled wholesale rates.  The Committee also  reached the  finding that the average return to the shareholder  was 2-2/3%   and  the  remuneration  to  the  managerial   staff constituted  a  very  small fraction of the  total  cost  of production.  Even according to the labour representatives on this  Committee the labour costs represented 47 per cent  of the total cost of production of tea. In the year 1 951 there was a sudden recession in the  world price of tea.  Fluctuations commenced in the middle of June, 1 951 and there was a rather rapid decline in prices of  tea in November, 1951.  Cachar prices came down from 1-10-1  per lb. on October 30, 1951 to 1-2-11 per lb. on March 17, 1952. ’The prices of Cachar tea ranged between 0- 1 4-4 per lb. to 0-12-11  per lb. between June, and August 1952.  In May  the price  came  down to 0-12-3.  After June 1952 the  price  of Cachar  tea ranged between 1-1-0 to 0-12-2.  The decline  in prices  covered a long period and was unprecedented  in  its character.   To add to the difficulties of the tea  industry there  was a notification under the Minimum Wages Act  dated March  11,  1952 raising wages of labour  substantially.   A representation  was  made  to the  Government  of  India  by Associations  of  Tea  Producers in March  and  April,  1952 regarding the difficulties of the industry 347 as a result of the steep fall in prices.  The Government  of India  appointed  a  two-member  Committee  (known  as   the Official  Team) to investigate into the matter.  Before  the team  concluded its investigation the situation had taken  a critical  turn  and the tea industry in Cachar  was  on  the verge  of a total collapse.  By January 22, 1953, 82 out  of Ill  gardens  in  Cachar  district  had  closed  down.   The Official  team  recommended conversion of  food  concessions into  cash, arrangement for credit facilities through  suit- able   co-operative   banks   and   postponement   of    the implementation of the Plantation Labour Act for a period  of two  years.  As regards the question of the revision of  the Minimum  Wage the tea industry was asked to  make  necessary representation to the State concerned.  In its report  dated January  31, 1953 the Minimum Wage Committee  observed  that the  estates  in  Cachar  District  stood  on  an   entirely different  footing and expressed a fear that almost  all  of them  were likely to go out of business if the existing  low prices of tea continued for any length of time.  Even at the time of the Minimum.  Wage Notification a number of  estates were  known to be uneconomic and the increase in wage  rates resulting from the Notification. was a severe blow to  them. The hope that prices of tea would rise was completely belied and events so conspired that most of the, estates turned out to  be uneconomic.  The Committee further observed  that  it was  realised that labour could ill-afford to agree. to  any Suggestion  to  reduce  the existing minimum  wage  but  the situation   was  such  that  drastic  measures  had  to   be considered in, the interest of the laborers themselves.   It

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is to be noted also in this connection that Cachar labourers who  have  been settled on the estates for  generations  had alternative  sources  of income in common with  the  village folk   in   the  neighbourhood.   In   pursuance,   of   the recommendation  of the Committee there was a  revised  noti- fication dated February 9, 1953, under the Minimum Wages Act with regard to all the tea estates in the district of Cachar and  the  uneconomic tea estates in the Assam  Valley.   The notification provided that there shall be no issue of  food- stuffs  at  concessional rates and no cash  compensation  as such  in  lieu  thereof.  But with a view  to  mitigate  the hardship  of labour due to suspension of  food  concessions, the  existing dearness allowance was raised temporarily  for all  Cachar tea estates at the rate of one anna  for  adults and’  six pies for minors for each working day.   After  the issue of the revised notification the economic condition  of the  tea  estates  improved and  many  tea  estates  started refunctioning.  Many of the workmen who were retrenched were taken   back  in  employment  and’  others   were   provided alternative   employment  in  tea  estates  outside   Cachar district in the Assam Valley district or elsewhere. 348 The case of the Cachar Chah Sramik Union (hereinafter called -the  Union) before the Industrial Tribunal was  that  there was no genuine crisis which could justify retrenchment,  lay off or even reduction of working days in a week.   According to  the  Union the financial crisis was manipulated  by  the management  because  of the notification under  the  Minimum Wages  Act  issued  in  March,  1952.   The  object  of  the management  was  to  force the  Government  to  revise  that notification  and  at the same ,time to  crush  the  growing trade   union   movement.   It  was   contended   that   the introduction  of short working hours and  retrenchment  were unfair  labour practice.  The Union claimed compensation  on the  ,ground that the measures taken by the management  were wholly  unjustified.   It was alternatively  contended  that even  if  the  measures ’were justified,  the  workmen  were entitled   to   compensation  on  account   of   involuntary unemployment which they had suffered for no fault of theirs. The  opposite view was put forward by the management and  it was contended on its behalf that it was compelled to  reduce the number of working days and, in some cases, to resort  to retrenchment  because there was a real and sudden  financial crisis  in  the industry and the industry could not  be  run with profit without resort to these measures. Upon  these rival contentions the Industrial Tribunal  held, in  the first place, that the financial crisis  was  genuine and  was  not  a result of any  manipulation  and  that  the management  was entitled under cl. 8(a)(i) and (iii) of  the Standing  Orders  to lay off the workmen for  an  indefinite period.   The Tribunal further held that the management  was also  entitled  to  retrench  workmen under  cl.  9  of  the Standing  Orders.  The Tribunal considered that even if  the lay  off and retrenchment were bona fide and justified,  the workmen were entitled to a reasonable compensation and fixed the  quantum of compensation at the rate of one  week’s  pay for every four months of unemployment.  Finally the Tribunal held  that  the provision of khet land and  other  amenities like housing and medical facilities available to the workmen should  be taken to adequately represent one  week’s  wages. After  laying down these principles the Industrial  Tribunal examined  the  case of each individual  garden  and  awarded compensation  in  some  cases while refusing  to  grant  any compensation in others. On behalf of the appellant-Union Mr. Aggarwala submitted, in

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the,  first place, that cl. 8(a) of the Standing Orders  had no application to the present case and the Tribunal was  not justified  in holding that the financial  difficulty  facing the  tea  estates  was a matter beyond the  control  of  the management, and the workmen                             349 could  not, therefore, be laid off by the  management  under this clause.  The relevant portion of cl. 8 reads as follows :               "Closing  and  re-opening of sections  of  the               industrial   establishments,   and   temporary               stoppages   of  work,  and  the   rights   and               liabilities   of  the  employer  and   workmen               arising Therefrom.               (a)   (i)  The manager may at any time in  the               event  of  fire, catastrophe,  break  down  of               machinery,   stoppage  of  power  or   supply,               epidemic,  civil  commotion,  strike,  extreme               climate conditions or other causes beyond  his               control,  close  down either  the  factory  or               field work or both without notice.               (iii) In cases where workmen are laid off  for               short  periods on account of failure of  plant               or a temporary curtailment of production,  the               period  of  unemployment shall be  treated  as               compulsory  leave either with or without  pay,               as the case may be; when, however workmen have               to be laid off for an indefinitely long period               their services may be terminated after  giving               them due notice or pay in lieu thereof." In  support of this argument Mr. Aggarwala referred  to  the decision  of  this Court in Workmen of Dewan Tea  Estate  v. Their Management(1).  But the ratio of that decision has  no application to the present case in which the material  facts are  different.   In Workmen of Dewan Tea  Estate  v.  Their Management(1) there was no sudden slump in the price of  tea but  there was difficulty experienced by the  management  in obtaining  financial  facilities  from  banks.   It  was  an individual case of management experiencing financial  diffi- culty,  and it was, therefore, held by this Court  that  the stoppage  of financial assistance will not fall  within  the phrase  "stoppage of power or supply" in cl. 8(a)(i) of  the Standing Orders.  It was also pointed out in that case  that there  was no evidence produced on behalf of the  management to  substantiate  its plea of non-availability  of  finance. There  was  also no evidence on the record  to  justify  the assumption  of the management that the financial  difficulty faced  by it was beyond its control.  The material facts  in the  present case are different.  It has been found  by  the Industrial  Tribunal  that there was a sudden slump  in  the price  of  tea in the world markets, that the  recession  of prices of tea commenced in the middle of 1951 and  continued during the whole of 1952 for a (1)  [1964] 5 S.C.R. 548. 350 period of about 18 months.  The low level of prices  reached in  May,  1952, was unprecedented.  The  Tribunal  has  also found that the economic crisis of the tea industry in Cachar region was real and was caused by reasons beyond the control of  the management of the tea estates.  In our opinion,  the last  part  of  cl. 8(a)(i) which refers  to  "other  causes beyond  his control" would cover a case of sudden  slump  in the  world market and the consequent financial  difficulties of the tea estates.  We accordingly hold that the Jay off in the  present case was justified by cl. 8(a)(i) and (iii)  of

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the  Standing  Orders and the argument of Mr.  Aggarwala  on this aspect of the case is not warranted. As  regards retrenchment, we are satisfied that the  manage- ment  had also the additional power of  retrenching  workmen under cl. 9 of the Standing Orders which reads as follows :               "Termination of employment and notice  thereof               to be given by the employer and workmen.               Notice  of termination of employment,  whether               by Manager or by worker, shall be given  equal               to the wageperiod of the worker concerned.               Provided that-               (a)   The Manager may terminate the employment               of  a worker forthwith and pay his  wages  for               the  wageperiod  (equivalent  to  his  average               earnings  over the preceding period  of  three               months) in lieu of notice.               (b ) Notice of termination of employment shall               be necessary only in case of permanent workers               and  not in the case of outside  or  temporary               workers except insofar as is laid down in  any               agreement entered into between the Manager and               such outside or temporary workers.               (c)......................................               (d)  Where  the  employment of any  worker  is               terminated  the wages earned by him and  other               dues, if any, shall be paid before the  expiry               of  the  second  working  day  on  which   his               employment is terminated. The  Tribunal has found that there was no  victimisation  or unfair  labour  practice  or mala fide on the  part  of  the management in closing the gardens or in making the retrench- ment.   Mr.  Aggarwala on behalf of the  appellant  did  not challenge  the  finding of the Tribunal on this  point,  but learned Counsel 3 5 1 argued  that  even  if the  management  was  justified,  the workmen  were entitled to payment of compensation  according to the scale laid down in s. 25F of the Industrial  Disputes Act.  It was conceded by learned Counsel that Ch.  VA  which contains  s.  25F  came into force on October  24,  1953  by amending Act 43 of 1953 and the retrenchment in the  present case  was effected long before that date.  It was,  however, contended  that the principle embodied in s. 25F  should  be applied  in the present case.  It was said that by  enacting Ch.  VA the legislature was merely recognising the  practice of  payment of compensation by Labour Tribunals  before  the date  of the amendment and the legislature decided,  by  the amendment,  to  standardise the payment of  compensation  by prescribing a statutory rule in that behalf (See The  Indian Hume  Pipe Co. Ltd. v. The Workmen and another) (1).   There is  substance in the argument put forward on behalf  of  the appellant  and the Tribunal has also applied this  principle in  granting  compensation to the  retrenched  workmen  even though  the  case  was  not  attracted  by  s.  25F  of  the Industrial  Disputes  Act.  But the Tribunal has  taken  the view  that  one  week’s  wages  for  every  four  months  of unemployment  was adequate compensation.  The contention  of the  appellant  is that the compensation  should  have  been awarded  on the scale laid down in s. 25F of the  Industrial Disputes  Act.   We are unable to accept  this  argument  as correct.   As pointed out by this Court in The  Indian  Hume Pipe  Co.  Ltd. v. The Workmen, and  another(1),  Industrial Tribunals  had  been awarding compensation even  before  the enactment of s. 25F but there was no uniformity or certainty in the matter and in determining the, amount of compensation

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the Tribunals considered a variety of relevant factors.   It is  manifest that in determining the amount of  compensation the  Tribunals exercised complete discretion and took  into, account  whatever factors they considered relevant.  In  the present  case,  the  Tribunal has estimated  the  amount  of compensation  as one week’s wages for every four  months  of unemployment and it is not shown on behalf of the  appellant that in making this estimate the Tribunal has committed  any error of law or applied any wrong principle. As regards the compensation to retrenched workmen, the  Tri- bunal has stated in para 135 of the Award that the amenities granted   to   them  included  undisturbed   possession   of residential quarters and khet lands.  They were also granted medical  relief, fuel and other forest produce  even  during the  period  of suspension of work.  The  Tribunal  did  not attempt  to evaluate accurately the pecuniary value  of  all these concessions but it has expressed the- (1) [1960] 2 S.C.R. 32 at p. 42. Sup CI/66-9 3 5 2 view  that the value of these concessions would  be  roughly equal  to  one  week’s,  wages  for  every  four  months  of unemployment  and therefore the retrenched workmen were  not entitled to any compensation in cash apart from any right to wages in lieu of a week’s notice under cl. 9 of the Standing Orders.  On behalf of the appellant Mr. Aggarwala said  that the retrenched workmen were entitled to get a larger  amount of  compensation  than that awarded by  the  Tribunal.   The quantum of compensation is, however, a matter primarily  for the Tribunal to estimate and it is not open to this Court to go  into this question unless it is shown that the  Tribunal has  committed  any  error  of law  or  legal  principle  in deciding  it. As regards the workmen who were  subjected  to short  hours  of work, the Tribunal has observed  that  they have been granted ex gratia payments which were, in  several cases in excess of the total loss of wages by reason of  the revision  of  the  daily wages  under  the  notification  of February 9, 1953 under the Minimum Wages Act.  On behalf  of the  appellant  reference was made by Mr. Aggarwala  to  the deposition of Mr. R. M. Bipan at page 97, Part 1 that the ex gratia payment compensated merely, for the minimum wages cut and  not the loss to labour by the short workweek.  But  the Tribunal  having  examined the entire evidence  reached  the conclusion  that the ex gratia payment was in several  cases in  excess of total loss of remuneration on account  of  the notification  under  the Minimum Wages Act.  There  is  also undisputed evidence in this case to show that even in normal times  short  hours had to be imposed by  employers  upto  a period  of three days in a week in Cachar tea  gardens.   In this  state of facts it is not possible for us to hold  that the  Tribunal  was in error in holding that  the  ex  gratia payment  made by the management was sufficient  compensation to the workmen who were not retrenched outright but who were put on short hours of work. For the reasons expressed we hold that there is no merit  in this  appeal  which  is accordingly dismissed.   We  do  not propose to pass any order as to costs. Appeal dismissed. 353