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PETITIONER: HARIPRASAD SHIVSHANKAR SHUKLA

       Vs.

RESPONDENT: A.D. DIVIKAR (With Connected Appeal)

DATE OF JUDGMENT: 27/11/1956

BENCH: DAS, S.K. BENCH: DAS, S.K. DAS, SUDHI RANJAN (CJ) BHAGWATI, NATWARLAL H. AIYYAR, T.L. VENKATARAMA MENON, P. GOVINDA

CITATION:  1957 AIR  121            1957 SCR  121

ACT: Industrial  Dispute-’Retrenchment’, Meaning  of-If  includes termination  of service on bona fide closure of industry  or change  of ownership or management-Construction of  statute- Industrial  Disputes  Act (XIV Of 1947), as amended  by  Act XLIII Of 1953, ss. 2 (00), 25F.

HEADNOTE: The word ’retrenchment’ as defined in s. 2(oo) and the  word retrenched’ in S. 25F of the Industrial Disputes Act,  1947, as amended by Act XLIII of 1953, have no wider meaning  than the  ordinary accepted connotation of those words  and  mean the discharge of surplus labour or staff by the employer for any  reason  whatsoever,  otherwise  than  as  a  punishment inflicted by’ way of disciplinary action, and do not include termination  of  services  of all workmen  on  a  bona  fide closure of industry or on change of ownership or  management thereof. Pipraich  Sugar Mills Ltd. v. Pipraich Sugar  Mills  Mazdoor Union [1956] S.C.R. 872, followed. Burn  & Co., Calcutta v. Their Employees [1956] S.C.R.  781, referred to. The  provisions  of  the Act have in view  an  existing  and continuing  industry  and  cls.  (a), (b)  and  (c)  of  the definition only exclude certain categories of termination of service  from within its ambit but do not indicate what  are to be included therein. The  word ’retrenchment’ has acquired no special meaning  so as to include a discharge of workmen on a bona fide  closure of  an  industry, as a result of  certain  Labour  Appellate Tribunals  awarding compensation to workmen on such  closure as  an  equitable  relief for a  variety  of  reasons.   The intention  of the legislature in enacting S. 25F of the  Act appears to have been to simplify and standardise the payment of compensation for retrenchment, as ordinarily  understood, on  the  basis of the length of service  of  the  retrenched workman. The  Hyderabad Vegetable Oil Products Ltd. v. Their  Workers [1950]   2   L.L.J.  1281,  Employees  of   Messrs.    India

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Reconstruction  Corporation  [1953] L.A.C.  563  and  Kandan Textiles  Ltd.  v.  Their  Workers  [1954]  2  L.L.J.   249, considered. Section  25FF,  which  was  inserted into  the  Act  by  the amending  Act  of 1956, is not retrospective  and  does  not apply to the instant 16 122 cases,  and  the  object  the legislature  had  in  view  in enacting  the  same was to partially nullify the  effect  of certain  judicial  decisions  relating to the  effect  of  a change of ownership or management and it was not intended to be a parliamentary exposition of the pre-existing law. The  language of item Io of the third and fourth  schedules, engrafted  into the Act by S. 29 Of the Industrial  Disputes (Amendment   and   Miscellaneous  Provisions)   Act,   1956, indicates  that  the  legislature  envisaged  a  distinction between  retrenchment  and closure and the former  does  not include the latter. Although  on  such construction, S. 25F applies only  to  an existing industry and s. 25FF becomes largely redundant,  no question of any hardship arises as the judicial decisions on the  basis  of  which S. 25FF was  enacted  were  themselves incorrect and must be overruled. In construing a parliamentary statute the time when and  the circumstances  in  which it was enacted may  be  taken  into consideration  and  the general principle  of  parliamentary exposition   or   subsequent  legislation  as  an   aid   to construction  of prior legislation, can have no  application where  the subsequent statute itself was based on  incorrect assumptions   and   judicial   decisions   based   on   such assumptions. Great Northern Railway v. United States of America, 315 U.S. 262  and Ormond Investment Co. Limited v. Betts [1928]  A.C. 143, referred to. If  the  other  conditions  of  the  definition  clause  are fulfilled,  the  transfer of ownership or management  of  an industry and its closure stand on the same footing so far as the  definition  clause is concerned,  notwithstanding  that there  is a distinction in fact between the two;  there  is, however,   no  retrenchment  within  the  meaning   of   the definition  clause  unless there is a discharge  of  surplus labour  or staff by the employer in a  continuing  industry, for  any reason whatsoever, otherwise than as  a  punishment inflicted by way of disciplinary action. Consequently,  in  the  instant  cases,  where  in  one  the services of all the workmen were terminated by the  employer on  a real and bona fide closure of the industry and in  the other  on  a change of ownership, such termination  did  not amount to retrenchment within the meaning Of S. 2(00) or  s. 25F of the Act and the appellants were not bound to pay  any compensation under cl. (b) Of S. 25F of the Act.

JUDGMENT: CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos. 103 &  105 of 1956. Appeal  from the judgment and order dated January 24,  1955, of  the Bombay High Court in Special Civil  Application  No. 2546 of 1954. 123 N.   A.  Palkiwala  and J. B. Dadachanji, S. N.  Andley  and Rameshwvar  Nath, for appellants in Civil Appeal No. 103  of 1956

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M.   C.   Setalvad,  Attorney  General  for  India,  C.   K. Daphtary, Solicitor General for India, Porus A.   Mehta  and R. H. Dhebar, for respondents. S.   M. Bose, Advocate-General of West of Bengal,N.    A. Palkiwala,  J.  B. Dadachanji, S. N.  Andley  and  Rameshwar Nath, for the appellant in Civil Appeal No. 105 of 1956. Rajini Patel, M. V. Jayakar and I. N. Shroff, for respondent No. 1. Porus A. Mehta and R. H. Dhebar, for respondents Nos. 4 & 5. 1956.  November 27.  The Judgment of the Court was delivered by S.   K.  DAS J.-These two appeals, brought  on  certificates granted by the High Court of Bombay, raise common  questions of law and for that reason, have been heard together.   This judgment will govern them both.             CIVIL APPEAL No. 105 OF 1956. In  Civil Appeal No. 105 of 1956 the main appellant  is  the Barsi  Light Railway Company Limited, Kurduwadi, within  the State  of Bombay (hereinafter called the  Railway  Company). The principal respondent is the President of the Barsi Light Railwaymen’s  Union,  respondent No. I to the  appeal.   The General Manager, Central Railway, Bombay, and the Secretary, Railway Board, New Delhi, are respondents Nos. 4 and 5.  The facts,  so  far as they are relevant for  our  purpose,  are these.  Under an agreement dated August 1, 1895, between the Secretary  of  State for India in Council  and  the  Railway Company,  the  latter constructed, maintained and  worked  a light  railway between Barsi Town and Barsi Road Station  on the   railway  system,  known  then  as  the  Great   Indian Peninsular  Railway.  It is not necessary to state here  the various  clauses  of the aforesaid  indenture  of  agreement except to mention 124 that  it  contained a clause under which  the  Secretary  of State  could  purchase and take over the  undertaking  after giving  the  Railway Company not less than  twelve  calendar months’  notice  in writing of the intention so to  do.   On December  19,  1952,  a  notice was  given  to  the  Railway Company, for and on behalf of the President of India, by the Director  of  the  Railway  Board to  the  effect  that  the undertaking  of the Railway Company would be  purchased  and taken over as from January 1, 1954.  The notice stated inter alia: "The  President  of India hereby gives this  notice  to  the Company of the determination of the-original contract of the 1st day of August, 1895, and the contract of the 26th day of August, 1902, between the Secretary of State in Council  and the  Barsi  Light  Railway  Company Ltd.,  and  of  all  the contracts  supplemental  thereto, at the  expiration  of  12 calendar  months  next  after  the  current  month  and  the contracts  shall terminate accordingly on the expiration  of 12  calendar  months next after the current  month  and  the President  of  India will on the 1st day of  January,  1954, purchase  and  take over the entire railway  system  of  the Company  including  all the extension and,all  the  railways together  with all its rolling stock, machinery,  equipments buildings  and  property etc., and together with  all  other things,  stores and fixtures etc., as specified and  in  the manner  provided  in clause 43 of the Indenture of  the  1st August, 1895, and in clause 63 of the Indenture of the  26th August, 1902." On November 11, 1953, the Railway Company served a notice on its workmen intimating that as a result of the Government of India’s  decision to terminate the contract of  the  Railway Company and take over the railway from January 1, 1954,  the

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services of all the workmen of the Railway Company would  be terminated  with effect from the afternoon of  December  31, 1953.   The  notice further stated that  the  Government  of India intended to employ such of the staff of the Company as would  be  willing  to serve on the  railway  on  terms  and conditions which were to be notified later.  On December 15, 1953, the Railway Board intimated the terms and conditions 125 on  which  the staff of the Railway Company would  be  taken over  and employed by Government.  The letter by  which  the terms and conditions were communicated enclosed three forms- one   for  clerical  and  like  categories,  a  second   for categories  of staff needing training or  refresher  course, and a third for workshop staff and other tradesmen requiring trade-testing.   In substance, the new terms and  conditions as  embodied in the letter and the three forms  stated  that the  service  of the staff employed by Government  would  be treated  as continuous for certain specific  purposes  only, such  as, contribution to provident fund, leave, passes  and privilege ticket orders, educational and medical  facilities etc.   It  was  made clear,  however,  that  the  Government Railway  rules  applicable to other staff appointed  on  the same  day would be applicable to the ’staff of  the  Railway Company,  and  previous service under  the  Railway  Company would  not count for the purpose of seniority.   It  appears from  the  statement of respondents 4 and 5  that  when  the undertaking  was  actually taken over on  January  1,  1954, about 77 per cent. of the staff of the Railway Company  were re-employed  on the same scales of pay, about 23  per  cent. were re-employed on somewhat lower scales of pay though  the pay  which they actually drew at the time  of  re-employment was  not affected; only about 24 of the former employees  of the Railway Company declined service under the Government. Soon   after,   respondent  No.  I  filed   some   sixty-one applications  on  behalf  of the erstwhile  workmen  of  the Railway  Company  under s. 15 of the Payment of  Wages  Act, 1936,  for payment of retrenchment compensation to the  said workmen  under cl. (b) of a. 25F of the Industrial  Disputes Act,  1947 (hereinafter called the Act).   The  applications were made to respondent No. 3, Civil Judge (Junior Division) Madha,  who was the relevant authority under the Payment  of Wages Act, 1936. These applications were contested by -the present appellants and  several issues were framed.  Three of the issues  were- (1) whether the authority under the 126 Payment  of Wages Act, 1936, had jurisdiction to  deal  with and  adjudicate on the claim of  retrenchment  compensation; (2)  whether  the erstwhile workmen were entitled  to  claim compensation under clause (b) of a. 25F of the Act ; and (3) whether they had been retrenched’ by their former  employer, the  present  appellants, on December 31, 1953,  within  the meaning  of the expression ’retrenchment’ in the  Act.   The Civil Judge of Madha found against the workmen on issue  No. I  but in their favour on the other two issues.  By  consent of  parties,  the  aforesaid findings given on  one  of  the applications  (Miscellaneous  Application No.  27  of  1954) governed  the other applications also, and the  applications were dismissed as a result of the finding on the question of jurisdiction. Respondent  No.  I then moved the High Court  of  Bombay  in Civil  Application No. 2546 of 1954 and prayed for writs  or appropriate directions under the provisions of Arts. 226 and 227 of the Constitution, for quashing the order of dismissal passed  by respondent No. 3, the Civil Judge of  Madha,  and

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directing  the latter to dispose of the applications  before him   on  merits.   In  the  High  Court  the  question   of jurisdiction  of  the authority under the Payment  of  Wages Act,  1936, was not argued, because learned counsel for  the Railway  Company rightly pointed out that assuming that  the said  authority had jurisdiction to deal with the  claim  of the  workmen, the controversy between the parties would  not come to an end by a decision on the question of jurisdiction only;  because the Railway Company still contended that  the workmen had not been ’retrenched’ within the meaning of  the Act  and were not entitled to claim compensation  under  al. (b)  of s. 25F.  Thereupon, both parties agreed in the  High Court that Civil Application No. 2546 of 1954 should not  be restricted  to  the question of jurisdiction but  should  be decided on merits; that is, on the validity or otherwise  of the claim of the erstwhile workmen to compensation under cl. (b)  of s. 25F on the termination of their services  by  the Railway  Company on December 31, 1953.  Learned counsel  for the Railway Company agreed and undertook on behalf of 127 his  client  to  accept whatever finding was  given  by  the High  Court on merits, subject to an appeal to  this  Court. The  High  Court  (Chagla C. J. and Dixit J.)  held  by  its judgment and order dated January 24, 1955, that the  workmen were  entitled to claim compensation under clause (b) of  s. 25F  of  the Act and the Railway Company was liable  to  pay such  compensation to them.  It is from that  decision  that Civil Appeal No. 105 of 1956 has been brought.             CIVIL APPEAL No. 103 OF 1956. The  facts in this appeal are somewhat different.  The  main appellant  is  Shri  Dinesh  Mills  Ltd.,  Baroda,  and  the principal  respondent  is the District  Labour  Officer  and Inspector  under the Payment of Wages Act, 1936, at  Baroda. The  appellant Company was running a woollen mill at  Baroda for several years and had in its employ at the relevant time 450 workmen and 20 clerks.  The work was done in shifts, day and night.  On or about October 31, 1953, the appellant  put up a notice declaring its intention to close down the entire mills  from  December 1, 1953.  On  November  19,1953,  this notice was withdrawn and another notice was put up declaring the  intention  of the appellant to close  down  the  second shift  with effect from December 20, 1953.  A  third  notice was  put up saying that the second shift would be closed  on December 20, 1953, as notified earlier, and the first  shift would  be closed as from January 8, 1954.  A similar  notice was put up on the same date terminating the services of  the clerks with effect from January 19,1954.  It was not disput- ed  that though the steps in the process of closure  of  the business  of  the  appellant Company  were  staggered,.  the process  was really one, and as a result of the closure  the services  of all 450 workmen and 20 clerks were  terminated. The  appellant  Company  claimed that  the  closure  of  its business was bona fide, being due to heavy losses  sustained by the Company. On  April  27,  1954,  the  principal  respondent  made   an application  to  the relevant authority (respondent  No.  3) under the Payment of Wages Act, 1936, claiming  retrenchment compensation for the workmen of the 128 appellant  under  el.  (b)  of  s.  25F  of  the  Act.   The application was contested by the appellant Company, and here again  the same questions of jurisdiction of  the  authority under the Payment of Wages Act, 1936, to deal with the claim and  the maintainability of the claim under el. (b)  of  is. 25F of the Act arose for decision.  The authority under  the

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Payment  of Wages Act decided against the erstwhile  workmen on all the important issues.  The respondent then moved  the High  Court of Bombay for appropriate writs  or  directions, and  the  High court (Bavdekar and Shah JJ.) held  that  the authority  under  the  Payment  of  Wages  Act,  1936,   bad jurisdiction   to  deal  with  the  claim  of   retrenchment compensation; on the merits of the claim, the learned Judges felt bound to accept the decision of the Bench (Chagla C. J. and   Dixit  J.)  in  the  case  of  the  Railway   Company. Accordingly, the order of respondent No. 3 was set aside and he was directed to dispose of the application before him  in accordance  with law.  Civil Appeal No. 103 of 1956 is  from the  aforesaid  decision of the High Court  dated  July  25, 1955. It  should be apparent from the facts stated  above,  though they  are a little different with regard to the two  appeals before us, that a common question "of law emerges therefrom, namely,  whether the claim of the erstwhile workmen-both  of the  Railway  Company and of Shri Dinesh  Mills  Limited--to compensation  under cl. (b) of s. 25F of the Act is a  valid claim in law.  The second question, that of jurisdiction  of the authority under the Payment of Wages Act, 1936, is not a live  question  in Civil Appeal No. 105 of  1956  after  the agreement  of  parties in the High Court.   It  does  arise, however,  in  Civil  Appeal No. 103 of  1956.   But  learned counsel for the appellants in that appeal has been ingenuous enough  to state that he does not wish to take our  time  by addressing us on that question-not because he considers that the question of jurisdiction is devoid of all merit, but  by reason  of the fact that under the provisions of s. 25 1  of the Act the claim for retrenchment compensation, if found to be legally valid, can still be enforced against the 129 appellants.    Section   19  of  the   Industrial   Disputes (Amendment and Miscellaneous Provisions) Act, 1956, purports to repeal s. 25 I of the principal Act, but that section has not  yet  been brought into force with the result  that  the provisions  of s. 25 I are still available for the  recovery of   retrenchment   compensation.   Learned   counsel   has, therefore, submitted before us that these appellants will be content  to abide by our decision on the principal  question in  these two appeals, namely, the validity or otherwise  of the claim for retrenchment compensation under cl. (b) of  s. 25F of the Act. The Act which has been in force since April 1, 1947, has bad a  plexus of amendments, and some of the  recent  amendments have been quite extensive in nature.  Section 25F occurs  in Ch.   VA of the Act; that chapter dealing with ’lay off  and retrenchment’ was inserted by an amending Act (Act XLIII  of 1953) in 1953.  Section 25F is in these terms: "No  workman  employed  in  any industry  who  has  been  in continuous  service  for  not less than one  year  under  an employer shall be retrenched by that employer until- (a)the workman has been given one month’s notice in  writing indicating  the reasons for retrenchment and the  period  of notice has expired, or the workman has been paid in lieu  of such notice, wages for the period of the notice: Provided  that  no  such notice shall be  necessary  if  the retrenchment  is under an agreement which specifies  a  date for the termination of service; (b)the  workman has been paid, at the time of  retrenchment, compensation  which  shall be equivalent  to  fifteen  days’ average pay for every completed year of service or any  part thereof in excess of six months; and (c)notice  in  the  prescribed  manner  is  served  on   the

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appropriate Government." In the first part of the provisions of the section, the word used  is’ retrenched’ and in cls. (a) and (b) the word  used is ’retrenchment’.  Obviously, they have 17 130 the  same  meaning, the only difference being  that  in  the first  part the word used is a verb and in the  clauses  the word  is used as a noun.  It is obvious that  to  appreciate the  true  scope  and  effect  of  s.  25F,  we  must  first understand what is meant by the expression ’ retrenched ’ or ’retrenchment’.   By  the same amending Act of  1953  a  new definition  was  added to the definitions in s. 2,  being  a definition of the word ’ retrenchment’ in el. (oo) of s.  2. The definition is in these terms: Section  2(oo)-" retrenchment’ means the termination by  the employer  of  the  service  of  a  workman  for  any  reason whatsoever, otherwise than as a punishment inflicted by  way of disciplinary action, but does not include- (a)  voluntary retirement of the workman; or (b)  retirement  of  the  workman on  reaching  the  age  of superannuation  if  the contract of employment  between  the employer and the workman concerned contains astipulation  in that behalf; or (c)termination  of the service of a workman on the  groundof continued ill-health." Leaving out the excluding sub-cls. (a), (b) and (c) for  the time  being-these sub-clauses not being directly  applicable to  the cases under our -consideration-the  definition  when analysed   consists   of  the   following   four   essential requirements-(a)  termination of the service of  a  workman; (b)  by  the employer; (c) for any  reason  whatsoever;  and (d)otherwise  than  as  a punishment  inflicted  by  way  of disciplinary   action.   It  must  be  conceded   that   the definition  is in very wide terms.  The  question,  however, before us is-does this definition merely give effect to  the ordinary, accepted notion of retrenchment in an existing  or running industry by embodying the notion in apt and  readily intelligible words or does it go so far beyond the  accepted notion  of  retrenchment as to include  the  termination  of services  of  all workmen in an industry when  the  industry itself   ceases  to  exist  on  a  bona  fide   closure   or discontinuance  of  his business by the employer  9  Learned counsel for the appellants contend that the 131 first  gives  the correct meaning of the  definition,  while learned  counsel for the principal respondents urge that  by reason of the wide words used in the definition, the  second gives the correct meaning of the expression retrenchment’. There  is  no  doubt that when the  Act  itself  provides  a dictionary  for  the  words used, we  must  look  into  that dictionary first for an interpretation of the words used  in the  statute.   We  are  not  concerned  with  any  presumed intention  of  the legislature; our task is to  get  at  the intention  as  expressed  in  the  statute.   Therefore,  we propose first to examine the language of the definition  and see  if the ordinary, accepted notion of  retrenchment  fits in,  squarely and fairly, with the language used.   What  is the ordinary, accepted notion of retrenchment in an industry ? We have had occasion to consider this question in Pipraich Sugar Mills Ltd.v.  Pipraich  Sugar Mills Mazdoor Union  (1) where we observed:"But retrenchment connotes in its ordinary acceptation that the business itself is being continued  but that  a  portion  of  the  staff  or  the  labour  force  is discharged as plusage and the termination of services of all

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the  workmen  as  a result of the closure  of  the  business cannot therefore be properly described as retrenchment."  It is true that these observations were made in connection with a  case  where the retrenchment took place in 1951,  and  we specially   left   open   the  question   of   the   correct interpretation  of the definition of ’retrenchment’ in s.  2 (oo)  of  the  Act.  But the  observations  do  explain  the meaning of retrenchment in its ordinary acceptation.  Let us now see how far that meaning fits in with the language used. We have referred earlier to the four essential  requirements of  the definition, and the question is, does  the  ordinary meaning  of retrenchment fulfil those requirements ? In  our opinion,  it  does.  When a portion of the staff  or  labour force   is  discharged  as  surplusage  in  a   continuing,; business,  there  are (a) termination of the  service  of  a workman; (b) by the employer; (c) for any reason whatsoever; and (d) otherwise than as a punishment (1)  [1956] S.C.R. 872, 132 inflicted by way of disciplinary action.  It has been argued that  by excluding bona fide closure of business as  one  of the reasons for termination of the service of workmen by the employer,   we  are  cutting  down  the  amplitude  of   the expression ’for any reason whatsoever’ and reading into  the definition  words which do not occur there.  We  agree  that the adoption of the ordinary meaning gives to the expression ’for  any reason whatsoever’ a somewhat narrower scope;  one may  say that it gets a color from the context in which  the expression  occurs; but we do not agree that it  amounts  to importing  new words in the definition.  What after  all  is the  meaning of the expression ’for any reason  whatsoever’? When a portion of the staff or labour force is discharged as surplusage   in  a  running  or  continuing  business,   the termination of service which follows may be due to a variety of reasons; e.g., for economy, rationalization in  industry, installation  of  a  new  laborsaving  machinery  etc.   The legislature   in  using  the  expression  ’for  any   reason whatsoever’ says in effect: "It does not matter why you  are discharging  the surplus; if the other requirements  of  the definition  are fulfilled, then it is retrenchment." In  the absence  of  any  compelling  words  to  indicate  that  the intention  was  even to include a bona fide closure  of  the whole business, it would, we think, be divorcing the expres- sion  altogether  from its context to give it  such  a  wide meaning  as  is  contended for by learned  counsel  for  the respondents.   What  is being defined is  retrenchment,  and that  is the context of the definition.  It is true that  an artificial  definition may include a meaning different  from or  in excess of the ordinary acceptation of the word  which is  the  subject  of  definition; but  there  must  then  be compelling words to show that such a meaning different  from or  in excess of the ordinary meaning is  intended.   Where, within  the  framework of the ordinary  acceptation  of  the word,  every single requirement of the definition clause  is fulfilled,  it  would  be wrong to take  the  definition  as destroying the essential meaning of the word defined. There  is  another way of looking at the  problem.   Let  us assume. that the definition clause is so worded that 133 the requirements laid down therein are fulfilled, whether we give  a restricted or a wider meaning: to that extent  there is an ambiguity and the definition clause is readily capable of more than one interpretation.  What then is the  position ? We must then see what light is thrown on the true view  to be taken of the definition clause by other provisions of the

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Act or even by the aim and provisions of subsequent statutes amending  the Act or dealing with the  same  subject-matter. In Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union  (1) it was observed: "It cannot be doubted  that  the entire scheme of the Act assumes that there is in  existence an  industry,  and then proceeds onto  provide  for  various steps  being taken, when a dispute arises in that  industry. Thus,  the  provisions  of the  Act  relating  to  lock-out, strike, lay-off, retrenchment, conciliation and adjudication proceedings, the period during which the awards are to be in force, have meaning only if they refer to an industry  which is  running  and not one which is closed." In  Burn  &  Co., Calcutta v. Their Employees (2) this Court observed that the object of all labour legislation was firstly, to ensure fair terms  to  the workmen, and secondly,  to  prevent  disputes between employers and employees so that production might not be adversely affected and the larger interests of the public might  not  suffer.  It was then observed  in  The  Pipraich Sugar  Mills’ case (1) (supra), " Both these  objects  again can  have  their fulfillment only in an existing and  not  a dead industry.  The view therefore expressed in Indian Metal and Metallurgical Corporation v. Industrial Tribunal, Madras (3)  and K. M. Padmanabha Ayyar v. The State of Madras  (4), that  the industrial dispute to which the provisions of  the Act  apply  is  only one which arises  out  of  an  existing industry is clearly correct.  Therefore, where the  business has been closed and it is either admitted or found that  the closure  is  real and bona fide, any  dispute  arising  with reference  thereto would, as held in K. M. Padmanabha  Ayyar v. The State of Madras (4), fall outside the (1)  [1956] S.C.R. 872. (2)  [1956] S.C.R. 781. (3)  A.I.R. 1953 Madras 98. (4)  [1954] 1 L.L.J. 469. 134 purview  of the Industrial Disputes Act." In view  of  these observations,  it would be against the entire scheme of  the Act  to give the definition clause relating to  retrenchment such  a  meaning  as would  include  within  the  definition termination  of service of all workmen by the employer  when the  business itself ceases to exist.  Learned  counsel  for the appellants in the two appeals have pointed out that  the definition  clause is inartistically drawn up  and  sub-cls. (a)  and (b) of s. 2 (oo) are not easily  intelligible  with reference  to  one  of the  essential  requirements  of  the definition,  namely, that the termination of service of  the workman must be by the employer.  It has been submitted that voluntary retirement of the workmen cannot be termination of service  by  the employer.  We do not, however,  think  that sub-cls.  (a),  (b) and (c) are conclusive of  the  question before us; they, no doubt, apply to a running or  continuing business  only,  but  whether inserted by  way  of  abundant caution or on account of excessive anxiety for clarity, they merely exclude certain categories of termination of  service from  the ambit of the definition.  They do not  necessarily show what is to be included within the definition. Two  other cognate sections to which our attention has  been drawn  are  ss. 25G and 25H.  They are  applicable,  clearly enough,  to a running business only.  The learned  Attorney- General,  who has appeared for the principal  respondent  in one  of the appeals, has pointed out that if the  definition clause  covers  the  case of termination  of  service  in  a continuing  business  as also termination of  service  on  a closure  of business, the circumstance that ss. 25G and  25H provide for some instances of retrenchment only is no ground

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for  holding  that  they  exhaust  all  possible  cases   of retrenchment  or  that s. 25F must also be restricted  to  a running business only.  We agree that if it is conceded that the definition clause includes cases of closure of business, no  difficulty  is presented by ss. 25G and  25H.   But  the fundamental question at issue is, does the definition clause cover cases of closure of business, when the closure is real and  bona  fide?   The  point  to  be  emphasised  in   that connection is that there is no 135 provision  (except perhaps s. 25FF inserted in 1956  by  Act XLI of 1956 to which we shall presently refer) which can  be said  to bring a closed or dead industry within the  purview of  the  Act.  The provisions of the Act,  almost  in  their entirety, deal with an existing or continuing industry.  All the  provisions  relating to lay off in ss. 25A to  25E  are also inappropriate in a dead business. Learned  counsel  for the appellants have also  adverted  to some  surprising  results  which  would  follow  the   wider interpretation  of  the definition clause.  If  an  employer dies  and  his  heirs  carry on the  business  or  there  is compulsory  winding  up  of a company  and  the  company  is reconstructed  or  a business is converted  into  a  limited company, or a new partner is taken into the business,  there is in law a termination of service by a particular  employer and a new employer appears on the scene; will the workmen in such circumstances be entitled to retrenchment  compensation though  they  continue  in service as before  ?  There  must indeed be found very compelling reasons in the words of  the statute before it can be held that such was the intention of the  legislature.  We think that no such compelling  reasons are  available  from  the  provisions of  the  Act;  on  the contrary,   they   point  really  one   way-that   the   Act contemplates  an existing or continuing industry and  not  a dead industry. This  brings  us  to two other  arguments  advanced  by  the learned Attorney-General.  One is that before the  enactment of the amending Act of 1953 (Act XLIII of 1953) retrenchment had  acquired a special meaning meaning which  included  the payment  of compensation on a closure of business,  and  the legislature  gave effect to that meaning in  the  definition clause and by inserting s. 25F.  The second argument is that s. 25FF inserted in 1956 (Act XLI of 1956) is ’parliamentary exposition"  of the meaning of the definition clause and  of s. 25F.  We shall now consider these two arguments. As  to  the first argument, a large number of  decisions  of Industrial or Lpobour Appellate Tribunals have 136 been  placed  before us.  The learned  Attorney-General  has relied  particularly  on  three  decisions:  The   Hyderabad Vegetable  Oil Products Ltd. v. Their Workers(1);  Employees Of Messrs.  India Reconstruction Corporation Ltd.,  Calcutta v.   Messrs.    India   Reconstruction   Corporation   Ltd., Calcutta(") ; Kandan Textiles Ltd. v. Their Workers(3 ). The decision  in  Employees  of  Messrs.   India  Reconstruction Corporation Ltd., Calcutta v. Messrs.  India  Reconstruction Corporation  Ltd.,  Calcutta(2)  Was  considered  by  us  in Pipraich  Sugar Mills Lid. v. Pipraich Sugar  Mills  Mazdoor Union(4)where  we  said that we were unable  to  accept  the observation   of  the  Tribunal  that,  in   substance   the difference  between closure and normal retrenchment was  one of  degree  only.  We are aware that in  some  cases  Labour Appellate  Tribunals  awarded retrenchment  compensation  on closure of business, even when the closure was bona fide  or justified.  We expressed our dissent from those decisions in

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the  Pipraich Sugar Mills case(4).  When  closely  examined, none  of  those decisions show, however, that  discharge  of workmen  on bona fide closure of business was held  to  fall within the meaning of normal retrenchment.  In The Hyderabad Vegetable Oil Products Ltd. v.. Their Workers(1) the grounds on  which compensation was allowed were (1)  involuntary  or forced  unemployment  of  the workmen, (2)  absence  of  any social  security scheme like unemployment insurance and  (3) financial  position  of  the company.   On  similar  grounds compensation  was awarded in Kandan Textiles Ltd.  v.  Their Workers(3) as an equitable relief, and a variety of  factors were referred to as determining the appropriate relief to be given  in a particular case.  We consider it unnecessary  to examine all the decisions on this point, and it is enough to indicate what we consider to be the correct position in  the matter.  Retrenchment means discharge of surplus workmen  in an  existing  or  continuing business; it  had  acquired  no special  meaning  so as to include discharge of  workmen  on bona  fide  closure of business’ though a number  of  Labour Appellate Tribunals awarded compensation to (1) (1950] 2 L.L.J. 1281.  (3) [1954] 2  249. (2)  [1953] L.A.C 563. (4) [1956] S  872, 137 workmen on closure of business as an equitable relief for  a variety  of  reasons.  It is reasonable to  assume  that  in enacting s. 25F, the legislature standardised the payment of compensation  to  workmen  retrenched  in  the,  normal   or ordinary  sense in an existing or Continuing  industry;  the legislature did away with the perplexing variety of  factors for  determining  the appropriate relief in such  cases  and adopted a simple yard stick of the length of service of  the retrenched  workmen.   If the intention of  the  legislature ’was  to  give  statutory effect to  those  decisions  which awarded  compensation  on  real and  bona  fide  closure  of business,  the  legislature would have said  so  instead  of being  content by merely adding a definition  clause,  every requirement of which is fulfilled by the ordinary,  accepted meaning of the word ’retrenchment’. We  turn now to the second argument.  We have said  that  s. 25FF was inserted in 1956 by amending Act XLI of 1956, which came into force on September 4,1956.  Before that date,  the two decisions under appeal had been given by the Bombay High Court  as  also a further decision in The  Hospital  Mazdoor Sabha  v. The State of Bombay(1) where it was held that  the failure  to  comply  with  the  condition  for  payment   of compensation to an employee at the time of his  retrenchment under  s. 25F (b) of the Act gave the employee the right  to challenge his retrenchment and to contend that his  services were not legally and effectively terminated.  Faced with the situation  created  by  those  decisions,  the   legislature stepped  in and enacted s. 25FF.  That section is  in  these terms: Notwithstanding  anything  contained  in  section  25F,   no workman shall be entitled to compensation under that section by reason merely of the fact that there has been a change of employers  in any case where the ownership or management  of the  undertaking  in  which he is  employed  is  transferred whether  by agreement or by operation of law, from  one  em- ployer to another: Provided that (1)  (1956) 58 Bom.  L.R. 769. 18 138 (a)the  service of the workman has not been  interrupted  by

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reason of the transfer; (b)  the  terms and conditions of service applicable to  the workman  after  such  transfer  are  not  in  any  way  less favourable  to  the  workman than those  applicable  to  him immediately before the transfer; and (c)  the employer to whom the ownership or management of the undertaking  is  so transferred is, under the terms  of  the transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the  basis that his service has been continuous and has not been inter- rupted by the transfer." The section is not retrospective and does not in terms apply to any of the two cases before us. -But the question is-what light  does it throw on the meaning of s. 25F?  The  learned Attorney-General  has  placed  great reliance  on  the  non- obstante  clause  with  which the section  begins,  and  has contended  that  it  shows by necessary  intendment  that  a workman  whose  service has been terminated by reason  of  a change  of employers on account of a change of ownership  or management  will  be entitled to  retrenchment  compensation under  s.  25F unless the conditions (a), (b) and  (c)  laid down  in  s.  25FF are fulfilled.  This,  according  to  the learned Attorney-General, is parliamentary exposition of the true meaning of retrenchment in the definition clause and in s.  25F.   At first sight there appears to  be  considerable force  in this argument, and the  learned  Attorney-General, has  cited English and American decisions of high  authority in  support of his contention: Attorney General v.  Clarkson (1)  ; Ormond Investment Co.  Ltd. v. Betts (2);  George  H. Cope v. Janet cope(3)  Great  Northern  Railway Co. v.  United  States  of America(4).   In considering the effect of s. 25FF  we  must take  note of the circumstances in which it was inserted  in the Act.  The situation was that any transfer or closure  of business and any change of (1)[1900] 1 Q.B. 156. (2)[1928] A.C. 143. (3)[1891] 137 U.S. 682, 688. (4)[1941] 315 U.S. 262, 139 employer or management was judicially held to give rise to a claim for retrenchment compensation, with consequences which might  result  in  a  complete  industrial  deadlock.    The legislature could not declare the decisions to be incorrect, but  could partially supersede their effect by an  amendment of  the law.  These were the circumstances in which s.  25FF was  enacted.   We  agree  with  learned  counsel  for   the appellants  that the aim or object of the enactment  was  to supersede  partially  the effect of the  aforesaid  judicial decisions,  at  least with regard to the  urgent  matter  of change of ownership or management of a business  undertaking which   is  of  quite  frequent  occurrence,   rather   than parliamentary  exposition  of  the  pre-existing  law;   the general question of closure of business, of a lesser  degree of  urgency,  was  naturally  left  to  be  dealt  with,  if necessary,  after the appeals had been disposed of.  We  are fortified  in this view by an examination of the  provisions of  the  Industrial Disputes  (Amendment  and  Miscellaneous Provisions) Act, 1956.  Be it noted that this Act was passed on  August  28,  1956,-only  about  seven  days  before  the enactment of s. 25FF.  Section 29 of the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956,  inserts new schedules to the Act, and item 10 of the Third  Schedule (Matters  within the jurisdiction of  Industrial  Tribunals) is: " Retrenchment of workmen and closure of establishment";

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in  the  Fourth  Schedule,  item  10  is:  "Rationalisation, standardisation  or improvement of plant or technique  which is  likely to lead to retrenchment of workmen." It  is  true that  these new Schedules have not yet come into force,  but the  wording of the items mentioned therein shows  that  the legislature   clearly   envisaged  a   distinction   between retrenchment  and closure and retrenchment did  not  include closure  of business; item 10 of the Fourth Schedule  almost clinches  the  issue, because it shows how  retrenchment  of surplus  labour may occur in a running industry.  If we  are to choose between the two amending Acts of 1956 on the point of parliamentary exposition, we unhesitatingly hold that the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 140 (Act  XXXVI of 1956) is more in the nature of  parliamentary exposition  than  the Industrial Disputes  (Amendment)  Act, 1956 (Act XLI of 1956) which merely supersedes the effect of certain  judicial  decisions.   We are  aware  that  on  the narrower  interpretation  of the definition  clause  on  the basis    of   the   ordinary,   accepted   connotation    of retrenchment,, s. 25F will apply to a continuing or  running business  only and s. 25FF will become largely  unnecessary. We   do  not  think  that  consideration  need   cause   any difficulty; the judicial decisions on the basis of which  s. 25FF  was  enacted  being held to be  erroneous  by  us,  no hardship  is  caused  if s. 25FF  is  rendered  superfluous, because its aim is served by the correct interpretation  now given  of the definition clause and of the provisions of  s. 25F,  both of which are on that interpretation brought  into harmony with the rest of the Act. A  few  words more about the authorities relied  on  by  the learned  Attorney-General:  the  American  decisions  merely enunciate  the  general  principle that "  several  Acts  of Congress,  dealing as they do with the same  subject-matter, should be construed not only as expressing the intention  of Congress at the dates the several Acts were passed, but  the later   Acts   should  also  be  regarded   as   legislative interpretations of the prior ones." This general rule is not an  inflexible  rule, and as stated in  the  Great  Northern Railway  Co.  v. United States of America(1),  "we  are  not limited to the lifeless words of the statute and formalistic canons  of  construction  in our search  of  the  intent  of Congress  (Parliament  in  our case)  and  in  construing  a statute, we may with propriety. recur to the history of  the times  when it was passed." That history  shows  indubitably the aim and purpose of the enactment of s.   25FF.  As  Lord Atkinson pointed out in his speech in   Ormond    Investment Co. Limited v. Betts (2), " an Act of   Parliament does  not alter  the law by merely betraying an erroneous  opinion  of it."   Legislation  founded  on  a  mistaken  or   erroneous assumption  has not the effect of making that the law  which the  legislature had erroneously assumed to be so.   In  the cases before us, (1)  [1942] 315 U.S. 262, 273. 94                  (2) [1928] A.C. 143, 164. 141 the  legislature  proceeded  on the basis  of  the  judicial decisions  then available to it, and on that  basis  enacted s.25FF.  We  do  not think that  the  general  principle  of parliamentary exposition or subsequent legislation as  an aid to construction of prior Acts can be called in  aid  for construing the definition clause and s. 25F of the Act. For ’the reasons given above, we hold, contrary to the  view

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expressed  by  the Bombay High Court, that  retrenchment  as defined  in  s. 2 (oo) and as used in s. 25F  has  no  wider meaning than the ordinary, accepted connotation of the word: it  means  the discharge of surplus labour or staff  by  the employer  for  any reason whatsoever, otherwise  than  as  a punishment inflicted by way of disciplinary action, and.  it has  no application where the services of all  workmen  have been  terminated  by the employer on a real  and  bona  fide closure of business as in the case of Shri Dinesh Mills Ltd. or where the services of all workmen have been terminated by the employer on the business or undertaking being taken over by  another  employer  in circumstances like  those  of  the Railway Company.  Mr. Mehta, appearing for respondents  Nos. 4  and  5 in Civil Appeal No. 105 of 1956, tried to  make  a distinction between transfer of ownership with  continuation of  employment (which according to him did not  come  within the  definition)  and termination of service on  closure  of business.   There is in fact a distinction between  transfer of  business  and  closure of business; but so  far  as  the definition  clause  is  concerned, both stand  on  the  same footing  if  they  involve termination  of  service  of  the workmen by the employer for any reason whatsoever, otherwise than as a punishment by way of disciplinary action.  On  our interpretation, in no case is there any retrenchment, unless there  is  discharge,  of  surplus  labour  or  staff  in  a continuing or running industry.  We  have so far dealt with the question of construction  of the  definition clause and s. 25F of the Act.  On behalf  of the appellants a further question as to tile  constitutional validity  of s. 25F has been raised.  The Argument  on  that question has proceeded from two 142 points  of view: one of which is based on the point of  view that retrenchment includes termination of service on closure of  business and the other even in respect of a  running  or continuing  business.  Under Art. 19 (1), sub-cls.  (f)  and (g),  of  the Constitution, all citizens have the  right  to acquire,  hold and dispose of property and to  practise  any profession,  or  to  carry  on  any  occupation,  trade   or business.   Under cls. (5) and (6) of the said Article,  the right is, inter alia, subject to reasonable restrictions  in the interests of the general public.  The right to carry  on a business, it is contended, has three facets-(a) the  right to  start a business, (b) the right to continue  a  business and  (c) the right to close a business.  Section 25F of  the Act,  it is argued, imposes a restriction on that right,  if the section is so widely interpreted as to include a closure of  business.   The restriction, it is submitted, is  not  a reasonable  restriction  in  the interests  of  the  general public,  because (a) it is unrelated to the capacity of  the employer  to  pay  and (b) unrelated to  the  needs  of  the employee.   From  the other point of view, the  argument  is that even in respect of a running or continuing industry, s. 25F imposes an unreasonable restriction.   Reasonableness,it is submitted, has to be considered with regard to the object of the legislation and if the direct and immediate object of s. 25F is relief against involuntary unemployment, then  the restriction  imposed is excessive, because a  provision  for such  relief  unrelated to the period  of  unemployment  and other  relevant factors is over-simplification of a  complex problem.   Such  over-simplification, it is  stated,  itself amounts to an unreasonable restriction. On the construction which we have adopted of the  definition clause and of s. 25F of the Act, we are relieved of the task of  making  any final pronouncement on  this  constitutional

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question.  On our construction, s. 25F has no application to a  closed or dead industry and the constitutional  arguments based on a different construction need not be considered  in these  appeals.  So far as a running or continuing  industry is  concerned,  an obvious answer may be  that  unemployment relief  is not the only purpose or object of s.25F. We  have pointed out 143 earlier that it is reasonable to assume that standardisation of   retrenchment  compensation  and  doing  away   with   a perplexing  variety  of factors  for  granting  retrenchment compensation  may  well have been the purposes  of  a.  25F, though  the basic consideration must have been the  granting of  unemployment  relief.   However,  on  our  view  of  the construction of s. 25F, no compensation need be paid by  the appellants in the two appeals.  It is unnecessary  therefore to decide whether, in other cases of a different  character, s. 25F imposes a reasonable restriction or not. In  the result, we must allow the two appeals and set  aside the decisions of the High Court of Bombay in the two  cases. We  hold  that  the appellants in the two  appeals  are  not liable  to pay any compensation under s. 25F of the  Act  to their  erstwhile workmen who were not retrenched within  the meaning  of  that  expression  in  that  section.   In   the circumstances  of  these two cases, the  parties  must  bear their own costs throughout. Appeals allowed.