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PETITIONER: J.K. IRON AND STEEL CO.  LTD., KANPUR

       Vs.

RESPONDENT: THE IRON AND STEEL MAZDOOR UNION, KANPUR(with connected appe

DATE OF JUDGMENT: 23/12/1955

BENCH: BOSE, VIVIAN BENCH: BOSE, VIVIAN AIYYAR, T.L. VENKATARAMA AIYAR, N. CHANDRASEKHARA

CITATION:  1956 AIR  231            1955 SCR  (2)1315

ACT:   Industrial  Disputes Act, 1947, (Act XIV of 1947),  ss.  7 and  11--  Adjudicator--Scope and  authority  of--Democratic Constitution--Essentials  thereof--Rule  of   Law-Benevolent despotism--Foreign thereto.

HEADNOTE:    Held,  that  adjudication  by an  adjudicator  under  the Industrial Disputes Act does not mean adjudication according to  the  strict  law  of master  and  servant  and  that  an adjudicator’s   award   may  contain  provisions   for   the settlement of a dispute which no court could order if it was bound  by ordinary law.  Thus the scope of  an  adjudication under the Industrial Disputes Act is much wider than that of an arbitrator making an award.  Industrial Tribunals are not fettered   by  such  limitations  and  an  adjudicator   has jurisdiction  to  investigate disputes about  discharge  and dismissal and where necessary, to direct reinstatement. Nevertheless, wide as their powers are, these Tribunals  are not absolute and there are limitations to the ambit of their authority.   Though they are not courts in the strict  sense of the term, they have to discharge quasi judicial functions and  as such are subject to the overriding  jurisdiction  of the Supreme Court under Art. 136 of the Constitution.  Their powers  are derived from the statute that creates  them  and they have to function within the limits imposed there and to act  according to its provisions.  Those  provisions  invest them with many of the trappings" of a court and deprive them of arbitrary or absolute discretion and power. Benevolent   despotism   is   foreign   to   a    democratic Constitution.  When the Constitution of India converted this country  into a sovereign, democratic, republic, it did  not invest it with the mere trappings of democracy but  invested it,  with  the real thing, the true kernel of which  is  the ultimate authority of the courts to restrain all exercise of absolute  and arbitrary power not only by the executive  and by   officials  and  lesser  tribunals  but  also   by   the legislatures   and   even   by   Parliament   itself.    The Constitution  established a "Rule of Law" in this  land  and that  carries with it restraints and restrictions  that  are foreign to despotic power.

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The courts, however, must always exercise caution and should not substitute their own judgment and discretion for that of such tribunals. 166 1316    In  view of ss. 7 and 11 of the Industrial Disputes  Act, 1947 and U.P. State Industrial Tribunal Standing Orders 1951 these Tribunals, though not bound by all the  technicalities of Civil Courts must nevertheless follow the general pattern of the Civil Courts in the matter of taking the pleadings of the parties in writing and the drawing up of issues.  It  is not open to the Tribunals to disregard the pleadings and  to reach any conclusion that they think are just and proper.    The  Supreme  Court  remitted  the  case  to  the  Labour Appellate  Tribunal  for a rehearing of the appeals  as  the Adjudicator  and the Labour Appellate Tribunal  had  adopted the  attitude  of  benevolent despots and  had  based  their conclusion on irrelevant considerations and ignored the real questions that arose for decision and the issues that  arose out of the pleadings of the parties.    Western   India  Automobile  Association  v.   Industrial Tribunal,  Bombay ([1949] F.C.R. 321, 345), State of  Madras v. C. P. Sarathy, ([1953] S.C.R. 334, 348), Bharat Bank Ltd. v. Employees of Bharat Bank Ltd., ([1950] S.C.R. 459,  497), Muir Mills Co. v.  Suti Mills Mazdoor Union, Kanpur  ([1955] 1 S.C.R. 991, 1001), referred to.

JUDGMENT:   CIVIL  APPELLATE JURISDICTION: Civil Appeals Nos.  22  and 22-A and 301 of 1955.  Appeals by special leave from the judgment and order  dated the 4th July 1952 of the Labour Appellate Tribunal of India, Lucknow  in Appeals Nos. 391 and 392 of 1951 arising out  of the Award dated the 1st November 1951 of the Adjudicator and Additional Regional Conciliation Officer, Kanpur in Case No. 53 of 1951.   G.S. Pathak, (Rameshwar Nath and Rajinder Narain), for the appellants in all the appeals.   G. C. Mathur, for the respondent in C. A. Nos. 22 and 22-A and respondent No. 4 in C. A. No. 301 of 1955.    K.     B. Asthana and C. P. Lal, for the respondent No. 3 in C. A. No. 301 of 1955.   1955.   December  23.   The  Judgment  of  the  Court  was delivered by   BOSE  J.-We are concerned here with three  appeals.   They arise  out  of  a dispute between the J.K.  Iron  and  Steel Company  Limited and the Iron and Steel Mazdoor  Union.   We will call them the 1317 Company  and the Mazdoor Union respectively.  The facts  are as follows.  The  Company had its factory and other works at  Kanpur  in Uttar Pradesh.  On 10-4-1948 the Ministry of Commerce in the Government  of India ordered the Company to shift  its  Jute Baling Hoops factory from Kanpur to Calcutta.   As  no land was available in Calcutta no effect  could  be given to this order till the year 1950-51.  On 19-3-1951 the Iron  and Steel Controller ordered the Company to  stop  the rolling  of  jute baling hoops at  once.   Accordingly,  the production of these hoops was stopped from that date.   At the same time there was scarcity of scrap iron and  the Company’s  case is that forced it to reduce the  working  of its furnace from three shifts a day to one.

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 The Company states that because of these two causes it was obliged  to  retrench its staff.  Therefore, it  issued  the following- notice dated 15-5-1951 to 128 of its workers:   "Consequent  to transfer of the Rolling Mill  to  Calcutta and  want  of  scrap  to Furnace  Department  in  full,  the services  of the persons as per list attached are  dispensed with from today.   Their wages and other dues in full settlement will be paid after 2 P.m."   Twenty five of the 128 accepted their wages and other dues in  full  settlement but the remaining 103  refused.   Their cause  was accordingly espoused by the Mazdoor  Union  which made an application to the Regional Conciliation Officer  at Kanpur  on 16-5-1951 complaining that the  retrenchment  was illegal and asking that the workmen be reinstated with  full payment of their wages for the period they were out of work.    This was forwarded to the Government of Uttar Pradesh and on  28-6-1951  the  Governor  of  that  State  referred  the following  issue  to the Regional  Conciliation  Officer  at Kanpur  under  sections 3, 4 and 8 of  the  U.P.  Industrial Disputes Act, 1947 for adjudication: "Whether the retrenchment of the workmen 1318 given  in  the Annexure by Messrs J. K. Iron and  Steel  Co. Ltd’ Kanpur, is unjustified?  If so, to what relief are  the workmen entitled?"   The  parties filed their written statements  on  14-7-1951 and  the  Company  filed  a  rejoinder  on  20-7-1951.   The Adjudicator  thereupon took evidence, oral and  documentary, and gave his award on 1-11- 1951.  But before that was  done the  case  of  one  of the workmen  (Kapil  Deo  Singh)  was withdrawn and that left 102 for him to deal with.   The  Adjudicator reached the following  conclusions.   The Mazdoor Union had contended that the retrenchment was not in good faith.  The Adjudicator held that it was and that there was  neither harassment nor victimisation.  So also  on  the question about the shortage of scrap he held that there  was a  shortage but that it was only temporary and that  it  was not  likely  to last for more than 8 or 9 months.   He  then referred  to the Standing Orders and said that  the  Company was not entitled to resort to retrenchment except as a  last resort  and  that in the circumstances of the  present  case these  workmen  should (1) have been offered the  option  of employment in the new set up at Calcutta; and (2) those that did  not  want  it should have been  laid  off  in  rotation instead  of being retrenched.  He accordingly  ordered  that should   be  done  and  drew  up  a  graduated   scale   ,of compensation.   We observe in passing that the expression used  throughout has  been "played off".  The reason for that is that is  the phrase  used in the Standing Orders and in the copy  of  the Act  and Model Standing Orders reproduced by the U.  P.  De- partment of Labour in its Annual Review of Activities.   But it seems to us that was due to printer’s error at some stage which  has  been repeated in various  places.   The  correct expression  is "lay off".  That is the expression  used  and defined  in the Act.  The Standing Orders should  have  used the same phrase.  Apart from the definition in the Act, "lay off " is a well-known industrial term meaning, according  to the Oxford Dictionary, "a period during which 1319 a  workman  is  temporarily discharged".  We  will  use  the correct expression in this judgment.   Both sides appealed to the Labour Appellate Tribunal.  The decision,  there  was as follows.  The Tribunal  upheld  the

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finding that there was in fact a shortage of scrap iron  and also agreed with the Adjudicator that was only likely to  be temporary.   Then  it held, apparently as a matter  of  law, that  under  the Standing Orders it is  not  permissible  to retrench workmen and deprive them of their maintenance  when there is only a temporary shortage of material, whatever the duration of the shortage; all that the employer can do in  a case like that is to lay them off.   The  Tribunal also upheld the finding that the  Hoop  Mill was in the course of transfer to Calcutta consequent on  the orders  of Government, but they held that there was  nothing on the record to show which of the 105 persons (it should be 102)  whose cases they were considering  were  "specifically engaged  in the Hoop Mills and had become surplus by  reason of the transfer to Calcutta".   This  is  one of the findings attacked before  us  by  the Company  on  the  ground that the  Tribunal  has  failed  to realize that the Company’s operations must be considered  as a  whole  and  that because of the  interdependence  of  its various departments a closure of one section, coupled with a shortage of materials in another, is bound to affect its all round  working  and therefore the question  of  retrenchment cannot  be looked at from the narrow point of view  of  only one department but must be viewed in its all round  setting. We will deal with this later. Another of the Tribunal’s findings on the "transfer"  aspect of  the  case was that a cut in profits is not in  itself  a good ground for retrenchment.  It held that retrenchment can only  be made when there is a total closure of the mill  "or when for any such other reason the workmen become surplus".   The  final  conclusion  of  the  Tribunal  was  that   the retrenchment was "wholly unjustified".  Accordingly, it  set aside the retrenchments and held that the 1320 affected  workmen will be deemed to be "still  in  service". and  directed  that they be reinstated.  The appeal  of  the Mazdoor  Union  was partly allowed and that of  the  Company dismissed.   This impelled the Company. to do the following things: (1)to file a writ petition in the Allahabad High Court on 4- 8-1952.   This was dismissed by that Court on  9-4-1953  and Civil  Appeal  No. 301 of 1955 is the appeal to  us  against that order; (2)to  file two appeals to this Court against the  order  of the  Labour  Appellate Tribunal.  These  appeals  are  Civil Appeal No. 22 of 1955 and Civil Appeal No. 22-A of 1955. This judgment covers all three appeals. Mr. G. C. Mathur, who appeared for the Mazdoor Union, raised a preliminary objection against the Company’s appeals  based on  the following facts.  The Company had appealed  to  this Court  against the Labour Appellate Tribunal’s  decision  on 26-8-1952.   The petition was summarily dismissed  on  10-9- 1952.   Counsel contended that barred the  present  appeals: Civil  Appeal 22-A of 1955 because it is an  appeal  against the  very order that is now under appeal, and  Civil  Appeal 301  of 1955 on the basis of res judicata because it  raises the  same points as were raised in the petition for  special leave which was dismissed.   We  rejected this objection because the previous  petition for  appeal  does not appear to have been dismissed  on  the merits  but on two technical grounds.  It is true the  order of dismissal is general but the office note states (1)  that no certified copy of the decision appealed against was filed though Order 13, rule 4, of the Rules of the Supreme  Court, requires  that  and  (2)  that the  reliefs  sought  in  the

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petition  for special leave and in the writ petition  before the High Court are the same.  It is evident that formed  the basis  of  the order of dismissal especially as  it  is  the usual  practice  not  to entertain an  appeal  here  when  a similar matter is pending in the High Court, 1321 Before we come to the merits it will be necessary to set out the grounds on which the High Court proceeded.  The  learned Judges  were  concerned with a writ for  certiorari  and  so naturally   focussed   their  attention  on   questions   of jurisdiction  rather  than on the merits.   They  considered that  the Adjudicator’ was free to take  into  consideration all  matters bearing on the question of retrenchment and  to consider  whether it was "absolutely necessary" to  retrench the  workmen.   They  looked at  Standing  Order  16(a)  and decided  that the Adjudicator had jurisdiction to  determine the  scope  and meaning of this Order and that  he  and  the Labour Appellate Tribunal were competent to hold that  these orders meant that the Company was not entitled to take  what the learned Judges called the "extreme step of retrenchment" so long as it was possible for it to "lay off " the workmen.  That at once raises questions about the scope and authority of  an adjudicator under the Industrial Disputes  Act.   But that,  we  feel is now settled by  authority.   The  Federal Court  held  in  Western  India  Automobile  Association  v. Industrial  Tribunal, Bombay(1) that adjudication  does  not mean adjudication according to the strict law of master  and servant  and  held that an adjudicator’s award  may  contain provisions for settlement of a dispute which no Court  could order  if  it  was bound by ordinary law.   They  held  that Industrial  Tribunals are not fettered by these  limitations and  held  further that an adjudicator has  jurisdiction  to investigate  disputes  about discharge  and  dismissal  and, where necessary, to direct reinstatement. That  decision was followed with approval by this  Court  in State of Madras v. C. P. Sarathy(2) and it was again pointed out  that the scope of an adjudication under the  Industrial Disputes Act is much wider than that of an arbitrator making an  award.  It would be pointless to cover the same  ground; so we must take that now as settled law. All the same, wide as their powers are, these Tri- (1) [1949] F.C.R 321, 345.  (2) [1953] S.C.R. 334, 348, 1322 bunals  are  not absolute and there are limitations  to  the ambit of their authority.  In Bharat Bank Ltd. v.  Employees of  Bharat Bank Ltd.(1) this Court held by a  majority  that though these Tribunals are not Courts in the strict sense of the term they have to discharge quasi judicial functions and as  such are subject to the overriding Jurisdiction of  this Court  under article 136 of the Constitution.  Their  powers are derived from the statute that creates them and they have to  function  within  the limits imposed there  and  to  act according  to its provisions.  Those provisions invest  them with many of the "trappings" of a court and deprive them  of arbitrary  or absolute discretion and power.  There  is,  in our opinion, an even deeper reason which is hinted at in the judgment of Mahajan J. (as he then was) at page 500 where he says  that "benevolent despotism is foreign to a  democratic Constitution".   That, in our opinion, is the heart  of  the matter.   When  the  Constitution of  India  converted  this country into a great sovereign, democratic, republic, it did not invest it with the mere trappings of democracy and leave it  with merely its outward forms of behaviour but  invested it  with  the real thing, the true kernel of  which  is  the ultimate authority of the Courts to restrain all exercise of

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absolute and arbitrary power, not only by the executive  and by   officials  and  lesser  tribunals  but  also   by   the legislatures   and   even   by   Parliament   itself.    The Constitution  established a "Rule of Law" in this  land  and that carries with it restraints and restrictions that are foreign to despotic power.   Despite  this,  however, the Courts must  always  exercise caution  and  see  that they do  not  substitute  their  own judgment and discretion for that of these Tribunals, for, as Mahajan, J. said in Bharat Bank Ltd. v. Employees of  Bharat Bank  Ltd.(1)  the  overriding powers of  this  Court  under article  136  are exceptional; and he went on to  point  out that-   "extraordinary  Powers  of  this  character  can  only  be justifiably used here there has been a grave miscarriage  of justice or where the procedure adopted by  (1) [1950] S.C.R. 459, 497. 1323 the Tribunal is such that it offends against all notions  of legal procedure". Now the position in the present case is this.  The Tribunals are directed by section 7 of the Industrial Disputes Act  to adjudicate  industrial  disputes  "in  accordance  with  the provisions of the Act" and section 11 directs them to follow "such  procedure as may be prescribed".  The  procedure  for the  Uttar Pradesh Tribunals is laid down by the U.P.  State Industrial Tribunal Standing Orders, 1951.  Very broadly  it follows the pattern of the civil Courts.  Once the reference is  made  by  Government,  the  Tribunal  has  to  take  the pleadings  of the parties in writing and to draw up  issues. Then   it  takes  evidence,  hears  arguments  and   finally pronounces  its "judgment" "in open Court".  It  is  evident from  this that though these tribunals are not bound by  all the  technicalities of civil Courts, they must  nevertheless follow  the  same general pattern.  Now the  only  point  of requiring pleadings and issues is to ascertain the real dis- pute between the parties, to narrow the area of conflict and to  see just where the two sides differ.  It is not open  to the Tribunals to fly off at a tangent and, disregarding  the pleadings, to reach any conclusions that they think are just and proper.   What  exactly  was the dispute in the present  case?   The broad conflict was of course about the retrenchment and  the Tribunal  was  asked to decide whether the  retrenchment  of these  103 persons was unjustified; but that by itself  left the   issue  much  too  broad,  so  it  was   necessary   to "particularise" and that was done in the pleadings.  The  Company  justified  its action  on  two  grounds:  (1) because  of  the shortage of scrap and (2)  because  of  the stoppage  of work in the Hoop Department consequent  on  the orders  of Government.  But none of the  persons  retrenched came from the Hoop Department and the Company explained that was   because   of  the  interdependence  of   its   various departments   and,  taking  the  retrenchments  in   groups, department  by department, it explained just  why  reduction was effected in those particular places.  In 167  1324 this way, it dealt serially with the retrenchments in(1)  the Scrap Department, (2) the Cast Iron Foundry,(3) the Punching and  Pressing Department, (4) the Watch and Ward  Department and (5) the Clerical Department.   The  Company also made the following assertions, (1)  that retrenchment  is  a necessary incidence of an  industry  and that  the  discretion  of  the  management  should  not   be

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interfered  with; (2) that it is the exclusive  function  of the  management to determine the size of its  working  force and  (3) that the employer must be the sole judge as to  how economically or efficiently its business is to be run.   The Mazdoor Union retorted that the retrenchments were not done  in good faith.  It denied that there was any  shortage of  scrap  but admitted the interdependence of  the  various departments  and used that fact as an argument  to  indicate the Company’s bad faith.  The Union said the very fact  that there  had been no retrenchment in the department  that  was directly  affected, namely the Hooping Department, and  that there was no retrenchment in certain allied departments that would have been the first to be bit, had there been any real shortage  of  scrap, showed that the reasons  given  by  the Company  for the retrenchment were untrue.   In  particular, the Union pointed out that there had been no retrenchment in the following departments which, according to it, would have been  the  hardest  hit  had there been  any  truth  in  the Company’s  case  namely,  (1) the  Furnace  Department,  (2) Rolling  Mill  Department, (3) Workshop,  (4)  Painting  and Bundling,  (5) Works and Maintenance.  Then, as regards  the Foundry Department and the Scrap Department where there  bad been  retrenchments, the Union said that  these  departments bad sub-sections and yet there were no retrenchments in  the sub-sections  that  would  have been hit  if  the  Company’s allegations were true.   The Union gave no reply to the Company’s assertions  about its  right  to retrench in the absence of  bad  faith-,  its right to determine the size of its work- 1325 ing  force  and  its  right to  judge  of  the  economy  and efficiency of its business.   The  Company  filed a written rejoinder and  explained  in detail  why  there had been no retrenchments in  the  places where, according to the Union, there should have been on the facts  alleged by the Company and it again explained why  it had  retrenched workers in the departments which,  according to  the  Union, ought to have been the  hardest  hit.   This explanation  again  brought out the interdependence  of  the various departments.   Instead  of drawing up issues, as it is required to do  by Standing  Order 22 of 1951, and determining just  where  the parties  disagreed,  the Adjudicator at  once  proceeded  to record  evidence and entered upon a rambling  enquiry  which embraced questions which had not been raised at all.  On the only point on which the parties were really at issue, namely the  good  faith  of the management, the  findings  were  in favour of the Company.  So also the Adjudicator accepted the Company’s assertion about its right to determine the size of its labour force and to effect retrenchment where  necessary subject  only  to the proviso which the  Adjudicator  added, namely that this must be done in good faith; and indeed  the Mazdoor  Union  had not challenged these assertions  in  its written statement. The Adjudicator said-   "It is however an accepted principle that such changes  as are  being  done  by  the management  now  form  a  part  of managerial  discretion and cannot be interfered with  unless it  is coloured with the element of victimisation or  unfair labour practice".    But  despite  this, and despite his findings  about  good faith,  the Adjudicator considered that, in spite of it  all "the  right of the workmen has to be safeguarded to  certain extent".   What  is left of the right if the "accepted principle"  be

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what  he says it is-and if there is no victimisation or  bad faith,  he did not proceed to explain.  If the principle  he enunciated and accepted is sound, then the only rights  they have are to complain of 1326 bad  faith,  victimisation and so forth.   However,  feeling under a compulsion to safeguard these unexplained rights  he had  recourse to Standing Order 16(a) and  ignored  Standing Orders 19 and 20.   The  "accepted principle" to which the Adjudicator  refers in  the passage quoted above is implicit in Standing  Orders 19(a) and 20(a).  They deal with the termination of  service by  an  industrial  establishment and  prescribe  a  certain quantum of notice in writing, and then comes this  important proviso in Standing Order 19 (a) - "Provided that if a permanent workman feels that he has been discharged for reasons not connected with his employment  or that  the  reason of discharge communicated to  him  is  not genuine,  he may make an appeal to the Labour  Commissioner. The  decision  of  the  Labour  Commissioner................ shall be binding on both the parties".   Reading  the body of Standing Order 19 (a) along with  the proviso  in  the light of the "accepted  principle",  it  is evident  that  the  only right the  workman  has,  when  his services are lawfully terminated after service of due notice and so forth, is to question the order on only two grounds- (1)that  he  has been discharged for reasons  not  connected with his employment, and (2)that  the reason of discharge communicated to him is  not genuine.    There  is  nothing in these Standing Orders  to  indicate that  retrenchment is a measure of last resort and  that  an employer  must  continue  to lay  off  his  workmen  however uneconomical that may be to the business; still less that he must lay them off in rotation and thus affect other  workmen who  would  not  be  affected  by  a  legitimate  order   of retrenchment.   That  cuts  at the  root  of  the  "accepted principle".    In  any  event,  the  ground  on  which  the  adjudicator proceeded  was not a matter in dispute between  the  parties because  it was not raised in their pleadings and could  not have been put in issue bad the Adjudicator troubled to  draw up  issues  as he should have done.  As  Mahajan,  J.  said, adjudicators and tribu- 1327 nals  cannot act as benevolent despots and that  is  exactly what  it  comes to when an adjudicator, after  setting  out, correctly in our opinion the Company’s rights, holds against the  Union  on the only grounds that it did raise  and  then proceeds to give an award, not only on grounds that are  not raised  but  on  grounds that fly in the face  of  the  very principles that he enunciated; and that only because he felt that he was under a compulsion to "safeguard" the workmen to "a certain extent".   Both  sides appealed to the Labour Appellate Tribunal  and the second ground of the appeal lodged, by the Mazdoor Union was  "that  the award of the learned  Adjudicator  is  quite arbitrary" which, of course, is exactly what it was And so also ground No. 9:   "That   the  learned  Adjudicator  has  gone  beyond   his jurisdiction in awarding relief on a question not,  referred to it by Government".   That  again we feel is justified.  What was  referred  was the  question  of  the  justification  for  retrenchment  of certain specified workmen.  What was awarded was the  laying

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off of persons whose cases were not even considered, that is to  say,  when  the  Adjudicator  directed  laying  off   in rotation,  his  order necessarily affected persons  who  had neither  been  laid off nor retrenched and whose  cases  not even  the Union had in mind.  It is to be observed that  the Mazdoor  Union  complains about this part of  the  order  in ground No. 11 though on a different ground.   The Company also appealed against the Adjudicator’s  order and  grounds Nos. 6, 9 and 24 of their appeal  are  directed against  that part of the order that deals with the lay  off of  the workmen.  Among other reasons advanced is that  this will  adversely affect others who are not  retrenched.   The other grounds repeat what was said in the company’s  written statement though in different language.    The  Labour Appellate Tribunal contrasted Standing  Order 15(a)  with Standing Order 16(a) but also  ignored  Standing Orders 19(a) and 20 which are the 1328 only  ones  that really apply to this case.  It  upheld  the finding  of  the Adjudicator that there was  a  shortage  of scrap  but held that as the shortage was for only  6  months retrenchment was not justified.   In  point of fact, the Labour Appellate Tribunal is  wrong about the six months.  It was under the impression that  the Adjudicator  had  come  to that conclusion.   But  what  the Adjudicator  said  was that the shortage at best was  for  a period  of 8 or 9 months.  The passage which  the  Appellate Tribunal  quotes is not the finding of the  Adjudicator  but the  argument advanced on behalf of the Company.   The  full passage runs thus:   "Shri  Mahalingam stated that Standing order  16(a)  which provides  for a lay off of a maximum period of 12 days in  a month  contemplates  a  temporary  shortage  of  very  short duration.   It could not apply to shortage of raw  materials lasting for more than 6 months and hence the Company’s right to  retrench  is  not affected  by  the  aforesaid  Standing Order".   The   Appellate  Tribunal  quoted  the  portion  we   have underlined but ignored the rest of the sentence and the part that  went before and concluded that the portion  underlined was a part of the Adjudicator’s findings.   However,  even if we assume that the Tribunal  would  have reached  the  same conclusion if it had  realised  that  the shortage  was for as long as 8 or 9 months, the  error  into which  it  has fallen is that the question  of  retrenchment cannot be made to depend on the duration of the shortage  or even on the fact that those retrenched will be thrown out of employment  but on the effect that an omission  to  retrench will  have on the business.  In some cases, laying off  even for  6  or 8 or 9 months might make  the  Company  bankrupt, therefore, if the Appellate Tribunal considered that it  had power  to  stop retrenchment for reasons  other  than  those given in the proviso to Standing Order 19(a) it was bound to look into the Company’s finances and determine the  question of justification on that basis.  The only question  referred was the retrenchment justified? and we find it 1329 impossible  to  see  how  that  can  be  determined  without considering  the question of good faith which in turn  would largely  depend  on  the finances of  the  Company,  on  the adverse effect that retention would have on the business and on  whether  retention  would  mean  the  deadweight  of  an uneconomic surplus and so forth. Next,  when the Appellate Tribunal turned its  attention  to the  transfer of the Hoop Mill to Calcutta, it  agreed  that

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would have been a good ground for retrenching those who were specifically  engaged in the Hoop Mill but not  the  others. But  this  takes an impossibly narrow view and  ignores  the over-all working of a business concern and the repercussions that  a transfer of this kind would have on other  parts  of the  business.   It  totally ignores the  pleadings  of  the parties  and, like the adjudicator, bases its conclusion  on some  airy view of what it considers would be a  good  thing for  the  workmen.   That  is  not  a  decision  "given   in accordance with the Act" and is as much open to objection on that score as the award of the Adjudicator. It is pertinent at this stage to refer to a decision of this Court  reported  in  Muir Mills Co. v.  Suti  Mills  Mazdoor Union, Kanpur(1) where Bhagwati, J. delivering the  judgment of the Court said-   "The  considerations  of social justice  imported  by  the Labour  Appellate  Tribunal in arriving at the  decision  in favour  of  the  respondent were  not  only  irrelevant  but untenable".   In  the  present  case also we are  of  opinion  that  the Adjudicator  and the Labour Appellate Tribunal  had  adopted the  attitude  of benevolent despots and  have  based  their conclusions  on irrelevant considerations and  have  ignored the  real questions that arose for decision and  the  issues that arose out of the pleadings of the parties.   It  would not be right for us to substitute  our  judgment and discretion for that of the Adjudicator and the Tribunal: accordingly,  as we are of opinion that the. real  questions that were in dispute between the  (1) [1955] 1 S.C.R. 991, 1001. 1330 parties  were neither appreciated nor considered we have  no alternative but to remit the matter to the Labour  Appellate Tribunal for a proper decision after drawing up issues  that arise  out of the pleadingS, considering them  and  deciding the dispute accordingly, with liberty of course to remit the case  to the Adjudicator for a retrial or for the taking  of further  evidence if it is of the opinion that the  omission to  draw  up issues and focus attention on the  points  that seem  to  be in dispute has had the result of  shutting  out evidence that might otherwise have been led.  An agreement said to have been reached between the  parties on  7-9-1953  was placed before us towards the  end  of  the arguments  but we have not looked at it because counsel  for the  Mazdoor Union said it did not cover the case  of  these retrenched  workers.  The Company insisted that it did.   We were  not prepared to investigate that dispute at that  late stage  but  we  make  it plain  that  the  Labour  Appellate Tribunal  will  be at liberty to consider it or  not  as  it deems right after hearing what both sides have to say about it.   The  award  and  the  decision  of  the  Labour  Appellate Tribunal  are  set  aside and the case is  remitted  to  the Labour  Appellate Tribunal for a re-bearing of  the  appeals filed before it and for a fresh decision in the light of the foregoing observations.   We  will, however, have to make some  interim  arrangement for  payment  of what may be termed a  sort  of  subsistence allowance  to  the affected workmen during the  pendency  of those further proceedings.  As there is no agreement between the  parties  on  the subject, we leave  it  to  the  Labour Appellate  Tribunal or the Adjudicator, as the case may  be, to make suitable orders in this respect.   There will be no order, about costs as neither party is to blame for what has happened.

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