08 May 1956
Supreme Court


Case number: Appeal (civil) 353 of 1955






DATE OF JUDGMENT: 08/05/1956


CITATION:  1956 AIR  628            1956 SCR  560

ACT:        Industrial  Disputes  (Appellate Tribunal)  Act,  1950,  No.        XLVIII  of 1950-Ss. 23 and 22(a)-Lay off during pendency  of        prior dispute-Application under s. 23 alleging breach of  s.        22(a) Tribunal finding lay off justified-Application  should        be  dismissed Quantum of compensation  payable-When  proviso        (b) to s. 25-C, Industrial Disputes Act applicable.

HEADNOTE:        During the pendency of an appeal before the Labour Appellate        Tribunal  in respect of a prior industrial  dispute  between        the same parties the management laid off certain workmen and        offered  to pay compensation equal to half the  basic  wages        and  dearness allowance for the first 45 days in  accordance        with  the provisions of proviso (a) to s.  25-C,  Industrial        Disputes  Act.   The  workmen made  an  application  to  the        Tribunal  under s. 23 of the Industrial Disputes  (Appellate        Tribunal)  Act, 1950 alleging that there was a breach of  s.        22(a)  of  the same Act, and that the lay off was  not  bona        fide and claimed full wages for the entire period of the lay        off as compensation.  The Tribunal held that the lay off was        justified  but  that the workmen were entitled to  half  the        basic wages and dearness allowance not merely for the  first        45 days but for the entire period under proviso (b)    to s.        25-C.        Held,  that on the finding of the Tribunal that the lay  off        wag  justified the application under s. 23 was liable to  be        dismissed.        Proviso  (b)  to s. 25-C, Industrial Disputes Act,  is  only        applicable in case of a second and distinct lay off and does        not apply to a period subsequent to the first 45 days of one        continuous lay off.

JUDGMENT:        CIVIL APPELLATE JURISDICTION: civil Appeal No. 353 of 1955.        On appeal by special leave from the judgment and order dated        the  22nd  August 1955 of the Labour Appellate  Tribunal  of        India at Lucknow in Misc.  Case No. 111-C-650 of 1954.        Veda Vyas, (S.  K. Kapur and N. H. Hingorani, with him)  for



      the appellant.        J.   N.  Bannerji,  (P.   C. Agarwalla, with  him)  for  the        respondent.        561        1956.  May 8. The Judgment of the Court was delivered by        VENKATARAMA  AYYAR J.-The appellant is a company  registered        under  the Indian Companies Act, and owns a  factory  called        Modi  Oil Mills in the district of Meerut.  The  respondents        are  workmen  employed in the Mills.  The  business  of  the        Mills  consists in the manufacture of oils and  paints.   On        12-7-1954 the management put up the following notice:        "Notice  is  hereby given that due  to  non-availability  of        groundnut  seed and neem seed at the parity with the  ruling        prices of the groundnut oil and neem oil, the Management  is        reluctantly  compelled  to  close  the  Groundnut   Crushing        Section and Neem Section till the next groundnut season  and        thus the workers in the attached list are surplus and  their        services are laid off with effect from 14th July, 1954.        Workers, thus affected, shall be paid compensation according        to  Industrial  Disputes (Amendment) Act, 1953,  subject  to        conditions  laid therein.  It is further notified  that  the        time of the attendance as provided in Section 25(D) and  (E)        shall be 10 a.m. for all the laid off workers".        Pursuant  to  this notice, 142  workmen  mentioned  therein,        being the respondents in this appeal, were laid off from the        14th  July  1954.  On 26-7-1954 the workmen  acting  through        their  Union sent a notice to the management demanding  full        wages  for the period of lay off on the ground that  it  was        unjustified and illegal.  The management denied these  alle-        gations, and. refused the demand.  This being an  industrial        dispute  as  defined  in  section  2(k)  of  the  Industrial        Disputes   Act  XIV  of  1947,  in  the   ordinary   course,        proceedings  would  have been taken with  reference  thereto        under  the  provisions of that Act.  But there was  at  that        time another industrial dispute between the parties  pending        final  adjudication.  That dispute had been referred  -under        section  10 of the Industrial Disputes Act for  adjudication        to  the Regional Conciliation Officer, Meerut.  He had  pro-        nounced his award, and against that, both the parties        562        had preferred appeals to the Labour Appellate Tribunal,  and        they  were  pending  at  the  date  of  the,  notice.    The        Industrial Disputes (Appellate Tribunal) Act XLVIII of 1950,        hereinafter  referred  to  as  the  Act,  contains   special        provisions  with reference to certain disputes  which  might        arise  between  parties,  when  there  is  already   pending        adjudication between them another industrial dispute.   They        are sections 22 and 23, which are as follows:        "22.   During  the  period of thirty days  allowed  for  the        filing of an appeal under section 10 or during the  pendency        of any appeal under this Act no employer shall-        (a)alter, to the prejudice of the workmen concerned in  such        appeal,  the  conditions  of  service  applicable  to   them        immediately before the filing of such appeal, or        (b)discharge  or punish, whether by dismissal or  otherwise,        any workmen concerned in such appeal, save -with the express        permission’ in writing of the Appellate Tribunal.        23.  Where an employer contravenes the provisions of section        22 during the pendency of proceedings before the   Appellate        Tribunal, -any employee aggrieved by such contravention, may        make  a  complaint in writing, in the prescribed  manner  to        such  Appellate Tribunal and on receipt of  such  complaint,        the  Appellate Tribunal shall decide the complaint as if  it        were  an  appeal pending before it, in accordance  with  the        provisions  of  this Act and shall  pronounce  its  decision



      thereon   and  the  provisions  of  this  Act  shall   apply        accordingly"’.        On 24-8-1954 the respondents filed an application before the        Labour  Appellate  Tribunal  under section 23  of  the  Act.        Therein,  they alleged that the lay off was not  bona  fide,        because the ground given therefor, namely,  non-availability        of groundnut and neem seeds at parity with ruling prices was        not  true; that further in view of the pendency  before  the        Labour  Appellate Tribunal of an industrial dispute  between        the  parties, the lay-.off was in contravention  of  section        22(a) of the Act, and they accordingly prayed        563        that they might be awarded by way of compensation full wages        for  the  entire  period  of the  lay  off.   The  appellant        contested the claim.  It contended that the non-availability        of groundnut and neem seeds as ,mentioned in the notice  was        true,  and that the lay off was bonafide.  It  also  claimed        that  section  22(a ) of the Act had no application  to  the        dispute,  as the notice distinctly stated that  the  workmen        would  be paid compensation as provided in section  25-C  of        the Industrial Disputes Act as amended by Act XLIII of 1953.        It  also contended that under that section compensation  was        payable only for the first 45 days at the rate mentioned  in        the  body of the section and not for any  period  subsequent        thereto.  The Tribunal held that the lay off was  justified.        It  further held on a construction of section 25-C that  the        workmen  were entitled to half the basic wages and  dearness        allowance  not  merely  for the first 45 days  but  for  the        entire  period, and that as the appellant did  "not  observe        them provisions’of that section", there was an alteration of        the  conditions of service within section 22(a) of the  Act.        It  accordingly  awarded compensation for the whole  of  the        period  at  50  per cent. of the basic  wages  and  dearness        allowance.   Against  this  decision,  the  management   has        preferred this appeal by special leave.        On behal of the appellant, Sri Veda Vyas contended  firstly,        that on its finding that the lay off was justified, the only        order  which  the  Tribunal could have  passed  was  one  of        dismissal of the petition filed by the respondents and  that        the  award  of  compeneation  was  in  consequence,  without        jurisdiction;  and secondly, that on a true construction  of        section  25-C  of the industrial Disputes Act,  the  workmen        were  entitled to compensation only for a period of 45  days        as  provided  in  proviso (a) to section 25-C.   We  are  of        opinion that both these contentions are well-founded.        On  the first question, the jurisdiction of the Tribunal  to        grant  relief under section 23 of the Act arises only if  it        is  made out that there was contravention of section  22  by        the  management.  The respondents ,understood this  position        quite correctly, and with        564         view  to bring themselves within section 23,  they  alleged        that the lay off was not bona.’ fide, inasmuch as, in  fact,        groundnut  and neem seeds were available.   This  contention        rests  on  the supposition that the conditions  under  which        workmen  could  be  laid  off are  conditions  as  to  their        service,  ’and  that  when the  employer  lays  off  workmen        without  proper grounds therefor, it is a violation of  the-        conditions of service within section 22(a) of the Act.        There was some argument before’ us whether lay off,  whether        justifiable  or otherwise, could be -brought within  section        22(a)  of the ’Act as amounting to breach of the  conditions        of  service.   On the one hand, the argument  was  that  the        expression  "conditions of service" would include only  such        conditions  as would operate when the workmen were  actually



      in  service  ,such as the quantum of wages, hours  of  work,        provision for leave and so forth, and that when there was  a        lay off, these conditions could by their very nature have no        application, and that if the lay off ’was unjustified,  that        would give the workmen a right to take proceedings under the        ’provisions  of the Industrial Disputes Act, but  that  they        could make no claim under section 23 as for a breach of  the        provisions  of section 22(a).  The contention  on the  other        side,  was  that the workmen and the management  ,should  be        deemed  to have agreed that there would be lay off only  for        good  and proper reasons and under conditions  permitted  by        law,  and that if those conditions were not  satisfied,  the        lay off would be an alteration of the conditions of  service        within   section  22(a).   The  question  is  one  of   some        importance, but it is unnecessary to express any opinion  on        it,  as counsel for the appellant conceded after some  argu-        ment  that conditions under which the workmen could be  laid        off  would be conditions of service. - On this -footing,  he        contended that as the lay off *as, in fact, justified, there        Was no breach of those conditions, and that, in consequence,        section  22(a) of the Act had no application.  On behalf  of        the respondents, it is argued that the lay off must, by  its        very nature, be temporary and of short duration, and that if        it is for        565        a long or indefinite period as in the present case, it could        not  be said to be a proper lay off such as could be  deemed        to  have  been agreed to by the workmen,  and  that  section        22(a) of the Act would, therefore, be applicable.        It  is  common  ground that there  are  no  statutory  rules        prescribing the conditions under which there could be a  lay        off.  If there had been, they would operate as conditions of        service  between  the parties, and then the  question  would        simply  have been whether there had been a  compliance  with        them.   Under  the provisions of the  Industrial  Employment        (Standing  Orders) Act XX of 1946, certain  Standing  Orders        had  been framed with reference to this matter.  Counsel  on        both sides state that after the enactment of the  Industrial        Disputes  (Amendment) Act XLIII of 1953, they are no  longer        in  force,  and  that  there  are  no  statutory  provisions        applicable  to  the present dispute.   We  must,  therefore,        decide  the question on the footing that the only  condition        which  the parties might be taken to have agreed to is  that        the  lay  off  should  be for adequate  grounds  and  for  a        reasonable  period.   On  this question, there  is  a  clear        finding in favour of the appellant.  The Tribunal has  found        that  groundnut and neem seeds were not available at  parity        prices,  and  that  for  that reason, the  work  had  to  be        stopped.  It is not likely that businessmen would cut  their        profits to spite the workmen.  The period of the lay off was        expressed to be until the next groundnut season and we  have        been  told that the season for groundnut begins sometime  in        November  December.  In fact, all the respondents have  been        reemployed  in  relays from September onwards,  and  by  the        first  week of December all of them had been  absorbed.   On        the finding of the Tribunal that the lay off -was justified,        it  follows  that the application of the  respondents  under        section  23  of the Act was liable to be  dismissed  on  the        ground  that  there  had been no  contravention  of  section        22(a).        But., notwithstanding this finding, the Tribunal went on  to        hold  that the application under section 23 of the  Act  was        maintainable.  To appreciate the        566        reasoning ’behind this decision, it is necessary to refer to



      section  25-C of the Industrial Disputes Act, which runs  as        follows:        "Right  of  workmen laid-off for  compensation:  Whenever  a        workman  (other  than a badli workman or a  casual  workman)        whose  name  is borne on the muster rolls of  an  industrial        establishment  and who has completed not less than one  year        of  continuous  service under an employer  is  laid-off,  he        shall  be paid by the employer for all days during which  he        is  so  laid  off, except for such weekly  holidays  as  may        intervene,  compensation which shall be equal to  fifty  per        cent. of the total of the basic wages and dearness allowance        that would have been payable to him bad he not been so  laid        off:        Provided that-        (a)the  compensation payable to a workman during any  period        of twelve months shall not be for more than forty-five  days        except in the case specified in clause (b);        (b)if during any period of twelve months, a workman has been        paid  compensation for forty-five days and during  the  same        period  of  twelve months he is again laid off  for  further        continuous  periods  of  more than one week at  a  time,  he        shall, unless there is any agreement to the contrary between        him and the employer, be paid for all the days’ during  such        subsequent  periods  of  lay-off compensation  at  the  rate        specified in this section".        The appellant does not dispute the right of the  respondents        to  compensation,  and, in fact, they were informed  by  the        very notice dated 12-7-1954 under which they were laid  off,        that  compensation would be paid to them in accordance  with        section 25-C.  It is as regards the quantum of  compensation        payable  under that section that the parties are  disagreed.        It  will be remembered that the lay off commenced  on  14-7-        1954  and was to continue until the next  groundnut  season,        and that the workers were actually absorbed in batches  from        September, and that by the first week of December, they  had        all  of them been employed.  There was thus  one  continuous        lay off        567        for periods varying from 57 to 121 days.  The contention  of        the  appellant  is that, on these facts,  the  workmen  were        entitled to compensation only in accordance with proviso (a)        to  section 25-C, and that they would therefore be  entitled        to  50 per cent. of the basic wages and  dearness  allowance        for  the  first 45 days and for the rest of the  period,  no        compensation  was  payable.   The  respondents  agree   that        proviso  (a) to section 25-C applies to the first period  of        45  days; but they contend that for the remaining period  of        the lay off, the governing provision is proviso (b) to  sec-        tion  25-C,  and  that under that proviso,  they  would  ,be        entitled  to  compensation as provided in the  body  of  the        section,  i.e. 50 per cent. of the basic wages and  dearness        allowance,  for the remaining period also.  This  contention        -was  accepted  by  the  Tribunal,  and  holding  that   the        compensation awarded by the appellant was not in  accordance        with  section 25-C, it decided, as already  mentioned,  that        there  was an alteration of the conditions of  service,  and        accordingly  awarded  compensation under section 23  of  the        Act.        It  is  contended for the appellant  that  the  construction        which the Tribunal has put on section 25-C is erroneous, and        that the amount of compensation offered by the appellant was        the  correct amount payable under that section.  As  already        stated,  there is no dispute that the  compensation  payable        for  the  first 45 days has to be determined  in  accordance        with proviso (a) to section 25-C.  The dispute is only as to



      whether  for the rest of the period of lay off  the  workmen        are  entitled to compensation under proviso (b)  to  section        25-C.  That proviso would apply only if the workmen had been        paid  compensation for 45 days, and were again laid off  for        further  periods  of more than one week at a time.   On  the        wording  of the section, it is clear that the lay off  which        falls  within proviso (b) to section 25-C must  be  distinct        from that for which compensation had been paid in accordance        with  proviso (a) to section 25-C and subsequent thereto  in        point  of time.  And as, in the present case, there was  one        continuous lay off for the entire period, proviso (b)  could        have no application.        568        Counsel  for the respondents contends that though there  was        only one lay off, it should notionally be split up into two,        the first period being the 45 days covered by proviso (a) to        the section and the rest of the period, by proviso (b) It is        arguable  that there could be a second and distinct lay  off        following  the first without a break, as for  example,  when        the  management  first notifies lay off for a period  of  45        days  and  pays compensation therefor, and  again  issues  a        fresh  notification  at the end of the  period  declaring  a        further   lay  off  for  a  period  exceeding  7   days   in        continuation  of the notified lay off, and that  that  would        fall  within proviso (b).  But, in the present  case,  there        was only one notification., and the period specified therein        was up to the next season.  By no straining of the language.        of proviso (b) to section 25-C can such a lay off be brought        within  its  purview.  The respondents rely  in  support  of        their  contention on the decision in Automobile Products  of        India Ltd. v. Their Workmen(1).  But that decision gives  no        effect whatever to the words "again laid off", and moreover,        if the construction adopted therein is correct, there  would        be  no need for the provisos (a) and (b), as what  would  be        -payable  under  them, according to the  respondents,  would        become payable under the body of the section itself.  If, as        observed in the above decision, this conclusion leads to  an        anomalous position, it is for the legislature, if it  thinks        fit,  to  amend  the section and not  for  the  Tribunal  to        construe  it otherwise than what it plainly means.   We  are        accordingly of opinion that the respondents are entitled  to        compensation  only  for the 45 days as provided  in  proviso        (a),  and that as the appellant had offered to pay the  same        by  its notice dated 12-7-1954, there was no  aIteration  of        the conditions of service within section 22 of the Act,  and        that,  in consequence, the petition of the  respondents  was        liable to be rejected.        We accordingly allow the appeal, set aside the order of  the        Tribunal, and dismiss the petition of the respondents.   The        parties will bear their own costs.        (1)  [19551 1 Labour Law Journal 67.        569