23 October 1956
Supreme Court
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PIPRAICH SUGAR MILLS LTD. Vs PIPRAICH SUGAR MILLS MAZDOOR UNION.


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PETITIONER: PIPRAICH SUGAR MILLS LTD.

       Vs.

RESPONDENT: PIPRAICH SUGAR MILLS MAZDOOR UNION.

DATE OF JUDGMENT: 23/10/1956

BENCH:

ACT: Industrial Dispute-Definition-Claim in dispute arising prior to  closure  of industry-Government, if competent  to  issue notification  for adjudication subsequent to  such  closure- Discharge of workmen on closure of industry and discharge on retrenchment-Distinction--Award    of    compensation    for termination  of  service  on  closure,  if  permissible-U.P. Industrial  Disputes  Act (U.P. XXVIII of 1947), ss.  2,  3- Industrial Disputes Act (XI V of 1947), S. 2(k).

HEADNOTE: The appellant company could not work its Mills to full capa- city  owing  to  short  supply of  sugar-cane  and  got  the permission  of  the  Government to sell  its  machinery  but continued  crushing cane under a lease from  the  purchaser. The  workmen’s Union in order to frustrate  the  transaction resolved to go on strike and communicated its resolution  to the  company.  There wag correspondence between the  parties in course of which the company offered to pay to the workmen 25  per cent. of the profits of the sale on  condition  that the  strike  notice  must  immediately  be  withdrawn.   The workmen  did  not  fulfill the condition  and  made  certain counter-proposals.  The company insisted that the  condition must  first be fulfilled before the counter-proposals  could be  considered and renewed its offer.  Although the  workmen did  not  actually go on strike, they did not  withdraw  the strike notice, and did not co-operate with the management in the  dismantling and delivery of the machinery to  the  pur- chaser,  with the result that the company lost heavily.   On the  expiry  of the lease and closure of the  industry,  the services of the workmen were duty terminated by the  company on  March  21, 1951.  The workmen  thereafter,  claimed  the share  of  profits  on the basis of the offer  made  by  the company  in the correspondence and the dispute was  referred to  the  Industrial Tribunal for adjudication  by  the  U.P. Government  by  a  notification  under  s.  3  of  the  U.P. Industrial Disputes Act of 1947.  The Tribunal held that the company was bound by the offer it had made and awarded a sum of Rs. 45,000 to the workmen as representing their share  of the profits.  On appeal the award of the Industrial Tribunal was  affirmed  by  the Labour Appellate  Tribunal.   It  was contended  on  behalf  of the  appellant  company  that  the notification  was  ultra vires, and the  reference  and  the award  void  in consequence and that there  having  been  no concluded agreement between the parties, it was not bound to pay. Held, that the definition of an industrial dispute contained in  s. 2(k) of the Industrial Disputes Act XIV of  1947  and adopted  by the U.P. Industrial Disputes Act XXVIII of  1947

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contemplated the                                         873 existence  of an industry and a subsisting  relationship  of employer  and employee between the parties  and,  therefore, there  could be no industrial dispute within the meaning  of those  Acts  where  the industry had been  closed,  and  the closure was real and bona fide, if the dispute arose on such closure, or thereafter, if that could be conceived. Section  3 of the U.P. Industrial Disputes Act of 1947  only required that there must be an industrial dispute before the Government  could make a reference under that section  arid, consequently, in the instant ease where the claim in dispute had arisen, if at all, prior to the closing of the industry, the   Government   was   fully  competent   to   issue   the notification. Indian  Metal  and Metallurgical Corporation  v.  Industrial Tribunal, Madras (A.I.R. 1953 Mad. 98) and E. N.  Padmanabha Ayyar  v.  The  State  of  Madras  ([1954]  1  L.L.J.  469), approved. Messrs Burn and Co. Ltd., Calcutta v. Their Workmen,  (Civil Appeal  No.  325  of 1955, decided  on  October  11,  1956), referred to. In  the  instant  case,  however, as  the  findings  of  the Tribunal  were  inconsistent  and  conflicting,  the   court examined  the  correspondence  and  held  that  it  did  not establish  that there was a concluded agreement between  the parties  whereby the workmen could be entitled to any  share of  the  profits and, consequently, the award  made  by  the Labour Appellate Tribunal must be sot aside. Nor  was the award sustainable as one for  compensation  for termination  of  the services of workmen on closure  of  the industry  as such discharge was different from discharge  on retrenchment, which implied the continuance of the  industry and  discharge only of the surplusage, and the workmen  were not entitled either under the law as it stood on the day  of their -discharge or even on merits to any compensation.  Employees   of  Messrs  India  Reconstruction   Corporation Limited, Calcutta v. Messrs India Reconstruction Corporation Limited,  Calcutta  ([1953] L.A.C. 563)  and  Messrs  Benett Coleman  & Company Ltd. v. Their Employees,  ([1954]  L.A.C. 24), distinguished and disapproved.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 247 of 1954. Appeal from the judgment and decree dated July 21, 19 53  of the Labour Appellate Tribunal of India, Third Bench, Lucknow in Appeal.  No. Calcutta 44 of 1952. G.   G. Mathur, for the appellant. H.   J. Umrigar, amicus curiae for the respondent, 874 1956.  October 23.  The Judgment of the Court was  delivered by VENKATARAMA  AYYAR  J.-The appellant is a  limited  Company, which had been carrying on business in crushing sugarcane at a place called Pipraich in Gorakhpur District from the  year 1932.   In 1946 it decided to expand its business, and  with that  object,  sold its old machinery which had  a  crushing capacity  of 160 tons per day, and purchased a new one  with 650 tons capacity.  The new plant was installed in 1947, and it actually started working in 1948-49.  During this period, the  sugar  industry was passing through a crisis  owing  to shortage  of sugarcane, and in consequence,  the  Government assumed  control  of its production and supply.   The  quota

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which was allotted to the appellant’s Mill proved too  small to  its  being worked profitably, with the  result  that  in 1948-49  and  1949-50  the Company  sustained  losses  which according to the appellant came to Rs. 2,67 042-7-4.   After several  unsuccessful attempts at setting a  larger  supply, the  management  wrote to the Government on  May  11,  1950, either to increase their quota or to permit them to sell the Mills.  In October, 1950, the Government granted  permission for  the  sale  of the plant  and  machinery,  and  pursuant thereto, the management sold them to a Madras party.  As the crushing season was then on, the appellant obtained from the purchaser  a  lease  of the Mills  for  the  current  season agreeing to deliver possession thereof on the termination of the  lease.  It should be mentioned that the  appellant  was also carrying on negotiations with the purchaser, for itself dismantling  the machinery and erecting it at Madras  for  a lump  consideration,  expecting  to  perform  the   contract through its own workmen. When  the  workmen became aware of the  agreement  of  sale, their  reaction  to it was thoroughly  hostile,  and  acting through their union, the respondent herein, they decided  to prevent  the  transaction going through, as  otherwise  they would  be thrown out of employment.  With that object,  they moved the 875 Government to cancel the permission granted to the appellant for the sale of the Mills, and they also passed a resolution on December 26, 1950, to go on strike from January 12, 1951, and  communicated  the same to the appellant.  This  led  to correspondence  between  the  parties, and as  that  is  the foundation of the claim for compensation put forward by  the respondent and awarded by the Tribunal, it becomes necessary to set it out with sufficient fulness.  On January 3,  1951, the  Managing  Director offered through the Manager  of  the Mills,  to  allot  25 per cent. of the profit  on  the  sale transaction  with  the  Madras party on  certain  terms  and subject  to the condition "that the notice of strike  should be withdrawn at once and today, so that arrangement of  work could be made".  To this, the reply of the Union on  January 5, 1951, was as follows: "With  reference  to  the assurance given  by  the  Managing Director, communicated by your goodself to us under your No. 975 dated 4th January 1951, asking us to withdraw the notice of  strike, we regret to inform you that our fight  is  with the  Government,  which is not solved with this  only.   Our members  are bent upon keeping the Sugar mills here  at  any cost,  either  by strike, satyagrah, etc.,  or  through  any other means guided by our federation, otherwise there is  no assurance of employment of thousands of creatures". Then  the letter proceeded to take exception to some of  the terms, and finally wound up by stating that the workmen were waiting for their President Kashinath Pandey to advise  them in the matter.  Replying to  the objections raised by the respondent to some  of  the terms,  the  management wrote on January 8,1951,  that  they were   ready  to  reconsider  them,  but  insisted  on   the withdrawal  of  notice of strike as "the chief  point".   On January  9,1951,  Kashinath  Pandey came  to  Pipraich,  and discussed the matter with the management, and following upon it,  the General Manager wrote to the respondent on  January 10,  1951, that "in case the strike notice was withdrawn  at once  he would accede to the following points raised by  the Union", and then the points were set down.  The 876 letter concluded by stating that the amount of  compensation

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"will  not be less than a lac".  The respondent  replied  to this  on the same day that the workers were waiting for  the "final order" of Kashinath Pandey in the matter, and assured the  management  that "in the meantime the  strike  was  not coming  off from the 12th".  After this, the  appellant  did not  hear from the respondent, the strike also did not  take place,  and  the crushing went on till the end  of  January, 1951,  when  the season came to an end.  One of  the  points that arises for our determination in this appeal is  whether on  this correspondence there was a concluded.  and  binding agreement that the appellant should pay 25 per cent. of  the profits on the sale transaction to the workmen. To continue the narration, the lease having expired with the crushing season, the purchaser came over to Pipraich to take delivery of the Mills and to arrange for the machinery being dismantled  and removed to Madras for being  erected  there. The appellant who, as already stated, was negotiating to get the dismantling done for a lump consideration found that its workmen  were as hostile to it as ever, and refused to  help in the work.  To adopt the language of the respondent in its written  statement  "they declined out of sentiment  to  dig their own graves".  After fruitless attempts at getting them to  co’operate in dismantling the machinery, the  management put up the following notice on February 28, 1951: "The workers of Pipraich.  Sagar Mills Ltd. should know that we  have sold our Mill to Madras party under the  permission of  the Government.  The party has arrived for  dismantling. Under  the terms of agreement, we are bound to help them  in this  work.  So the workers should know that we can do  this favour  that  we can take contract of dismantling  here  and erection in Madras and keep the workers engaged and  request the  purchasers for providing them in their concern.   Hence it is notified that workers who are not ready to  co-operate they  should consider themselves to be discharged  from  1st March 1951.  Fifteen days’ notice is served on the  workers. Those who 877 create  obstructions will be deprived of benefit,,  promised to them". But the Union could not reconcile itself to the prospect  of the  Mills  being shifted, and on March  4,  1951  Kashinath Pandey wrote a letter to the Government threatening to go on hunger  strike,  if  the  Mills  were  to  be  shifted  from Pipraich.   The workmen were thus in no mood to  accept  the terms  contained in the notice dated February 28, 1951,  and so, the management had to issue further notice on March  14, 1951 in the following terms: "Whereas the workers have already been notified that we have sold our entire plant to a Madras party who have arrived  to take charge of the Machines and whereas we have to hand over the  plant from 15-3-1951 to the purchasers and  thus  there will  be  no work for our workers and  whereas  the  Mazdoor Union,  has  already refused our suggestion  to  engage  the workers  in the work of dismantling and erection at  Madras. Now  in  pursuance  of our notice  dated  28-2-1951,  it  is notified  that  the following workers have  been  discharged from  the services since 1-3-1951 subject of course  to  the payment  of 15 days wages.  The workers are hereby asked  to take their wages of 15 days on the 15th and 16th instant". It  appears from a notice dated March 16, 1951, sent by  the appellant  to  the respondent, that after the  notice  dated March   14,  1951,  was  issued,  Kashinath  Pandey  had   a discussion  with  the management, as a result of  which  the date of termination of service of, the workers was  extended from  the  15th to 21st March pending the  decision  of  the

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Government   on  the  "future  programme  of  the   Pipraich factory", the workmen agreeing on their part to "take up the dismantling  of  the  Mill after the said  date".   But  the Government  declined by its letter dated March 21, 1951,  to interfere with the sale of the machinery, and in  accordance with  the  understanding reached above, the  workers  should have  co-operated  with  the appellant  in  dismantling  the machinery  from March 21.  But they declined to do  so,  and thereupon,  acting  in  accordance with  its  notices  dated February 28, 1951, 114 878 and March 14, 1951, the management duly discharged them.  In view  of  the  inability of the appellant  to  take  up  the contract,  the  purchaser entered into  direct  negotiations with  the  workmen, and on 1-4-1951 concluded  an  agreement with them for dismantling the machinery.  The net result was that the appellant lost a contract on which, as admitted  by the  respondent, it would have earned a profit of  at  least Rs.  2 lakhs.  The workers., having taken the benefit  of  a direct  contract  with  the purchaser  for  dismantling  the machinery, next turned their attention to the appellant, and on  the  basis  of the letters dated January  3,  1951,  and January  10,  1951, sent a notice to it on April  19,  1951, asking  for  distribution among the workers of the  "25  per cent labour-share of the profits on sale of machinery".   By its  letter dated June 19, 1951, the  appellant  repudiated. the claim, and stated: "Then  we  also refer you to our notice dated  27-2-1951  in which  we  appealed to the labour to cooperate. with  us  so that  we  might  take the contract of  dismantling  here  at Pipraich and erection at Etikoppaka and said definitely that those  who  do  not co-operate  should  consider  themselves discharged.  This would have given us a good saving to  meet the demand of the labour, but as you in spite of our  appeal and  notice refused to co-operate, we had to suffer a  heavy loss, for which you are directly responsible". Thereafter,  the  respondent moved the  Government  to  take action  in the matter, and the result was that  on  November 16,1951,  the U. P. Government issued a  notification  under section  3  of the U. P. Industrial Disputes Act  XXVIII  of 1947,  hereinafter  referred to as the  Act,  referring  the following  dispute  to the adjudication  of  the  Industrial Tribunal: "Whether  the  services  of workmen, if so  how  many,  were terminated  by  the concern known as  Pipraich  Sugar  Mills Ltd.,  Pipraich, District Gorakhpur, without  settlement  of their  due claims and improperly; and if so, to what  relief are the workmen concerned entitled?" By its award dated February 28,1952, the Indus- 879 trial Tribunal held firstly that the closure of the business and  the  sale of the machinery by the  appellant  was  bona fide,  as it had been continuously incurring losses and  the supply position of sugarcane held out no immediate prospects of  improvement,  that the conduct of the workmen  had  been throughout  unfair  and  such  as  to  disentitle  them   to compensation  but that the promise contained in the  letters dated  January  3 and 10, 1951, to pay 25 per cent.  of  the profits  realised by the sale of the Mills, was  binding  on the  management.  It further held, repelling the  contention of  the appellant, that the notification dated November  16, 1951,  was competent, notwithstanding that at that date  the business  had been closed.  The Tribunal then  proceeded  to ascertain  the profits made by the appellant on its sale  of

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the  Mills, and held that a sum of Rs.  45,000  representing the  25  per  cent. of the net profits was  payable  to  the workmen.  The management appealed against this decision  but the  same was confirmed by the Labour Appellate Tribunal  by its order dated July 21, 1953.  The matter now comes  before us.  in  appeal  under  art.  136.   As  the  appeal  raised questions   of  importance,  and  as  the   respondent   was unrepresented we requested Mr. Umrigar to assist us, and  we are  indebted  to  him for  his  learned  and  comprehensive argument. Two  contentions have been urged in support of  the  appeal: (1) The notification dated November 16, 1951, referring  the dispute  to the adjudication of the Industrial  Tribunal  is ultra vires, and the reference and the award therein are  in consequence void; and (2) there was no concluded or  binding agreement  by the appellant to pay the workmen any share  of profits  in the sale transaction and the award is  therefore bad on the merits. Taking  the  first contention, the provision  of  law  under which the impugned notification dated November 16, 1951, was issued  by the State is section 3 of the Act, which runs  as follows: "If in the opinion of the State Government, it is  necessary or  expedient  so to do for securing the  public  safety  or convenience, or the maintenance of 880 public order or supplies and services essential to the, life of the community, or for maintaining employment, it may,  by general or special order, make provision-- (d)  for referring any industrial disputes for  conciliation or adjudication in the manner provided in the order". An  "industrial  dispute",  as defined in  s.  2(k)  of  the Industrial Disputes Act XIV of 1947-and by force of  section 2,  that definition applies to the Act"means any dispute  or difference  between  employers  and  employees,  or  between employers and workmen, or between workmen and workmen, which is  connected with the employment or non-employment  or  the terms of employment or with the conditions of labour, of any person".  Now, the contention of the appellant is that it is a  condition precedent to the exercise by the State  of  its power  under  s.  3  of the Act  that  there  should  be  an industrial  dispute,  that  there  could  be  no  industrial dispute  according  to this definition, unless  there  is  a relationship  of employer and employee; that in the  present case,  as the appellant sold its Mills, closed its  business and discharged the workmen on March 21, 1951, paying to them in  full  whatever was due in accordance with  the  standing orders. there was thereafter no question of any relationship of  employer  and employees between  them  that  accordingly there  was  no  industrial  dispute  at  the  date  of   the notification on November 16, 1951, and that it was therefore incompetent.   Reliance  was  placed  in  support  of   this position   on   the   observation  in   Indian   Metal   and Metallurgical Corporation v. Industrial Tribunal,  Madras(1) that  the definition of an "industrial dispute"  presupposes the continued existence of the industry, and on the decision in  K.  N. Padmanabha Ayyar v. The State of  Madras(2)  that there  could  be  no industrial dispute  with  regard  to  a business, which was not in existence. It  cannot  be  doubted that the entire scheme  of  the  Act assumes that there is in existence an industry, (1) A.I.R. 1953 Mad. 98, 102. (2) [1954] 1 L.L.J. 469. 881 and  then  proceeds on to provide for  various  steps  being

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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 Messrs Burn and Co., Ltd., Calcutta v. Their  Workmen(1), 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.  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 (supra) and K. N. Padmanabha  Ayyar v.  The State of Madras (supra)  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. N. Padmanabha  Ayyar  v.  The State  of  Madras (supra), fall outside the purview  of  the Industrial Disputes Act.  And that will a fortiori be so, if a  dispute  arises if one such can  be  conceived-after  the closure of the business between the quondam employer and em- ployees. In the light of the principles stated above, we must examine the nature of the dispute which is the subject-matter of the reference under the impugned notification.  The claim of the workmen  is that the promise made by the management  in  its letters  dated January 3, 1951, and January 10, 1951,  is  a binding  agreement and that they are entitled to be paid  in accordance  therewith.   Now,  if this  contention  is  well founded, the dispute relates to a claim which arose  (1) Civil  Appeal No. 325 of 1955, decided on  October  11, 1956. 882 while the industry was in existence and between persons  who stood  in  the relationship of employer and  employees,  and that  would clearly be an industrial dispute as  defined  in the  Act.  But it is argued for the appellant that even  so, the   ’notification  dated  November  16,  1951,  would   be incompetent  as  the industry had been  closed  before  that date,  and there was therefore no relationship  of  employer and  employee  at that point of time.  In other  words,  the power of the State to make a reference under section 3  will depend, according to the appellant, not only on the  dispute having  arisen in an existing industry but further,  on  the continued  existence  of that industry on the -date  of  the notification.   We do not find anything in the  language  of section  3  of  the Act to warrant the  imposition  of  this additional  limitation on the power of the State to  make  a reference.   That  section only requires, apart  from  other conditions,  with  which we are not  concerned,  that  there should  be an industrial dispute before there can be a  ref- erence,  and  we have held that it would  be  an  industrial dispute  if it arises out of an existing industry.  If  that condition  is  satisfied, the competence of  the  State  for taking  action under that section is complete, and the  fact that  the industry has since been closed can have no  effect on it.  Any other construction would, in our opinion, result in  serious  anomalies and grave injustice.   If  a  workman improperly  dismissed  raises  an  industrial  dispute,  and

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before  action  is taken by the Government the  industry  is closed,  what happens to the right which the Act  gives  him for appropriate relief, if the Act vanishes into thin air as soon  as the industry is closed?  If the contention  of  the appellant  is correct, what is there to prevent an  employer who  intends, for good and commercial reason, to  close  his business  from indulging on a large scale in  unfair  labour practices, in victimisation and in wrongful dismissals,  and escaping  the  consequences  thereof  by  closing  down  the industry?  We think that on a true construction of s. 3, the power  of the State to make a reference under  that  section must be determined with reference not to the date,on which 883 it  is made but to the date on which the right which is  the subject-matter of the dispute arises, and that the machinery provided  under the Act would be available for  working  out the rights which bad accrued prior to the dissolution of the business. It was next argued that even on this view, the  notification dated  November  16, 1951, was incompetent inasmuch  as  the management had offered by its letter dated January 3,  1951, to  pay the workmen 25 per cent. of the profits on the  sale transaction  only  on April 30, 1951, and the right  to  the amount thus accrued to the workmen only after the closure of the business on March 21, 1951.  But this argument  proceeds on  a misapprehension of the correct position on the  facts. The true scope of the promise contained in the letter  dated January  3, 1951, is that the workmen acquired thereunder  a right in praesenti to 25 per cent. of the profits, but  that the amount became payable only on April 30, 1951, the reason obviously  being that it could be precisely determined  only after  the transaction was completed.  In this view, as  the claim  for  share of profits arose on January 3,  1951,  and January  10,  1951,  when  the  industry  was  working,  the reference   dated  November  16,  1951,  would   be   valid, notwithstanding  that the business was closed on  March  21, 1951. That brings us on to a consideration of the second question, as  to whether there was a concluded agreement  binding  the appellant  to pay 25 per cent. of the profits in.  the  sale transaction to the workmen.  The Tribunal has answered it in the  affirmative,  and  its  finding  was  accepted  by  the Appellate  Tribunal  as, being one of fact, it  had  to  be, under  section  7  of  the  Industrial  Dispute   (Appellate Tribunal)  Act  No.  XLVIII of 1950.  It is  argued  by  Mr. Umrigar  that following the usual practice of this Court  in special appeals not to disturb findings of fact by Tribunals unless  there were exceptional grounds therefore  we  should not  interfere with the finding of the  Industrial  Tribunal that  there was a concluded and enforceable agreement.   But our  difficulty  is  that the Tribunal  has  spoken  in  two voices, and has given inconsistent 884 and  conflicting  findings, and it has  consequently  become necessary  for us to determine which of its findings  should be accepted as supported by materials. We start with the letter dated January 3, 1951, wherein  the management made an offer to pay 25 per cent. of the  profits of  the sale transaction to the workmen.  It  was  expressly subject  to the condition that the strike should  be  called off  "at once and today".  That was not done.  On the  other hand,  the respondent made certain counter-proposals in  its letter dated January 5, 1951, and the management replied  on January 8, 1951, that it would reconsider its terms provided the strike notice was withdrawn.  Thus, the offer  contained

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in  the letter dated January 3, 1951, was not  accepted  and lapsed.   Then on January 10, 1951, the  management  renewed its  offer  subject again to the condition that  the  strike notice  was  withdrawn at once.  The  respondent  passed  no resolution  withdrawing the notice, and in its  reply  dated January  10, 1951, it made it clear that it was waiting  for Kashinath Pandey for it to come to a final decision’.  There was no further communication from the Union.  We do not  see bow on this correspondence it could be held that there was a concluded  agreement  between the parties, and that  is  the view  which the Tribunal itself took of it when it  observed that  "no  final agreement could be arrived  at........  and consequently the management served a notice on 28th February 1951".   But then, it went on to observe that, in fact,  the workmen  did  not  go on strike on  January  12,  1951,  and continued  in service till they were served with  notice  of discharge on February 28, 1951, that that was  consideration for the promise made by the agreement, which must  therefore be  taken  to  have become a term of service,  and  that  in consequence  "the promise of the management as contained  in the  letters  of  3rd and 10th January 1951,  is  a  binding agreement   under   which  the  workmen  are   entitled   to compensation  for  termination  of  their  services  on  the closure  of the Mills".  This argument rests on a  confusion of  thought.  The question whether there was  consideration. for the promise made by the 885 management  in its letters dated January 3, and January  10, 1951  arises only if the offer contained in the letters  had been  accepted  by the respondent, so as to  ripen  into  an agreement.  And if there was no concluded agreement  between the  parties,  as  the Tribunal itself had  held,  then  the further   question  as  to  whether  it  was  supported   by consideration  would  not  arise, nor  would  there  be  any question of its becoming one of the terms of the service. It  was argued that though a formal  resolution  withdrawing the strike was not passed, in fact there was no strike,  and that must be taken to be acceptance of the offer by conduct. That would not be acceptance as required by the  ’appellant, and that alone would be sufficient to reject the  contention of  the respondent.  But this contention must fail  even  on the  merits.   In  its letter dated January  10,  1951,  the respondent,  while  stating that the strike was  not  taking place  on the 12th, made it clear that this was pending  the final  decision  of  the  Union.  That  clearly  is  not  an acceptance  of the offer.  The matter does not rest  there., The  object of the strike was, it should be remembered,  not anything directly connected with the terms of employment but something collateral to it. It was to prevent the Mills from being removed from Pipraich to Madras.  When the  management offered to part with 25 per cent. of the profits of the sale transaction, its object was clearly to disarm the opposition of  the  workmen  and to get the  machinery  dismantled  and delivered to the purchaser peacefully.  Did the workmen ever agree  to  it?  As late as March 5, 1951,  Kashinath  Pandey wrote to the Government that if the Mills were to be shifted from Pipraich, he would go on hunger strike.  Even after the Government  had  informed  him that the sale  could  not  be interfered  with,  the workmen did not co-operate  with  the management  in  the dismantling of the  machinery  with  the result  that the appellant had to give up the contract  with reference thereto and to lose Rs. 2 lakhs profits.  To crown all, the workmen having successfully prevented the appellant from getting the contract for dismantling, themselves 886

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entered into it directly with the purchaser and  undoubtedly intercepted  a part, if not the whole, of the profits  which the  appellant would have earned.  It is impossible to  hold on these facts that there was a concluded agreement  between the  parties  binding the appellant to give  the  workmen  a share of the profits of the sale transaction. It was next contended by Mr. Umrigar that even if there  was no concluded agreement by the management to pay the  workmen a  share of profits on the sale transaction, it  would  have been  open to the Tribunal to have awarded compensation  for the termination of their services, treating it as  retrench- ment,  and  that the ’award of compensation  of  Rs.  45,000 which was what the management itself had suggested, might be sustained on that footing.  This contention assumes that the termination of the services of workmen, on the closure of  a business, is retrenchment.  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 surplusage and the  termination  of services  of all the workmen as a result of the  closure  of the  business  cannot  therefore be  properly  described  as retrenchment.  It is ’however contended by Mr. Umrigar  that the   definition  of  retrenchment  in  section   2(oo)   of the  Industrial Disputes Act XIV of 1947 is wide  enough  to include  discharge consequent on the, closure  of  business, and  that under section 25-F, compensation could be  awarded therefore  Our attention has been invited on behalf  of  the appellant  to  the  decision in J. K.   Hosiery  Factory  v. Labour  Appellate  Tribunal(1),  where  it  was  held   that retrenchment as defined in section 2(oo) does not comprehend discharge  on  the  closure of  business,  but  Mr.  Umrigar contends  that  it  is erroneous.  We  do  not  consider  it necessary  to  decide this question, as  the  definition  of "retrenchment" in section 2(oo) of Act XIV 1947 and  section 25-F  therein  were  inserted  by  the  Industrial  Disputes (Amendment)  Act  No.  XLIII of 1953, and we  have  held  in Messrs Burn and Co., Ltd., Calcutta v. (1)  A I.R. 1956 All. 498. 887 Their  Workmen  (supra) that this Act has  no  retrospective operation.  The rights of the parties to the present  appeal must  therefore be decided in accordance with the law as  it stood on March 21, 1951, when the workmen were discharged. It  was next contended, on the strength of the decisions  in Employees   of  Messrs  India   Reconstruction   Corporation Limited, Calcutta v. Messrs India Reconstruction Corporation Limited, Calcutta(1) and Messrs Benett Coleman & Company Ltd v.  Their Employees(2) that even prior to the  enactment  of Act XLIII of 1953, the Tribunals had acted on the view  that retrenchment included discharge on closure of business,  and had awarded compensation on that footing and that the  award of  the Tribunal in the present case could be  supported  in that  view  and should not be disturbed.   In  Employees  of Messrs India Reconstruction Corporation Limited, Calcutta v. Messrs  India Reconstruction Corporation  Limited,  Calcutta (supra), the Tribunal observed at P. 576 as follows: "Ordinarily  retrenchment  means discharge from  service  of only the surplus part of the labour force but in the case of closure  the  whole  labour force  is  dispensed  with.   In substance   the  difference  between  closure   and   normal retrenchment  is  one  of degree only.  As in  the  case  of retrenchment  so in the case of closure the workmen are  not responsible for closing their jobs.  In both the cases, what is called compensation by way of retrenchment relief  should be admissible".

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We  are  unable to agree with  these  observations.   Though there   is   discharge  of  workmen  both  when   there   is retrenchment and closure of business, the compensation is to be awarded under the law, not for discharge as such but  for discharge   on  retrenchment,  and  if,  as   is   conceded, retrenchment  means in ordinary parlance, discharge  of  the surplus,   it  cannot  include  discharge  on’  closure   of business.   Moreover,  there was no question of  closing  of business   in  Employees  of  Messrs  India   Reconstruction Corporation Limited, Calcutta v. Messrs India Reconstruction Corporation (1) (1953] L.A.C. 563. (2) [1954] L.A.C. 24. 888 Limited,  Calcutta (supra), as what happened there was  that one  of  the  units of the company, that  at  Calcutta,  was closed  and  that would be a case of retrenchment,  and  the observations  quoted above were purely obiter.   They  were, however,  quoted  and  followed without  discussion  by  the Appellate  Tribunal in Messrs Benett Coleman & Company  Ltd. v. Their Employees (supra), which further remarked at p. 27: "Thus whether the closure was justified or not, the  workmen who   have   lost  their  jobs  would  in  any   event   get compensation.  If it was not bona fide or not justified,  it may be that the measure of compensation would be larger than if it was otherwise". For  the  reasons  given above, we cannot  assent  to  these observations.  It, should be mentioned that in Messrs Benett Coleman  and Company Ltd. v. Their Employee  (supra),  there was  no closure of business, but winding up of the  Calcutta unit  by  a  newspaper  publishing  company  which  had  its headquarters  at Bombay.  We must accordingly overrule  this contention also.  We should add that the Tribunal was of the opinion that, apart from agreement, the workmen should  not, in  view of their conduct, be awarded compensation,  and  we entirely  agree with it.  And as we have found  against  the agreement,  we  must allow this appeal, and  set  aside  the award  of compensation to the workmen made by the  Tribunal. In the circumstances, the parties will bear their own  costs throughout. Appeal allowed. 889