03 April 1964
Supreme Court


Case number: Appeal (civil) 742 of 1963






DATE OF JUDGMENT: 03/04/1964


CITATION:  1964 AIR 1690            1964 SCR  (7) 639

ACT: Industrial  Dispute--Termination  of  Service--Validity   of notice--Abolition  of  all  posts  of  an   establishmeut-If amounts  to reduction of posts-Road  Transport  Corporations Act 1950(64 of 1950), as amended by Act 87 of 1956, s. 47-A- Central  Provinces and Berar Industrial Disputes  Settlement Act, 1947 (C.P. & Berar 23 of 1947), s. 31 Sch.  II, Item 1.

HEADNOTE: As a result of the passing of the States Reorganisation Act, 1956,  Vidharbha  area  which was in  the  State  of  Madhya Pradesh  became  part of the State of Bombay  and  when  the State of Bombay was divided under the Bombay  Reorganisation Act,   1950,  the  said  area  remained  in  the  State   of Maharashtra.   Before 1956. the Bombay State Road  Transport Corporation  and Provincial Services established  under  the Road Transport Corporations Act, 1950, were operating in the States  of Bombay and Madhya Pradesh respectively.  To  meet the  situation  arising  from  these  territorial   changes, Parliament   made   amendments   to   the   Road   Transport Corporations  Act,  1950, by which, inter alia s.  47-A  was introduced providing for the reconstitution,  reorganisation and  dissolution of the corporations established  under  the Act.  On May, 27, 1961, the Central Government made an Order under s. 47-A of the Act, inter alia, approving a scheme for the reorganisation of the Bombay State Road Transport  Corp- oration  and amalgamating with it the  Provincial  Transport Services  which  had, under the  Reorganisation  Act,  1956, become  a commercial undertaking of the State of Bombay  and which had been operating in the Vidharba area.  Clause  9(1) of  this provided for the abolition of all the posts in  the Provincial  Transport  Services  and for  discharge  of  all persons  holding  such  posts for service  but  giving  such people  an  option  of  continuing in  the  service  of  the Maharashtra  State Road Transport Corporation.  Notice  ter- minating  the  services  of  the  persons  employed  by  the Provincial  Transport Services (operating in Vidharba)  were issued.   Thereupon, two former employees of the  Provincial Transport  Services  and the Union of the  workmen  of  that concern made an application before the High Court of  Bombay under  Arts.  226  and 227 of  the  Constitution  of  India,



challenging  the  validity, inter alia, of  the  notices  of termination of service served on the employees on the ground that  the action taken by the Government in  abolishing  the posts and issuing notices of termination of services of  the employees  was bad as it contravened, inter alia,  the  pro- visions  of  s.  31  of  the  Central  Provinces  and  Berar Industrial Disputes Settlement Act, 1947. Held:     Abolition of all posts of an establishment did not amount to reduction of posts within the meaning of Item 1 of the   Schedule  II  of  the  Central  Provinces  and   Berar Industrial Disputes Settlement Act, 1947; and the Government order  abolishing the posts and terminating the services  of the employees. 640 did  not amount to a change within the meaning of s.  31  of the  Act.   The Government was, therefore, not  required  to follow the procedure mentioned in s. 31.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 742 of  1963. Appeal from the judgment and order dated July 4, 5, 1961  of the  Bombay High Court (Nagpur Bench) at Nagpur  in  Special Civil Application No. 150 of 1961. S.   V. Gupte, Additional Solicitor-General, G. B. Pai,  and R.   H. Dhebar, for the appellants. The respondent did not appear. April 3, 1964.  The Judgment of the Court was delivered by DAS GUPTA, J.-A short point arises for consideration in this appeal.  But to understand how the point arises it is neces- sary to embark on a somewhat lengthy statement of facts. Three Road Transport Corporations established under the Road Transport Corporation Act, 1950 were operating in the States of  Bombay,  Madhya Pradesh and Hyderabad in 1956  when  the States  Reorganisation Act, 1956 was enacted.   These  three corporations  were known as the Bombay State Road  Transport Corporation, the Provincial Transport Service and the  State Transport  Marathewada  respectively.  As a  result  of  the reorganisation of the States under the States Reorganisation Act,  1956  the former State of Bombay lost certain  of  its territories  to  the newly formed State of Mysore  and  some areas  to  the State of Rajasthan.  On the other  hand,  the State  of  Bombay gained the Marathewada from the  State  of Hyderabad  and the Vidharbha area from the State  of  Madhva Pradesh and certain other areas from the then existing State of Saurashtra and the State of Kutch.  To meet the situation arising  from these territorial changes,  Parliament  passed the  Road  Transport Corporation Amendment Act,  1956,  thus amending the Road Transport Corporation Act, 1950.   Section 47-A  which was introduced by the amending Act provides  for the  reconstitution, reorganisation and dissolution  of  the Corporations established under s. 3 of the Act.  On December 31,  1956 an order was made by the Central Government  under the  provisions  of  this section  approving  a  scheme  for reorganisation  submitted by the Government of  Bombay.   By this  scheme  those  areas in which the  Bombay  State  Road Transport   Corporation   had  been   operating   but   were transferred under the State Reorganisation Act to the States of  Mysore and Rajasthan were excluded from the area of  the operation  of the Bombay State Road  Transport  Corporation. This  came into force from the 1st January,  1957.   Another consequence  of the States Reorganisation Act was  that  the two commercial undertakings which were known as 641



the Provincial Transport Services, and the State  Transport, Marathewada, became the commercial undertakings of the State of  Bombay.   Further, territorial changes occurred  in  the State  of Bombay in the year 1960.  By the Bombay  Reorgani- sation  Act, No. II of 1960, the State of Bombay  was  again divided;  part of what was in the former State,  was  formed into a new State by the name of the State of Gujarat,  while the remaining area was named, the State of Maharashtra.   In consequence  of  this some other areas were excluded  by  an order under s. 47-A of the Act from the area of operation of the Bombay State Road Transport Corporation.  The  situation then was the State Transport, Marathewada, was operating  in the  Maharashtra area, the Provincial Transport Service  was operating  in  the Vidharbha area while in the rest  of  the Maharashtra State the Bombay State Transport Corporation was operating.   It  was when things stood like  this  that  the Central Government made an order on the 27th May, 1961 under s.  47-A of the Amending Act.  By this order it  approved  a scheme  for  the  reorganisation of the  Bombay  State  Road Transport  Corporation and amalgamation with it of  the  two other transport undertakings of the State Government,  viz., the Provincial Transport Services, and the State  Transport, Marathewada.   After the reorganisation the Corporation  was to  be  known  as  the  Maharashtra  State  Road   Transport Corporation.   Clause  9(1) of this Order provided  for  the abolition  of  all the posts in the  two  undertakings,  the Provincial  Transport  Services,  and  the  State  Transport Marathewada,  and for discharge of all persons holding  such posts from service.  There was a provision, however,  giving such  people option either of taking terminal benefits  such as  compensation, pension, or gratuity to which they may  be entitled under the rules applicable to them or of continuing as from the 1st July 1961 in the service of the  Maharashtra State  Road  Transport Corporation.  Sub-clause 2 of  cl.  9 provided  that every person who as a result of the  exercise of   such  option  is  continued  in  the  service  of   the Maharashtra State Transport Corporation shall be entitled to be  employed  by  that Corporation on  the  same  terms  and conditions,   including  pay  as  were  applicable  to   him immediately  before  the  appointed day  and  to  count  his service  under the previous corporations for  all  purposes. Subclause 3 of cl. 9 was in these words: -               "Nothing in sub-paragraph )2) shall be  deemed               to  affect the right of the Maharashtra  State               Road  Transport  Corporation, subject  to  the               provisions   of   S.   77   of   the    Bombay               Reorganisation  Act,  1960  (11  of  1960)  to               determine or vary after the appointed day, the               conditions  of  service of any person  who  is               continued in the service of the Corporation".               L/P D)ISCI--21               642               "Provided  that the conditions of service  ap-               plicable immediately before the appointed day,               to any such person shall not be varied to  his               disadvantage.   except   with   the   previous               approval of the Central Government". Notices  terminating the services of the employees  employed by   the   Provincial  Transport  Services   (operating   in Vidharbha)  were issued.  On 12th June 1961  an  application was made under Art. 226 and Art. 227 of the Constitution  by two former,, employees of the Provincial Transport  Services and the Union of the workmen of that concern challenging the validity  of  the order of reorganisation made on  the  27th May.  1961 and the notices of termination of service  served



on  the employees.  The following reliefs were  prayed  for: (a) that the notices of termination be quashed; (b) that the amalgamation  of the Provincial Transport Services with  the Bombay State Road Transport Corporation as directed under s. 47-A be not carried out, and (c) that "a writ of mandamus be also  issued to respondents 1 to 3 directing them  to  carry out  the  obligations under s.25-F and other  provisions  of retrenchment of the Industrial Disputes Act, 1947, and other provisions  of law before taking any action as  required  by law and also by paragraph 9 of the order even assuming  that the amalgamation order is legal and proper." Three  contentions were raised in support of these  prayers. It  was  first  urged that the order made on  the  27th  May violated  the  provisions  of  s.47-A of  the  Act  and  was therefore  bad  in law, The second contention was  that  the proviso  to  sub cl.3 of cl.9 of the order  contravenes  the provisions  of  s.77  of  the  Bombay  Reorganisation   Act. Lastly,  it  was  contended that the  action  taken  by  the Government  in abolishing the posts and issuing  notices  of termination  of  services of the employees  was  bad-firstly because  it contravened s.25F (b) and (c) of the  Industrial Disputes  Act  and  secondly,  because  it  contravened  the provisions of s.31 of the C.P. and Berar Industrial Disputes Settlement Act, 1947. The  High  Court  rejected the  first  contention  that  the Government  Order  violated  s.47-A of  the  Act.   It  also rejected  the petitioner’s contention that the action  taken by the Government was bad because of contravention of  s.25F (b) and (c)    of  the  Industrial Disputes Act.   The  High Court was however   of opinion that the proviso to sub-cl. 3 of cl. 9 of the order was bad in law, being in conflict with s.77 of the Bombay Reorganisation Act, but it held that  the proviso was severable and its illegality did not affect  the working  of  the scheme.  The High Court also  accepted  the petitioner’s  contention  that  the  action  taken  by   the Government in issuing notices of termination of services  on abolition  of  posts did not comply with the  provisions  of s.31 of the C.P. and Berar Industrial Disputes 643 Settlement Act and was accordingly invalid.  In the  result, the  High  Court  quashed  the  Government  resolution   for abolition of posts and the notices of termination that  were issued in consequence thereof.  It also ordered the issue of a direction, directing the Maharashtra State Road  Transport Corporation  "not  to take any action under the  proviso  to sub-paragraph  (3) of paragraph 9 of the Order  relating  to varying  the conditions of services to the  disadvantage  of any  of  the  employees  who were  employees  of  the  first respondent  immediately before the appointed day, i.e.,  1st July  1961."  Against these orders of the  High  Court,  the State  of Mahrashtra, the Maharashtra State  Road  Transport Corporation and the Motor Transport Controller, Maharashtra, have appealed.  At the hearing of the appeal nobody appeared before  us on behalf of the petitioners in the  High  Court. The correctness of the High Court’s decision that the  order of the 27th May, 1961 did not violate s. 47-A of the Act was not challenged before us.  Nor was the High Court’s decision that  the  Government’s  action  in  abolishing  posts   and terminating  services  of employees was not bad  because  of contravention  of  s.  25F(b)  and  (c)  of  the  Industrial Disputes Act. questioned before us.  We have, therefore, not examined  the correctness or otherwise of these  conclusions and  shall  dispose  of the appeal on  the  basis  that  the decision on these points are correct. The first contention urged in support of the appeal is  that



the  High Court was wrong in thinking that in  ordering  the abolition of posts and terminating the services of employees in those posts the Government had contravened the provisions of  s.  31 of the C. P. and Berar Industrial  Disputes  Set- tlement Act.  That section is in these words:-               "31.  (1) If an employer intends to  effect  a               change in any standing orders settled under s.               30  or  in respect of  any  industrial  matter               mentioned  in  Schedule  11,  he  shall   give               fourteen days’ notice of such intention in the               prescribed  form  to  the  representative   of               employees.               (2)  The  employer shall send a  copy  of  the               notice  to  the  Labour  Commissioner,  Labour               Officer  and  to such other person as  may  be               prescribed and shall also affix a copy of  the               notice at a conspicuous place on the  premises               where  the employees affected by the  proposed               change  are employed and at such other  places               as  may  be specially directed by  the  Labour               Commissioner in any case.                (3)  On   receipt   of   such   notice    the               representative  of employees  concerned  shall               negotiate with the employers". L/P(1))ISCI-21(a).... 644 Schedule  II of this Act mentions a number of  matters,  +he first of which is "Reduction intended to be of permanent  or semi-permanent  character in the number of persons  employed or  to be employed not due to force majeure".  The  argument that  prevailed in the High Court was that abolition of  all posts amounted to permanent reduction within the meaning  of this  Item  in  Schedule 11.  If that be  correct  it  would necessarily  follow that the Government had to  observe  the procedure  prescribed  in s. 31.  Admittedly, that  was  not done.   The  short  question,  therefore,  is  whether   the abolition  of  all  posts  of  an  establishment  amount  to reduction of posts.  In our opinion, the word reduction  can only  be  used when something is left after  reduction.   To speak  of abolition as a reduction of the whole  thing  does not  sound sensible or reasonable.  We ,ire unable to  agree with the High Court that the term reduction in the number of persons  employed or to be employed" as mentioned in Item  1 of  Schedule  11  covers abolition of  all  posts.   In  our opinion,  the Government Order in abolishing the  posts  and terminating the services of the employees did not amount  to a change within the meaning of s. 31 of the C. P. and  Berar Industrial  Disputes  Settlement Act.  The  Government  was, therefore, not required to follow the procedure mentioned in s. 31. This  brings  us to the question about the validity  of  the proviso  to  sub-cl. 3 of cl. 9 of the  Order.   As  already indicated  the  workmen’s contention was  that  the  proviso contravened   the  provisions  of  s.  77  of   the   Bombay Reorganisation Act.  That section contained a provision that on transfer or reemployment of any workman in consequence of reconstitution. reorganisation, amalgamation or  dissolution by any body corporate, cooperative society or any commercial undertaking   or  industrial  undertaking  the   terms   and conditions  of service applicable to the workman after  such transfer or reemployment shall not be less favourable to the workman than those applicable to him immediately before  the transfer of reemployment.  It was apparently apprehended  by the workmen that though sub-cl. 3 of cl. 9 of the Order  did state  definitely  that the right of the  Maharashtra  State



Road   Transport  Corporation  to  determine  or  vary   the conditions of service of any person who is continued in  the service of the corporation was subject to the provisions  of s.77  of the Bombay Reorganisation Act, advantage  might  be taken of the proviso to the sub-clause, which seems at least at  first  sight to suggest that with the  approval  of  the Central  Government the conditions of service of a  work-man might  be  varied to his  disadvantage  notwithstanding  the provisions  of s. 77 of the Bombay Reorganisation  Act.   We are   informed,  however,  that  there  has  been  no   such variation.  The petition itself did not contain any specific assertion that there had been any 645 variation  to the disadvantage of any workman.  Only an  ap- prehension  that  there  might be a  change  in  future  was expressed.  In the counter-affidavit the  Government  stated that  the Order passed in the notices issued clearly gave  a guarantee  that  the  conditions  of  service  will  not  be changed.   If there was any reason to think that  there  had been any change in any conditions of service or that in  the immediate future there was any likelihood of any such change being made on the strength of the impugned proviso it  would have been necessary for us to examine the question about the validity  of this proviso.  As however no change appears  to have  been  made and it does not appear that there  was  any apprehension  of  any  change being made  in  the  immediate future, we have thought it desirable to leave this  question open-particularly in view of the fact that the workmen  were not  represented  before  us  in  this  appeal.   We   have, therefore,  not heard full arguments on this  question  from the learned Counsel for the appellant. The  decision of the High Court that the proviso is  bad  is therefore,  set  aside  and the question is  left  open  for decision  if and when it becomes really necessary to do  so. In  view  of  our  decision that the  High  Court  erred  in thinking  that  s.  31 of the C.  P.  and  Berar  Industrial Disputes  Settlement Act had to be applied the High  Court’s order  quashing  the abolition of posts and the  notices  of termination cannot be sustained. We accordingly allow the appeal, set aside the order of  the High  Court quashing the Government resolution of  the  29th May,  1961  directing the abolition of posts  and  also  its order  quashing the notices of termination.  As we have  set aside  the High Court’s decision as regards the validity  of the proviso to sub-cl. 3 of cl. 9 of the Order and left  the matter  open,  the  High Court’s direction  that  no  action should be taken under the proviso is also set aside.   There will be no order as to costs. Appeal allowed. 646