1. Closure of factory and termination of services during pendency of appeal — Complaint under Section 23 for contravention of Section 22, Industrial Disputes (Appellate Tribunal) Act, 1950. (Para 1 , 2 , 3 )
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1956 Supreme(SC) 105
SUPREME COURT OF INDIA
28th November 1956
S.R. DAS, C.J.I., BHAGWATI, VENKATARAMA AYYAR, SINHA AND S.K. DAS, JJ.
Banaras Ice Factory Ltd., Appellant
Versus
Its Workmen, Respondents.
Civil Appeal No. 135 of 1955
Advocates appeared
Mr. R. R. Biswas; Advocate, for Appellant; Mr. Sukumar Ghose, Advocate amicus curiae, for Respondents.
Advocates:
R.R.BISWAS, SUKUMAR GHOSH
R.R.BISWAS, SUKUMAR GHOSH
The term 'discharge' under Section 22(b) of the Industrial Disputes (Appellate Tribunal) Act, 1950, does not include the termination of services of all workmen resulting from a bona fide closure of business, as labour legislation applies to existing industries and not to dead industries.
Headnote:(A) Industrial Disputes (Appellate Tribunal) Act, 1950 - Sections 22 and 23 - Industrial Disputes Act, 1947 - Interpretation of "discharge" - Whether termination of services of all workmen on a real and bona fide closure of business constitutes "discharge" under Section 22(b) - The object of Section 22 is to protect workmen from victimization and ensure peaceful termination of pending proceedings, which is applicable only to a running or existing industry and not a dead industry - Bona fide closure of business does not amount to "discharge" within the meaning of Section 22(b) as the industry itself ceases to exist. (Paras 7, 8, 9)
(B) Industrial Disputes Act, 1947 - Scope and application - Provisions apply to an existing industry and not a dead industry. (Para 7)
Facts of the case:
A company manufacturing ice faced financial difficulties and decided to close its factory. After a period of temporary closure and a subsequent settlement, the company again decided to close the business bona fide. The workmen alleged that the termination of their services during the pendency of an appeal before the Appellate Tribunal constituted a "discharge" without permission, thereby contravening Section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
Findings of Court:
The closure of the business was bona fide. The termination of services resulting from such closure does not fall within the meaning of "discharge" under Section 22(b) of the Act.
Issues: Whether the word "discharge" in Section 22(b) of the Industrial Disputes (Appellate Tribunal) Act, 1950, includes the termination of services of all workmen on a real and bona fide closure of business.
Ratio Decidendi: The court held that the protections provided under Section 22 are intended to prevent victimization in a running industry. When a business is closed bona fide, the industry becomes a "dead industry," and the concept of altering service conditions or "discharging" workmen in the context of victimization no longer applies.
Result: Appeal allowed.
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Table of Contents
2. Whether bona fide closure of business constitutes discharge under Section 22(b) of the Act and whether such restriction violates the fundamental right to carry on business. (Para 3 , 4 , 5 )
3. Labour legislation and Section 22 of the Act apply to existing industries to prevent victimization; they do not restrict the employer's right to bona fide closure of business. (Para 7 , 8 , 9 )
4. Termination of services of all workmen upon a real and bona fide closure of business does not amount to discharge within the meaning of Section 22(b) of the Act. (Para 10 )
5. Appeal allowed and the order of the Labour Appellate Tribunal set aside. (Para 12 )
6. Does the term discharge in Section 22(b) of the Industrial Disputes (Appellate Tribunal) Act, 1950 include termination of services due to bona fide closure of business?
No. The court held that discharge refers to the discharge of a person in a running or continuing business, not the termination of all workmen when the industry ceases to exist due to a bona fide closure. (Para 7 , 8 , 10 )
7. What is the primary object of Section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950?
The object is to protect workmen from victimization during pending proceedings and ensure that disputes are terminated in a peaceful atmosphere without fresh disputes exacerbating strained relations between employer and workmen. (Para 9 )
8. Do the provisions of the Industrial Disputes (Appellate Tribunal) Act, 1950 apply to a dead industry?
No. The court observed that labour legislation, including the Industrial Disputes Act 1947 and the Appellate Tribunal Act, applies to an existing industry and not a dead industry. (Para 7 , 8 , 9 )
Judgement
S. K. DAS J.- This is an appeal by special leave from the judgment and order of the Labour Appellate Tribunal of India at Allahabad dated 30th October 1952. The relevant facts are these. The Banaras Ice Factory Limited, the appellant before us, was incorporated on 13th September 1949 as a private limited company and was carrying on the business of manufacturing ice in the city of Banaras, though its registered office was in Calcutta. The factory worked as a seasonal factory and had in its employment about 25 workmen at all material times. These workmen were employed from the month of March to the month of September every year. The appellant Company got into financial difficulties on account of trade depression, rise in the price of materials and increase in the wages and emoluments of workmen. It tried to secure a loan of Rs. 10,000 from a Bank but met with no success. Thereupon it decided to close down the factory and on 15th January 1952, a notice was given to its workmen saying that the factory would be closed down with effect from 17th January 1952, and the services of the workmen would not be necessary for two months from that date. The workmen received their wages up to 16th January 1952. On 18th March 1952, they were again taken into service but this temporary closing of the factory gave rise to an industrial dispute and the workmen complained that they were wrongfully laid off with effect from 17th January 1952. The dispute was referred to the Regional Conciliation Officer, Allahabad, for adjudication. In the meantime, that is, on 6th June 1952 the workman gave a strike notice and as there was no coal in the factory, the appellant also gave a notice of closure on 12th June 1952. A settlement was however arrived at between the parties on 15th June 1952 at the house of the Collector of Banaras. The terms of that settlement inter alia, were: (1) the management would withdraw its notice of closure dated, 12th June 1952; (2) the workmen would withdraw their strike notice dated 6th June 1952; (3) there being no coal, the workers would remain on leave for a period of thirty days with effect from 16th June 1952, and would report for duty on 16th July 1952 at 8 a.m. and (4) after the workers had resumed their duty on 16th July 1952, the appellant would not terminate the services of any workmen or p73 lay them off in future without obtaining the prior permission of the Regional Conciliation Officer, Allahabad.
2. On 28th June 1952, the Regional Conciliation Officer, Allahabad, gave his award in the matter of the industrial dispute between the appellant and its workmen with regard to the alleged wrongful laying off of the workmen from 17th January 1952, to 18th March, 1952, referred to above. By his award the Regional Conciliation Officer gave full wages to the workmen for the period in question. On 16th July 1952, none of the workmen report for duty accordance with the terms of the agreement referred to above, and on that date the appellant gave a notice to its workmen to effect that the appellant found it difficult to run the factory and had decided to close it down; the workmen were informed that their services would not be required and would be terminated upon the expiry of thirty days from 16th July 1952. The workmen, it is stated, accepted the notice and took their pay for one month (from 16th July to 15th August 1952) without any protest. Against the award of the Regional Conciliation Officer dated 28th June 1952, the appellant filed an appeal to the Labour Appellate Tribunal on 25th July 1952.
3. On 31st August 1952, a complaint was made on behalf of the workman to the Labour Appellate Tribunal under S. 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950, hereinafter referred to as the Act. The, gravamen of the complaint was that the appellant had contravened the provisions of S.22 of the Act, because the appellant had discharged all the workmen with effect from 15th August 1952, without the permission in
