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1960 Supreme(Pat) 2
PATNA HIGH COURT
V.Ramaswami and Kanhaiya Singh JJ.
Madan Lal Budhia
Versus
State Of Bihar
Miscellaneous Judicial Case No. 466 of 1958 ;
Decided On : JANUARY 06, 1960
The closure of business on 1st September 1955 was real and bona fide, and the workmen were not entitled to retrenchment compensation under Section 25F of the Industrial Disputes Act as it stood before the amendment. The amendment introduced by Section 25FFF was not applicable to the present case as it was given retrospective effect only from 28th November 1956, while the closure had taken place earlier on 1st September 1955.
Headnote:
INDUSTRIAL DISPUTES ACT - SECTION 25FFF - SECTION 33C - SECTION 25F - RETRENCHMENT COMPENSATION - CLOSURE OF BUSINESS - WORKMEN ENTITLED TO COMPENSATION - JURISDICTION OF STATE GOVERNMENT TO MAKE REFERENCE TO LABOUR COURT - AMENDMENT ACT, 1957 - RETROSPECTIVE EFFECT.
Fact of the Case:
The petitioners, engaged in the business of electricity generation and supply in Ramgarh, were denied a license by the State Government under the Indian Electricity Act, 1910. Subsequently, the State Government took over the business and requested the petitioners to continue distribution of electricity for a short period. The petitioners terminated the services of their employees with effect from 1st September 1955. The State Government held the petitioners liable to pay retrenchment compensation to the workmen under Section 25F of the Industrial Disputes Act. The petitioners challenged the State Government's decision and the subsequent notification issued under Section 33C(2) of the Act, referring the matter to the Labour Court for determining the compensation amount.
Finding of the Court:
The court held that the closure of the business on 1st September 1955 was real and bona fide, and the workmen were not entitled to retrenchment compensation under Section 25F of the Industrial Disputes Act as it stood before the amendment. The court further held that the amendment introduced by Section 25FFF, which provided for compensation in case of closure of undertakings, was not applicable to the present case as it was given retrospective effect only from 28th November 1956, while the closure had taken place earlier on 1st September 1955.
Issues: 1. Whether the closure of the business was real and bona fide, and whether the workmen were entitled to retrenchment compensation under Section 25F of the Industrial Disputes Act. 2. Whether the amendment introduced by Section 25FFF was applicable to the present case.
Ratio Decidendi: 1. The court relied on the Supreme Court's decision in Hariprasad Shivshanker Shukla v. A.D. Divelkar, which held that retrenchment meant the discharge of surplus labor or staff by the employer for any reason whatsoever, except as a disciplinary action, and did not apply where all workmen were terminated due to a real and bona fide closure of business. 2. The court held that the amendment introduced by Section 25FFF was not applicable to the present case as it was given retrospective effect only from 28th November 1956, while the closure had taken place earlier on 1st September 1955.
Final Decision: The court allowed the petition, quashed the State Government's notification issued under Section 33C(2) of the Industrial Disputes Act, and issued a writ of mandamus commanding the respondents not to take any steps in pursuance of the notification.
1. In this case the petitioners carried on the business of generation and supply of electricity in the district of Hazarihagh on the basis of a temporary sanction given by the State Government under Sec.28 of the Indian Electricity Act (Act No. IX of 1910) by Notification No. 1604-Misc/ IE-159/40, dated the 25th February, 1941. In 1952 the petitioners applied to the State Government for grant of a licence under Sec.3 of the Indian Electricity Act, 1910 with regard to the business of supply of electricity. The State Government refused to grant a licence by a letter dated the 12th April, 1952, on the ground that the Government themselves proposed to distribute power at Ramgarh as soon as power from the Damodar Valley Corporation was available. Thereafter in May, 1955, a notice was served on the petitioners terminating the agreement for the supply of electricity with effect from the 1st September, 1955. The notice was served by the Defence Department Authorities and it was stated in the notice that the Defence Department would take the supply of electricity from the State Government and not from the petitioner.
A copy of the notice is annexure C to the application. Thereafter the petitioners served a notice upon the employees terminating their services with effect from the 1st September, 1955, The notice dated the 1st June, 1955, is annexure D to the application. It appears that from the 1st September, 1955, the State Government obtained bulk supply of electricity from the Damodar Valley Corporation, but the State Government requested the petitioners to make arrangements for distribution of electricity for a short period till the Government could make its own arrangements. The petitioners accordingly carried on the work of distribution of electricity supplied from the State Governments grid in Ramgarh with the help of a skeleton staff for the period from the 1st September, 1955, to the 31st March, 1956, on which date the State assumed full control of the distribution system also and relieved the petitioners from the task of distributing the electricity.
The workmen, however, made a demand upon the petitioners for retrenchment compensation under Sec.25F of the Industrial Disputes Act as it stood on the relevant date. The petitioners denied that they were liable to pay any such compensation, but the State Government held that the petitioners were liable to pay a sum of Rs. 35,007/4/- as retrenchment compensation to the workmen and filed a certificate with the Certificate Officer of Hazaribagh for that amount being realised from the petitioners.
A copy of the certificate is annexure E to the application. The petitioners fifed an objection before the Certificate Officer, but the objection was dismissed by the Certificate Officer on the 7th June, 1956. An appeal was preferred before the Collector, but the appeal was also dismissed on the 14th September, 1956. The petitioners then took the matter in revision before the Commissioner of Chota Nagpur, who held by his order dated the 13th December, 1957, that the certificate should be kept pending without execution for a period of 6 months & the amount of liability should be determined either by agreement between the parties or by means of a civil suit to be filed by the workmen. The order of the Commissioner is based upon a decision of a Bench of this High Court in Sreo Behariji Mills Ltd. V/s. State of Bihar AIR 1957 Pat 488 where it was held that the State Government has no power to make an enquiry into the liability to pay compensation under Sec.25F of the Act, as it stood before the amendment, if there was a dispute between the employer and the workmen whether there was retrenchment or not.
There is no machinery provided in the Act for snaking such an enquiry and so any certificate of public demand for the recovery of compensation, in the circumstances, would be without jurisdiction. It appears that subsequently, on the 7th June, 1958, the State Government issued a notificatio
