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1967 Supreme(Del) 33
High Court Of Delhi
AVTAR SINGH ANAND - Appellant
Versus
E.KRISHNA - Respondent
Civil 493D of 1959
Decided On : 02/21/1967
HARISH CHANDER, S.C.Malik Sayeed Uddin
An employee is entitled to retrenchment compensation under Section 25-FFF of the Industrial Disputes Act, 1947, in case of closure of an undertaking, even if the closure is due to inter se differences between the partners.
Headnote:
INDUSTRIAL DISPUTES ACT, 1947 - SECTION 25-F, 25-FFF, 33-C(2) - RETRENCHMENT - CLOSURE OF BUSINESS - COMPENSATION - JURISDICTION OF LABOUR COURT.
Fact of the Case:
A partnership firm, Inder Singh Avtar Singh, closed down due to differences between the partners. One of the employees, Ram Sarup Sharma, filed a petition before the Labour Court under Section 33-C(2) of the Industrial Disputes Act, 1947, claiming retrenchment compensation.
Finding of the Court:
The Labour Court allowed the petition in part and computed the amount due to the employee under Section 25-F of the Act. The employer challenged the order before the High Court.
Issues: 1. Whether the employee was entitled to retrenchment compensation under Section 25-F of the Act, despite the closure of the business due to inter se differences between the partners? 2. Whether the Labour Court had jurisdiction to determine the employee's claim under Section 33-C(2) of the Act.
Ratio Decidendi: 1. The court held that the employee was entitled to compensation under Section 25-FFF of the Act, which was enacted retrospectively and provided for compensation to workmen in case of closure of an undertaking. The closure of the business in this case was not due to unavoidable circumstances beyond the control of the employer, and therefore, the proviso to Section 25-FFF(1) was not attracted. 2. The court rejected the employer's contention that the Labour Court lacked jurisdiction to determine the employee's claim under Section 33-C(2) of the Act. The court held that Section 25-FFF created a right in the workman to receive compensation, and therefore, the Labour Court had jurisdiction to decide the matter.
Final Decision: The petition was dismissed, and the Labour Court's order was upheld.
( 2 ) THE brief facts of the case are that the petitioner and Inder Singh respondent No. 3 were partners in the business of coal and brickkiln under the name and style of Inder- singh Avtarsingh with the offices at Delhi and Jharia. Ram Sarup Sharma respondent No. 2 was employed as a head clerk in that firm and worked as such for 16 years from 1st January 1941 to 15th December 1956. It appears that during the later part of 1956 the two partners of the above-mentioned firm fell out and on 20th October 1956 they applied for separate quotas tor themselves. In March 1957 the petitioner brought a suit for dissolution of partnership and rendition of accounts against defendant No. 3 and in that suit a preliminary decree was awarded in the petitioner s favour on 23rd July 1958. In the mentime a notice was given by Inder Singh respondent No. 3 to Ram Sarup respondent No. 2 terminating the latter s services with effect from 15th December 1956. Respondent No. 2 at that time was drawing a pay of Rs. 300 per mensem. Respondent No. 2 was also offered a cheque for Rs. 450, signed by the petitioner and respondent No. 3, in full and final settlement of his claim, but respondent No. 2 refused to accept that cheque. A petition under Section 33-C of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act) was filed by respondent No. 2 before the Labour Court. According to respondent No. 2 he was entitled to Rs. 4,050 as he had been retrenched from service. His employers were stated to have not paid the amount due in spite of notice. Respondent No. 2, accordingly, prayed that the amount due to him might be computed
( 3 ) THE petition was resisted by the petitioner and respondent No. 3.
( 4 ) THE Labour Court allowed the petition in part and computed the amount, due to respondent No. 2, under Section 25-F of the Act, to be Rs. 2,850. The petitioner, respondent No. 3 and their firm were held to be liable to pay the above-mentioned amount. The petitioner thereafter approached this Court to challenge the above-mentioned order.
( 5 ) BEFORE dealing with the respective contentions of the parties it would be useful to reproduce the provisions which have a bearing on this case. Clause (oo) of Section 2 of the Act defines the word "retrenchment and reads as under:
" retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include; (a) voluntary retirement of the workman or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or (c) termination of the service of a workman on the ground of continued ill-health". Section 25-F enumerates the conditions precedent to retrenchment of workmen, and is to the following effect:
"no workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until (a) the workman has been given one month s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of notice: Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date tor the termination of service; (b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days average pay for every completed year of cont
