A workman discharged on closure of an undertaking is entitled to retrenchment compensation under the Industrial Disputes Act, 1947, and a dispute relating to such compensation is an industrial dispute within the meaning of the Act.

Bishan Narain, J.

1. The Governor of Punjab, being of opinion that an industrial dispute exists between the Maharaj Weaving Mills of Amritsar (hereinafter called the Mill) and its workmen, referred by order, dated the 23rd July, 1957, the following dispute to the Labour Court under Section 10 (1) (c) of the Industrial Disputes Act, 1947 (hereinafter called the Act) for adjudication--

"Whether the workmen of the Maharaj Weaving Mills, (list to be supplied by the Union) who were retrenched by the management on the closure of the Mills, are entitled to retrenchment compensation. If so, what should be the quantum of such compensation and the terms and conditions of its payment to the workmen concerned."

The Mill has filed this petition under Article 226 of the Constitution challenging the validity of this order.

2 The facts relevant for the decision of this petition are not in dispute. On the 10th December, 1956, the management of the Mill gave a notice to its workmen individually that it derided to close the Mill from the 10th January, 1957, in view of heavy financial losses. In reply some workmen sent a counter-notice on the 15th December, 1956, to the management calling upon it inter alia to recall the notice of closure, as the proposed closure was mala fide and had been taken to harass the workmen, and they also made certain other demands on the Mill. The Mill informed one Ram Lal by letter, dated the 30th January, 1957, that the Mill had been closed on the 10th January, 1957, and the workmen had been paid their dues in full and final settlement till the 10th, and a copy of this letter was sent to the Labour Inspector. The Punjab Government then made the reference reproduced above.

3. It is contended on behalf of the Mill that the Act applies only to that dispute which arises out of an existing undertaking and that when there is a bona fide closure of an industry then any dispute arising with reference thereto falls outside the purview of the Act, and as the present dispute had arisen after the closure of the business, the action taken under Section 10 (1) (c) is invalid. In support of this contention the learned counsel has relied on the Supreme Court Judgment in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union, (S) AIR 1957 SC 95 (A).

4. Now, in this Supreme Court case the industry concerned closed down in 1951. At that time the Act did not contain any definition of "retrenchment". Their Lordships held that this expression in ordinary sense means discharge of the workmen of the surplus and not their discharge on closure of business. Their Lordships observed --

"The view * * * that the industrial dispute to which the provisions of the Act apply is only one which arises out of an existing industry is dearly 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.M. Padmanabha Ayyar v. State of Madras, (1954-1 Lab LJ 469 (Mad)) (B), 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 employees."

Their Lordships in this decision did not deal with the effect of Section 2 (oo) defining retrenchment and Section 25F regulating compensation payable on retrenchment, as these provisions had been introduced in the Act by the Industrial Disputes (Amendment) Act, 1953 (No. 43 of 1953). A similar matter again arose before the Supreme Court in Hariprasad v. A.D. Divelkar, (S) AIR 1957 SC 121 (C), in which case the industries concerned closed their business after the 1953 Amending Act had come into force, Their Lordships construing Section 2 (oo) and Section 25F laid down-- "Retrenchment as denned in Section 2 (oo) and as used in Section 25F has no wider meaning than the ordinary accepted connotation of the word. It means the dis