SUPREME COURT REPORTS [1960]

r 96o order destruction of articles seized in pursuance of a warrant issued under s. 430.

Chairman of the The argument advanced by counsel for the Municipal- Bankura ity that the seizure was in exercise of the powers under 1~1 unicipality - v. s. 428 and not under s. 430 has, in our judgment, no Lalji Raja & San' force. The report of the Chairman of the Municipality dated March 10, 1950, makes it abundantly clear that Shah J. the search warrant was issued by the Sub-Divisional Officer in exercise of his authority under s. 430 of the Bengal Municipal Act.

Any admission by the respondents that the seizure was under s. 428 of the Act in proceedings for resisting the order which the Municipality claimed to obtain against them can have no value.

z960

March 23.

Section 428 does not contemplate a seizure of articles of food which are unwholesome, under the authority of a Magistrate, and s. 430 is expressly the proviRion which authorises a Magistrate to issue a warrant, for such seizure. The powers under s. 431(2) are expressly directed to be exercised by the Magistrate in respect of articles seized under s. 428, and there is nothing in the former provision which may justify the view that those powers can also be exercised in respect of articles seized under a warrant issued under s. 430. In our opinion, the High Court was right in its conclusion.

The appeal therefore fails and is dismissed.

Appeal dismissed.

M/S. NORTH BROOK JUTE CO. LTD.

AND ANOTHER

THEIR WORKMEN (P. B. GAJENDRAGADKAR, K. N. WANCHOO and

K. C. DAS GUPTA, JJ.)

Ind1tstrial Dispute-Rationalisation scheme objected to by worknien~Scheme put into operation pending reference to Tribitnal~ Workmen's refusal to work-Lock-out-Claim for wages for the period of lock-out-Industrial Disputes Act, I947 (I4 of I947), ss. 3(2),

9A, 33, 33A.

A rationalisation scheme in the mills of the appellant companies was agreed to by the Works Committee and a notice under s. 9A of the Industrial Disputes Act, 1947, was given to the

..,

Union of their workmen. The workmen, however, objected to the introduction of the scheme and the dispute was referred by the Government to the Tribunal on December r3, r957. On December r6, the management of the companies put the rationalisation scheme into operation but the workmen refused to do the additional work placed on them by the scheme. Later, the same day, the mills declared a lock-out.

Work was, however, resumed a few days later as a result of a settlement, and a dispute arose as to whether the workmen were entitled to the payment of wages for the period during which the mills were closed: Held, (r) that the workmen's representatives on the Works Committee represented the workmen only for the purpose of the functions of the Works Committee and that the approval of the scheme of rationalisation by the Works Committee was not binding on the workmen or their Union.

Kemp and Company Ltd. v. Their Workmen, [r955] I L.L.J. 48, approved.

(2) that the introduction of a rationalisation scheme was an alteration of' conditions of service to the prejudice of the workmen.

(3) that the alteration of conditions of service was made not when notice under s. gA of the Industrial Disputes Act was given but on December r6, when the rationalisation scheme was put into operation, and that as it was done when the reference was pending before the Tribunal, it wa~ a contravention of s. 33 of the Act.

(4) that the closure of the mills in the circumstances of this case by the employer amounted to an illegal lock-out and that the workmen unable to work in consequence of the lock-out were entitled to wages for the period of absence caused by such lock-out.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 141 of 1959.

Appeal by special leave from the Award dated July 19, 1958, of the Fourth Industrial Tribunal, West Bengal, in Case No. VIII-240 (166)/57.

0. K. Daphtary, Soli.citor-General of India, Vidya Sagar and B. N. Ghosh, for the appellants.

P. K. Sanyal and P. K. Ohakravarty for R. 0.

Datta, for the respondents.

1960. March 23. The Judgment of the Court was delivered by

Nor th Brook f utd

Co. Ltd. v.

Their Workmen

DAS GUPTA, J.-On December 13, 1957, the Govern- Das Gupta J. ment of West Bengal referred under s. 10 of the Industrial Disputes' Act the following dispute between M/s. Northbrook Jute Co., Ltd., and Dalhousie Jute Mills who are appellants before us and, their workmen:-.

North Brook jute Co. Ltd. v.

Their Workmen

Das Gtpta J.

"Do the proposals of rationalisation in the above two mills involve any increase in workload ? If so, what relief the workmen are entitled to?" Almost a month before this the proposal of introducing a rationalisation scheme in the mills of these companies had been considered at an extraordinary meeting of the Works Committee and the Committee had agreed to the proposal. A notice under s. 9A of the Industrial Disputes Act was then given by the companies to the Unions of their workmen and it was because the workmen objected to the introduction of the rationalisation scheme that the dispute arose and was referred by the Government to the Tribunal. On December 16 when the above reference was pending before the Tribunal the management of these mills put the rationalisation scheme into operation but the workmen refused to do the additional work placed on them by the scheme. Later the same day the mills declared a lock-out.

Work was however resumed again in all departments excepting the weaving and finishing departments on December 20, and in these two departments on December 21, as a result of a settlement arrived at between the workmen represented by their Unions and rthe Mills as regards the introduction of the rationalisation scheme.

But a dispute arose as regards the payment of wages to workmen for their dues during the period when the mills were closed, viz., 16th December to 20th December in the weaving and finishing departments and 16th December to 19th December in all other departments.

This dispute was also referred to the Tribunal by an order of the Government dated February 1, 1958.

The earlier issue as regards the proposed introduction of the rationalisation scheme was also amended in view of what had happened in the meantime by substituting therefor :-"Have the rationalisation effected, in the above two mills since 16th December, 1957, involved any increase in the workload?

To what relief the workers are entitled to?" We are no longer concerned with this issue as the decision of the Tribunal thereon which is against the workmen is no longer disputed.

As regards the other two disputes the Tribunal has made an award in favour of the

• • ...

• -

workmen that they are entitled to wages for the period of absence above-mentioned.

On this question the workmen's case before the Tribunal was that the reason that workmen could not do any work on the days in question was the illegal lock-out by the employers; the employer's case was that the workmen had struck work illegally, and so, the closure of the mills on the 16th of December after such strike was not illegal or unjustified. The Tribunal was of opinion that the employer's attempt to put the rationalisation scheme into effect on the 16th December was a contravention of s. 33 of the Industrial Disputes Act, and so, the workmen's refusal to work in accordance with that scheme was not an illegal strike and the employer's closure of the mills was illegal.

Learned counsel for the employer-mills has tried to convince tis that they had acted in accordance with law, in introducing the rationalisation scheme on the 16th December.

He pointed out that the Works Committee duly constituted under the Act had considered the scheme and approved of it, and argued that as the workmen's representatives on the Works Committee had agreed to the scheme, the workmen themselves should be taken to have agreed to it. That the workmen's representatives on the Works Committee agreed to the introduction of the scheme by the companies" whenever they desired" is established by a copy of the resolution of the Works Committee.

It has to be noticed however that the workmen's representatives on the Works Committee do not represent the workmen for all purposes, but .only -for the purpose of the functions of the Works Committee.

Section 3(2) of the Act sets out the functions of the Works Committee in these words :

" It shall be the duty of the Works Committee to promote measures for securing and preserving amity and good relations between the employer and workmen' and, to that end to comment upon matters of their common interest or concern and endeavour to compose any material difference of opinion in respect of such matters."

North Brook Jute Co. Ltd. v.

Their Workmen

Das Gupta j.

North Brook ] ute

Co. Ltd.

Theif' Workmen

Das Gupta].

The language used by the Legislature makes it clear that the Works Committee was not intended to supplant or supersede the Unions for the purpose of collective bargaining; they are not authorised to consider real or substantial changes in the conditions of service; their task is only to smooth away frictions that might arise between the workmen and the management in day-to-day work.

By no stretch of imagination can it be said that the duties and functions of the Works Committee included the decision on such an important matter as the alteration in the conditions of service by rationalisation. "To promote measures for securing and preserving amity and good relations between the employer and workmen " is their real function and to that end they are authorised to " comment upon matters of their common concern or interest and endeavour to compose any material difference of opinion in respect of such matters." The question of introduction of rationalisation scheme may be said to be a matter of common interest between the employers and workmen; but the duty and authority of the Works Committee could not extend to anything more than making comments thereupon and to endeavour to compose any ma.terial difference of opinion in respect of such matters.

Neither " comments" nor the "endeavour" could be held to extend to decide the question on which differences have arisen or are likely one way or the other. It was rightly pointed out by the Labour Appellate Tribunal in Kemp and Company Ltd. v. Their Workmen(') that:

"the Works Committees are normally concerned with problems arising in the day to day working of the concern and the functions of the Works Committee are to ascertain the grievances of the employees and when occasion arises to arrive at some agreement also. But the function and the responsibility of the works committee as their very nomenclature indicates cannot go beyond recommendation and as such they are more or less bodies who in the first instance endeavour to compose the differences and the final decision rests with the union as a whole." The fact tlrnt the workmen's representatives on the Works Committee agreed to the introduction of the

(I) (1955] I L, L.J. 48,

.....

... ..

rationalisation scheme is therefore in no. way binding on the workmen or their Union.

The next argument was that whatever alteration was effected in the conditions of service, was made, on the date when notice under s. 9A was given and that being before the 13th December there was no contravention of s. 33. .There is in our opinion no substance in this contention, Section 9A in accordance with which the notice was given provides that "No employer who proposes to effect any change in the conditions of service applicable to any workmen in respect of any matter specified in the Fourth Schedule, shall effect such change- _

(a) without giving to the workmen likely to be affected by such a notice in the prescribed manner of the nature of the change proppsed to be effected; or

(b) within twenty-one days of giving such notice;".

With the proviso to the section we are not concerned.

What is important to notice is that in making this provision for notice the Legislature was clearly contemplating three stages. The first stage is the proposal by the employer to effect a change; the next stage is when he gives a notice and the last stage is when he effects the change in the conditions of service on the expiry of 21 days from the date of the notice. The conditions of service do not stand changed, either when the proposal is made or the notice is given but only when the change is actually effected. That actual change takes place when the new conditions of service are actually introduced.

It necessarily follows that in deciding for the purpose of s. 33 of the Act, at what point of time the employer "alters" any conditions of service, we have to ascertain the time when the change of which notice under s. 9A is given is actually effected. If at the time the change is effected, a proceeding is pending before a Tribunal, s. 33 is attracted and not otherwise. The point of time when the employer proposes to change the conditions of service and the point of time when the notic~ is given are equally irrelevant.

It was further contended that in any case, the alteration was not to the prejudice of the workmen. How such a contention can be seriously made is difficult to

North Brook jute Co. Ltd. v.

Their Workmen

Das Gupta ] .

r960 understand. The whole basis of the scheme was so to

N -- allocate the machines to workmen, as to enable fewer orth Brook jute k k th h' h h b co. Ltd wor men to wor e mac mes t an t e num er prev. viously required so that surplus workmen could be Their Workmen discharged. The object was to decrease the cost of production. The method adopted for attaining the Das Gupta J object was to obtain more work from the workmen for approximately. the same wages. However laudable the object be, it cannot be doubted for a moment that the scheme prejudiced the workmen seriously. Mr. Fraser, the company's witness, stated in his evidence that while previously for every machine in the batching department, there were two hands, now there are two hands for two machines. In giving the reasons for the introduction of the scheme, he said "we had surplus labour in both the mills.

The company was losing heavily. Till then we depended on natural wastage and did not think of rationalisation; in November last year, the decision was taken to take action on rationalisation. "

Rationalisation which was introduced had therefore two effects-first that some workers would become surplus and would face discharge ; and secondly, the other workmen would have to carry more workload.

The introduction of the rationalisation scheme was therefore clearly an alteration of conditions of service to the prejudice of the workmen.

The alteration was made on the 16th December, when reference as regards the scheme had already been made and was pending before the Industrial Tribunal.

The Tribunal has therefore rightly held that this introduction was a contravention of s. 33.

Lastly it was contended that even if the introduction of the rationalisation scheme was a contravention of s. 33 the workmen's remedy lay in applying under s. 33A, and that they were not entitled to strike work.

Section 33A no doubt gives the workmen aggrieved by the contravention by the employer of s. 33 to apply to the Tribunal for relief; but the existence of this remedy does not mean that the workmen were bound to work under t'3.e altered conditions of service, even though these were in clear contravention of law. When they refused to do the additional work which the

rationalisation scheme required them to do, they refused to do work, which the employer had no right in law to ask them to do. It is difficult to say that this amounted to a "strike" by the workmen ; but even if it could be said to be a " strike " such strike was certainly not illegal or unjustified.

Our conclusion therefore is that the Tribunal was right in its opinion that the closure of the mills by the employer amounted to an illegal lock-out, and the workmen, unable to work 'in consequence of the lockout, are entitled to wages for the period of absence, caused. by such lock-out.

The appeal is therefore dismissed with costs.

Appeal dismissed.

MANAGEMENT OF KAIRBETTA ESTATE,

KOTAGIRI

RAJ AMANICKAM AND OTHERS.

(P. B. GAJENDRAGADKAR and K. 0. DAS GUPTA, JJ.)

I ndu.strial Dispute-Lay-off compensation-Closure of division due to disturbances by workers-Lock-out-Subsequent reopening of division-Claim for lay-off compensation-Lock-out and lay-off, Distinction-Industrial Disputes Act, z947-(I4 of z947), ss. 2(l), 2 (kkk), 25C, 25E(iii), 33C.

The appellant's manager was violently attacked by its workmen as a result of which he sustained serious injuries.

The workers in the lower division also threatened the appellant's staff working in that division that they would murder them if they worked there. The appellant was therefore compelled to notify that the division would be closed until further notice.

Subsequently as a result of conciliation before the labour officer, the division was opened again. The workers made a claim for lay-off compensation under s. 25C of the Industrial Disputes Act, r947, for the period during which the lower division was closed on the footing that :the management for their own reasons did not choose to run the division during that period.

The appellant's answer was, inter alia, that the closure of the division amounted to a lock-out which under the circumstances was perfectly justified and as such the workers were not entitled to claim any lay-off compensation : Held; (r) that the concept of a lock-out is essentially different from that of a lay-off and where the closure of business amounts to a lock-out under s. 2(1) of the Industrial Disputes Act,

Nor th Brook ] ute Co. Ltd. v.

Their Workmen

Das G"pta ].

March z4.

s. 430

s. 428

s. 430

Lalji Raja

March 10, 1950

s. 430

s. 428

Section 428

s. 430

s. 431(2)

s. 428

s. 430

M/S. NORTH BROOK JUTE CO. LTD.

AND A

THEIR WORKMEN

P. B. GAJENDRAGADKAR

K. N. WANCHOO

K. C. DAS GUPTA

ss. 3(2),

9A, 33, 33A

s. 9A

Industrial Disputes Act, 1947

December r3, r957

December r6,

Industrial Disputes Act

s. 33

K. Daphtary

Vidya Sagar

B. N. Ghosh

P. K. Sanyal

P. K. Ohakravarty

DAS GUPTA

s. 10

Northbrook Jute Co., Ltd.

Dalhousie Jute Mills

North Brook jute Co. Ltd.

Das Gtpta

s. 9A

Industrial Disputes Act

February 1, 1958

16th December, 1957

s. 33

Industrial Disputes Act

Section 3(2)

North Brook Jute Co. Ltd.

Labour Appellate Tribunal

s. 9A

s. 33

Section 9A

Fourth Schedule

s. 33

s. 9A

s. 33

Fraser

s. 33

s. 33

s. 33A

Section 33A

s. 33

RAJ AMANICKAM

K. 0. DAS GUPTA

Distinction-Industrial Disputes Act

ss. 2(l), 2

s. 25C

Industrial Disputes Act

s. 2(1)

Industrial Disputes Act


3 S.C.R. SUPREME COURT REPORTS 371

rationalisation scheme required them to do, they refused to do work, which the employer had no right in law to ask them to do. It is difficult to say that this amounted to a "strike" by the workmen ; but even if it could be said to be a " strike " such strike was certainly not illegal or unjustified.

Our conclusion therefore is that the Tribunal was right in its opinion that the closure of the mills by the employer amounted to an illegal lock-out, and the workmen, unable to work 'in consequence of the lockout, are entitled to wages for the period of absence, caused. by such lock-out.

The appeal is therefore dismissed with costs.

Appeal dismissed.

MANAGEMENT OF KAIRBETTA ESTATE,

KOTAGIRI

RAJ AMANICKAM AND OTHERS.

(P. B. GAJENDRAGADKAR and K. 0. DAS GUPTA, JJ.)

I ndu.strial Dispute-Lay-off compensation-Closure of division due to disturbances by workers-Lock-out-Subsequent reopening of division-Claim for lay-off compensation-Lock-out and lay-off, Distinction-Industrial Disputes Act, z947-(I4 of z947), ss. 2(l), 2 (kkk), 25C, 25E(iii), 33C.

The appellant's manager was violently attacked by its workmen as a result of which he sustained serious injuries.

The workers in the lower division also threatened the appellant's staff working in that division that they would murder them if they worked there. The appellant was therefore compelled to notify that the division would be closed until further notice.

Subsequently as a result of conciliation before the labour officer, the division was opened again. The workers made a claim for lay-off compensation under s. 25C of the Industrial Disputes Act, r947, for the period during which the lower division was closed on the footing that :the management for their own reasons did not choose to run the division during that period.

The appellant's answer was, inter alia, that the closure of the division amounted to a lock-out which under the circumstances was perfectly justified and as such the workers were not entitled to claim any lay-off compensation : Held; (r) that the concept of a lock-out is essentially different from that of a lay-off and where the closure of business amounts to a lock-out under s. 2(1) of the Industrial Disputes Act,

Nor th Brook ] ute Co. Ltd. v.

Their Workmen

Das G"pta ].

March z4.

1960 it woulrl be impossible to bring it within the scope of a lay-off under s. z (kkk) of the Act.

Management of ·(z) that the expression "any other reason " ins. z (kkk) Kairbetta Estate means any reason which is allied or analogous to reasons already v. specified in that section.

Rajamanickam ]. J{. Hosiery Factory v. Labour Appellate Tribunal of India & Anr, A.LR. 1956 All. 498, approved.

(3) that the lock-out which was justified on the facts of the case, \vas not a lay-off and therefore the 'vorkmen \Vere not entitled to claim any lay; off compensation.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 91 of 1959.

Appeal by special leave from the decision dated March 24, 1958, of the Labour Court, Coimbatore, in R. P. No. 35 of 1958.

G. B. Pai and Sardar Bahadur, for the appellant.

M. K. Ramamurthi and T. S. Venkataraman, for the respondents.

1960. March 24.

The Judgment of the Court was delivered by

Gajendragadkar ].

GA.TENDRAGADKAR, J.-This appeal by special leave iR directed against the order passed by the Labour Court, at Coimbatore directing the appellant, the Management of the Kairbetta Estate, Kotagiri, to pay lay-off compensation to its workr; nen, the respondents, for the period between July 28, 1957, to September 2,

1957. This order was passed on a complaint filed by the respondents before the Labour Court under s. 33C(2) of the Industrial Disputes Act, XIV of 1947 (hereinafter called the Act).

The material facts leading to the respondents' complaint must be set out briefly at the outset. On July 26, 1957, Mr. Ramakrishna Iyer, the appellant's Manager, was assaulted by some of the workmen of the appellant. He suffered six fractures and had to be in hospital in Coouoor and Madras for over a month. The appellant's staff working in the division known as Kelso Division was also threatened by the workmen.

As a result of these threats three members of the staff wrote to the appellant on July 27, 1957, that they were afraid to go down to the lower division and it was impossible for them to work there becaue their lives were in danger. , They added that tho workers in the lower division were threatening them

• -

that they would murder them if they worked in the 1960 .lower division. On receiving this communication f ff h II fi d h Management of rom its sta t e appe ant noti e on t e same day J(airbetta Estate that the Kelso Division would be closed from that v: day onwards until further notice. This notice referred Rajamanickam to.the brutalassault on theManager and to the threat . - .. held out against the field staff who were reluc'tant to Ga1endragadkar ], face the risk of working in the lower division. It appears that the Kelso Division continued to be closed until September 2, 1957, on which date it was opened, as a result of conciliation before the labour officer, when the respondents gave an assurance that there would not be any further trouble. The claim for layoff is made for the said period during which the division remained closed between July 28 to September 2, 1957. ' Soon after the division was closed the respondents made a complaint to the Labour Court (No. 43of1957) under s. 33A of the Act in which they , alleged that they had been stopped from doing their work without notice or enquiry and claimed an order of reinstate- 4 ment with back wages and continuity of service.

At the hearing of the said complaint the appellant raised a preliminary objection that the closure in question was a lock-out and that it did not amount either to an alteration of conditions of service to the prejudice of the workmen nor . did it constitute discharge or punishment by dismissal or otherwise under els. A and B of s. 33 respectively, and so the petition was incompetent. This preliminary objection was upheld by the Labour Court and the complaint was accordingly dismissed on November 30, 1957.

Thereafter the present complaint was filed by the respondents on January 31, 1958, under s. 330 of the Act. In this complaint it was stated that the respondents were refused work from July 28 to September 2, 1957, "by declaring a lock-out of a division of the estate " and the claim :inade was that, as the management for their own reasons did not choose to run the division during the said days and laid-off the respondents, the respondents were entitled to claimlay-off compensation under s. 250 of the Act.

Against this pqmplaint. the appellant raised several contentions .

..s

1960 It was urged on it.s behalf that the complaint was incompetent under s. 330 and that the Labour Court Management of Kairbetta Estate had no jurisdiction to deal with it. It was also conv. tended that the closure of the division amounted to a llajamanicham lock-out which under the circumstances was perfectly . - justified and as such the respondents were not entitld Ga; endragadkar J. to claim any lay-off compensation. 'l'he Labour Court

rejected the preliminary objection as to want of jurisdiction and held that the complaint was competeut under s. 33C. On the merits it found in favour of the respondents and so it directed the appellant to pay to the respondents the lay-off compensation for the period in question. It is this order which is challenge< I before us in the present appeal; and the same two questions are raised before us.

For the purpose of deciding this appeal we will assume that the complaint filed by the respondents under s. 33C was competent and that the Labour Court

could have entertained a claim for lay-off compensation if the respondents were otherwise entitled to it. •On that assumption the question which we propose to decide is whether the closure of the appellant's divisi011 during the relevant period which amounts to a lock-out can he said to fall within the definition of lay-off.

We have already pointed out that in the earlier complaint by the respondents under s. 33A it has been held by the Labour Court that the closure in question was a lock-out and as such the appellant had not contravened the provisions of s. 33 of the Act.

Even in the present application the respondents have admitted that the said closure is a leek-out but they have added that a lock-out falls within the definition of Jay-off and that is the basis for their claim for layoff compensation. The question which thus arises for our decision is: Does a lock-out fall under s. 2(kkk) which defines a Jay-off?

Section 2(kkk) defines a lay-off as meaning the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been

• - -

t ..

retrenched. There is an explanation to the definition. z960 which it 'is unnecessary to set out. It is clear that the M anageme11t of lay-off takes place for one or more of the reasons J<airlietta Estate specified in the definitioa. Lay-off may be due to v; shortage of coal or shortage of power or shortage of Rajamanio/1am raw materials or accumulation of stocks or breakdown of machinery or any other reason. " Any other Gajemiragadkar J. reason" to which the definition refers must, we thillk, be a reason which is allied or analogous to reasons already specified. It has been urged before us on behalf of the respondents that " any other reason" mentioned in the definition need not be similar to the preceding reasons but shoulainclude any other reason of whatsoever character for which lay-off may have taken place ; and in support of this argm:b.nt reliance is placed on s. 25E(iii). Section 25E deals. with three categories of cases where compensation is not liable to be paid to a workman even though he may have been laid-off. One of these is prescribed by s. 25E(iii); if the laying-off is due to a strike or slowing down of production on the part of workmen in another part of the establishment no compensation has to be paid.

The argument is that laying-off which is specified in this clause has been excepted because, but for the , exception, it .. would have attracted the definition of

. s. 2(kkk) and would have imposed an obligation on the employer to pay lay-off compensation.

That no doubt is true ; but we do not see how the case specified in this clause is inconsistent with the view that "any othei reason " must be similar to the pre. ceding reasons specified in the definition.

If there is a strike or slowing down of production in one part of the establishment, and if lay-off is the consequence, the reason for which lay-off has taken place would undoubtedly be similar to the reasons specified in the definition.

We are, therefore, satisfied that the expression "any .other reason" should be construed to mean reason similar or analogous to the preceding reasons specified in the definition. That is the view taken by the Allahabad High Court in J. K. Hosiery Factory v. Labour Appellate 1'ribunal of India & Anr.(_!);

(I) A.I.R, 1956 All. +98,

376 SUPREME COUH.T REPOl{TS [1960]

'960 Let us now consider what a fock-out means under the Act. Section 2(1) defines a lock-out as 'meaning A! anagement of J(airbetta Estate the closing of a place of employment, or the suspenv. sion of work, or the refusal by an employer to con- Rajamanickam tinue to employ any number of ]Jersons employed by -- him.

It may be relevant to point out hat the Gajendmgadka• J. definition of lock-out contained in s. 2(e) of the Trade Disputes Act, 1929 (VII of 1929), had, in addition to the present definition under s. 2(1), included an additional clause describing a lockout which provided that " such closing, suspension or refusal occurs in consequence of a dispute and. is intended for the purpose of compelling those persons or of aiding another employer in compelling persons employed by him to accept terms or conditions of or affecting employment". This clause has now been _deleted. Even so, the essential character of a lock-out continues to be substantially the same. Lock-out can be described as the antithesis of a strike.

Just as a strike is a. weapon available to the employees for enforcing their industrial deniands, a lock-out is a weapon available to the employer to persuade by a coercive process the employees to see his point of view and to accept his demands. In the struggle l]etween capital and labour the weapon of strike is available to labour and is often used by it, so is the weapon of lock-out available to the employer and can be used by him. The use of both the weapons by the respective parties must, however, be subject to the relevant provisions of the Act. Chapter V which deals with strikes and lock-outs clearly brings out the antithesis between the two weapons and the limitations subject to which both of them must be exercised.

Thus the concept of lockout is essentially different from the concept of lay-off, and so where the closure of business amounts to a 'lock-out under s. 2(1) it would be impossible to bring it within the scope of lay-off under.s. 2(kkk). As observed by the Labour Appellate Tribunal in M/S. Presidency Jute Mills Go. Ltd. v. Presidency Jute Mills Go.

Employees' Union (2), in considering the essential character of a lock-out its dictionary meaning may be borne in mind.

According to the dictionary meaning

(2) [I9S•] L.A.C. g>.

'- -

• -

' -

' . --

lock-out means " & refusal by the employer to furnish r960 work to the operatives except on conditions to be 11 . l , Management of accepted by the latter co ect1ve y '.

Kairbetta E; tate Stated broadly lay-off generally occurs in a continuv. ing business, whereas a lock-out is the closure of the Rajainanickam business. In the case of a lay-off, owing tp the reasons . .

Specified in S. 2(kkk) the employer is unable to give Ga; ondragadkar ]. employment to one or more workmen. In the case of a lock-out, the employer closes the business and locks out the whole body of workmen for reasons which have no relevance to causes specified in s. 2(kkk).

Thus the nature of the two concepts is entirely different and so are their consequences. In the case of a . lay-off the employer may be liable to pay compensaj; ion as provided by s. 25(C), (D) and (E) of the Act; but this liability cannot be invoked in the case of a lock-out. The liability of the employer in cases of lock-out would d_epend upon whether the lock-outwas justified and legal or not; but whatever the liability, the provisions applicable to the payment of lay-off compensation cannot be applied to the cases of lockout.

Therefore, we hold that the lock-out in the present case was not a lay-off, and as such the respondents are not entitled to claim any lay-off compensation from the appellant. Incidentally we would like to add that the circumstances of this case clearly show that the lock-out was fully justified. The appellant's Manager had been violently attacked and the other members of the staff working in the lower division were threatened by the respondents. In such a case if the appellant locked out his workmen no grievance can be made against its conduct by the respondents.

In the result the appeal is allowed, the order passed by the Labour Court is set aside and the complaint filed by the respondents under s. 330 is dismissed.

There would be no ordsr as to costs.

Appeal allowed .

RAJ AMANICKAM AND OTHERS

P. B. GAJENDRAGADKAR

K. 0. DAS GUPTA, JJ.

Distinction-Industrial Disputes Act

ss. 2(l), 2

s. 25C

Industrial Disputes Act

s. 2(1)

Industrial Disputes Act

Rajamanickam

G. B. Pai

Sardar Bahadur

M. K. Ramamurthi

T. S. Venkataraman

Gajendragadkar

GA.TENDRAGADKAR

s. 33C(2)

Industrial Disputes Act

July 26, 1957

Ramakrishna Iyer

Coouoor

Madras

July 27, 1957

Rajamanickam

September 2, 1957

July 28 to September 2, 1957

s. 33A

s. 33

November 30, 1957

January 31, 1958

s. 330

s. 250

s

1960

s. 330

endragadkar

s. 33C

s. 33C

s. 33A

s. 33

s. 2(kkk)

Section 2(kkk)

Gajemiragadkar

s. 25E(iii)

Section 25E

s. 25E(iii)

s. 2(kkk)

Allahabad High Court

Section 2(1)

s. 2(e)

Trade Disputes Act, 1929

s. 2(1)

s. 2(1)

s. 2(kkk)

S. 2(kkk)

s. 2(kkk)

s. 25(C)

s. 330


1y60

A1arch 24.

SUPREME COURT REPORTS

[HJ60]

BHARAT BARREL AND DRUM J\H'G. 00.

PRIVATE LTD.

'V.

GOVIND GOPAL \VAGHMARE AND ANOTHEH,

(P. B. GAJENDRAGADKAR, K. N. WANCHOO and K. o. DAS GUPTA, JJ.)

Industrial Dispute-Full Bench formula-lncomc:tax payablehd. • The workmen of the appellant company claimed four months, \vages including dearness allo\vancc as bonus for the year 1952, and retrospective operation of the increased wage scale to be fixed by the Industrial Tribunal from March l, 1952.

The appellant agreed to the increased wage scale suggested by the Tribunal but wanted that it should be linked to some guaranteed production, and opposed its operation retrospectively on the ground that there had been eliberate slowing down of production by the workmen in the previous years. The Tribunal found that there was some justiffoation in the appellant's contention that there was considerable go-slow which had affected production and ordered that retrospective effect should be given to its order relating to increase in wages which was passed on May 13; 1957, from June r, 1956, and not March l, r952, as claimed by the workmen. The increased \Vages \Vere not linked to any guaranteed production but it \vas made clear that the workers would give certain reasonable production to which the workmen agreed. The Tribunal granted five months' basic wages by way of bonus on the basis of the Full Bench .formula which is generally applied to these matters.

On appeal by the Appellant-company by special leave :

Held, that there was no reason for interfeience with the order of the Tribunal fixing the date as June l, 1956, from which the increased wages should come into force and that the Tribunal had jurisdiction to award five months' basic wag_es by way of bonus.

For the purpose of the Full Bench formula, the incometax payable has to be deducted on the figures worked out according to the formula and it is immaterial what the actual income-tax paid is-whether more or less.

OrvrL APPELLATE JURISDICTION: Civil Appeal No. 93 of 1959.

Appeal by special leave from the Award dated May 13, 1957, of the Industrial Tribunal, Bombay, in H, eference (I.T.) No. 166 of 1955.

R. J. Kolah, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vuhra, for the appellants.

K. R. Ohaudhury and Janardan Shanna, for the respondents Nos. l and 2.

• -

...

1960. March 24.

The , Judgment of the Court waf\ delivered by

WANOHOO, J.-This appeal by special leave raises two questions, namely, (i) bonus for the year 1952 and

(ii) retrospective operation of the order of the Industrial Tribunal relating to increase in wages. The appellant is a company manufacturing barrels and drums at Bombay. There was a dispute between the appella1'lt and its workmen about a number of matters, which was referred to the tribunal by the Government of Bombay on November l 'l, 1955. In respect of the two matters which are now raised in appeal the workmen claimed (i) four months' wages including dearness allowance as bonus for the year 1952 and (ii) retrospective operation of the wage-scale to be fixed by the tribunal from March 1, 1952.

So far as the increase in wages is concerned, the appellant agreed to the scale suggested by the tribunal but it opposed the grant of the increased scale retrospectively and also wanted that the increased wages should he linked to some guaranteed production. The reason for this was that the appellant felt that there had been deliberate slowing down of production by the workmen in the previous years. The tribunal was qf opinion that there was some justification in the appellant's contention that there had beell consider~ able go-slow which had affected production. Taking that into account it ordered that retrospective effect should be given to its order which was passed on May 13, 1957 from June 1, 1956. As to the linking of the increased wages to a certain guaranteed production it found it difficult to lay down any norm itself; but it made it clear that the increase in wages was made by it on the basis that the workers would give a certain reasonable production and noted that the workers were agreeable to do that. It, however, recommended that immediately after the award had been given, 'an expert should be appointed by agreement, if possible, to go into this question. It also said that in case it was not possible to appoint an expert by agreement it would be op({n to the appellant to appoint one. ·

Bharat Barrel &

Drum Mfg .. Co. (P) Lid. v.

Govind G opal

Waghmare

Wanchoo ] .

, 96o The appellant's contention before us is that the - tribunal having found some justification in its conten- Bharat Barrel & tion that there had been considerable go-slow should

Dru; tZ~· co. not have given retrospective effect at all to the order

v. relating to the increase in wages. This matter has Govind Gopal been considered fully by the tribunal and it came to Waghma" the conclusion that increase in wages should be granted from June 1, 1956.

This could hardly be called Wanchcn f. retrospective considering that the reference was made in November 1955; in any case the tribunal rejected the claim of the workmen for retrospective operation for the period of over four years from March 1952 to May 1!:156 and a good deal of go-slow was practised during this period. In the circumstances we see no reason for interference with the order of the tribunal fixing the date as June 1, 1956, from which the increased wages should come into force.

This brings us to the next question relating to bonus.

The tribunal has awarded five months' basic wages by way of bonus. The first contention in this connection is that the workmen had only claimed four months' basic wages and the tribunal could not have awarded anything more than what the workmen claimed. This in our opinion is incorrect. The workmen had claimed four months' wages including dearness allowance as bonus.

Five months' basic wages which the tribunal has allowed are admittedly less than the claim put forward (namely, four months' wages including dearness allowance). In the circumstances the tribunal certainly had jurisdiction to award what it has awarded to the workmen.

The next question is whether the tribunal was justified in awarding as much as five months' basic wages on the basis of the Full Bench formula, which is generally applied to these matters. The gross profit found by the tribunal is not challenged, namely, Rs. 5·05 lacis.

The tribunal bas then allowed Rs. I 36 lacs as depreciation, leaving a balance of Rs. 3·69 lacs.

Deducting income-tax from this at seven annas in a rupee (i.e., Rs. l 61 lacs), we are left with a balance of Rs. 2·08 lacs. Six per cent. per annum interest on the paid-up capital along with four per cent. interest on the working capital comes to Rs. 16,000, leaving an avai!a, ble

·~ ....

• - -

surplus of Rs. l 92 lacs. Out of this, the tribunal has allowed five months' basic wages as bonus which according to its calculations comes to Rs. 91,000, leaving Rs. l Ol lacs. There will be a rebate of Rs. 40, QOO on this sum, leaving a total of Rs. l 41 lacs with the appellant. On these figures, the bonus awarded by the tribunal cannoli be interfered with.

The appellant, however, draws our attention to two

ircumstances in this connection. In the first place it urges that the tribunal has not taken into account anything for rehabilitation. But it may be mentioned that the appellant had proved no rehabilitation amount as such. What it had done was to appropriate Rs. 3·16 lacs towards depreciation, which of course was not the proper amount of notional normal depreciation, which is allowable under the formula. Our attention is drawn, however, to the figures filed by the workmen in Ex. U-4 in which Rs. 40,000 has been allowed towards rehabilitation. Even accepting this concession by the workmen and deducting it from the figures given by us above, the appellant would still be left with Rs. l Ol lacs after paying five months' basic wages as bonus. There is thus no reason to interfere with the award of bonus on this ground.

Lastly it is urged that according to the income-tax assessment which was actually made in this case sometime after the order of the tribunal, the appellant has been assessed to income-tax amounting to Rs. 2·35 lacs. The appellant claims that it should be allowed this entire amount and not the notional figure calculated by us, namely, Rs. l 61 lacs as incoine-tax. We are of opinion that for the purpose of the Full Bench formula, the income-tax payable has .to be deducted on the figures worked out according to the formula and it is immaterial what the actual income-tax paid is-whether more or less. In this particular case, the income-tax appears to be more because certain items which were challenged by the workmen but were allowed as proper expense by the tribunal have apparently not been allowed as proper expense by the income-tax department. The industrial tribunal, however, is not concerned directly with what the income

I960

Bharat Barrel &

Drum Mf:. Co.

(P) Ltd. v.

Govind Gopal

Waghmare

Wanchoo j .

Bharat Barrel &

Drum Mfg. Co.

(P) Ltd. ..

Govind Gopal Waghmare

Wanchoo ].

r960

tax authorities assess as actual income-tax in a particular year; it is concerned with working out the Full Bench formula in accordance with its notional calculations and this is what has been done in this case.

There is no ground therefore for interference with the award of bonus for this reason either.

We therefore dismiss the appeal, but in the circumstances pass no order as to costs.

Appeal dismissed.

B. N. ELIAS AND CO., LTD., EMPLOYEES'

UNION AND OTHERS

B. N. ELIAS & CO., LTD., AND OTHERS.

(P. B. GAJENDRAGADKAR, K. N. w ANOHOO

and K. C. DAS GUPTA, JJ.)

Industrial Dispute-Bonus-Implied term of agreement or condition of service-Ex gratia payments-Cttstomary bonus- -Pnja

bonus.

Since 1942 the respondents had been making ex gratia payments to their employees (appellants) in addition to wages and salaries, bnt these were not regular and in 1956, no ex gratia payments were made at all. The appellants claimed that their right to be paid bonus had become an implied term of agreement or a condition of service and, at any rate, it should be paid as customary bonus, and relied on the case of The Graham Trading Co. (India) Ltd. v. Its Workmen, [1960] l S.C.R. 107. The evidence showed that though the payments were made from 1942 to 1952 it was made clear every time that the payments were made as ex gratia: Held, (1) Where payments are made to workers ex gratia and are accepted as such, it is not possible to imply a term of service on the basis of an implied agreement to pay bonus.

(2) that there cannot be a customary payment of bonus between employer and employee where terms of service are governed by contract, express or implied, except where the bonus may be connected with a festival, whether Puja in Bengal or some other equally important festival in any other part of the country.

The Graham Trading Co. (India) Ltd. v. Its Workmen, [1960] l S.C.R. 107, explained.

(3) that for the year 1956 one month's basic wage should be paid as Puja bonus to the subordinate staff as it has become customary and traditional in the respondents' concerns.

• -

BHARAT BARREL AND DRUM MFG. CO PRIVATE LTD

GOVIND GOPAL \VAGHMARE AND ANOTHEH

P. B. GAJENDRAGADKAR

K. N. WANCHOO

K. o. DAS GUPTA, JJ.

May 13; 1957

R. J. Kolah

S. N. Andley

J. B. Dadachanji

Rameshwar Nath

P. L. Vuhra

K. R. Ohaudhury

Janardan Shanna

WANOHOO

Bombay

Government of Bombay

November l 'l, 1955

March 1, 1952

May 13, 1957

June 1, 1956

Govind Gopal

Govind Gopal Waghmare

B. N. ELIAS AND CO., LTD

B. N. ELIAS & CO., LTD

K. N. w ANOHOO

K. C. DAS GUPTA

Bengal


Bharat Barrel &

Drum Mfg. Co.

(P) Ltd. ..

Govind Gopal Waghmare

Wanchoo ].

r960

SUPREME COURT REPORTS [1960]

tax authorities assess as actual income-tax in a particular year; it is concerned with working out the Full Bench formula in accordance with its notional calculations and this is what has been done in this case.

There is no ground therefore for interference with the award of bonus for this reason either.

We therefore dismiss the appeal, but in the circumstances pass no order as to costs.

Appeal dismissed.

B. N. ELIAS AND CO., LTD., EMPLOYEES'

UNION AND OTHERS

B. N. ELIAS & CO., LTD., AND OTHERS.

(P. B. GAJENDRAGADKAR, K. N. w ANOHOO

and K. C. DAS GUPTA, JJ.)

Industrial Dispute-Bonus-Implied term of agreement or condition of service-Ex gratia payments-Cttstomary bonus- -Pnja

bonus.

Since 1942 the respondents had been making ex gratia payments to their employees (appellants) in addition to wages and salaries, bnt these were not regular and in 1956, no ex gratia payments were made at all. The appellants claimed that their right to be paid bonus had become an implied term of agreement or a condition of service and, at any rate, it should be paid as customary bonus, and relied on the case of The Graham Trading Co. (India) Ltd. v. Its Workmen, [1960] l S.C.R. 107. The evidence showed that though the payments were made from 1942 to 1952 it was made clear every time that the payments were made as ex gratia: Held, (1) Where payments are made to workers ex gratia and are accepted as such, it is not possible to imply a term of service on the basis of an implied agreement to pay bonus.

(2) that there cannot be a customary payment of bonus between employer and employee where terms of service are governed by contract, express or implied, except where the bonus may be connected with a festival, whether Puja in Bengal or some other equally important festival in any other part of the country.

The Graham Trading Co. (India) Ltd. v. Its Workmen, [1960] l S.C.R. 107, explained.

(3) that for the year 1956 one month's basic wage should be paid as Puja bonus to the subordinate staff as it has become customary and traditional in the respondents' concerns.

• -

CIVIL APPELLATE JURISDICTION: Civil Appeal z96o No. 121 of 1959. .

B. N. Elias & Co.

Appeal by spemal leave from the A ward dated Ltd. Employees' June 3, 1957, of the Second Iudustrial Tribunal, West Union.

Bengal. v.

N. C. Chatterjee, D. L. Sen Gupta and Dipak Datta B. N. Elias & Co.

Choudhri, for the appellants. l.td.

C. K. Daphtary, Solicitor-General of India, H. N.

Sanyal, Additional SoUcitor-General of India and S. N. Mukherjee, for the respondents.

1960. March 24.

The Judgment of the Court was delivered by

"VANCHOO, J.-This appeal by special leave raises Wanclwo J. the question of bonus. There was a dispute between the workmen of B. N. Elias & Co. Ltd. (hereinafter called the appellants) and their employers, B. N. Elias . and Co. Ltd. and others (hereinafter called the respondents) with respect to bonus for the years 1954, 1955 and 1956. The case of the appellants was that they were entitled to bonus as a condition of service irrespective of profit or loss on the following scale :-

I-Clerical staff. 1 month's basic pay as bonus in April, 1 month's basic pay as bonus in August, 1 month's basic pay as bonus in December.

II-Subordinate staff. 1 month's basic wages as bonus in April, 1 month's basic wages as bonus in August, 1 month's basic wages as bonus at Puja time, 1 month's basic wages as bonus in December.

According to the appellants this bonus was always paid from 1942 to 1952. Later as there were some disputes between the appellants and the respondents, the respondents wanted to stop the payment of bonus from 1953, though something less was paid that year.

In 1954 the amount of bonus was further reduced.

Consequently, a dispute was raised which was referred by the Government of West Bengal in May 1956.

Subsequently another dispute was raised with respect to the bonus for the years 1955 and 1956 and this time it was claimed as a customary bonus or as a condition of service payable at regular intervals of four

months and at a uniform rate. Thereupon a consolidated reference was made by the Government of West

Bi.~: i~;;0~~~· Bengal in September 1956 with respect to all the Union three years, i. e., 1954, 1955 and 1956, to the same v. tribunal. ·

B. N. Elias<>- Co.

When the matter came up before the tribunal, the

Ltd. respondents contended that they were not in a pro

Wanchoo j. sperous condition and were unable to pay any further bonus besides what had already been paid for the years in dispute. It was admitted that since about 1942 the respondents had been making ex gratia payments to their employees in addition to wages and salaries. These payments were made at the , rate of one month's basic wage each time but their number in the course of one year used to vary. At one time four ex gratia payments were made to clerical and subordinate staff but later the number of ex gratia payments was reduced for the clerical staff to three per year but it remained at four for the subordinate staff until the year 1952.

As, however, the trading result in 1952 deteriorated as compared with the previous years, the respondents made only two ex gratia payments to clerical staff and three to subordinate staff for the year 1953. A dispute was then raised by the workmen with regard to that year but the Government refused to make a reference to the tribunal. In 1954 and 1955 two ex gratia payments were made to clerical staff and two to the subordinate staff. In 1956, no ex gratia payments were made at all.

The respondents denied that these payments were made as a condition of service or as an implied term of agreement irrespective of profit or loss. They also denied that these were customary payments irrespective of profit and loss. It was alleged that they were truly and strictly ex gratia payments made by the respondents voluntarily out of goodwill in circumstances in which no tribunal would award a bonus. The respondents .therefore resisted the claim for any further payment as bonus for these three years.

Before thE! tribunal, the appellants abandoned their claim for bonus on the basis of the Full Bench formula. They however pressed t.heir claim on the

' • .. -

3 S.C.R. SUPREME COURT REPORTS 385 ·-'"' ..,. ground that bonus was payable all an implied condiz96o

tion of service and had also acquired the status of B N ;;:- & c customary bonus. The tribunal, however, negatived Ltd.' E~; oyees?· the contention that the payment of bonus as claimed Union had become an implied condition of service. It also v held that the case of the employees based on custom B. N. Elias & Co. was not tenable. In consequence it refused to grant Ltd. any further bonus for the years 1954 and 1955 beyond wanchoo J.

~ what the appellants had been already paid and rejectis ed the claim for 1956 altogether.

Shri N. C. Chatterjee for the appellants has mainly pressed the claim for bonus on the ground that it is a customary bonus and relies on The Graham Trading Co. (India) Ltd.v.Its Workmen( 1).

Before we deal i with this aspect of the matter we may shortly dispose

of the claim based on an implied agreement or condition of service. The evidence shows that though payment was made uninterruptedly from 1942to 1952 three times a year to the clerical staff and four times a year to the subordinate staff, it was made clear every time the payment was made that it was an ex gratia payment. Further the receipts given by the employees, a sample of which was produced, show

~ that the bonus was accepted as ex gratia bonus.

As is

~ pointed in The Graham Trading Co. (1) it would not be possible to imply a term of service on the basis of an implied agreement when the payment was clearly made ex gratia and had even been accepted as such, as in this case. Therefore, the contention of the appel- 1ants that the bonus.claimed by them has become an implied term of agreement or a condition of service '" must fail.

' Our attention in this connection was drawn to a letter of appointment -issued to one 0. V. Thomas in which under the head "other allowance", the following appears-

" Equivalent to a month's salary every 4th month will be allowed after your confirmation in employment." " ....,.. x That is, however, an express term in the contract between the National Tobacco Company of India Limited (which is one of the respondents before us)

(I) [1960] I S.C.R. 107.

.,.

I960 and Thomas and cannot be a basis for a finding of an - implied term of agreement to give bonus three times a B. N. Elias & Co.

Th h

J • th b f th Ltd. Employees' year. f omas mayb ave a ch~1m ond eh as1s o 1s Unio,,. term o agreement etween 1m an t e company, v. about which we say nothing. Another letter of appoint- B. N. Elias & Co. ment also of National Tobacco Co. of India Limited

Ltd. with respect to one Ram Shankar Misra was referred to. In that letter, however, among the terms we find a Wanchoo ]. term relating to bonus at the rate of Rs. 15 per month > after confirmation. That is again an express term between that employee and the National Tobacco Co. of India Limited and cannot support the case of an implied term of agreement by which a month's bonus is paid thrice a year in April, August and December.

The tribunal was therefore right in rejecting the " contention based on the implied term of agreement or condition of service.

Turning now to the case of customary bonus which has been pressed before us on the authority of The Graham Trading Co. (1 ) we may point out that that was a case of a customary and traditional bonus payable at Puja which was a special festival of particular importance in Bengal. That case cannot be -. held to have laid down that there can be customary bonus as such unconnected with some festival. It is difficult to introduce a customary payment of bonus between employer and employee where terms of service are governed by contract, express or implied, except where the bonus may be connected with a festival whether Puja in Bengal or some other equally important festival in any other part of the country. -., The principles laid down in that case for governing customary and traditional bonus connected with a festival cannot in our opinion'be extended to what may be called a customary bonus unconnected with any festival.

We are therefore of opinion that the appellants having failed to prove (except in one matter with which we shall .deal presently) that there was an implied agreement or condition of service for payment of bonus, they cannot ask for payment of any bonus _,"' on the basis of any customary payment unconnected with any festival.

( !) [1960] I S.C.R. 107

This brings us to one of the payments to subz96o ordinate staff which was" one month's basic wages as B N El-:- & c bonus at Puja time ". It will be noticed that this Ltd: E~;:oyees?·

payment to the subordinate staff at Puja time is in Union. addition to the other payments which are common v. between the clerical and the subordinate staff. This B. N. Elias & Co. payment of one month's basic wage as bonus at Puja Ltd. appears to have continued uninterrupted from the wanchoo J. time it started in 1942 or thereabout upto the time the dispute arose in 1954. The payment was invariably of one month's basic wage and it appears that it was paid even in a year of loss, vide Ex. E. We are therefore of opinion that the principles laid down in The Graham Trading Co. (1) apply to one month's Puja bonus payable to the subordinate staff and it should be held that this payment has become customary and traditional in the respondents' concerns when the dispute was raised for the first time in 1954. We' have no doubt that if the judgment in The Graham Trading Co. (1) was available to the tribunal it would have held that one month's basic wage as bonus at Puja time o subordinate staff had become customary and traditional in the respondents' concerns. We therefore partly allow the appeal and hold that one month's basic wage as Puja bonus to the subordinate staff has become customary and traditional in the respondents' concerns and we order the respondents to pay that for the year 1956 for which no bonus whatsoever has been paid.' The rest of the appeal fails and is hereby dismissed. In the circumstances we order the parties to bear their own costs. ·

Appeal allowed in part.

(1) [196oJ 1 s.c.R. 107,

Bharat Barrel &

Drum Mfg. Co.

(P) Ltd.

Wanchoo

B. N. ELIAS & CO., LTD., AND OTHERS

P. B. GAJENDRAGADKAR

K. C. DAS GUPTA, JJ.

Bengal

N. C. Chatterjee

D. L. Sen Gupta

Dipak Datta B. N. Elias

C. K. Daphtary

H. N.

Sanyal

S. N. Mukherjee

VANCHOO

Wanclwo

B. N. Elias & Co. Ltd.

B. N. Elias . and Co. Ltd.

Government of West Bengal

B. N. Elias<>-

S.C.R. SUPREME COURT REPORTS 385

N. C. Chatterjee

Graham Trading Co.

B. N. Elias

Ram Shankar Misra

National Tobacco Co. of India Limited

Puja

Puja Ltd.


Ig6o

March 25.

SUPREME COURT REPORTS [1960]

R. P.KAPUR v.

THE STATE OF PUNJAB

( P .B. GAJENDRAGADKAR, K. N. WANCHOO and K. c. DAS GUPTA, JJ.)

Criminal Trial-Quashing of proceedings-Inherent power of High Court-When to be exercised-Code of Criminal Procedure, r898 (V .9f I898), s. 56I-A.

• One S lodged a first information report against K. When K found that no action was taken on the report for several months he filed a criminal complaint against S contending that the report lodged by S was false. At the instance of S the magistrate ordered K's complaint to stand adjourned till the police made its final report on the first information report.

Thereupon K moved the High Court under s. 56r-A of the Code of Criminal Procedure for quashing the proceedings initiated by the first information report.

Pending the hearing the police submitted its report under s. r73 of the Code. Subsequently the High Court dismissed the petition.

K obtained special leave and appealed: Held, that no case for quashing the proceedings was made out.

The inherent jurisdiction of the High Court could be exercised to quash proceedings in a proper case either to prevent the abuse of the process of any Court or otherwise to secure the ends of justice. The following are some categories of cases where the inherent jurisdiction could and should be exercised to quash proceedings:

(i) where there was a legal bar against the institution or continuance of the proceedings;

(ii) where the allegations in the first information report or complaint did not make out the offence alleged ; and .

(iii) where either there was no legal evidence adduced in support of the charge or the evidence adduced clearly or manifestly failed to prove the charge.

In exercising its jurisdiction under s. 56r-A of the Code the High Court cannot embark upon an enquiry as to whether the evidence in the case is reliable or not.

In the present case there was no legal bar to the institution of the proceedings or to their continuance; the allegations made in the first information report did constitute the offences alleged and it C?uld not be contended that on the face of the record the charge was unsustainable.

In re: Shripad G. Chandavarkar, A.LR. r928 Born. r84, Jagat Chandra Mozu.mdar v. Queen Empress, (r899) LL.R. 26 Cal. 786, Dr. Shankar Singh v. The State of Punjab, (1954) 56 Punj. L.R. 54, Nripendra Bhusan Ray v. Govind Bhandhu Majumdar, A.LR. r924 Cal. ro18 and Ramanathan Chettiar v. K. Sivarama Subrahmanya Ayyar, (1924) LL.R. 47 Mad. 722, referred to.

S.P. faiswal v. The State, (r953) 55 Punj. L.R. 77, distinguished.

• ..

CRIMINAL APPELJ, ATE JURISDICTION: Criminal Appeal No. 217of1959.

R. P. Kapur Appeal by special leave from the judgment and v. order dated September 10, 1959 of the Punjab High state of Punjab -Court in Criminal Misc. No. 559 of 1959.

Appellant in person.

S. M. Sikri, Advocate-General for the State of Punjab, Mohinder Singh Punnan, T. M. Sen and D .. Gupta, for the respondent.

1960. March 25. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-On December 10, 1958, Mr. Gajendragadkar ], M. L. Sethi lodged a First Information Report against • the appellant Mr. R. P. Kapur and alleged that he and - • his mother-in-law Mrs. Kaushalya Devi had committed offences under ss. 420-109, 114 and 120B of the Indian Penal Code. When the appellant found that for several months no further action was taken on the said First Information Report which was hanging like a sword over his head he filed a crimihal complaint on April 11, 1959, against Mr. Sethi under ss. 204, 211 and /385 of

..,,..

,. . -~

the Indian Penal Code and thus took upon himself the onus to prove that the First Information Report lodged by Mr. Sethi was false.

On the said complaint Mr. Sethi moved that the proceedings in question should be stayed as the police had not made any report on the First Information Report lodged by him and that the case started by him was still pending with the police. After hearing arguments the learned Magistrate ordered t_hat the appellant's complaint should stand adjourned.

Thereupon the appellant moved the Punjab High Court under s. 561-A of the Code of Criminal Procedure for quashing the proceedings - initiated by the First Information Report in question. Pending the hearing of the said petition. in the said High Court the police report was submitted under s. 173 of the Code on July 25, 1959. Subsequently, on September 10, 1959, Mr. Justice Capoor heard the appellant's petition and held that no case had been made out for quashing the proceedings under s. 561-A. In the result the petition was dismissed. It is against this order that the appel- Ia.nt has come to this Court by special leave.

SUPREME COURT REPORTS [Hl60) • x96o The material facts leading to the proceedings against the appellant lie within a very narrow com1mss.

It, R. P. Kapur

v. appears that in January 1957 the mother.in.Jaw of the State of Punjab appellant and his wife entered into an agreement with the owners of certain lands in village Mohammadpnr Gajendmgadkar ]. Munirka to purchase lands at Rs. 5 per sq. yd.

Earnest money was accordingly paid to the vendors and it was agreed that the sale had t? be completed by April 13, 1957; by consent this period was extended to , June 13, 1957. Meanwhile, on March 8, 1957, not ifications were issued by the Chief Commissioner under ss. 4 and 6 of the Land Acquisition Act, 1894, for acquiring considemble area of land which included the lands belonging to the vendors; this acquisition was intended for the housing scheme of the Ministry of Vil or ks, Housing and Supply in the Government of India. The proposed acquisition was treated as one of urgency and so under s. 17 of the Acquisition Act possession of the land was taken by the Collector on June 8, 1957. Some of the persons concerned in thp, said lands filed objections against the validity of the action taken under s. 17. It was under these circumstances that the sale deeds were executed by the vendors in favour of Mrs. Kaushalya Devi and certain other vendees on June 12, 1957. It appears that the vendees presented their claim before the Land Acquisition Collector and an award has been made in September 1958 by which Mrs. Karnihalya Devi has been allowed compensation at Rs. 3-8·0 per sq. yd.

That, is how the title of the lands in question passed to Mrs.

Kaushalya Devi.

The First Information Report filed by Mr. Sethi alleges that he and the appellant were friends and that on January 4, 1958, the appellant dishonestly and fraudulently advised him to purchase 2,000 sq. yds. of land in Khasra Nos. 22, 23, 24 and 25 in the aforesaid village Mohammadpur Munirka on the representation that as owner of the land in the area Mr. Sethi would get a plot of desired dimensions in the same area developed by the Ministry under its housing scheme.

The appellant also represented to Mr. Sethi, according to t.he First Information Report, that since under the scheme no person would be allotted more than one

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plot he would have to surrender a part of his land; 1960 that is why as a friend , he was prepared to give to Mr. h h d b R. P. Kapur Sethi one plot at the price at w ich it a een purv. chased.

According to Mr. Sethi the appellant dictated State of Punjab an application which he was advised to send to the Secretary of the Ministry of Works and he accordingly Gajendragadkar J. sent it as advised. _ The First Information Report further .alleges that the appellant had assured Mr .

Sethi that the land had been purchased by his motherin-law at Rs. 10 per sq. yd. Acting on this representation Mr. Sethi paid Rs. 10,000 by cheque drawn in favour of Mrs. Kaushalya Devi on January 6, 1958.

This cheque has been cashed. Subsequently a draft of the sale deed was sent by.the appellant to Mr. Sethi in the beginning of March 1958 and on March 6, 1958, a further sum of Rs. 10,000 was paid by cheque. The draft was duly returned to the appellant with a covering letter in hich Mr. Sethi stated that he would have liked to add one clause to the deed to the effect that in the event of the authorities not accepting the sale for the purpose of allotment, the amount of Rs. 20,000 would be refunded to him; and he expressed the hope that even if the said clause was not included in the document the appellant would accept it.

The sale deed in favour of Mr. Sethi was registered on March 21, 1958. It is this transaction which has given rise to the First Information Report in question.

Broadly stated the First Information Report is based on four material allegations about fraudulent misrepresentation. It is alleged that the appellant fraudulently misrepresented to Mr. Sethi that the land had been purchased at Rs. 10 per sq. yd.; that the appellant fraudulently concealed from Mr. Sethi the pendency of the proceedings before the Land Acquisition Collector, Delhi, and of the acquisition of the said property under s. 17 of the said Act; he also made similar fraudulent misrepresentations as regards the scheme of housing to which he referred.

As a result of these misrepresentations Mr. Sethi entered into the transaction and parted with Rs. 20,000. That in brief is the nature of the complaint made by Mr. Sethi in his First Information Report. The appellant urged before the Punjab High Court that the case started aai.nst

i96o him by the First Information Report should be quashed under s. 561-A of the Code. The Punjab High R.P. J(apur v.

Court has rejected the appellant's contention. The state of Punjab question which arises for our decision in the present - appeal is: Was the Punjab High Court in error in Gajmdragadka. J. refusing to exercise its inherent jurisdiction under s. 561-A of the Code in favour of the appellant?

Before dealing with the merits of the appeal it is necessary to consider the nature and scope of the inherent power of the High Court under s. 561-A of the Code. The said section saves the inherent power of the High Court to make such orders as may be necessary to give effect to any order under this Code or to prevent abuse of the process of any court or otherwise to secure the ends of justice. There is no doubt that this inherent power cannot be exerQised in regard to matters specifically covered by the other provisions of the Code. In the present case the magistrate before whom the police report has been filed under s. 173 of the Code has yet not applied his mind to the merits of the said report and it may be assumed in favour of the appellant that his request for the quashing of the proceedings is not at the present stage covered by any specific provision of the Code. It is well-established that the inherent jurisdiction of the High Court can be exercised to quash prnceedings in a proper case either to prevent the abuse of the process of any court or otherwise to secure the ends of justice.

Ordinarily criminal proceedings instituted against an accused person must be tried under the provisions of the Code, and the High Court would be reluctant to interfere with the said proceedings at an interlocutory stage.

It is not possible, desirable or expedient to la.y down any inflexible rule which would govern tho exercise of this inherent jurisdiction. However, we may indicate some _categories of cases where the inherent jurisdiction can and should be exercised for quashing the proceedings.

There may be cases where it may be possible for the High Court to take the view that the institution or continuance of criminal proceedings against an accused person may amount to the abuse of the process of the court or that the quashing of the impugned proceedings would secure the ends of

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j; stice. If the criminal proceeding in question is in ;960 respect of an offence alleged to have been committed by an accused person and it manifestly appears that R. P. Kapur there is a legal bar against the institution or continu- State 0/I'unjab ance of the said proceeding the High Court would be justified in quashing the proceeding on that ground. Gajendragadkar ].

Absence of the requisite sanction may, for instance, furnish cases under this category. Cases may also arise where the allegations in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety, do nqt

constitute the offence alleged ; in such cases no question of appreciating evidence arises; it is a matter_~/ merely of looking at the complaint or the First Infor- (' mation Report to decide whether the offence alleged is disclosed or not. In such cases it would be legitimate for the High Court to hold that it would be manifestly unjust to allow the process of the criminal court to be issued against the accused person. A third category of cases in which the inherent jurisdiction of the High Court can be successfully invoked may also arise. In cases falling under this category the allegations made against the accused person do constitute an offence alleged but there is either no legal evidence adduced in support -of the case or evidence adduced clearly or manifestly fails to prove. the charge. In dealing with this class of cases it is important to bear in mind the distinction between a case where there is no legal evidence or where there is evidence which is manifestly and clearly inconsistent with the accusation made and cases where there is legal evidence which on its appreciation may or may not support the accusation in questiop. In exercising its jurisdiction under s. 561-A the High Court would nqt embark upon an enquiry as to whether the evidence in question is reliable or not. That is the function of the trial magistrate, and ordinarily it would not be open to any party to invoke the High Court's inherent jurisdiction and contend that on a reasonable appreciation of the evidence the accusation made against the accused would not be sustained. Broadly stated that is the nature and scope of the inherent jurisdiction of the High Court under s. 561-A in the matter of quashing •

;!94 SUPREME COUJ{'f Rll'ORTS LlU6U J

z960 criminal proceedings, and that is the effect of the - judicial decisions on the point (Vide: In Re: Shri- R. P.:<apur pad G. Ohandavarkar ('}, Jagat Chandra Mozumdar v.

State of Punjab Queen Empress (2), Dr. Shanker Singh v. The State of

--- Punjab (3), Nripendra Bhusan Ray v. Gobind Bandhu Gajendragadkar J. Majumdar( 4} and Ramano.than Ohettiyar v. K. Sivarama Subrahmanya Ayyar (5).)

Mr. Kapur, who argued his own case with ability before us, strongly relied on the decision of the Punjab

High Court in S. P. Jaiswal v. The State & Anr. (") and contended that in the interest of justice and in order to avoid unnecessary harassment to him we should ourselves examine the evidence on record and decide whether the said evidence can possibly lead to his conviction. In that case Jaiswal was charge'd with having committed offences under s. 147 ands. 452 of the Code and it does appear from the judgment of the High Court that the learned judge elaborately considered all the evidence on which the prosecution relied and came to the conclusion that the proceedings taken against Jaiswal and his co.accused should be quashed.

It is, however, clear from the judgment that the learned judge was very much impressed by the fact that the police had reported that there was no case or at the most only a technical offence against Jaiswal but the district magistrate had interfered with the statutory duty of the police and had directed the police officer concerned to prosecute him. On these facts the learned judge was inclined to take the view that there was a violation of the fundamental right guaranteed to J aiswal under Art. 21 of the Constitution. Besides, in the opinion of the learned judge the evidence on which the prosecution relied showed that the essential ingredients of the offence charged were missing "and the very essentials were non.existent". It is on these findings that the criminal proceedings against Jaiswal were qua§hed. It is unnecessary for us to consider whether the fundamental right guaranteed under Art. 21 had really been contravened or not. We have merely referred to the relevant findings recorded by

(1) A.LR. 1928 Born. I8j.

(2) (1899) LL.R. 26 Cal. 786.

(3) (1954) 56 Punjab L.R. 54.

(4) A.LR. 1924 Cal. 1018.

(5) (I9z4) l.L.R. 47 Mad. 7n.

(6) (19531 55 Punjab L.R. 77 •

the learned judge in order to emphasise the fact that x960 this decision cannot be read as an authority for the proposition that an accused person can approach the R. P. :apur High Court under s. 561-A of_ the Code and ask it to State of Punjab appreciate the evidence adduced against him and quash the proceedings in case it thought that the said Gajendragadkar .J. evidence did not justify the charge. In fact, in dealing with the case the learned judge has himself approved of the several decisions which have construed the nature and scope of the inherent jurisdiction under s. 561-A and so the decision must be confined to the basic findings recorded by the learned judge in that case.

This being the true legal position the question which falls for our decision is: Does the appellant show that his case falls . under any of the three categories already mentioned by us. There is no legal bar to the institution of the present proceedings.or their continuance, and it is ol; ivious that the allegations made in the First Information Report do constitute offences alleged against the appellant. His argument, however, is that the evidence on record clearly and unambiguously shows that the allegations made in the First Information Report are untrue; he also contends that "certain powerful influences have been operating against him with a view to harm him and debar him o.:ffi.cially and otherwise and have instigated and later seized upon the false First Information Report filed by Mr. Sethi against him". In this connection he has naturally placed emphasis on the fact that the investigating agency has acted with extraordinary dilatoriness in the matter and that for several months the police did not make the report under s. 173 of the Code. It is true that though the complaint against the appellant is essentially very simple in its nature the police authorities did not make their report for nearly seven months after the First Information Report was lodged.

We have already indicated -how the appellant was driven to file a complaint on his own charging Mr. Sethi with having filed a false First Information Report against him, and how the Report, in question was filed aJter the appellant moved the High

r960 Court by his present petition under s. 561-A. It is very much to be deplored that the police officers R. P. I<apu' concerned did not act diligenUy in this matter, and

State 0; Punjab it is not surprising that this unusual delay has given rise to the apprehension in the mind of the appellant Gajendragadk"' J. that the object of the delay was to keep the sword hanging over his head as long as possible. It is perhaps likely that the appellant being the senior-most Commissioner in the Punjab the investigating authorities may have been cautious and circumspect in taking further steps on the First Information Report ; but we are satisfied that this explanation cannot account for the inordinate delay made in submitting the report under s. 173. It is of utmost importance that investigation into criminal offences must always be free from any objectionable features or infirmities which may legitimately lead to the grievance of the accused that the work of investigation is carried on unfairly or with any ulterior motive. Even so it is difficult to see how this conduct on the part of the police officers can materially assist the appellant in his prayer that the proceedings which have now reached the criminal court should be quashed. ·

\Ve must, therefore, now proceed to consider the appellant's case. that the evidence on record is demonstrably against the allegation of Mr. Sethi that he was induced by the appellant to part with Rs. 20,000 as a result of the several misrepresentations alleged in the First Information Report. He contends that the principal allegation against him is two-fold, that he fraudulently and dishonestly concealed from Mr. Sethi any information about the pendency of the proceedings before the Collector, and fraudulently represented to him that the land had been purchased at Rs. 10 per sq. yd.

According to the appellant, if t.he correspondence on the record is considered, and the statements made'by Mr. Sethi and his wife and their conduct at the material time are taken into account, it would irresistibly show that the whole story about the fraudulent misrepresentations is untrue. The appellant has taken us through the relevant correspondence and has referred us to the statements and the

oeni:lnct of the parties. We are anxious not to expres~

any opinion on this part of the appellant's argument. i96o All we wish t,_o say is that we would inevitably have.

I d R. P. Kapur to consider the evidence ourse ves an to appreciate v. it before we pronounce any opinion on the validity or State of Punjab otherwise of the argument. It is not a case where the - appellant can justly contend that on the face of the re- Gajendragadkar J. cord the charge levelled against him is unsustainable •.

The appellant no doubt very strongly feels that on the relevant evidence it would not be reasonably possible to sustain the charge but that is a matter on which the appellant will have to satisfy the ma.gistrate who takes cognisance of the case. We would, however, like to emphasise that in rejecting the appellant's prayer for quashing the proceedings at this stage we are expressing no opinion one way or the other on the merits of the case.

There is another consideration which has weighed in our minds in dealing with this appeal. The appellant has 'come to this Court under Art. 136 of the Constitution against the decision of the Pµnjab High Court; and the High Court has refused to exercise its inherent jurisdiction in favour of the appellant. Whether or not , we would have come to the same conclusion if we were dealing _with the matter ourselves under s. 561-A is not really very material because in the present case what we have to decide is whether the judgment under appeal is erroneous in law so as to call for our interference under Art. 136.

Under the circumstances of this ca§e we are unable to answer this question in favour of the appellant.

The result is the appeal fails and is dismjssed.

Appeal dismissed.

THE STATE OF BOMBAY

M/S. S. S. MIRANDA LIMITED (P. B. GAJENDRAGADKAR and K. N. WANCHOO, JJ.) Excise Duty-Imposition at successive stages of transportation of excisable article-Validity of-Bombay Abkari Act, z878 (Bom. V of

I878), SS. IO, I9 & I9A. . The respondent held a trade and import licence for foreign liquor-as well as a velldor's licence under the Bombay Abkari

March 25.

R. P.KAPUR

THE STATE OF PUNJAB

P .B. GAJENDRAGADKAR

K. N. WANCHOO

K. c. DAS GUPTA, JJ.

Code of Criminal Procedure

s. 56I

s. 56

Code of Criminal Procedure

s. 56

R. P. Kapur

S. M. Sikri

Mohinder Singh Punnan

T. M. Sen

D .. Gupta

GAJENDRAGADKAR

Gajendragadkar

M. L. Sethi

R. P. Kapur

Kaushalya Devi

ss. 420

Indian Penal Code

April 11, 1959

Sethi

ss. 204, 211

Indian Penal Code

Punjab High Court

s. 561

Code of Criminal Procedure

s. 173

July 25, 1959

September 10, 1959

Capoor

s. 561

R. P. Kapur

Munirka

April 13, 1957

June 13, 1957

March 8, 1957

ss. 4 and 6

Land Acquisition Act, 1894

Government of India

s. 17

June 8, 1957

s. 17

June 12, 1957

Karnihalya Devi

Mohammadpur Munirka

R. P. Kapur Sethi

State of Punjab

January 6, 1958

March 6, 1958

March 21, 1958

Delhi

s. 17

s. 561

Punjab High R.P. J(apur v.

Court

state of Punjab

Gajmdragadka

s. 561

s. 561

s. 173

R. P. Kapur

s. 561

s. 561

Shri- R. P.:<apur pad G. Ohandavarkar

94 SUPREME COUJ{'f Rll'ORTS LlU6U J

z960 criminal proceedings, and that is the effect of the - judicial decisions on the point (Vide: In Re: Shri- R. P.:<apur pad G. Ohandavarkar ('}, Jagat Chandra Mozumdar v.

State of Punjab Queen Empress (2), Dr. Shanker Singh v. The State of
Punjab (3), Nripendra Bhusan Ray v. Gobind Bandhu Gajendragadkar J. Majumdar( 4} and Ramano.than Ohettiyar v. K. Sivarama Subrahmanya Ayyar (5).)

Kapur

Jaiswal

s. 147

J aiswal

Art. 21

Art. 21

R. P. :apur High Court

s. 561

State of Punjab

s. 561

s. 173

High

r960 Court

s. 561

Gajendragadk

Punjab

s. 173

Art. 136

Pµnjab High Court

s. 561

Art. 136

STATE OF BOMBAY

S. S. MIRANDA

P. B. GAJENDRAGADKAR