WORKMEN OF DEWAN TEA ESTATE & Ors. v. THE MANAGEMENT

The first question which arises for our decision is whether the Tribunal was justified in holding that s. 25C recognises the common law right of the respon- dent to declare a lay off for reasons other than those specified in the relevant clause of the Standing Order. While dealing with this argument, we must proceed on the assumption that the financial difficulties ex perienced by the respondent at the relevant time which have been compendiously described by it as · constituting trading reasons for the lay off do not fall within the purview of the said relevant clause. The respondent's argument is that though the trading reasons may not justify the declaration of the lay off '( • ' ..... ·' ·< t y'< 5 S.C.R. SUPREME COURT REPORTS 553 J. v. 1963 - - under the said clause, as prudent employers who must be given liberty to run their industry in the best manner they choose, they have a common law Workmen of right to declare a lay off if they feel that the alternative Dewan Tea to the lay off would be closure and acting bonafide Estate and Ors. they want to avoid closure and adopt the lesser evil of declaring the lay off. Does section 25C of the The Management Act justify this argument? Section 25C(l) which recognises the right of the workmen who are laid Gajendragadkar off, for compensation, provides that whenever a workman therein specified has been laid off, he shall be paid by the employer for whole of the period of the lay off, except for such weekly holidays as may in tervene, compensation at the rate prescribed by the section. The proviso to this section lays down that the compensation payable to a workman during any period of twelve months shall not be for more than 45 days; and this proviso seems to indicate that the legislature thought that normally the period of lay off within 12 months may not exceed 45 days. Section 25C(2), however, contemplates the possibility that the period of lay off may exceed 45 days, and it lays down that if during any period of 12 months, a work- man is laid off for more than 45 days, whether con tinuously or intermittently, he shall be paid com pensation in the manner indicated by it. Thus, the position is that workmen who are laid off are entitled to compensation and the method in which the said compensation has to be calculated has been prescribed by the two clauses of s. 25C. It is, however, significant that when s. 25C deals with workmen who are laid off and proceeds to pres cribe the manner in which compensation should be paid to them, it is inevitably referring to the lay off as defined by s. 2(kkk) of the Act. The said section defines a "lay-off" (with its grammatical variations and cognate expressions) 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 554 SUPREME COURT REPORTS [1964] 1963 Workmen of Dewan Tea Estate and Ors. to give employment to a workman whose name is borne on the muster rolls of his industrial es tablishment and who has not been retrench ed." · v. It would be legitimate to hold that lay off which pri- The Management marily gives rise to a claim for compensation under G . ;;-- dk . s. 25C must be a lay off as defined by s. 2(kkk). If a1en 'j'ga m the relevant clauses in the Standing Orders of industrial employers make provisions for lay off and also pres the manner in which compensation should be paid to them for such lay off, perhaps the matter may be covered by the said relevant clauses; but if the relevant clause merely provides for circumstances under which lay off may be declared by the employer and a question arises as to how compensation has to be paid to the workmen thus laid off, s. 25C can be invoked by workmen provided, of course, the lay off permitted by the Standing Order also satisfies the requirements of s. 2(kkk). Whether or not s. 25C can be invoked by workmen who are laid off for reasons authorised by the relevant clause of the Standing Order applicable to them . when such reasons do not fall under s. 2(kkk), is a matter with which we are not directly concerned in the present appeal. The question which we are concerned with at this stage is whether it can be said that s. 25C recognises a common law right of the industrial employer to lay off his workmen. This question must, in our opinion, be answered in the negative. When the laying off of the workmen is referred to in s. 25C, it is the laying off as defined by s. 2(kkk), and so, workmen who can claim the benefit of s. 25C must be workmen who are laid off and laid off for reasons contemplated by s. 2(kkk); that is all that s. 25C means. If any case is not covered by the Standing Orders, it will necessarily be governed by the provisions of the Act, and lay off would be permissible only where one or the other of the factors mentioned by s. 2(kkk) is present, and for such lay off compensation would be awarded under s. 25C. Therefore, we do not think that the Tribunal was right in holding that s. 25C recognises the inherent right 5 S.C.R. SUPREME COURT REPORTS 555 1963 of the employer to declare Jay off for reasons which he may regard as sufficient or satisfactory in that behalf. No such common Jaw right can be spelt out Workmenof from the provisions of s. 25C. Dewan Tea Estate and Ors. That takes us to the question whether the lay v off in the present case is justified under Rule 8 of the Th M · g 1 Standing Orders which have been duly certified under ~nc:._ emen the Industrial Employment (Standing Orders) Act Gajendragadkar (No. 20 of 1946). The relevant portion of Rule 8 reads thus:- J. e . • t • "Closing and re-opening of sections of the in dustrial establishments, and temporary stoppages of work, and the rights and liabilities of the employer and workmen arising therefrom . (a) (1) The Manager may at any time in the event of fire, catastrophe, break down of machinery, stoppage of power or supply, epidemic, civil commotion, strike, extreme climate conditions or other causes beyond his control, close down either the factory or field work or both without notice. (iii) In cases where workmen are laid off for short periods on account of failure of plant or a temporary curtailment of production, the period of unemployment shall be treated as compulsory leave either with or without pay, as the case may be, when, however, workmen have to be laid off for an indefinitely fong period, their services may be terminated after giving them due notice or pay in lieu thereof." It will be seen that the circumstances under which a lay off can be declared have been specifically des cribed by Rule 8(a)(J). Two grounds have been ur~ed b~fore us by Mr. Banerj~e in support of the Tnbunal s conclusion that the impugned lay off is justified. He contends that the clause "stoppage of .supply" may cover cases of stoppage of financial assistance. The argument is that in 1959 when the lay off was declared, the companies found that they 556 SUPREME COURT REPORTS (1964] v. 1963 could not raise enough money to carry on the operations in the tea gardens, and so, it was a case of stoppage Workmen °1 of supply. If that be so, the lay off would be justified. In our opinion, this argument is wholly misconceived. Dewan Tea Estate and Ors. Stoppage of supply must, in the context, mean stoppage In regard to of raw material or other such thing. The Managementthe factory, the stoppage of supply may mean the stoppage of tea leaves, or in the case of field work, Ga1endragadkar it may mean the stoppage of supply of other articles It is impossible to necessary for field operations. accept the argument that "supply" in the context can mean money or funds. . - - 1· The other argument urged before us is that the last clause of R. 8(a)(i) which refers to "other causes beyond his control" would take in the financial difficul ties of the Cos. We are not inclined to accept this argument also. Other causes beyond his control for one thing should be similar to the causes that have preceded; even otherwise we see no justification for the arguinent that the financial difficulty which is alleged to have confronted the respondent was beyond its control. In fact, on this point the Tribunal has made a definite finding that though the respondent had produced a letter from the Chartered Bank of the 9th April, 1959 in which the Bank expressed its re luctance to afford financial facilities, it was by no means clear that the Companies acting through their Managing Agents completely failed to raise the necess ary finances at the relevant time. As the Tribunal has observed, the letter written by the Bank shows that it had promised to consider the matter and write to the Companies again; no evidence was produced to show what the Bank subsequently stated and whether finances became available or not. On the other hand, it is clear that at the end of the period of the lay off, all the Cos. started operating their tea gardens and we have been told that the operations have continued uninterrupted ever since. Besides, the letter on which reliance is placed was written in April, 1959, whereas the lay off was declared in February, 1959. Therefore, there is no evidence on the record which can justify l i 5 S.C.R. SUPREME COURT REPORTS 557 J. v. 1963 - - It is true, as Mr. Banerjee has pointed out, the assumption made by Mr. Banerjee when he raised the contention that the financial difficulties faced by the respondent at the relevant time were beyond Workmen of its control. The fact that some of the Cos. have Dewan Tea been incurring losses and have not made profits would Estate and Ors. not necessarily show that the financial position which they had to face at the relevant time was beyond their The Management control. that the three Cos. Scottpore, Tarrapore and Dood- Gajendragadkar putalee have not been able to pay dividends between 1951 to 1958 and it may be that with the exception of the year 1954, the position of all of them is not very satisfactory; but, on the other hand, there are other tea gardens in the same area and it is not suggested or shown that their position was any better than that It is also true that of the companies before us. at the relevant time, all the tea companies in Cachar in general, and the Managing Agents of the nine companies before us in particular M/s. Macneill and Barry Ltd. were trying their best to persuade the Assam Government to give them some relief in the matter of taxation. But the question which we have to decide is whether the financial position disclosed by the evidence on the record can be described as constitu- ting a cause beyond the control of the respondent. We are not inclined to answer this question in favour of the respondent. Besides, as we have already indicated, having regard to the factors specified by Rule 8(a)(i) before the clause in regard to other causes beyond his control was introduced, it would not be easy to entertain the argument that a trading reason of the kind suggested by Mr. Banerjee can be included in that clause. Therefore, we are satisfied that the Tribunal was in error in holding that the impugned lay off could be justified by Rule 8(a)(i). Rule 8(a) (iii) which refers to temporary curtail ment of production must obviously be read in the light of R. 8(a)(iJ and if the case of the present lay off does not fall under R. 8 (a)(i), R. 8(a) (iii) would not improve the position. Mr. Banerjee has then urged that the present Standing Orders which were duly certified under the ' • 558 SUPREME COURT REPORTS [1964] · v. 1963 Standing Orders Act came into force in 1950, whereas s. 2(kkk) which defines a lay off was added to the Workmenof Act by the Amending Act 43 of 1953 on the 24th Dewan Tea October, 1953. His argument is that the Standing Estate and Ors. Orders having been certified before the definition of the lay off was introduced in the Act, the respondent The Management is entitled to rely upon the said definition in support of the plea that the impugned lay off was justified. G . -;- a1en ';gadkar Basing himself on the definition of the lay off as prescribed by s. 2(kkk), Mr. Banerjee urged that this definition was wider than R. 8(a)(i) of the respondent's Standing Orders and would take in the trading reasons on which he relies. We are not prepared to accept the argument that in the present case, the respondent can rely on the definition of lay off as prescribed by It will be recalled that the Standing Orders s. 2(kkk). which have been certified under the Standing Orders Act became part of the statutory terms and conditions of service between the industrial employer and his employees. Section 10(1) of the Standing Orders Act provides finally certified under this Act shall not, except on agreement between the employer and the workmen, be liable to modification until the expiry of six months from the date on which the Standing Orders or the last modifica tion thereof came into operation. If the Standing Orders thus become the part of the statutory terms and conditions of service, they will govern the relations between the parties unless, of course, it can be shown that any provision of the Act is inconsistent with the said Standing Orders. In that case, it may be per missible to urge that the statutory provision contained in the Act should over-ride the Standing Order which had been certified before the said statutory provision was enacted. Assuming without deciding thats. 2(kkk) may include the trading reasons as suggested by Mr. Banerjee, the definition prescribed by s. 2(kkk) is not a part of the operative provisions of the Act, and so, the argument that there is inconsistency between the definition and the relevant Rule of the Standing Orders does not assist Mr. Banerjee's case. If there had been a provision in the Act specifically providing the Standing Orders • • ·~ - 5 S.C.R. SUPREME COURT REPORTS 559 v. · . - 1963 that an employer would be entitled to lay off his workmen for the reasons prescribed by s. 2(kkk), it might have been another matter. The only pro- Workmenof vision on which reliance has been placed is contained Dewan Tea in s. 25C and that, as we have already seen, merely Estate and Ors. takes in the definition of lay off inasmuch as it refers to the workmen as laid off and provides the The Management manner in which compensation would be paid to them. An alleged conflict between the definition Ga1end7gadkar of lay off and the substantive rule of the Standing Orders would not, therefore, help the respondent to contend that the definition over-rides the statutory conditions as to lay off included in the certified Standing Order. Therefore, we do not think Mr. Banerjee would be entitled to contend that s. 2(kkk) of the Act is wider than the relevant Rule in the Standing Orders and should apply to the facts of this case. We ought to make it clear that in dealing with this argument, we have not thought it necessary to consider whether the broad and general construction of s. 2(kkk) for which Mr. Banerjee contends is justified. In fact, Mr. Agarwala for the appellants has very strongly urged that the words "for any reason" found ins. 2(kkk) will not take in the trading considerations. He contends and prima facie with some force that the said words must be construed ejusdem generis with the words that precede them. (vide Management of Kairbetta Estate, Kotagiri v. Rajamanickam & Ors.)< 1 > According to him, the circumstances specified in s. 2(kkk) which justify a lay off must be integrally connected with production, and so, trading reasons cannot be included in that definition. According to this argument, the distinguishing features of the genus of which the several circumstances mentioned in the definition are different species, are: they are beyond the control of the employer, are expected to be of a short duration, and are of compulsive effect. As we have already indicated, we do not think it necessary to decide this interesting point in the present appeal because we are satisfied that the present dis- (!) [1960] 3 S.C.R. 371. • • 560 SUPREME COURT REPORTS (1964] pute must be governed by Rule S(a)(i) of the respon dent's Standing Orders. 1963 Workmen of Dewan Tea · J. b ana emen v · g h ecause w atever may In the result, we reverse the finding of the Tribunal Estate and Ors. !hat the lay <!ff 4eclared by the .respon~e!lt for 45 days m 1959 was Justified. That bemg so, 1t 1s unnecessary t to consider the individual cases of the nine respective "''he M h · ,, een t elf compames, Gajendragadkar respective financial position, under the relevant Rule they could not validly declare a lay off at all, nor could they have declared the lay off in exercise of their alleged common law right. The questions referred to the Tribunal must, therefore, be answered in favour of the appellants. The appeal is accordingly allowed and the appellants' claim for full wages for the 45 days of lay off in respect of the 11 tea gardens is awarded to them. The appellants will be entitled to their costs throughout. b h • Appeal allowed. 1963 November. 25 N.A. MALBARI AND BROS. v. COMMISSIONER OF INCOME-TAX, BOMBAY (A.K. SARKAR, M. HIDAYATULLAH AND J.C. SHAH, / "' </ JJ.) Income Tax-Penalties-One earlier, the second on disclosure of full facts-Whether justifiahle-Tncome-tax Act, 1922 (II of 1922), s. 28. The appellant, a firm of Surat, had a branch at Bangkok, to which it exported cloth, and the branch also made purchases locally and sold them. During the war the business of the branch had been in abeyance, but was re-started after the termination of the hostilities. In its return for the assessment year 1949-50 the appellant did not include any profit of the branch, but stated that the books of account of branch were not available, and therefore its profits might now be assessed on an estimate basis subject to