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Judgment
V. Ramaswami, J.—The first Respondent is a company engaged in the manufacture of automobiles. For certain reasons which it is not
necessary here to refer, the management announced the closure of the factory at New Perungalathur, Madras by a notice, dated 22nd May, 1970.
At the intervention of the Government, a settlement was arrived at u/s 12(3) of the Industrial Dispute Act of 1947 (hereinafter referred to as the
Act) on 15th February, 1971. Under this settlement, amongst others, the closure was accepted as a fact with legal consequences of such closure.
The management re-opened the factory as a new unit on 22nd September, 1971. Most of the workers in the erstwhile closed factory were taken
in as new employees and their previous services were agreed to be taken into account only for the purpose of gratuity. Since the closure was
accepted as a fact and final and the factory was opened on 22nd September, 1971 as a new unit, 217 of the workers filed claim petitions u/s 33-
C(2) of the Act claiming closure compensation. Of the, 217 workers, who filed such claim petitions 22 were staff workers, who were paid monthly
salary. The remaining 195 were daily rate workers but payment were made on monthly basis on the daily rate. There were two illegal strikes during
12th September, 1969 to 6th November.1969 and 12th February, 1970 to 26th February 1970. The management contended that in view of the
illegal strike, the services of the claimants were interrupted and they ceased to be in continuous service. It was also contended that in order to claim
closure compensation u/s 25FFF of the Act each of the claimants had to establish that he was in continuous service for not less than one year in the
establishment, immediately before the closure. For both those reasons, namely that the continuity of the service of the Petitioners had been lost in
view of the illegal strike, and for the reason that they have not been in continuous service for not less than one year immediately before the closure,
the management contended that the claimants were not entitled to the benefit of the closure compensation. This contention of the management was
accepted and the claim petitions were dismissed by the Labour Court by an order dated 11th January 1974. These two writ petitions have been
filed as test cases, one by the employee belonging to the worker-service and the other belonging to the staff-service.
The main part Section 25 F.F.F.(1) with which alone we are now concerned reads as follows:
(1) Where an undertaking is closed down for any reason whatsoever, every workman, who has been in continuous service for not less than one
year in that undertaking immediately before such closure shall, subject to the provisions of Sub-section (2), be entitled to notice and compensation
in accordance with the provisions of Section 25F, as if the workman had been restrenched:
Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the
compensation to be paid to the workmen under Clause (b) of Section 25F shall not exceed his average pay for three months.
(Explanation omitted).
It may be seen from this provision that if workman satisfies the condition that he has been in continuous service for not less than one year in that
undertaking immediately before such closure he shall be entitled to notice and compensation in accordance with the provisions of Section 25F as if
the workman had been retrenched. u/s 25F, a workman, who has been in continuous service for not less than one year shall, at the time of
retrenchment, be entitled to one month''s notice in writing or one month''s wages in lieu of such notice and fifteen days average pay for every
completed year of continuous service or any part thereof in excess of six months. Continuous service is defined in Section 25F and that reads as
follows:
(1) a workman shall be said to be in continuous service for a period, if he is, for that period in uninterrupted service including service which may be
interrupted on account of sickness or authorised leave or an accident or a strike which is not illegal or a lock-out or a cessation of work which is
not due to any fault on the part of the workman; and
(2) where a workman is not in continuous service within the meaning of Clause (1) for a period of, one year or six months, he shall be deemed to
be in continuous service under an employer:
(a) for a period of one year, if the workman, during a period of twelve calendar months proceeding the date with reference to which calculation is
to be made, has actually, worked under the employer for not less than:
(i) one hundred and ninety days in the case of a workman employed below ground in mines; and
(ii) two hundred and forty days, in any other case.
(b) for a period of six months, if the workman, during a period of six calendar months proceeding, the (late with reference to which calculation is to
be made, has actually worked under the employer for not less than:
(i) ninety-five days, in the case of a workman employed below ground in a mine; and
(ii) one hundred and twenty days, in any other case.
Explanation:--For the purposes of Clause (2), the number of days on which a workman has actually worked under an employer shall include the
days on which:
(i) he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act,
1946, or under this Act, or under any other law applicable to the industrial establishment;
(ii) he has been on leave with full wages, earned in the previous years;
(iii) he has been absent due to temporary disablement caused by accident arising out of and in the course of his employment; and
(iv) in the case of a female, she has been on maternity leave; so, however, that the total period of such maternity leave does not exceed twelve
weeks.
The learned Counsel for the Petitioners contended that if a worker had been in continuous service for not less than one year within the meaning
of Section 25B, he will be eligible for closure compensation irrespective of whether he was in such continuous service in the year immediately
preceding the date of closure of the undertaking. In any case, the words has been in continuous service for not less than one year in that
undertaking immediately before such closure refer to the last completed continuous year of service of the worker concerned and not the year which
ended with the date of closure. On the other hand, the learned Counsel for the management contended that normally the concept of completed
year of continuous service would mean and will have to be calculated with reference to the date of entry in the service and from the date of service,
the year of service starts. That is, each block of one year from the date of entry into service will form one completed year of service. But, for the
purpose of applicability of Section 25FFF, a new arbitrary one year period of continuous service is required to be complied with. According to the
learned Counsel, the words has been and the words immediately before such closure indicate and require that the workman should show that he
has been in continuous service for the year immediately preceding the date of closure that is the year ending with the date of closure words be
taken as a test year and in that year the workman should have been in continuous service within the meaning of Section 25B and, if he satisfies that
test, the section requires notice and compensation to be paid in accordance with the provisions of Section 25F as if the workman had been
retrenched. For the purpose of calculating the notice and compensation each block of year from the date of entry into service would have to be
taken into account. In other words, the pre-condition for entitlement of the notice and compensation in accordance with Section 25F is a
satisfaction that the workman was in continuous service in the year ending with the date of closure. If the answer to the question, whether the
workman was in continuous service in the year ending with the date of closure is yes, then the provisions of Section 25F have to be applied and the
compensation worked out. If the answer is no the workman concerned is not entitled to any compensation, however long his period of service may
be in the undertaking. The test of continuous service in the year immediately preceding the closure is to find out whether the said workman is
entitled to compensation or not. Once he is found entitled to compensation he will have to be paid compensation in accordance with Section 25F
as if he was retrenched;
There can be no doubt that for the purpose of applicability of Section 25F, each completed year of continuous service is the block of one year
each from the date of entry into service. With reference to each such block of one year from the date of entry into service, it will have to be tested,
whether the workman could be said to have been in continuous service applying the definition of Section 25B. In applying this test, the concerned
workman may satisfy in respect of one year and he may not satisfy in respect of another year. While testing, whether he was in continuous service,
Clause (1) of Section 25B will have to be applied first. If the period during the said block of one year is uninterrupted within the meaning of that
clause, then the workman concerned can be said to be in continuous service for that year. But if there was a break or interruption for any particular
period in that year then Clause (1) is not applicable. Even in such a case, be will be deemed to be in continuous service, if he had complied with
the provisions of Clause (2) of Section 25B. We are not concerned here with the mining workmen. In the instant case, if the workman had satisfied
the condition of actually working under the employer for hot less than 240 days in that year, he shall be deemed to be in continuous service in that
year.
Section 25F was amended by Act XXXVI of 1964 by substituting the words, for every completed year of continuous service for the words for
every completed year of service. Section 25B as it stands now came into force with effect from 19th December, 1964. Prior to this date
continuous service was defined in Section 2(eee) and there was also a definition of continuous service in Chapter V.A. under the original Section
25B. With reference to these provisions, the Supreme Court, in the decision reported in Ramakrishna Ramnath Vs. The Presiding Officer, Labour
Court, Nagpur and Another, held that if a workman during the period of 12 calendar months has actually worked in an industry for not less than
240 days, he shall be deemed to have completed one year of service in the industry and after satisfying that test it is not necessary for him to further
show that he has worked during all the period in service of the employer for 240 days in the year. The new definition in Section 25B and the
substitution of the words for every completed year of continuous service for the words for every completed year of service in Section 25B clearly
indicate that the workman will now be entitled to compensation only for those completed years of continuous service worked out from the date of
en try into service in the manner above stated and, he will not be entitled to any retrenchment compensation in respect of the year in which he could
not be said to be in continuous service within the meaning of Section 25B. Thus on the first or earliest completed year of continuous service a
workman qualifies himself and becomes entitled to retrenchment compensation, but the compensation is to be calculated for every completed year
of continuous service or any part thereof in excess of six months. It will be seen that it will not be enough as per the existing provisions, if the
workman satisfies the test of Section 25B in respect of one year alone in order to enable him to claim compensation for all the period, he has been
in service under the employer. Thus far there is mo difficulty and it is accepted by the learned Counsel for the Respondent.
But, in order to enable the workman to claim closure compensation, according to the learned Counsel for the Petitioner, he will have to satisfy a
further pre-condition that he has been in continuous service in the year immediately preceding the date of closure. The decision depends, therefore,
on the meaning we would give for the Words who has been in continuous service for not less than one year in that undertaking immediately before
such closure. This can be split up into three groups of words; has been, immediately before such closure and continuous service for not less than
one year. The words has been do show that the workman concerned should have been in the pay rolls of the company from the date of service till
the date of closure. The words immediately before only mean, right up to the time of closure, that is having nothing intervening from continuity of
the service and the closure. The meaning of similar wording came up for consideration in the decision reported in Newport Borough Council v.
Leicester County Council (1937) 1 All. E.R. 439. The words Every person resident in the added areas immediately before the appointed day
were construed to mean resident in the added area up to the appointed day. The words continuous service for not less than one year are also
found in the provision relating to retrenchment compensation u/s 25F. We have already construed those words with reference to the definition in
Section 25B and in the context of Section 25F, as meaning the years completed with reference to the date of entry into service. We do not find
any reason as to why any different meaning will have to be given for these words in Section 25FFF. The condition requiring for continuous service
for not less than one year is thus to be determined with reference to the date of entry into service and the date of closure. The entire period
between these two dates has to be taken as the period of service. If there had been a continuous service for not less than one year from the date of
entry upto the date of closure, he shall be deemed to have complied with the condition for the applicability of Section 25FFF. That is the unbroken
period of service from the date of entry till the date of closure is the period which has to be taken for test as to whether continuous service was
there or not within the meaning of Section 25B. In other words, there is no distinction between Section 25F and Section 25FFF except that the
relevant dates for computing the compensation are the date of entry into service and the date of closure and, if on the date of closure, he was on
the pay rolls of the company, he would be entitled to be paid closure compensation right from the date of entry into service till the date of closure
for every completed year of continuous service worked out as provided in Section 25B. This construction is also in consonance with the provisions
contained in Clause (2) of Section 25FFF. That section provides that in the case of construction companies which were not completed within two
years, the workmen will be entitled to notice and compensation for every completed year of continuous service or any part thereof in excess of six
months. The provision is in pari materia with the language used ii Section 25F. The closure of construction companies and the closure of other
companies could make no difference at all n the matter of payment of compensation. We are, therefore of the opinion that even in respect of
Section 25FFF in order to entitle a person to closure compensation it will have to be found oat whether he has been in continuous service for not
less than one year from the date of entry into service and it is not necessary for him to comply with any other further condition of continuous service
in the year ending with the date of closure.
One other point that arises for consideration in these writ petitions relates to the actual meaning to be given to the words actually worked under
the employer for not less than 240 days. The learned Counsel for the Petitioners would contend that in calculating the 240 days, the Saturdays and
Sundays and paid festival holidays would have to be included. On the other hand the learned Counsel for the management contended that the
words actually worked in Section 25B(2) clearly imply and show that Saturdays and Sundays and even paid holidays should not be included in
calculating the 240 days. We are in entire agreement with this contention of the learned Counsel for the management. The words actually worked
would not include even holidays for which full wages are paid. The words days worked itself would normally mean days actually worked. The
Legislature as if it were to give emphasis has also added the word actually. There could therefore be no scope for argument that paid holidays are
to be included in actually worked days. The explanation to Section 25B has included in this actually worked days certain deemed actual working
days. Only these days which are provided in the explanation could be included in calculating the 240 days in addition to the actual working days
and we cannot enlarge the meaning of the words actually worked beyond what is contained in the explanation. The number of working days
worked by a workman in a completed year of service thus will have to be worked out with reference to the actual working days if it is a case
falling under Clause (2).
In the result, the writ petitions are allowed. The order of the Labour Court is set aside and the matter is remanded to the Labour Court for
working out the closure compensation in the light of our judgment. The Petitioners would be entitled to their respective costs.